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SEZ in India

SEZs in India

  • SEZs are Industrial Townships outside the customs duty territory of India.
  • SEZs are synonymous with globalization and meant to ensure a flow of labor and capital from surplus to deficit regions, so that everyone benefits from investment and export promotion.
  • India’s growing market for consumer goods, already in the top ten, could reach US $400 billion by 2010 making it one of the five largest in the world.
  • The lower cost of production an SEZ makes exporting from India attractive while offering the unique advantage of servicing a potentially large Indian market at the same time.
  • PIL’s role as a developer is to create world-class infrastructure for the processing units, and to operate and maintain the SEZ. Infrastructure includes industrial (standard and specific design factory), business, offshore banking, and social amenities viz. living (residential areas and shopping malls), learning, healthcare, recreation, utilities, logistics, security etc.
  • PIL will also create separate entities for business, residential, recreational, or utility facilities within the SEZs with a 26% minimum shareholding by PIL in such entity.

SEZs in India are Unique

The SEZ policy framework is the most visionary, ambitious and far-reaching initiative of the Government of India (GOI) so far, designed to transform fundamentally the ‘Foreign Direct Investment (FDI) Landscape’ for all times to come. It aims to provide complete business freedom to large multinational companies which are seeking to globalize their production bases.

The central and distinctive anchors of the SEZ policy framework in India cover the following themes:

  • 100% tax break/holiday for ten years up to 2010 (in other countries, tax reliefs are regulated).
  • Unrestricted access to domestic markets (with payment of applicable duties/taxes).
  • The permissible economic activity in SEZ is vast and it covers trading, servicing, reconditioning, labeling, repacking etc.
  • 100% foreign ownership automatically cleared in the manufacturing sector. The Chinese SEZs for long have insisted on joint ventures with local partners