SEZ and Export Promotion

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The SEZ and Export Promotion facilitated the growth of the Indian Special Economic Zones. The creation of special Economic Zones in India in the 2000 give many dividends as projected during their inception. The main factor for the under performance of these Special Economic Zones were poor export policy of India, which was loaded with huge taxes and duties. The Government of India eased the export policy of India to facilitate easy growth of SEZ and Export Promotion of Indian goods across international destinations. This created a congenial environment for the development of a special kind of units within the designated Special Economic Zones. These specialized export oriented units were called Export Oriented Units or EOU and they were created to increase the overall export potential of these SEZ. Further, these EOU were devised in such a way, so that they can focus specifically on the growth of Indian exports.

Further, their recipient also facilitates these units to sell their products in the domestic markets in case of rejection by them, after payment of designated tax and within the direct tariff area. Only some exclusive commodities are barred from such selling process. Thereafter, the development of SEZ and Export Promotion could be witnessed simultaneously. In other words these Export Oriented Units shared a reciprocal dependency with the Special Economic Zone of India.

The provisions of Indian export policy, which facilitated growth of SEZ and Export Promotion of Indian goods, are as follows -
  • Exemption on duties on Indian capital goods and inputs are offered as per the requirements of the approved business activity.

  • Taxes are either exempted or waived and even reimbursed in case they are paid in advanced to the concerned authority.

  • Duty-free imports of spares, raw materials, capital goods, and consumables are offered as per the requirements of the approved business activity.

  • Preferential treatment of these units to the Indian market for easy dissemination of their products and / or service.

  • Rejected commodities (specifically barred commodities cannot be sold) within an overall limit of 50% may be sold in the domestic tariff area (DTA) on payment of respective duties as applicable after proper notification to the Indian customs authorities. And such sales of commodities in the domestic tariff area shall be counted against DTA sale entitlement and sale of such rejected commodities (up to 5% of FOB value of exports) shall not be subject to achievement of NFE.

  • All EOU / EHTP / STP / BTP units may sell their finished products or services (excluding pepper and pepper products and marble) Units manufacturing electronics hardware and software, the NFE and direct tariff area (DTA) sale entitlement shall be judged separately for its hardware and software products.

  • Facilitated to retain 100 % in foreign currency in EEFC account of the said trader.

  • Tax waiver of dividends and profits for repatriates, without any application of repatriation tax.

  • Total tax exemption on corporate incomes as per the provisions of Section 10 A and 10 B of the Indian Income Tax Act.

  • Easy and automatic acceptance system for use of existing trademarks, brand names and technological know-how .

  • Facilitated with out-sourcing of subcontract capacities for export production against orders secured by other SME units.

  • All SEZ units, (excluding gems and jewelry units) may sell goods up to 50% of FOB value of exports subject to fulfillment of positive NFE on payment of concessional duties. Within the entitlement of domestic tariff area (DTA) sale, the unit may sell in DTA its products similar to the goods, which are exported or expected to be exported from the units.

  • Facilitated with out-sourcing of subcontract of production or part of production process to Indian or any foreign units.

  • Sale to direct tariff agreement is subject to mandatory requirement of registration for pharmaceutical products and inclusive of bulk drugs.

  • For Software services units, the sale in the DTA in any mode, including on line data communication shall be permitted up to 50% of FOB value of exports and / or 50% of foreign exchange earned through exports of such services, where the payment of such services offered to its overseas clients, is received in foreign exchange.

  • SEZ units associated with manufacturing gems and jewelry may sell up to 10% of FOB value of exports of the preceding year in direct trade agreement and subject to fulfillment of positive NFE. Further, in case of sale of plain jewelry, the recipient of such trade shall pay concessional rate of duty as applicable. Furthermore, in case of studded jewelry, duty shall be payable as recommended and amended from time to time.

  • Total exemption of duties / taxes on scrap or waste or remnants in case the said crap or waste or remnants are destroyed as per the approval of the customs authorities of India.

  • If the end products is a by-product and it is included in the LOP, then it may also be sold in the direct tariff area, subject to achievement of positive NFE on payment of applicable duties within the provisions of such laws. The sale of such by-products by units those are not entitled to direct tariff area sales.

  • Facilitated with out-sourcing of subcontract capacities for export production against orders secured by other units.

Last Updated on May 29, 2015