SEZ & EPZ's

Meaning of Export Processing Zones

Export Processing Zones (EPZs) can be summarized as a unit bearing clusters of specially designed zones of

aggressive economic activity for the promotion of export. The main concept of Export Processing Zones was conceived in the early 1970s to promote the growth of the sickening export business of India. Further, the meaning of Export Processing Zones (EPZs) can be broadly defined as an area enjoying special government of India support with respect to fiscal incentives, tax rebates and other exclusive benefits for the growth of export.

Special Economic Zone List

Special Economic Zone is one or more areas of a country where the tariffs and quotas are eliminated and bureaucratic requirements are lowered so that more companies are attracted to the area. The companies establishing in the area also gets extra incentives for doing business.

In India the policy for setting up SEZ was introduced on April 1, 2000 with a view to provide an internationally competitive and hassle free environment for exports. The policy offered setting up of SEZ in the public, private, joint sector or by State Governments.

The following are the list of SEZ in India. Out of these, Noida (Uttar Pradesh), Falta (West Bengal), Chennai (Tamil Nadu) and Vishakapatnam (Andhra Pradesh) SEZ were Export Processing Zone (EPZ) before April 1, 2003.

Export Processing Zones (EPZs) also encompasses pre-defined infrastructural facilities and regulations pertaining to establishment of such zones and environmental stipulations, respectively. These Export Processing Zones of India were established to help the growth of Indian export commodities, especially from the fast growing sectors.

Objectives of setting up of EPZs

Encourage and generate the economic development Encourage Foreign Direct Investments (FDI)

To channel the sources of foreign exchange within the system in a phased manner

Foster the establishment and development of industrial enterprises within the said zones

Encourage and generate wider economic activities by encouraging foreign investments for the development of the zones

To channel the foreign exchange earnings for the further development of these zones and explore new areas for the development of Indian exports

Encourage establishment and development of Indian industries and business enterprises and facilitate with proper infrastructure Generate employment opportunity

Upgrade labor and management skills

Acquire advanced technology for increased productivity

Ensure world class quality of products

Three-tier management system in EPZs

Tier one is headed by the Ministry of Commerce headed by the Commerce Secretary, which drafts and implements policies and reviews the performance of each such zones

Tier two is headed by the Board of Approval (BOA), which is responsible for examination of proposals for opening up of new enterprises in the zone and which is headed by a person of the level of Additional Secretary

The Development Commissioner, who is the chief executive of the Export Processing Zone, heads the three tiers. The Development Commissioner is vested with the power for the day-to-day function of the zone. Further, he is the head of functions relating to administration, approval of investment, and he also enforces various regulatory provisions

Export Processing Zone Scheme

Free Trade Zones (FTZ)/ Export Processing Zones (EPZs) have emerged as an effective instrument to boost export of manufactured products. The Zones, set up as enclaves separated from the Domestic Tariff Area (DTA) by physical barriers, are intended to provide an internationally competitive duty free environment for export production at low costs. The basic objectives of EPZs are to enhance foreign exchange earnings, develop export-oriented industries and to generate employment opportunities. The first Zone was set up at Kandla (Gujarat) in 1965, followed by SEEPZ, Mumbai in 1972. Thereafter, four more Zones were set up at NOIDA (UP), FALTA (West Bengal), Cochin (Kerala), Chennai (Tamil Nadu) in 1984 and at

Vishakapatnam (Andhra Pradesh) in 1989. In 1997, Surat Export Processing Zone came into existence. With the announcement of Special Economic Zone Scheme in year 2000, the four Export Processing Zones / FTZ, namely Kandla, SEEPZ, Cochin and Surat have been converted into Special Economic Zones with effect from 1-11-2000.

2.        Each Zone provides basic infrastructural facilities, like developed land, standard design factory buildings, built-up sheds, roads, power supply and drainage, in addition to a whole range of fiscal incentives by way of Customs, Excise and Income Tax exemptions. Customs clearance facilities are offered within the Zone at no extra charge, while facilities like banking, post office and clearing agencies are also available in the service centers attached to each Zone.

3.        The Export & Import Policy provisions for Export Processing Zones are the same as applicable to EOUs. Thus, the provisions of EXIM Policy regarding importability of goods, DTA sale, clearance of samples, sub-contracting, inter-unit transfer, repairs, re-conditioning and re-engineering, sale of unutilized material, debonding etc. for EOUs are applicable to EPZ units.

4.        The Development Commissioners appointed by the Ministry of Commerce monitor and coordinate the functioning of each Zone. The Customs act in close liaison with the Development Commissioner of the respective Zone in providing bond facilities and for ensuring that goods imported/indigenously procured duty free are utilised in the production of goods for export. To enable the EPZs to import/procure locally their requirement of raw materials, capital goods and office equipment etc. duty free, a number of Customs and Central Excise notifications have been issued by the Ministry of Finance. These notifications specify the different categories of items allowed to be imported/procured duty free as well as the conditions thereof. The permissible item, cover almost all categories of goods required in connection with the production activity for export & include capital goods, raw materials, components, packing, consumables, spares etc. The relevant notifications are as under:-

(i)133/94-Cus, dated 22.6.1994 for allowing duty free import of specified goods to the units located in the Export Processing Zone;

(ii)58/2000-Cus, dated 8.5.2000 for allowing granite-quarrying units located in the Export Processing Zone to import specified goods duty free;

(iii)

177/94-Cus, dated 21.10.1994 for allowing Gems & Jewellery units located in the Export Processing Zone to import specified goods duty free;

(iv)126/94-CE, dated 2.9.1994 for allowing EPZ units to procure locally the specified goods duty free;

(v)37/2000-CE, dated 8.5.2000 for allowing granite-quarrying units located in the Export Processing Zone to procure specified goods duty free;

            As the policy provisions for units located in Export Processing Zone are the same as those applicable to EOUs, for details the chapter on EOUs may please be referred to. It may be mentioned that in case of EPZ, the units are not required to take licence under section 58 of the Customs Act. Further, the EPZ units are not required to pay cost recovery charges for the Customs staff posted in the Zone.

export processing zone (EPZ)

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Definition

Type of free trade zone (FTZ), set up generally in developing countries by their governments to promote industrial and commercial exports. In addition to providing the benefits of a FTZ, these zones offer other incentives such as exemptions from certain taxes and business regulations. Also called development economic zone or special economic zone.