SEZ Rules 2006

The main provisions of the Indian SEZ Rules 2006 can be summarized as promotion of industrialization and economic growth through sustainable development of Indian industries. The main essence of the Indian SEZ Rules 2006, states that these Special Economic Zones of India shall be offered tax rebates, fiscal incentives and lands at subsidized rates. The implementation of the first drafted Special Economic Zone policy took place from the end of the year 2000 and the subsequent years witnessed a paradigm development and amendment of the basic Special Economic Zone Rules of India. The first draft of Special Economic Zone Rule for the development of Special Economic Zones in India was drafted as a five-year project, starting from 1.11.2000 to 09.02.2006. Further, the first draft of Special Economic Zone Rule of India was amended to accommodate and compliment the economic growth attained by India.

The basic provisions of the SEZ Rules 2006 can be summarized as follows -

  • Creation of additional economic activity across all such designated zones
  • Promotion of exports of goods and services across all such designated zones
  • Promotion of investment from domestic and foreign sources
  • Creation of employment at competitive rate
  • Development of infrastructure facilities to compliment the growth of SEZ units
  • Promulgation of simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business
  • Single window clearance booth for setting up of a SEZ and within all such Special Economic Zone unit
  • Single window clearance on matters relating to Central as well as State Governments approval and certification process
  • Facilitation of easy and simplified compliance procedures and documentations with stress on self certification process
Some of the key provisions of the Indian SEZ Rules 2006 are mentioned as below -

  • Should be exempted from duties on all imports for project development
  • Should be exempted from excise / VAT on domestic sourcing of capital goods for project development
  • Should be offered 10-year tax holiday in a block of the first 20 years
  • No foreign ownership restrictions in developing zone infrastructure and no restrictions on repatriation
  • Freedom to develop township in to the SEZ with residential areas, markets, play grounds, clubs and recreation centers without any restrictions on foreign ownership
  • Should be exempted from taxation on business income
  • Should be exempted from import duty, VAT and other taxes
  • 10% FDI allowed through the automatic route for all manufacturing activities
  • Procedural ease and efficiency for speedy approvals, clearances and customs procedures and dispute resolution
  • Simplification of procedures and self-certification in the labor acts
  • Artificial harbor and handling bulk containers made operational through out the year
  • To be equipped with air ports for easy transit of men and goods
  • To be equipped with host of Public and Private Bank chains to offer financial assistance for business houses
  • Should be a vibrant industrial city with abundant supply of skilled manpower, covering the entire spectrum of industrial and business expertise
  • Should be well connected with network of public transport, local railways and cabs
  • To encourage pollution free environment with proper drainage and sewage system
  • To house in-house customs clearance facilities
  • Should have easy access to airport and local railway station
  • Full authority to provide services such as water, electricity, security, restaurants and recreational facilities within the zone on purely commercial basis
  • Should have abundant supply of technically skilled manpower
  • Should have abundant supply of semi-skilled labor across all industry sectors