1 PRESENTATION BY P.C. NAMBIAR Chairman, Export Promotion Council for Export Oriented Units and SEZs, India ZONE DEVELOPMENT AND OPERATION AN INDIAN PERSPECTIVE

INDIA – FEDERAL SET UP 29 STATES AND 7 UNION TERRITORIES RULED BY 13 DIFFERENT POLITICAL PARTIES. INDEPENDENT FEDERAL AUTHORITY ON CERTAIN VITAL ISSUES LIKE LAND USE, LABOUR,LAW & ORDER ETC. INDEPENDENT STATE TAX LEGISLATIONS. 2

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INDIA - FEDERAL SET UP SMALLEST STATE SIZE Mn Ha LARGEST STATE SIZE Mn Ha VARYING RATIO OF LITERACY RATES UNEVEN POPULATION DENSITY 30 LANGUAGES SPOKEN WITH DIFFERENT CULTURE 4

INDIA – DEMOGRAPHY LACK OF ADEQUATE INDUSTRIAL, COMMERCIAL AND SOCIAL INFRASTRUCTURE 3 TIER GOVERNANCE ACROSS THE COUNTRY LACK OF ECONOMIC AWARENESS 5

INTRODUCTION ZONE DEVELOPMENT STARTED IN 1965 INITIALLY ONLY GOVERNMENT ZONES STATE GOVT DEVELOPED 10 ZONES ONLY ONE PVT ZONE UPTO 2006 SEZ ACT 2005 AND SEZ RULES 2006 ENACTED 6

7 SEZ SIZE- SECTOR FOCUS FOR IT/ITES SECTOR MINIMUM BUILT-UP AREA SPECIFIED Category “A” – 1,00,000 Sq Mtr Category “B” - 50,000 Sq Mtrs Category “C”- 25,000 Sq Mtrs.

SEZ SIZE – SECTOR FOCUS  Multi Product SEZs Ha  Multi Services SEZs – 50 Ha  Sector specific SEZs – 50 Ha  Port or Airport based SEZs- 50 Ha (in smaller and specified sector 25 Ha)  BT, Non conventional energy or gems and jewellery, Handicrafts, electronics - 10 Ha 8

FREE TRADE WAREHOUSING ZONE  FTWZ – Only FTWZ-40 Ha with a built up area of not less than 100,000 sq.mtr)  FTWZ can be set up Sector Specific SEZ- ( Max 20% of processing area ) in a Multi product SEZ no limitation prescribed 9

SPECIAL ECONOMIC ZONES IN INDIA. FORMALLY APPROVED -564 GOVERNMENT SPONSORED-18 PRIVATE SEZs NOTIFIED SEZs- 388 GOVERNMENT SPONSORED-18 PRIVATE SEZs OPERATIONAL SEZs – 192 GOVERNMENT SPONSORED-18 PRIVATE SEZs

SEZ LOCATION 9 OUT OF 29 STATES DON ’ T HAVE SEZ PRESENCE 3 OUT OF 7 UNION TERRITORIES DO NOT HAVE SEZ PRESENCE NO UNIFORM FISCAL BENEFITS OFFERED BY STATES 11

SEZ MAP IN TINY STATES BELOW 10 Mn HECTARES SIZE.37 Mn Ha SIZE GOA ( 7 SEZS APPROVED) 0 Operational Mn Ha SIZE NAGALAND ( 2 SEZ APPROVED) 0 Operational Mn Ha SIZE KERALA (30 SEZ APPROVED 14 Operational Mn Ha SIZE HARYANA (39 SEZ APPROVED 6 Operational 12

SMALLER SIZE STATES 5.03 Mn Ha size PUNJAB (8 SEZ APPROVED 2 Operational 5.36 Mn Ha SIZE UTTARAKAND (2 SEZ APPROVED) 0 Operational 7.47 Mn Ha SIZE JHARKAND (1 SEZ APPROVED) 0 Operational 8.87 Mn Ha size WEST BENGAL ( 17 SEZ APPROVED) 6 Operational 13

10 TO 20 Mn Ha SIZE STATES 13 Mn SIZE TAMIAL NADU (69 SEZs) 33 Operational 13.5 Mn Ha SIZE CHATTISGARH (2 SEZS) 0 Operational 15.5 Mn Ha SIZE ODISHA (10 SEZs) 1 Operational Mn Ha SIZE KARNATAKA (62 SEZs) 20 Operational 19.6 Mn Ha SIZE GUJARAT (47 SEZs) 17 Operational 14

BIGGER SIZE STATES 24.3 Mn Ha SIZE UTTAR PRADESH ( 32 SEZs) 10 Operational Mn Ha SIZE ANDHRA PRADESH (44 SEZs) 18 Operational Mn Ha SIZE TELANGANA 64 SEZ (24 Operational) Mn Ha SIZE MAHARASHTRA (99 SEZs) 25 Operational Mn Ha SIZE MADHYA PRADESH (19 SEZs) 2 Operational Mn Ha Size RAJASTHAN (10 SEZS) 4 Operational 15

16 LOCATION – STATES NOT HAVING SEZs STATESPOPULATIONSTATEPOPULATION ARUNACHAL PRADESH 1,382,611ASSAM31,169,272 BIHAR103,804,637HIMACHAL PRADESH 6,856,509 JAMMU & KASHMIR 12,548,926 MEGHALAYA2,964,007MIZORAM1,091,014 SIKKIM607,688TRIPURA3,671,032

17 SEZ LOCATION - UNION TERRITORIES NOT HAVING SEZs ANDAMAN & NICOBAR ISLANDS DAMAN AND DIU LAKSHADWEEP

INVESTMENT IN SEZs IN THE GOVERNMENT SPONSORED SEZs - US$ 4,007 Mn IN THE PRIVATE SECTOR SEZs - US$ 46,269 Mn 18

FDI in Zone Development 19 Cochin SEZUS$ 4.85 Mn Falta SEZUS$ 3.44 Mn Kandla SEZUS $ Mn SEEPZ, MumbaiUS $ Mn Noida SEZUS $ Mn Vishakapatnam SEZUS $ Mn Madras EPZUS $ 40 Mn TOTALUS $ Mn

DIRECT EMPLOYMENT IN SEZs IN THE GOVT. SPONSORED SEZs- 281,823 persons IN PRIVATE SECTOR SEZs - 995,822 persons. 20

SEZ PERFORMANCE NUMBER OF SEZ OPERATING UNITS - 3,818 EXPORTS AS OF US$ 82,346 Mn DOMESTIC SALE IN INDIA AS OF – US$ 11,386 Mn 21

SEZ SECTOR MIX MULTI PRODUCTS 10% OTHER SECTOR SPECIFIC MANUFACTURING 32% IT/ITES, ELECTRONIC HARDWARE, SEMI CONDUCTOR SERVICES 56% OTHER SERVICES- 2% 22 Of 192 Operational

State-wise distribution of approved SEZs (As on ) States/UTsFormal Approvals In-principle approvals Notified SEZs ^ Exporting SEZs (Central Govt. + State Govt./Pvt. SEZs + notified SEZs under the SEZ Act, 2005) Andhra Pradesh Chandigarh2022 Chhattisgarh2111 Delhi3000 Dadra & Nagar Haveli2010 Goa7030 Gujarat Haryana Jharkhand1010 Karnataka Kerala Madhya Pradesh19192 Maharashtra Manipur1010 Nagaland2020 Odisha10151 Puducherry1100 Punjab8022 Rajasthan101 4 Tamil Nadu Telangana Uttar Pradesh Uttarakhand2010 West Bengal17396 GRAND TOTAL

Sector-wise Distribution of approved SEZs ( As on ) SectorsFormal Approvals In-Principle approvals Notified SEZs Exporting SEZs (Central Govt./Pvt. SEZs + Notified SEZs under the SEZ Act, 2005) Agro6250 Airport based multi-product3000 Auto and related1111 Aviation/Aerospace/Animation & Gaming/Copper 7165 Beach & Mineral/Metals3030 Bio-tech Building prod./mal./transport equipments /ceramic and glass 2222 Electronic product/Industries3031 Engineering Footwear/Leather5043 Food Processing5044 FTWZ13673 Gems and Jewellery13363 Handicrafts & Carpets5032 IT/ITES/Electronic Hardware/Semiconductors/Servces Metal/Stain.Steel/Alum/Foundry7140 Light Engieering/Metallurgical Engineering/Automotive Components

Sector-wise Distribution of approved SEZs ( As on ) SectorsFormal Approv als In- Princi ple appr ovals Notified SE Zs Exporting SEZs (Central Govt./Pvt. SEZs + Notified SEZs under the SEZ Act, 2005) Multi-product Multi-Services10272 Non-Conventional Energy6042 Plastic processing0200 Petrochemicals & petro./oil and gas 4121 Pharmaceuticals/Chemicals Port-based multi-product6132 Power/alternate energy/solar3133 Textiles/Apparel/Wool Writing and printing paper mills2010 Granite processing Industries and other allied machinery/manufacturing 2010 GRAND TOTAL

REGULATION – SETTING UP OF SEZ BY CENTRAL GOVT ISSUANCE OF LETTER OF APPROVAL SEZ NOTIFICATION AUTHORIZE OPERATIONS 26

SINGLE WINDOW MECHANISM BOARD OF APPROVALS AT CENTRAL GOVT LEVEL UNIT APPROVAL COMMITTEE AT STATE LEVEL 27

SEZ DEVELOPMENT PROCEDURE – STEP 1 RIGHTFUL POSSESSION OF LAND ON HAND CLEARANCE FROM LOCAL GOVERNMENT APPLICATION TO BOARD OF APPROVALS RECOMMENDATION OF STATE GOVERNMENT LETTER OF APPROVAL NOTIFICATION OF SEZ 28

DEVELOPMENT PROCEDURE – STEP 2 DEMARCATION OF PROCESSING AND NON-PROCESSING AREA MASTER PLAN APPROVAL BY PLANNING AUTHORITY BUILDING LAYOUT AND INFRASTRUCTURE DEVELOPMENT APPROVAL POSTING OF CUSTOMS OFFICERS EXECUTION OF BOND FOR DUTY FREE BENEFITS BY DEVELOPERS/CO-DEVELOPERS 29

DEVELOPMENT PROCEDURE – STEP 3 COMPOUND WALL AROUND PROCESSING AREA LEASING OF AREA TO UNIT HOLDERS LETTER OF APPROVAL TO UNIT EXECUTION OF BOND BY UNITS FOR DUTY FREE BENEFITS PROGRESSIVE REPORTING OF SEZ PERFORMANCE BY DEVELOPER AND UNITS 30

GOOD GOVERNANCE DEVELOPMENT COMMISSIONER /UNIT APPROVAL COMMITTEE – NODAL AGENCY FOR PERMISSIONS AND APPROVALS ASSESSMENT, EXAMINATION AND CLEARANCE MONITORED BY OFFICERS DEPUTED FROM CUSTOMS DEPARTMENT SEZ OPERATIONS MONITORED THROUGH PERIODICAL REPORTING AND M.I.S. 31

INCENTIVES FOR SEZ IN INDIA ALL MATERIALS REQUIRED FOR INFRASTRUCTURE DEVELOPMENT BY DEVELOPERS ARE EXEMPT FROM CUSTOMS DUTY, CENTRAL EXCISE DUTY, AND STATE VAT ALL MATERIALS REQUIRED FOR AUTHORISED OPERATIONS BY UNITS ARE EXEMPT FROM CUSTOMS DUTY, CENTRAL EXCISE DUTY AND STATE VAT 32

INCENTIVES FOR SEZ ALL SERVICES RECEIVED IN CONNECTION WITH AUTHORIZED OPERATIONS ARE EXEMPT FROM SERVICE TAX 33

INCOME TAX- BENEFITS 100% INCOME TAX EXEMPTION FOR A BLOCK OF 10 YEARS OUT OF 15 YEARS FOR DEVELOPERS. 100% INCOME TAX EXEMPTION FOR 1 ST FIVE YEARS AND 50% FOR SUBSEQUENT FIVE YEARS (FOR UNITS) REINVESTMENT ALLOWANCE TO THE EXTENT OF 50% OF PLOUGHED BACK PROFITS CARRY FORWARD OF LOSSES(FOR UNITS). 34

INVESTMENT INCENTIVES-1 100% FOREIGN DIRECT INVESTMENT UNDER AUTOMATIC ROUTE FOR MANUFACTURING SECTOR IN SEZ UNIT NO CAP ON FDI FOR SSI RESERVED ITEMS. SETTING UP OFFSHORE BANKING UNITS ALLOWED IN SEZS 100% INCOME TAX EXEMPTION FOR 3 YEARS AND 50% FOR NEXT TWO YEARS FOR OFF SHORE BANKING UNITS 35

INVESTMENT INCENTIVES-2 EXTERNAL COMMERCIAL BORROWINGS UPTO USD 500 MILLION A YEAR ALLOWED WITHOUT ANY MATURITY RESTRICTION FOR UNITS. EEFC ACCOUNT FOR EXPORT PROCEEDS ALLOWED WITH FREEDOM TO INVEST OVERSEAS. EXEMPTION FROM INTEREST RATE, SURCHARGE ON IMPORT FINANCE. ENVIRONMENTAL CLEARANCE ON PRIORITY. NORMS FOR SEZ SIZE REDUCED TO SUIT INDUSTRIES 36

SEZ – DEVELOPMENT ISSUES WHILE THERE IS A CENTRAL SEZ ACT, MANY STATES DON’T HAVE THE CORRESPONDING STATE SEZ ACT NATURAL RESOURCES UNEVENLY DISTRIBUTED 70% POPULATION DEPENDS ON AGRICULTURE AND FOOD PROCESSING SECTOR NOT FULLY DEVELOPED 37

Some of the IT/ITES/EHTP SEZ s Wipro SEZ, Andhra Pradesh HCL Technologies SEZ, Noida (UP) EON Kharadi SEZ, Pune Mahindra SEZ, Chennai 38

SERUM BIO-PHARMA PARK SEZ, PUNE, INDIA INDIA ‘S FIRST BIO-PHARMA SEZ 39

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