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| Investments in Special Economic Zones |
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Special Economic Zones (SEZs) are a new instrument of India’s investment and trade regulations, announced in April 2000. SEZs are modelled on the principles of successful industrial Free Zones such as Singapore, Dubai and Schenzhen (South China), and are deemed ‘foreign territory’ where several Indian economic and corporate laws do not apply. Practically all products and services are allowed in these zones: including industrial production, assembly, services, and bonded-warehousing, subject to undertaking obligations for attaining net positive foreign-exchange earnings.
Foreign investors can set up facilities in these SEZs with a minimum of procedural requirements, and avail of the following incentives: |
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100% ownership with full repatriation of profits and capital |
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Exemption for all indirect taxes and duties (customs duties, excise, VAT, etc.) |
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Full income tax exemption for 5 years, followed by 50% exemption for the next two years, and 50% of ploughed- back profits for the next three years of operation. |
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Single- window clearances, and administrative simplification |
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At present 14 SEZs are operational, including 11 SEZs where existing Export Processing Zones located at Kandla and Surat (Gujarat), Cochin (Kerala), Santa Cruz (Mumbai-Maharashtra), Falta (West Bengal), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Noida (Uttar Pradesh) have been converted into Special Economic Zones. In addition, 3 new Special Economic Zones at Indore (Madhya Pradesh), Manikanchan – Salt Lake (Kolkata) and Jaipur have commended operations. Another 61 SEZs are under implementation.
New SEZs can also be sponsored by state governments to be set up by private sector partners, including foreign investors. Such zones must have a minimum area of 1000 hectares for a “multi-product” zone (for a “product-specific” zone, it is 100 hectares, and for information technology, biotechnology and jewellery, it is 10 hectares). As of November 2006, more than 250 SEZs have been approved. (Further details are available at www.sezindia.nic.in) |
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ICREON