Special Economic Zones in India
Special Economic Zones (SEZ) of India | Make in India
For IT or BPO Offshore Centers & Manufacturing
SEZ gelp you maximize benefit for Offshore Centers
A Special Economic Zone (SEZ) is a geographical region that that is treated as deemed foreign territory. SEZs carry multiple incentives as compared to the remaining domestic tariff area (DTA), which makes them suitable for locating 100% exporting units. India has specific laws for its SEZ.
SEZ in India are spread all over the country and available in almost all major tire1 and tire2 Cities and IT Industry clusters. Tire1 Cities being Bangalore, Delhi-Noida-Gurgaon (Delhi National Capital Region), Chennai, Pune, Mumbai, Hyderabad. Tire 2 Cities are Trivandrum, Kochi, Chandigarh, Jaipur, Gandhinagar, Coimbatore, Bhubeneshwar, Nagpur etc.
One can setup an IT and BPO Offshore center or a manufacturing plant in a SEZ. Such production untis setup in a SEZ are termed as SEZ units. SEZ unit can be setup in any Special Economic Zone (SEZ) established and notified by Government of India.
There are both Government and private players having developed SEZs with world class infrastructure.
There are sector specific SEZs also. Such as there are notified IT ans ITeS (BPO) SEZs. A large number of Captive Offshore Centers of foreign companies as well as lot of Indian IT companies have SEZ units operating under these Special Economic Zones specific to IT and ITeS.
Similarly there are multi sector SEZs also. Manufacturing operations can be setup in these SEZs. Also IT and ITeS operations can be setup in multisector SEZs.
Also a private company can set-up a captive SEZ of its own or become a co-developer with an existing private SEZ.
Why setup in SEZ?
A business can set-up an offshore center or a manufacturing operations to provide service to its global business from India, this service which may be a Software Development, Software/application maintenance, Software product development IT infrastructure or a BPO service (called in Indian legal parlance IT enabled service (ITeS)) or making and selling a product from Indian to rest of world. All these transactions are treated as exports from India.
SEZ is a 100% exported oriented scheme to promote exports from the country. As an SEZ unit the offshore center is entitled to various benefits.
Tax Incentives and facilities offered to the SEZs
The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-
- 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years. (You pay 18.5% Minimum Alternate tax in place of Approx 33% corporate Income tax), there is 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
- 100% Duty free import of capital goods for authorised operation of SEZ unit
- 100% GST exempted on domestic procurement of goods and services authorised operation of SEZ unit
- 100% repatriation of profits after payment of divident distribution tax
- External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels, allowing units to avail low interest rate borrowing at international market rate.
- Single window clearance for Central and State level approvals.
- Exemption from State stamp duty in many State Governments.
How we help in setting up SEZ operations?
Our services include end-to-end consulting and project management support to set up the offshore center according to your requirements. We help you in setting up a SEZ unit in four phases covering six modules as follows:
For an over view on our Framework of end-to-end service on setting up your delivery centers or production units please visit the following links.
- Captive Offshore Center in Special Economic Zones
- Managed Offshore Center in Special Economic Zone
- A manufacturing plant under Make in India plan
For Managed Offshore Center in Special Economic Zones, we provide in a similar manner that we provide in general open market operation. for Managed Offshore Center.
In Case of Captive Offshore Center we execute the end-to-end setup in an integrated framework where each of the below given module passes through the above four stages of Plan>Design>Establish>Manage.
SEZ units service is recommended for clients looking for long-term value.
Write to us at Contactus@excelict.com Or fill out inquiry form at Contactus page
India is doomed and the Indian SEZ Policy is doomed.dindooohindoo
• The pathetic state of the exports from the SEZ is assessed by the number of non-operative units and the poor capacity utilisation of the SEZ units – information of which is in public and national interest
• The planning of the GOI is highlighted by the fact that the GOI has done no benchmarking of the operations of the SEZ per se, and the SEZ units within – for each sector with comparable peersl,in India and the global competition
• If a sector, say X,exists in a SEZ in a specific maritime geography and its global export hub,is in Country A, and the GOI has not been benchmarking the operating parameters of the Indian SEZ and the SEZ units of that sector (X),every 3 years – then the said SEZ units in sector X,in India,will definitely cease to exist,or be in a state of terminal decline or exist at the mercy of competitors
• With the miserable performance of the Indian Rupee,and its impact of reduction in Dollarised Rupee costs payable to the SEZ authority by the SEZ units – why are the exports from the SEZs still a failure In addition, in several sectors, the rupee costs paid by the SEZ units to the SEZ Authority,are not the determinant for operating and financial viability of the SEZ units
• In essence,the GOI has utterly failed to provide a level playing field to exporters in this nation,in terms of admin costs,operating cost neutrality,financing costs,effective logistics costs and fiscal red tape and procedures
• The centres of manufacturing excellence near SEZs (For CMT/Job work/Material and Labour sourcing) are not cost effective – as there is no synergy between the SEZ and the Industrial planning and policy
• The strategy of the GOI is highlighted by the fact that the GOI has engaged no 3 rd party to analyse the inefficiency of the operating parameters of the SEZ , per se, and the SEZ units within the SEZ – for each sector within it , with comparable peers in India,and the global competition
• What planning and strategy will the GOI do,if it has no formal analysis of the specific operating costs,parameters,management and other issues,which explain the dismal state of the SEZ units by sector,scale and management quality
• The dismal state of the GOI planning is that the GOI has not properly planned the sector profile of the units in each SEZ, to ensure that the right sectors are in the appropriate geography,in the right SEZ,to minimise the net logistics costs on the EXIM chain, and minimise the inward material logistics costs – considering the future dislocations in inward and external material sources and options of transhipment and alternative export markets
• Several SEZs invest limited equity in SEZ units and common service providers,like banks,facilities,hotels,accounting firms etc,as a demonstration of their stake in the SEZ and their strategic inputs in the planning and operation of the same – which is then used to lower the lease charges etc – which is completely absent in India
• All of the above is to be seen in light of the fact that the SEZ has no data of the financial or operating performance of the SEZ units,loss making units or even the financial and operating performance of the Developers of the SEZ – and is naturally not concerned with the losses or the financial performance of the SEZ units therein
• The peculiar pattern of CMT and Job workers of key sectors such as Gold and Diamond jewellers,with multiple movement of stocks at different processors o/s the SEZ – is not the norm for Gems and Jewellery SEZs or SEZ units – and represents an abnormal industrial agglomeration with a planned and structural dislocation in manufacturing and processing operations – which cannot be solely for the purposes of manufacturing and commercial efficiency.
• Information on raids and prosecutions is critical especially in sectors with high import duties (on merit mode) for inputs,customised finished goods (wherein DRI/Customs cannot assess over invoicing),frequent movements to and from 3 rd party processors (which makes the case for wastages and losses in SION and disappearing materials), materials where the EXIM transit time is a few hours and the logistics costs are less than 1% of CIF/FOB rates, inputs and outputs with marked diferences in rates of different grades of items and offgrades,per se,warehousing artificial losses,amortisable costs ,bad debts and write offs in select SEZs (to be used for 3rd party exports or mergers to obviate tax on SEZ profits),items where the SEZ units are well aware of the sampling and test checks of the DRI and Customs at the SEZ for the inputs and outputs etc.
• The Gems and Jewellery industry is run by cartels from a particular community spread from Western India to North America,EU,East Asia,West Asia and Africa and is a well coordinated money laundering and smuggling operation from the state of rough diamonds and raw gold,to the marketing of jewellery and warehousing of processed and raw diamonds,the banking chain,raters and the chain of associate and front companies – which is all the more insidious,as all the data with DRI/ED/Customs/Interpol used by the Indian State for surveillance is all origined from the overseas counterparts and partners of the Indian traders located in India (Who are in many cases – in spirit the same de facto entity owners)
• The premise that Indians are the least cost labour source for the jwellery sector and their informal working style (w/o documentation,using informal labour and in slum style conditions) is an innovative marvel of Indian Genius,is a pathetic fraud and deception,and the entire array of fiscal and monetary sops for this sector (including SEZ) Allows the sector to generate financial buffers via money laundering,tax arbitrage,treasury operations, merchanting exports,accomodation financing ,cash financing, alternative fund transfers,FX speculation,leveraging double and layered financing,defrauding Indian Merchant exporters such as STC and MMTC,Credit insurance fraud etc. which provide the sector the pricing edge in overseas markets ( via illegal,nefarious and fraudulent means)