Professional Documents
Culture Documents
June2009
ExecutiveSummary
SEZpolicyintroducedin2000;SEZbillpassedin2005 ThreetypesofSEZspresentinIndia Sector specific,MultiproductandSEZinaport/airport SEZareacomprisesof ProcessingAreaandNonProcessingArea
MinimumarearequirementforsettingupSEZsvariesfrom10 1000hectares
Introduction
SEZScenario India I di
ThreestagesinvolvedinapprovalofSEZ Inprincipleapproval,FormalapprovalandNotifiedSEZs NotifiedSEZscompriseasmallproportionoftotalSEZs IT / IT S IT/ITeSsectorleadswithhighestnumberofformalapprovals t l d ith hi h t b ff l l SouthernandWesternstatesleadinSEZdevelopment SEZsaccountedforover10%shareinIndiasexportsin200708;92%yoygrowthinSEZexports GemsandJewelrysectorwasleadingsectorinSEZexports EmploymentinSEZsgrewatarateof17%annually InvestmentsinSEZwitnessedagrowthof58%perannum
GUIDETOSEZ INDIA.PPT
Performanceof e o a ce o SEZs
GUIDETOSEZ INDIA.PPT
SpecialEconomicZones(SEZs)inIndiahaveevolvedfromExport ProcessingZones(EPZs)andSoftwareTechnologyParks(STPIs)
GovernmentofIndia(GoI)provided specialincentivesforunitssetup primarilyformanufacturinggoodsmeant primarily for manufacturing goods meant forexportindesignatedExport ProcessingZones(EPZ) GoIintroducedSEZpolicyto: Enhanceforeigninvestment Promoteexports Providerightenvironmenttodomestic enterprises&manufacturerstobe competitiveglobally
1965
FirstExport processing processing zoneat Kandlain Gujarat
1991
Software Technology Technology ParksofIndia (STPI), established
2000
2002
GoI converted converted fourEPZs intoSEZ
2004
Gujarat becamethe firststateto passSEZ legislation
2005
SEZBill passedin passed in Parliamentin May
2006
SEZpolicy Introduced
GoIintroducedaspecificpolicyforexportofcomputer G Ii t d d ifi li f t f t software,whichplayedasignificantrolein: Providingphysicaltelecomandinternet infrastructure Allowing100%FDI Providing tax Incentives ProvidingtaxIncentives
GUIDETOSEZ INDIA.PPT
SEZscanbecategorizedonbasisofsector,functionorlocation andrequiredtohaveprocessingaswellasnonprocessingarea
TypesofSEZ Sector SpecificSEZ
Manufactureoneormoregoodsina particularsector Renderoneormoreservicesina particularsector
Multi ProductSEZ
Manufacturemultiplegoodsinonesector oracrossmultiplesectors Tradingandwarehousing Rendertwoormoreservicesina sectorormultiplesectors p
SEZinaportorairport
SEZinanexistingportorairportfor manufactureofgoodsfallingintwoor moresectorsorfortradingand warehousingorrenderingofservices
SEZLayout
ProcessingArea i ProcessingareaisthedemarcatedareainSEZ whereunitscanbelocatedformanufactureof goodsorrenderingofservices goods or rendering of services Minimumprocessingareahasbeenuniformly fixedat 35%forMultiproductSEZs 50%forproductspecificSEZs 50% for product specific SEZs
Non ProcessingArea i Nonprocessingareaisintendedtoprovide supportfacilitiestoSEZprocessingareaandmay include: Educationalinstitutions Hospitals Hotels Recreationandentertainmentfacilities Residentialandbusinesscomplexes
GUIDETOSEZ INDIA.PPT
SEZsarerequiredtoadheretominimumlandarearequirements andlandusecriteria
MinimumLandRequirement
NatureofSEZ Sector Sector Product Multi Product SEZinPortorAirport SEZforfreetradezoneorwarehousing Gems&Jewellery Biotechnology Non conventional Energy NonconventionalEnergy Electronichardware&software,IT MinimumContiguousLand AreaRequirement* 100hectares 100 hectares 1000hectares 100hectares 40hectares MinimumProcessingAreaRequired 50% 35%(canberelaxedto25%bycentralgovernmentin
certaincasesonrecommendationbyBoA)
50% 50%:100,000sq.mofbuilduparea Notexceed20%oftheprocessingareainsectorspecificSEZ 50%:
40,000sq.mforbiotechnology 50,000sq.mforGems&Jewellery 50 000 sq m for Gems & Jewellery
10hectares 10hectares
50%(100,000sq.mofbuiltupareawithcentralAC
LandusecriteriainSEZ(NonProcessingArea)
Residential 36% Recreational
18%
Transportation
12%
11% Agriculture g
GUIDETOSEZ INDIA.PPT
DifferenttypesofSEZsarepromotedbythedevelopersbasedon thelevelofsocialinfrastructuredevelopment
InIndiafullyintegrateddevelopment modelispopular
IndustrialParks
FullyIntegrated
OutsourcedFacility
Ports,airports,powerplants,desalinationplants, roadsareoutsourcedbydeveloperstoco developeronrevenuesharingagreement
SharedInfrastructure
ApopularmodelinChinawhere,fewSEZinthe samevicinitycometogetherandbuildandshare infrastructuresuchasports,airports,powerplants, etc
GUIDETOSEZ INDIA.PPT
InitialphaseofSEZsetupinvolveshugedevelopmentcostand requiremaximuminvestmentbythepromoters
Phase ProjectHighlights
Developmentcostishigh p g Discountofferedinitiallytoattractcustomers SocialInfrastructureislessdeveloped Expensivepropositiontobringincodevelopers AdditionalInfrastructureisaddedtosocial infrastructure Premiumoflandbecomeshigher Codevelopersarewillingtoparticipateindevelopment
FundRaising
MostlybyPromotersthroughEquity Bankloansdifficult IssueofBonds 25%oftheprojectcostcanbemetthroughadvances fromprospectivetenants Internalaccrualshelpinservicingdebt I t l l h l i i i d bt Easieraccesstodebt 2030%costcanbebornebythecodeveloper Advancesfromcustomerscanfund3540%ofthe project Nodebtorequityisrequired Profitsarehighatthisstage
Paybac k
Ramp up
Launch
A Annuit y
Sale&developmentisalmostover Maintenance&administrationisrequired
Fundsifneededcanbemetthroughaccruals
GUIDETOSEZ INDIA.PPT
GUIDETOSEZ INDIA.PPT
LegalframeworkforsettingupSEZisdefinedunderSEZActand StateSEZpolicy
StateSEZpolicy
Legal Framework k
SEZACT2005 SEZ ACT 2005 SEZRules2006 SEZ Rules 2006
GUIDETOSEZ INDIA.PPT
10
FunctioningofSEZisgovernedbyathreetieradministrativeset up
RegulatoryFrameworkofSEZ
GovernmentofIndia
BoardofApproval
DevelopmentCommissioner: p AlsoheadstheApproval Committee,headseachzone Heguidesentrepreneursin settingupunitsinSEZs Hecoordinatesbetweencentral andstategovernments Heensuresexportpromotion &monitorsperformanceof developersandunit
Development Commissioner
Monitorstheperformanceof theSEZunitsannually
GUIDETOSEZ INDIA.PPT
11
DeveloperisrequiredtogetapprovalofrespectiveState GovernmentforsettingupSEZ
SEZEstablishmentProcedureforaDeveloper
3
BOAcommunicatesits decisiontoCG
2 StateGovernment (SG)
Entitythatwishto establishtheSEZcan directlyapplytoBOAor makeanapplicationtoSG BasedonBOA decisionCG issuesaletter ofapprovalto theDeveloper th D l
4 5
DeveloperprovidesCG withparticularsof identifiedareainits possession
EstablishmentofSEZ Developer
Developer is a person granted approval to develop, operate and maintain SEZ including infrastructure facilities Developerisapersongrantedapprovaltodevelop,operateandmaintainSEZincludinginfrastructurefacilities DeveloperundertakesconstructionandmaintenanceofSEZ
GUIDETOSEZ INDIA.PPT
12
AunithastorouteitsapplicationthroughtheDevelopment Commissioner
EstablishmentProcedureforaUnit*
BoardofApproval (BOA)
BOAmustacceptorreject Proposalwithin45days DCforwardsFDI proposalstoBOA proposals to BOA DCforwardsapplication toAC to AC
ApprovalCommittee (AC)
ACmustacceptorrejectormodify proposalwithin15days
2 3
2 3
DevelopmentCommissioner(DC) D l tC i i (DC)
DCissuesletterofapprovalin linewithBOA/ACdecision Firstlevelscrutiny
4 Unit
Developer
*UnitisapersonorentityundertakingexportactivitiesandisapprovedforManufacturing,Processing,Trading&Warehousing,Services
GUIDETOSEZ INDIA.PPT
13
InordertoavailbenefitsofSEZ,itismandatoryfordeveloper andunittofulfilcertainrequirements
Requirementstobefulfilledbythedeveloper
Conformancetoallenvironmentalrequirements. Conformancetolocallaws,rules,regulationsorbyelawsinregardstoareaplanning,seweragedisposal,pollution controlandlabourlaws control and labour laws IssupposedtoraisethefundsfortheprojectaspertheguidelinesoftheMinistryofFinance,DepartmentofEconomic AffairsandGovernmentofIndia Requiredtoholdminimumof26%stakeintheSEZtoretainallthebenefits Required to raise the funds for the project as per the guidelines of the Ministry of Finance Department of Economic RequiredtoraisethefundsfortheprojectaspertheguidelinesoftheMinistryofFinance,DepartmentofEconomic AffairsandGovernmentofIndia Incasetheidentifiedareaisaleaseholdproperty,theleasemustnotbelessthanforaperiodtwentyyears DevelopermustensurethatIdentifiedareashallbecontiguousandvacanthavenopublicthoroughfare
RequirementstobefulfilledbyUnits
Positivenetforeignexchangeearning Availabilityofspaceandotherinfrastructurerequirements Fulfillmentofenvironmentalandpollutioncontrolnorms
GUIDETOSEZ INDIA.PPT
14
GUIDETOSEZ INDIA.PPT
15
Governmentprovidesvariousincentivestodevelopersandunits forsettingupSEZs
Development/ OperationStage Profit Stage ExemptionfromIncometax Exemption from Income tax Unit Nocustomsduty Noexciseduty Nosalestax Noservicetax Nopurchasetax Nostampduty®istrationfees Nostampdutyonmortgages No electricity duty Noelectricityduty
100%forthefirst5years 50%forthenext5years On50%ofprofitsploughedback forthenext5years
( ) NoMinimumAlternativeTax(MAT)
Developer /CoDeveloper
Otherbenefits
ITSEZsareexemptedfromenvironmentclearancesunderEnvironmentProtection IT SEZs are exempted from environment clearances under Environment Protection Act EnhancedlimitofINR24mnperannumallowedformanagerialremuneration underCompaniesAct ExemptionfromportrestrictionunderDrugs&CosmeticsRules ExemptionsunderEmployeesProvidentFundfor5years E i d E l P id F df 5
GUIDETOSEZ INDIA.PPT
16
GUIDETOSEZ INDIA.PPT
17
MajorityofSEZsunderdevelopmentarelessthan49hectaresin area
SEZApprovalStatus
SEZStatus
Formally y Approved InPrinciple Approval Notified
AreawiseSEZdistribution
1000+ 501-1000 201-500 50-100 5.9% 8.9% 4.3% 0.5% 63.6% Up to 49 *Areainhectares
Definition
GivenwhenlandisavailabletosetuptheSEZ p Givenwhenthelandhasnotyetbeen securedbutallothercriteriaarefulfilled Finalstageafterwhichphysicaldevelopment workbegins kb
101-200 16.9%
Approvalstatus
Number of SEZs Formal Approval In-principle approval Notified SEZ 141 552 15% 28% Total=967 57% NotifiedSEZs compriseasmall proportionof SEZs
Approvalstatusareawise
Total=225009hectares Formal Approval Area in hectares 70,037 31%
In-principle approval
122,537
54%
274
GUIDETOSEZ INDIA.PPT
18
IT/ITeSSEZshasthemaximumnumberofapprovedSEZsdueto smallerlandrequirementscomparedtoothersector
Overview
IT/ITeSsectorhashighestformalapprovals,but coversonly9%ofthelandareaofSEZs Almost80 85%ofIT/ITeSSEZsareoperational Almost 8085% of IT/ITeS SEZs are operational IT/ITeSsectorispopularinSEZsdueto:
Availabilityoftrainedmanpower SmallerlandrequirementascomparedtootherSEZs, whichresultsinspeedierlandacquisition UncertaintyregardingSTPItaxexemptionswhicharedue toexpirein2009
FormallyapprovedSEZs
Others 15% Multi Services Textile / Apparel 3% Pharma / Chemicals 4%4% Engineering 4% 4% Multi Product Multi-Product 5% Bio Tech Total=552
62%
NotifiedSEZs
Others Multi Services 11% Bio Tech 2% Textile / Apparel 4% 3% Multi-Product 4% Engineering 5% 5% Pharma / Chemicals Total=274
InprincipleapprovedSEZs
Others 18% ElectronicProduct AutoRelated Auto Related 4% 3% FTWZ 6% 66% Engineering
7%
8%
8%
9%
GUIDETOSEZ INDIA.PPT
19
SouthernandWesternStatesleadinSEZdevelopment
Overview
SouthernandWesternstateshave aggressivelyattractedinvestorsandmobilized investments Thenorthernandeasternstateslagway behindintermsofprovidingtheright environmentforproposalstobeformally approvedandnotified d d tifi d
StateWiseDistribution
State Maharashtra AndhraPradesh TamilNadu y Haryana Karnataka Gujarat Formal Approval 104 99 66 45 50 49 31 24 2 19 14 8 10 10 7 16 552 5 141 InPrinciple Approval 34 2 18 17 9 11 4 13 1 6 11 7 3 Notified SEZs 43 57 44 25 25 24 16 8 8 4 5 2 4 3 6 274 20
DistributionofSEZsregionwise
552
43%
274
30% 21% 7%
North West
21%
141
32% 11% 21% 35%
49% 26% 5%
Formal Approval
GUIDETOSEZ INDIA.PPT
21
EstablishmentofSEZshaveboostedtheinternationaltradein India
Exports
Exportsfromspecialeconomiczones(SEZs) rose33%duringtheyeartoendMarch2009 ItoutpacedIndiasoverallexportsgrowthof It t d I di ll t th f just4% SuperiorinfrastructureinSEZhashelped exporterscutcostsandremaincompetitive
Sectorwiseexports2007 08
Sector GemsandJewellery Gems and Jewellery TradingandService ElectronicsHardware Computer/ElectronicSoftware Engineering ExportsinINRbn 230.1 230 1 208.7 111.2 39.9 16.5 14.2 13.2 6.6 6.5 5.2 2.4 1.6 1.3 9.2 666.4
ExportsfromSEZ
INR bn
900 600 300 0 4.72 4.88
666
139
183
GUIDETOSEZ INDIA.PPT
22
SEZshavesucceededinattractingnewinvestmentsand generatingemploymentopportunitiesinIndia
Investments&employmentinSEZ
100%FDIispermittedunderautomaticroute forallinvestmentsinSEZs,exceptforactivities underthenegativelist under the negative list* MajorityofSEZworkersarefromruralIndia, thishasresultedinanincreaseinpercapita incomeofruralhouseholds
*ReferAppendix1 *R f A di 1
%ShareofSEZinFDIinvestment
30 20 10 0 17.4%
24.5%
1998
2003
InvestmentsinSEZ
INR bn
1,000 800 600 400 200 0 10 17 935
No.ofpeopledirectlyemployedinSEZ
362,650
+58%
+17%
300,000 ,
144,000
176,000
1998
2003
2008
1998
2003
2005
2007
2008
GUIDETOSEZ INDIA.PPT
23
GUIDETOSEZ INDIA.PPT
24
Recentlyapproved/UpcomingSEZs
NameoftheSEZDeveloper LepakshiKnowledgeHubPrivateLtd AnrakAluminium AILSalemSEZPrivateLtd Best&CromptonEngineeringLtd UnitechHitechProjectsPrivateLtd IndianFarmersFertilizerCooperativeLtd(IFFCO) I di F F tili C ti Ltd (IFFCO) GwaliorAgriculturalCompany UttarPradeshStateIndustrialCorp.Ltd UppalHousingLtd Uppal Housing Ltd DishmanInfrastructureLtd Dr.ReddysLaboratoriesLtd D R dd L b t i Ltd TypeofSEZ Multiproduct AluminiumSEZ SteelSEZ ElectronicHardwareSEZ IT/ITESSEZ MultiProductSEZ M lti P d t SEZ MultiServices IT/ITESSEZ ElectronicHardwareandSoftware Electronic Hardware and Software includingIT/ITES Engineering,PharmaandFine Chemicals PharmaSEZ Ph SEZ Location AndhraPradesh AndhraPradesh TamilNadu TamilNadu UttarPradesh AndhraPradesh A dh P d h MadhyaPradesh UttarPradesh UttarPradesh Uttar Pradesh Gujarat AndhraPradesh A dh P d h Approved 2009 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008
GUIDETOSEZ INDIA.PPT
25
GUIDETOSEZ INDIA.PPT
26
Appendix 1 CriteriaforapprovalofFDIproposalinSEZ
CriteriaforAutomatic approvalofFDIproposal inSEZ Itemsdonotattractcompulsorylicensing Locationisinconformitywiththeprescribedparameters ExportobligationlaiddownintherespectiveSTPschemeisfulfilled UnitisamenabletobondingbytheCustoms,andallthemanufacturing Unit is amenable to bonding by the Customs, and all the manufacturing operationsarecarriedoutinthesamepremisesandtheproposaldoes notenvisagesendingoutofthebondedareaanyrawmaterialor intermediateproductsforanyothermanufacturingorprocessingactivity
PetroleumSector AtomicSubstances Broadcasting A Armsandammunition,explosivesandallieditemsofdefence d ii l i d lli d i fd f equipments,defenceaircraftandwarships Atomicsubstances Narcoticsandpsychotropicsubstancesandhazardouschemicals Distillationandbrewingofalcoholicdrinks i ill i db i f l h li d i k Cigarettes/cigarsandmanufacturedtobaccosubstitutes
Allproposalswhichdonotmeetanyoralloftheparametersforautomaticapprovalneedto All proposals which do not meet any or all of the parameters for automatic approval need to beconsideredandapprovedbytheGovernment
27
GUIDETOSEZ INDIA.PPT
GUIDETOSEZ INDIA.PPT
28
GUIDETOSEZ INDIA.PPT
29
GUIDETOSEZ INDIA.PPT
30
GUIDETOSEZ INDIA.PPT
31
GUIDETOSEZ INDIA.PPT
32
GUIDETOSEZ INDIA.PPT
33
GUIDETOSEZ INDIA.PPT
34
GUIDETOSEZ INDIA.PPT
35
GUIDETOSEZ INDIA.PPT
36
GUIDETOSEZ INDIA.PPT
37
GUIDETOSEZ INDIA.PPT
38
GUIDETOSEZ INDIA.PPT
39
NA NA 11.7 26.6 NA NA NA
GUIDETOSEZ INDIA.PPT
40
NA NA 121.9 NA NA NA NA NA NA NA
GUIDETOSEZ INDIA.PPT
41
GUIDETOSEZ INDIA.PPT
42
GUIDETOSEZ INDIA.PPT
43
Thankyouforyourtime
Foranupdatedreportoranycustomizedresearchrequirements,pleasecontact: GauravKumar
EMail: gaurav.kumar@netscribes.com;sales@netscribes.com Phone: +913340646214;+919830309715
NetscribesServices:
RESEARCH&ANALYTICS RESEARCH & ANALYTICS InvestmentResearch EnterpriseMarketResearch PatentResearch SyndicatedMarketResearch S di t d M k t R h MARKETINTELLIGENCE MARKET INTELLIGENCE MarketMonitoring&Competitive Intelligence Sales&ProspectIntelligence Listening&MediaMonitoring Li t i & M di M it i BrandSurveillance CONTENTSOLUTIONS CONTENT SOLUTIONS SocialMediaMarketing MarcomSupportServices ContentManagementServices BookPackagingServices B kP k i S i
Forfurtherdetails,visitusat:www.netscribes.com
AboutNetscribes NetscribessupportstheorganicandinorganicgrowthobjectivesofglobalcorporationsthroughacombinationofEnterpriseMarket, Investment&PatentResearch,Market&SalesIntelligence,SocialMediaMonitoring&ManagementandCustomPublishingsolution. Disclaimer:Thisreportispublishedforgeneralinformationonly.Highstandardshavebeenusedforpreparingthismarketresearchreport; Disclaimer: This report is published for general information only High standards have been used for preparing this market research report; however,Netscribes,Inc.orNetscribesisnotresponsibleforanylossordamagearisingfromuseofthisdocument.Thisdocumentisthesole propertyofNetscribesandpriorpermissionisrequiredforguidelinesonreproduction.
GUIDETOSEZ INDIA.PPT
44