SPECIAL ECONOMIC ZONE’S IN INDIA

PRESENTED BY, SOP 2- MBA A BATCH

ABIN THOMAS AKHIL VIJAYAN MANU CHACKO PRASANTH.C.NAIR JIMSHIYA ASARIPPARAMBIL SINU RAJ

SPECIAL ECONOMIC ZONE

• Geographical region that economic and other

laws are free market oriented

• Nation wide rules suspended inside SEZ

• Main goal is increase in FDI and GDP

It covers a broad range of specific zones such as:

• Free Trade Zone(FTZ)

• Economic Processing Zones(EPZ)

• Industrial Parks

• Free Ports

SALIENT FEATURES OF SEZ

• Self certification for export and import

Import and export movements of goods are based on

self declaration

No routine examination is made unless specific order

from Development Commissioner or authority.

• Sub contracting

A SEZ unit may sub contract a part of it’s product or

production process to different units, even in abroad

• Fiscal incentives-Tax

Exemption from excise and customers duty on

procurement of capital assets, consumable stores,

raw-materials from domestic market

Exemption from sales tax, import duty, Income tax,

minimum alternative tax and dividend distribution tax

• Single Window Clearance

Submit regularity documents at single

locations

Less proceedings and save time

• Sales in DTA permittedDomestic Tariff AreAre within India and outside SEZ

Goods,rejects,remnants etc arising during manufacturing can be sold on DTA

Duties applicable

• Minimum area

Multi product 1000hectors 35%

Multi product(services) 100 hectors 35%

Port and airport 10 hectors 50%

Electricity, hardware

and software including

ITES 10 hectors 50%

• Eligible activities

Manufacturing, trading and service activities

HISTORY OF SEZ IN INDIA

• EPZ at Kandla in 1965• Performance of EPZ fell short due to lack of good

economic policies• Economic reforms in early 1990’s• Modern day SEZ came into existence• SEZ policy• Results were not desired and manufacturing sector

witnessed a sudden drop in over all growth• In 1990’s FDI’s deteriorated• Immature Indian markets• Lack of investor friendly environment• Present day SEZ policies

SOME OF IMPORTANT SEZ IN INDIA

INDIA

• Karnataka Biotechnology and Information Technology Services - SEZ on biotechnology sector in Bangalore's Electronics City, over an area of 43 acres

• Shree Renuka Sugars Limited - SEZ on sugarcane processing complex covering 100 hectares, comprising a sugar plant, power station and distillery, at Burlatti in Belgaum district

• Ittina Properties Private Limited and three other - SEZs in IT sector, covering electronics, hardware and software sectors in Bangalore, over an area of 15.732 hectares

• Wipro Infotech - SEZ on IT / ITES at Electronics City, Sarajpur Bangalore

• Hewlett Packard India Software Operation Pvt. Ltd. - SEZ on IT

• Food processing and related SEZ services in Hassan, over an area of 157.91 hectares

• SEZs on pharmaceuticals, biotechnology and chemical sectors in Hassan, covering of 281.21 hectares

• SEEPZ - Andheri (East), Mumbai• Khopata - Multi-product, Mumbai• Navi Mumbai - Multi-product, Mumbai• Salt Lake Electronic City, West Bengal• Manikanchan - Jems and jewelery, West Bengal• Calcutta Leather Complex, West Bengal• Falta food processing unit, West Bengal

IN KERALA

NAME OF DEVELOPERS LOCATION STATE TYPE OF SEZ

OBJECTIVES OF SEZ ACT

•Generation of additional economic activity

•Promotion of exports of goods and services

• Promotion of investment from domestic and foreign sources

•Creation of employment opportunities

•Development of infrastructure facilities

15

ROLE OF SEZ IN INDIAN ECONOMY

• To provide internationally competitive environment• To encourage FDI and enhance GDP• To increase share in global exports SEZ exports accounting for 26% of India’s total export in

2011.

16

EXPORTS FROM SEZ

0

5000

10000

15000

20000

25000

2003-04 2004-05 2006-07

Rs in Crores

MAJOR ISSUES• Land Acquisition

• Role of State Govt. in Land Acquisition

• Compensation Packages to land owners

• Rehabilitation packages for displaced farmers

• State Govt.’s commitment to create infrastructure

• Time frame for operationalisation

• Control over SEZs

ADVANTAGES OF SEZ

• Growth and development

• Attracts Foreign Direct Investment

• Exposure to technology and global market

• Increasing GDP and Economic Model

• Employment opportunities are created

DISADVANTAGES OF SEZ

• Land acquistion at very low prices

• Farmers loose their livelihood

• Tax holidays affect GDP

ADMINISTRATIVE SETUP FOR SEZ

• Board of approval- apex body in department• Each zone is headed by development

commissioner who is also heading approval committee

• Approval committee at the zonal level dealing with approval of units in SEZ and other related issues

BOARD OF APPROVAL

• Duty to promote and ensure orderly

development of SEZ

• Chairperson of board-special secretary to

government of India in ministry of commerce and

industry, dept of commerce consists of 18

members and nominee of each state govt.

MAJOR FUNCTIONS OF THE BOARD

• Granting approval or rejecting proposal or modifying the

approvals for establishment of SEZ

• Granting approval of authorised operations by the

developer in the SEZ

• Granting approval to the developers or units for foreign

collaborations and FDI in SEZ for its

development ,operations and maintenance

• Granting approval or rejecting of proposal for providing

infrastructure facilities in SEZ

DEVELOPMENT COMMISSIONER

• Central government may appoint any of its officers

not below the rank of Deputy Secretary to

government of India as the development

commissioner of one or more special economic zone

• Every development commissioner shall take all steps

in order to discharge his function to insure speedy

development of SEZ and promotion of exports

MAJOR FUNCTIONS OF DEVELOPMENT COMMISSIONER

• Guide the entrepreneurs for setting up of units in SEZ

• Ensure and take suitable steps for effective promotion of

exports for SEZ

• Ensure proper coordination with central government or

State Government departments concerned

• Monitor the performance of the developer and units in a

SEZ

APPROVAL COMMITTE

• Every SEZ has one approval committee

• 9 members

• Chairperson- Development commissioner

MAJOR FUNCTIONS OF APPROVAL COMMITTE

• Approve the import or procurement of goods from the Domestic Traffic Area, in the SEZ for carrying on the authorised operations by the developer

• Approve of services by a service provider, from outside or from the D.T.A

• Monitor the utilisation of goods and services or warehousing of trading in SEZ

• Approve, modify or reject proposals for setting up units for manufacturing or rendering services or warehousing trading in the SEZ

SWOT ANALYSIS OF INDIAN SEZ

STRENGTH• Based on Western model or SEZ in China• An established legal redress system • Relatively low labour costs• Employment opportunities• India’s large English speaking and skilled

workforce• Exposure to technology and global market

• Worldwide acceptance of capabilities in fields like• Pharmaceutical manufacturing & research• Clinical trials• Manufacturing auto parts• Engineering designing & consultancy, IT & ITES• Malls and hotels• Hospital

• Financial & other institutional Networks like Insurance Companies

WEAKNESS

• Poor infrastructure and transport

facilities

• High cost of capital

• Inadequate institutional support

• Political changes

• Inappropriate locations

OPPORTUNITIES

• An alternative manufacturing base, particularly

compared to Chinese SEZs

• Investments in core strength areas like IT and

software products and services.

• New small ports & airports are also being

developed keeping SEZ concept in mind

• A large NRI base who have traditionally invested

less in Greenfield development in India

THREATS• The pattern of buying & selling may not

continue. With relocations of industries in other third world countries, new competitors will emerge

• opposing interests • Prospect of even more restrictive labour laws

being introduced • Increasing rejection rate for proposals to

establish SEZs

CONCLUSION

•

• scope of human capital formation and technology upgrading effects will widen.

• Government to play a pro active role in strengthening these effects.

• linkages between the domestic economy and Special Economic Zones.

• Effects of Special Economic Zones are contingent upon the success of these zones in attracting Foreign Direct Investment.

THANK YOU…