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EXPORT IMPORT

DOCUMENTATION AND

LOGISTICS

Aritra Pallab Sil15-Apr-13

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Special Economic Zone

India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone

(EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a viewto overcome the shortcomings experienced on account of the multiplicity of controls andclearances; absence of world-class infrastructure, and an unstable fiscal regime and with a viewto attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy wasannounced in April 2000.

This policy intended to make SEZs an engine for economic growth supported by quality

infrastructure complemented by an attractive fiscal package, both at the Centre and the State

level, with the minimum possible regulations. SEZs in India functioned from 1.11.2000 to

09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made

effective through the provisions of relevant statutes.

To instill confidence in investors and signal the Government's commitment to a stable SEZ

policy regime and with a view to impart stability to the SEZ regime thereby generating greater

economic activity and employment through the establishment of SEZs, a comprehensive draft

SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were

held in various parts of the country both by the Minister for Commerce and Industry as well as

senior officials for this purpose. The Special Economic Zones Act, 2005, was passed by

Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft

SEZ Rules were widely discussed and put on the website of the Department of Commerce

offering suggestions/comments. Around 800 suggestions were received on the draft rules. After

extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th

February, 2006, providing for drastic simplification of procedures and for single windowclearance on matters relating to central as well as state governments. The main objectives of the

SEZ Act are:

(a)generation of additional economic activity(b)promotion of exports of goods and services;(c)promotion of investment from domestic and foreign sources;(d)creation of employment opportunities;(e)development of infrastructure facilities;

It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in

infrastructure and productive capacity, leading to generation of additional economic activity and

creation of employment opportunities.

The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and

creation of related infrastructure. A Single Window SEZ approval mechanism has been provided

through a 19 member inter-ministerial SEZ Board of Approval (BoA). The applications duly

recommended by the respective State Governments/UT Administration are considered by this

BoA periodically. All decisions of the Board of approvals are with consensus.

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The SEZ Rules provide for different minimum land requirement for different class of SEZs.

Every SEZ is divided into a processing area where alone the SEZ units would come up and the

non-processing area where the supporting infrastructure is to be created.

The SEZ Rules provide for:

" Simplified procedures for development, operation, and maintenance of the Special EconomicZones and for setting up units and conducting business in SEZs;

Single window clearance for setting up of an SEZ; Single window clearance for setting up a unit in a Special Economic Zone; Single Window clearance on matters relating to Central as well as State Governments; Simplified compliance procedures and documentation with an emphasis on self-certification

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Export Processing Zones

Export Processing Zones (EPZs) can be summarized as a unit bearing clusters of specially

designed zones of aggressive economic activity for the promotion of export. The main concept of

Export Processing Zones was conceived in the early 1970s to promote the growth of the

sickening export business of India. Further, the meaning of Export Processing Zones (EPZs) can

be broadly defined as an area enjoying special government of India support with respect to fiscal

incentives, tax rebates and other exclusive benefits for the growth of export.

Export Processing Zones (EPZs) also encompasses pre-defined infrastructural facilities and

regulations pertaining to establishment of such zones and environmental stipulations,

respectively. These Export Processing Zones of India were established to help the growth of

Indian export commodities, especially from the fast growing sectors.

Objectives of setting up of Export Processing Zones (EPZs)

1. Encourage and generate the economic development2. Encourage Foreign Direct Investments (FDI)3. To channel the sources of foreign exchange within the system in a phased manner4. Foster the establishment and development of industrial enterprises within the said zones5. Encourage and generate wider economic activities by encouraging foreign investments for

the development of the zones

6. To channel the foreign exchange earnings for the further development of these zones andexplore new areas for the development of Indian exports

7. Encourage establishment and development of Indian industries and business enterprises andfacilitate with proper infrastructure Generate employment opportunity

8. Upgrade labor and management skills9. Acquire advanced technology for increased productivity10.Ensure world class quality of products

Three-tier management system in Export Processing Zones (EPZs)

Tier one is headed by the Ministry of Commerce headed by the Commerce Secretary, whichdrafts and implements policies and reviews the performance of each such zones

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Tier two is headed by the Board of Approval (BOA), which is responsible for examinationof proposals for opening up of new enterprises in the zone and which is headed by a person

of the level of Additional Secretary

The Development Commissioner, who is the chief executive of the Export Processing Zone,heads the three tiers. The Development Commissioner is vested with the power for the day-to-day function of the zone. Further, he is the head of functions relating to administration,

approval of investment, and he also enforces various regulatory provisions

Export Processing Zones in India

1. Kandla Free Trade Zone (KAFTZ), Kandla, Gujarat2. Santa Cruz Electronic Export Processing Zone (SEEPZ), S. Cruz, Maharashtra3. Cochin Export Processing Zone (CEPZ), Cochin, Kerala4. Falta Export Processing Zone (FEPZ), Falta,West Bengal5. Madras Export Processing Zone (MEPZ), Madras, Tamil Nadu6. Noida Export Processing Zone (NEPZ), Noida, Uttar Pradesh7. Visakhapatnam Export Processing Zone (VEPZ), Visakhapatnam, Andhra Pradesh

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EXPORT ORIENTED UNIT SCHEME

The EOU Scheme introduced in early 1981, is complementary to the SEZ scheme (erstwhileEPZ scheme). It adopts the same production regime but offers a wider option in location withreference to factors like source of raw materials, port of export, hinterland facilities, availabilityof technological skills, existence of an industrial base, and the need for a large area of land forthe project.

Over the last decade, Export Oriented Units have evolved as a major player in the country'sexport effort. They have grown consistently at double digit level, and recorded a growth of about27.48% during the year 2004-05

Objectives of the Export oriented unit:

The main objectives of the EOU scheme is to increase exports, earn foreign exchange to thecountry, transfer of latest technologies stimulate direct foreign investment and to generateadditional employment.

SALIENT FEATURES

No license required for import. Exemption from Central Excise Duty in procurement of capital goods, raw-materials,

consumables spares etc. from the domestic market.

Exemption from customs duty on import of capital goods, raw materials, consumablesspares etc.

Reimbursement of Central Sales Tax (CST) paid on domestic purchases. Supplies from DTA to EOUs treated as deemed exports. Reimbursement of duty paid on furnace oil, procured from domestic oil. Companies to EOUs as per the rate of drawback notified by the Directorate General of

Foreign Trade.

100% Foreign Direct Investment permissible. Exchange earners foreign currency (EEFC) Account. Facility to retain 100% foreign exchange proceeds in EEFC Account.

Facility to realize and repatriate export proceeds within twelve months.

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Major Sectors in EOUs:

GRANITE TEXTILES / GARMENTS FOOD PROCESSING CHEMICALS COMPUTER SOFTWARE COFFEE PHARMACEUTICALS GEM & JEWELLERY ENGINEERING GOODS ELECTRICAL & ELECTRONICS AQUA & PEARL CULTURE

EOU Unit Obligations

The EOUs are required to achieve the minimum NFEP (Net Foreign Exchange Earning as aPercentage of Exports) and the minimum EP (Export Performance) as per the provisions ofEXIM Policy which vary from sector to sector. As for instance, the units with investment in plantand machinery of Rs.5 crore and above are required to achieve positive NFEP and export US$3.5 million or 3 times the CIF value of imported capital goods, whichever is higher, for 5 years.For electronics hardware sector, minimum NFEP has to be positive and minimum EP for 5years is US$ 1 million or 3 times the CIF value of imported capital goods, whichever is higher.NFEP is calculated cumulatively for a period of 5 years from the commencement of commercialproduction according to a prescribed formula.

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EXPORT PROMOTION COUNCIL

Export promotion refers to that policy of the government that offers encouragement to theexporters with a view to enhance the export of the country. In order to achieve this objective theyare given numerous incentives and facilities.

The Export Promotion Council (EPC) was established on August 19, 1992 through Legal NoticeNo. 4342, with the mandate of developing and promoting Kenyas exports. The ExportPromotion Council of Kenya (EPC) Kenyas premier institution in the development andpromotion of export trade in the country. The Council was established for the purpose of givingan outward orientation to an economy that was hitherto inward looking. EPC has fully embraced

the mandate of coordinating and harmonizing export development and promotion activities in thecountry, providing leadership to all national export programs. Today, EPC is the focal point forexport development and promotion activities in the country.

Objectives:

The basic objective of Export Promotion Councils is to promote and develop the exportsof the country. Each Council is responsible for the promotion of a particular group ofproducts, projects and services.

The main role of the EPCs is to project India's image abroad as a reliable supplier of highquality goods and services. In particular, the EPCs shall encourage and monitor theobservance of international standards and specifications by exporters. The EPCs shallkeep abreast of the trends and opportunities in international markets for goods andservices and assist their members in taking advantage of such opportunities in order toexpand and diversify exports.

The major functions of the EPCs are:

To provide commercially useful information and assistance to their members indeveloping and increasing their exports.

To offer professional advice to their members in areas such as technology up gradation,quality and design improvement, standards and specifications, product development,innovation, etc.

To organize visits of delegations of its members abroad to explore overseas marketopportunities.

To organize participation in trade fairs, exhibitions and buyer-seller meets in India andabroad.

To promote interaction between the exporting community and the Government both atthe Central and State levels.

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To build a statistical base and provide data on the exports and imports of the country,exports and imports of their members, as well as other relevant international trade data.