EPZs, EOUs, TPs & SEZs

By Prof. Neha Patel

(c) Prof. Neha Patel,GLS MBA Programs

Export Processing Zones (EPZs)

• Industrial estates which form enclaves of national territory

• Are usually near port

• The entire production of this zone is exported• Tax incentives available• Speedy import and export transactions• Govt. has permitted development of EPZ by

private sector, State, or joint

(c) Prof. Neha Patel,GLS MBA Programs

Other Zones

• EPIP – Export promotion Industrial Park Scene

• EOU – Export Oriented Unit

(c) Prof. Neha Patel,GLS MBA Programs

EPZ in India

• Kandla Free Trade Zone, Gujarat• Santa Cruz Electronic Export Processing Zone

(SEEPZ), Mumbai• Noida Export Processing Zone, UP• Madras Export Processing Zones, Chennai• Cochin Export Processing Zone, Kerala• Falta Export Processing Zone, West Bengal• Visakhapatnam Export Processing Zone

(c) Prof. Neha Patel,GLS MBA Programs

Contribution of EPZs to Industrial growth/diversification : A qualitative analysis

At the sector level •Contribution to technology transfer &spill over's •Development of Local entrepreneurship : Gems and Jewellery, Electronics, SW, rubber gloves

Regional development•Contribution to employment,

•Income generation•Ancillary industrial activities

•Most notable : Kandla, Noida

NationalContribution

to exports, employment

(c) Prof. N

eha Patel,G

LS M

BA

P

rogram

s

Export Oriented Units [EOUs]

• Units undertaking to export their entire production of goods and services – Except permissible sales in Domestic Tariff Area (DTA)

• Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) or Bio-Technology Parks (BTPs) – Also covered under EOU scheme. – These are product specific units availing the same benefits as

EOUs.

• EOUs are allowed to manufacture goods including– repair, re-making, reconditioning, reengineering, and rendering

of services wherever applicable.

(c) Prof. Neha Patel,GLS MBA Programs

Software Technology Parks in India (STPI)

• Setup in 1991 as an autonomous organization under Ministry of Information Technology

• Aim: To promote software Exports by acting as ONE STOP SHOP by:– Creating an enabling environment for healthy IT

exports nationwide– Strengthening Technical Infrastructure– Providing Single window clearance to software

exporters – Shift towards OFF SHORE model of software

development work

(c) Prof. Neha Patel,GLS MBA Programs

• STP Scheme is being operated by the technical body

• Investment Approvals decentralized

• Most of the authoritaties are sub-Delegated to the Directors of the STPI Centers – Result Decentralized Single Window

STPI Differentiators

(c) Prof. Neha Patel,GLS MBA Programs

Benefits

• Complete duty free import

• 100% foreign equity permitted

• No corporate income tax till 2010

• Dedicated Data Communication links

• Single window Government clearance

• Custom bonding and export certification provided at single point.

What is STP Scheme?

(c) Prof. Neha Patel,GLS MBA Programs

STPI: Key Areas of Contribution

Growth of IT Exports from the nation

Dispersal of Industry to Tertiary Cities

Contribution to SME Enablement

Enhanced Employment Generation Nationwide

(c) Prof. Neha Patel,GLS MBA Programs

Catalyst of Regional Development

Overall Regional Development

Nucleating effect on Employment generation

Secondary Industries coming up

Improvement in Basic and Social Infrastructure

(c) Prof. Neha Patel,GLS MBA Programs

1991 1995 After IT Taskforce

Bangalore

NOIDA

Pune

Hyderabad

Trivandram

Ghandinagar

Bhubaneshwar

Mohali

Jaipur

Mumbai

Aurangab

ad

Bhilai

Chennai

Coimbator

e

Dehradun

Guwahati

Hubli

Indore

Kanpur

Kolkatta

Lucknow

Nasik

Allahabad

Jodhpur

Jammu

Hubli

MangaloreManipalMaduraiMysoreNagpurPondicherryPuneRourkelaSrinagarShimlaThirupatiTrichyVijayawadaVizagWarangalTirunaveli

STPI Centers: Nationwide spread

(c) Prof. Neha Patel,GLS MBA Programs

SEZ – Special Economic Zone

• It is specifically delineated duty free enclave• Shall be deemed to be foreign territory• Goods going into SEZ shall be treated as Deemed exports• Goods coming from SEZ into DTA (domestic tariff area) shall be treated as being imported• Existing EPZ may also be converted into SEZ by Ministry of Commerce

(c) Prof. Neha Patel,GLS MBA Programs

What is special?

• Duty-free! – Exemption from taxes, various subsidies and tax sops

• Hassle-free! – Exemption from stringent labor and environment regulations

• Foreign enclave! – A designated duty free enclave and to be treated as foreign

territory for trade operations and duties and tariffs

• Single Window Clearance! • No license required for import• Only 25% of the area for industrial activity –

– the rest of the area for entertainment and residential as well as other commercial activities!

(c) Prof. Neha Patel,GLS MBA Programs

What is special?

• No fixed wastage norms • Full freedom for subcontracting including subcontracting abroad• Job work on behalf of domestic exporters for direct exports

allowed• Contract farming allowed for agriculture/ horticulture units• No routine examination by Customs of export & import cargo• In house customs Clearance

(c) Prof. Neha Patel,GLS MBA Programs

SEZ Framework

Pre

fere

ntia

l Pol

icy

Fram

ewor

k

Hassle Free O

perating Environm

ent

Integrated Infrastructure

Fiscal incentives & regulatory benefits

Thrust on self-certification &

in-zone empowerment

Self-contained & Self-managed

SEZ

(c) Prof. N

eha Patel,G

LS M

BA

P

rogram

s

Fiscal Benefits available to SEZ

Cenvat Cenvat

CustomsCustomsVAT VAT

Income Tax Income Tax

Service Tax Service Tax

Central Sales tax

Central Sales tax Securities

Transaction Tax

Securities Transaction

Tax

Exemptions of tax, duties or

cess in 21 Acts

Exemptions of tax, duties or

cess in 21 Acts

Stamp DutyStamp DutyFEMAFEMA

Other ActsOther Acts

(c) Prof. Neha Patel,GLS MBA Programs

(c) Prof. Neha Patel,GLS MBA Programs