SEZ sector in India
India’s Special Economic Zones (SEZs) have evolved into the country’s economic growth engine throughout time. These SEZs not only encourage private sector investment in the development of industries and services, but they also provide a valuable source of foreign exchange earnings through export-oriented units. Sandeep Sharma examines the growth of SEZs in India…
In April of 2000, the Special Economic Zones (SEZs) policy was announced. Parliament enacted the Special Economic Zones Act of 2005 in May 2005, and it obtained Presidential assent on June 23, 2005. The SEZ Rules of 2006 took effect on February 10, 2006. The SEZ development in India is guided by generation of additional industrial and economic activity; promotion of goods and services exports; promotion of local and foreign investment in manufacturing goods; creation of job opportunities; and development of infrastructure facilities. The development of SEZ paves the way for increase in industrial activity resulting in the growth of the country.
The following are the key features of the SEZ scheme:
- For the purposes of allowed operations in the SEZ, a designated duty-free enclave will be treated as a jurisdiction outside India’s customs area.
- Importing does not necessitate a licence;
- It is permissible to engage in manufacturing or service-related operations.
- The Unit must achieve Positive Net Foreign Exchange over a five-year period from the start of production;
- Domestic sales are subject to full customs charge and the current import policy;
- Subcontracting will be allowed in SEZ units.
- There is no systematic inspection of export/import cargo by customs authorities;
The SEZs Act, 2005 provides tax benefits to developers, co-developers, and units in SEZs. There were 7 Central Government Special Economic Zones (SEZs) and 12 State/Private Sector SEZs prior to the enactment of the SEZs Act, 2005. In addition, 425 proposals for setting up of SEZs in the country have been accorded formal approval under the SEZ Act, 2005. As of March 2021, 378 SEZs were notified, out of which 265 SEZs were operational. SEZs established under SEZ legislation have mainly or mostly achieved their goals. Exports of ₹22,840 Crore in 2005-06 have increased to ₹7,59,524 Crore in 2020-21; investment of ₹4,035.51 Crore in 2005-06 has increased to ₹6,17,499 Crore (cumulative basis) by 2020-21; and employment provided to 1,34,704 people in 2005-06 has increased to 23,58,136 people in 2020-21. The SEZ Act, 2005, contains the fiscal concessions and duty benefits available to SEZs, and they are aligned with the principles for establishing SEZs as part of the government’s larger economic objectives. However, there is currently no provision for further fiscal incentives.
As of July 2021 during the last three years, 1096 units have been registered in various Special Economic Zones (SEZs) across the country. The following is a list of these units’ exports by Zonal SEZ and year during the last three years:
In India, eight Special Economic Zones (SEZs) for the agro and food processing sectors have been approved as of December 2021. Seven of the eight SEZs have been notified, and three of them are active. In Maharashtra, there is currently no SEZ for the agricultural and food processing industries.
The three operational SEZs are: 1) Kerala Industrial Infrastructure Development Corporation (KINFRA) Agro-based food processing SEZ in Malappuram District, Kerala; 2) Parry Infrastructure Company Private Limited SEZ in Kakinada, Andhra Pradesh; and 3) CCCL Pearl City Food Port SEZ Limited SEZ in Tuticorin District, Tamil Nadu.
The notified SEZs include 1) Nagaland Industrial Development Corporation Limited SEZ at Demapur, Nagaland; 2) Ansal Colours Engineering SEZ Limited SEZ at Sonepat, Haryana; 3) CCL Products (India) Limited SEZ at Chittoor District, Andhra Pradesh; and 4) Tripura Industrial Development Corporation Limited SEZ at South Tripura District Tripura; The SEZ by Akshaypatra Infrastructure Private Limited at Mehsana, Gujarat has got formal approval and is not yet notified.
The 107th meeting of the Board of Approval (BoA) for Special Economic Zones (SEZs) was held on 25th November, 2021 and the following proposals were taken up:
1) Request of M/s Soft Rainbow Color Private Limited in the Plot No. Z/71 & Z/72 Dahej SEZ Limited, Dahej, Village: Luvara, Tal: Vagra, District: Bharuch, Gujarat for the extension of the letter of approval (LOA) upto 31/10/2022. The BoA has granted extension of the LOA validity upto 31/10/2022.
2) Request of M/s. Algolog Systems Private Limited in Ansal IT City & Parks Limited, IT/ITES SEZ at Plot No. TZ-06, Tech Zone, Greater Noida, Uttar Pradesh, for extension of letter of approval (LOA) for a further period of one year. The BoA has granted extension of the LOA validity upto 31st March, 2022.
3) Request of M/s Wockhardt Limited Unit 3 at Shendre, Aurangabad, Maharashtra for extension of the LOA validity period.The BoA has granted extension upto 26/10/2022.
4) Request of M/s Vidya Herbs Private Limited in the KIADB (Pharmaceutical) SEZ, Hassan, Karnataka for LOA extension.The BoA has approved extension upto 26/10/2022.
5) Request of M/s Wipro Enterprises Private Limited (Unit-II) in the KIADB (Aerospace) SEZ, Bangalore, Karnataka for LOA extension. The BoA has approved the extension upto 19/11/2022.
6) Request of M/s Pluto Fin Tech Private Limited for co-developer status in Cessna Business Park SEZ for property management and other infrastructure services. The BoA has approved this request for co-developer status for property management and other infrastructure services.
7) Proposal of M/s Xenosoft Technologies (India) Private Limited for approval of Co-Developer Status in M/s APIIC Limited, IT/ITES SEZ, Hill no. 3, Madhurwada, Visakhapatnam. The BoA has approved this request for co-developer status for undertaking infrastructural facilities viz. leasing of space to units, all operational and maintenance facilities in office building with a built-up area of 3,10,000 sft. with 4 cellars and 4 floors.
8) Request of M/s State Industries Promotion Corporation of Tamil Nadu Limited for co-developer status in the IT/ITES Electronic components and Hardware manufacturing and related services SEZ developed by M/s Flextronics Technologies India Private Limited. at SIPCOT Industrial Park, Phase-II, Sandavellur C Village, Sriperumbudur Taluk, Kancheepuram District. The BoA noted the request of the co-developer to undertake basic infrastructure facilities for facilitating the industrial units in the 60.73 Ha area out of the total notified area of 76.14 ha was approved in the 104th meeting of the BoA and LOA was granted on 7th June 2021 subsequently.
9) Request of M/s T&V Holdings Private Limited for cancellation of LOA issued to them as co-developer of M/s Estancia IT Park Private Limited.,Chennai. The BoA approved this request.
10) Request of M/s Mariapps Marine Solutions (I) Private Limited, co-developer for acquiring land of 0.04047 ha on lease basis, from the developer, M/s Smartcity (Kochi) Infrastructure Private Limited. The BoA has approved this request.
11) M/s RJT Tobaccos Private Limited has proposed to set up a SEZ unit at Visakhapatnam SEZ, Duvvada, Andhra Pradesh for manufacture of Cigarettes, Cigars, Cheroots, and other tobacco products under IDR Act, 1951. The BoA has approved the proposal with certain conditions laid.
12) M/s Rockman Advanced Composite Private Limited (a SEZ unit under jurisdiction of Surat SEZ) has proposed manufacturing allied items of defence equipment under IDR Act, 1951. The BoA has approved the proposal subject to certain conditions.
13) M/s Nagaland Industrial Development Corporation Limited, SEZ has requested further extension of the validity period of the formal approval granted for setting up a spector specific SEZ for Agro and Food Processing beyond 02/12/2020. The BoA has approved the extension upto 02/12/2022.
14) M/s Atar Mohd Saeed Dawood Private Limited, unit in JNPT SEZ, Navi Mumbai for extension of the validity period of LOA for a period of one year from 20/08/2021 to 20/08/2022. The BoA has approved the extension.
15) M/s Reliance Infrastructure Limited, a unit located at Plot no. 4-11, Dhirubhai Ambani Defence Park, Reliance Aerostructure Limited, Mihan SEZ for extension of the validity of letter of approval (LOA) for a period of one year beyond 26/09/2021. The BoA has approved the extension.
16) M/s Higher Heights Technology has requested for co-developer status in Mihan SEZ at Nagpur developed by Maharashtra Airport Development Co. Limited for providing infrastructure facilities and its maintenance. The BoA has approved the proposal.
17) M/s J. Matadee Free Trade Zone Private Limited, an FTWZ located at Mannur and Valarpuram Villages, Permbakkam Road, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu, has requested for an increase in area of 9.333 ha (beyond 10%) to their existing notified area of 84.775 ha. The BoA has approved the request subject to certain conditions.
18) M/s Ambika Scrap Recycling Private Limited has requested for renewal of LOA in respect of their metal scrap recyling unit and plastic recycling unit in KASEZ. The BoA has decided to treat the proposal as withdrawn and directed DC, KASEZ to re-examine the case and submit a consolidated proposal.
*Image used in this article is for illustration only
Note: The above-mentioned article covering India’s SEZ sector overview is taken from ProjectX India | 15th December 2021 edition. Each issue of ProjectX contains information on new projects, ongoing projects, contract award, commissioned projects, and e-procurement opportunities. Buy our latest or archival issues by clicking here…
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