Unshackle Barriers in Global Business
In India, SEZs have played an important role in facilitating exports, thereby enabling the country to be a part of globalisation.
Over the last decade or so, India is witnessing increasing interest to promote the export-oriented manufacturing sector through Special Economic Zones (SEZs). SEZ is a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs. In order words, SEZ is a geographical region that has economic laws different from a country's typical economic laws. FTZs, also known as commercial-free zones, are fenced-in, duty-free areas, offering warehousing, storage, and distribution facilities for trade, transhipment, and re-export operations. EOUs are units undertaking to export their entire production of goods. EOUs can be engaged in manufacturing, services, development of software, repair, remaking, reconditioning, re-engineering including making of gold / silver / platinum jewellery and articles. Further, units involved in agriculture, agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites can also obtain the status of EOU.
The Government of India provides several incentives and facilities to the units in SEZs for attracting investments into the SEZs, including foreign investment. Presently, units in SEZs enjoy 100 per cent income tax exemptions on export income for the first five years, 50 percent for the next five years thereafter, and 50 percent of the ploughed back export profit for another five years. Other benefits include a refund of integrated goods and services tax (IGST) on goods imported by units and developers of SEZs, easy refund procedure of input GST paid on procurement of goods and services if any, and minimal compliance requirement and return filing procedure. Units in SEZs also receive additional benefits from respective state governments in the form of stamp duty exemption, VAT exemption or refund, and electricity duty exemption.
With India poised to be the third largest global economy by 2030, a key policy of the Ministry of Commerce and Industry (Government of India) is to establish Special Economic Zones (SEZs) in the country to: