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Transcript of Special Economic Zonefinal
8/3/2019 Special Economic Zonefinal
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Special Economic Zone BY:-
ASHFAQ &UJJAWAL
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What is SEZ?
• A geographical region that has economic laws moreliberal than a country's typical economic laws.
• Covers a broad range of more specific zone types,including Free Trade Zones (FTZ), Export Processing
Zones (EPZ), Free Ports etc.
• A spatial economic island where more liberal economiclaws operate than outside that specified area.
• Main objective to attract FDI by excluding a specifiedgeographical area from the operation of certain tax lawsand import and export laws.
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Continued..
• No. of developing countries have resorted to this
strategy to attract FDI like China, India, Iran,Jordan, Poland, Kazakhstan etc.
• In India, SEZ were started from April 2000.
• As on today 101 SEZs are in operation and inprinciple approval has been given for setting upanother 117 SEZs.
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Shenzhen SEZ
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Shenzhen SEZ
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Shenzhen SEZ
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Types of SEZ
• SECTOR SPECIFIC SEZs.
• MULTI-PRODUCT SEZs.
• Port/ Airport Based SEZs
• Free Trade and Warehousing Zones
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• Defined as a zone meant exclusively for one or moreproducts or services in one sector.
• Minimum area requirement is 100 hectares (reduced to
50 hectares for specified States and Territories).
• For Electronic hardware and software including IT/ITES,minimum area required is 10 Hectares with a minimumbuilt up processing area of one lakh square meters.
SECTOR SPECIFIC SEZs.
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• Signifies an SEZ where units may be set up formanufacture of services of two or more goods/servicesin a sector or goods/services falling in two or moresectors.
• Minimum area requirement for SEZ exclusively forservices is 100 hectares.
• Minimum area requirement is 1000 hectares(reduced to 200 hectares for specified States andTerritories like in Assam , Meghalaya, Nagaland,
Mizoram, Manipur, J&K, Tripura , Sikkim , Himachal
MULTI-PRODUCT SEZ
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PORT/AIRPORT BASED SEZs
• Freeport's typically encompass much largerareas. They accommodate all types ofactivities, including tourism and retail sales,
permit on-site residence, and provide abroader set of incentives and benefits.
• Size of this type is greater than100 km2Market of this type Domestic, internal andexport markets
• Objective of this is integrated development
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The Subic Bay International Airport, the gateway to Subic
Bay Freeport, is a modern, international airport with 10,000
sq. m passenger terminal, capable of handling 700 passengers
at any given time and featuring the very latest technology forsecurity and comfort.
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SUBIC BAY
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Rehabilitated Marine Terminal at the NSD (Naval Supply Depot)
Part of the rehabilitation is the widening of the marine terminalapron by 12 meters (each side).
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The new container terminal at the Cuba Point.
Around two million cu.m. of earth was moved to construct the30-hectare container yard. Specifications: 2 berths; Depth: 13
meters; Length: 560 meters.
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SUBIC BAY – Tourism
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Free trade zones, also known as commercialfree zones and free commercial zones.
Objective is to support trade
Size is less than 50 hectares Market is domestic and re-export
Eligibility activity is trade-related activities
example is the Colon Free Zone in Panama.
FREE TRADE AND WAREHOUSING ZONES
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JEBEL ALI FREE TRADE ZONE
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Jebel Ali Free Trade Zone
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• FDI- 100% permitted under automatic route
• Objectives- Development of infrastructure facilities,
Investment Promotion, Promotion of exports of goods and
services, Generation of employment opportunities etc.• Establishment Procedure- SEZ can be established either bythe Central Government, State Government or any otherentity.
• Requirements- Minimum area requirements for different class
of SEZs, every SEZ is divided into a processing area( forunits) and the non-processing area (for supportinginfrastructure).
• Simplified Procedure- Single window clearance for settingup SEZ as well as units within SEZ
SPECIAL ECONOMIC ZONESFuelling India’s Economic Growth
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• To Provide Internationally CompetitiveEnvironment
• To Increase Share In Global Exports• To Encourage FDI And Enhance GDP
• To Act As Laboratories For Changes In Our
Policies
ROLE OF SEZS IN INDIAN ECONOMY
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SEZ – Current Status
• 396 SEZs formally approved: – 19 Multi Product SEZs; – 6 Port based Multi Product SEZs; – 132 Sector Specific SEZs; – 249 EH/IT/ITES SEZs
• 169 valid in-principle approvals;
• 151 SEZs notified; over 45 SEZs functional
• 2006-07 Exports at US$8.3 billion (Rs. 34,787 Crores)
• Growth in exports 52% over 2005-06
• Projected exports –2007-08 – US$15 billion(Rs.67,088 crores)(200% increase in two years)
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Tax Incentives
T I ti
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Tax Incentives
• Direct Tax Benefit to Developers
• 100% tax holiday for 10 consecutive years out of block of15 years
• Profit & gains derived from business of developing SEZnotified on or after 1st April 2005
• Transferee Developer can also claim deduction forbalance period of 10 years on Operation & Maintenanceincome
• Minimum Alternative Tax provisions not applicable
• Exemption from Dividend Distribution Tax
• Direct Tax Benefits to Units
• 100% of profits and gains derived from the export for fiveConsecutive Years from which business commences.
• 50% of for further five A.Y. and
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• Direct Tax benefits for Units • Minimum Alternative Tax provisions not applicable
• Capital gain tax exemption on relocation to SEZ
• Indirect Tax• Exemption from payment of Import duty
• Exemption from payment of Excise duty
• Exemption from payment of CST and VAT on purchasefrom DTA
• Exemption from Service tax
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SWOT Analysis for Indian SEZs• Strengths:
• Skilled Manpower – knows English
• Worldwide acceptance of capabilities in fields like
• Pharmaceutical manufacturing & research
• Clinical trials
• Manufacturing auto parts
• Engineering designing & consultancy, IT & ITES
• Entertainment etc
• Financial & other institutional Networks like StockExchanges, Insurance Companies, Educational Institutes
• Attraction of a large ‘Indian’ market:
• growing middle class with purchase power
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SWOT Analysis for Indian SEZs• Weakness:
• Infrastructure bottlenecks –connectinginfrastructure like Roads leading to SEZs.
• Political changes
• Convertibility of Currency on Capital A/c
• Zones by & large are still zones not smart cities.
• Inappropriate locations
• Long gestation period 4 to 5 years in absence ofinfrastructure development.
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SWOT Analysis for Indian SEZs
• Opportunities:
• An alternative manufacturing base, particularlycompared to Chinese SEZs.
• Services SEZs do not require movement of inputand output physically and hence, surroundinginfrastructure may not matter much.
• For multi-product SEZs, almost 23 ports areavailable. Most of them are likely to be EDIcompliant.
• New small ports & airports are also being developed
keeping SEZ concept in mind.
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SWOT Analysis for Indian SEZs
• Threats:
• Loosing edge of low labour costs - many countriesare competing.
• Formation of economic blocks, Effect onGovernment Revenues.
• Negotiations for FTAs with many countries mayerode competitiveness.
• The pattern of buying & selling may not continue.With relocations of industries in other third worldcountries, new competitors will emerge.
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