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| SEZ Bill in
next session (Business Standard news
release) |
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The
government will introduce a Bill on
special economic zones (SEZs) before
the end of the year. This would include
biotechnology parks, free trade and
warehousing zones (FTWZs), Commerce
and Industry Minister Kamal Nath said
today.
“We see SEZs as hubs of manufacturing
and FTWZs as trading hubs. In all
these, FDI up to 100 per cent would
be permitted, including in real estate
development and establishment of the
SEZs,” Nath said, while inaugurating
the OECD-India Investment Roundtable.
Stating that India's investment policies,
including policies on foreign direct
investment (FDI), were among the most
liberal in developing economies, Nath
pointed out that there were no restrictions
on FDI in most sectors.
“What we really want is FDI that
generates the maximum economic activity
and thereby creates employment, that
creates wealth for ordinary people.
We especially look to FDI in manufacturing
sectors and in greenfield projects,”
he said.
He said economic reforms have unleashed
productive capacities and it would
be taken forward. “Reforms enjoy
broad political consensus and the
government is committed to reduce
transaction costs and do away with
archaic rules and procedures,”
he said.
He said the comfortable foreign exchange
reserves, the sixth largest in the
world, had provided a “cushion”
to embark on bold economic reforms.
India, along with Russia and China,
will shape the global economy of the
future. Despite many positives in
the country’s economy, concerns
over infrastructure and poverty still
persist, he said, adding that India
needed $150 billion over the next
five years to improve infrastructure.
Nath said overseas investments by
Indian companies had exceeded $3 billion
in the last two years, with nearly
60 per cent in the manufacturing sector.
He informed that the telecom sector
in India was amongst the fastest growing
in the world today, with the number
of mobile phones increasing at over
50,000 each day.
“While the software prowess of
Indian manpower has come into sharp
focus, our manufacturing skills, particularly
in high precision, high-tech sectors
have not received adequate attention
from foreign investors,” Nath
said, adding most of the top vehicle
manufacturers and their suppliers
were sourcing high-quality automobile
components from India.
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Warehousing
zones to push trade hub (Business
Standard news release)
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The government announced
a new scheme to set up Free Trade
and Warehousing Zones (FTWZs), which
are aimed at making India a global
trading-hub. The Foreign Trade policy
(2004-09) announced also provides
service tax exemptions to export oriented
units (EOUs).
Special economic zones (SEZs) were
left untouched in the policy, as the
department of commerce would be bringing
in a separate legislation on the issue,
said Commerce and Industry Minister
Kamal Nath.
Units in the FTWZs will qualify for
benefits as applicable for SEZ units.
The zones will create trade-related
infrastructure to facilitate the import
and export of goods and services with
freedom to carry out trade transactions
in free currency.
Foreign direct investment would be
permitted up to 100 per cent in the
development and establishment of the
zones and their infrastructural facilities,
said Nath. Each zone would have a
minimum outlay of Rs 100 crore and
500,000 square metres built up area.
Explaining the rationale behind the
setting up of these zones, DGFT G
K Pillai said, “the intention
is to bring an international trading
hub right on our shores so that our
local industries can make purchases
easily without having to travel abroad”.
Pillai clarified that no manufacturing
activity would be permitted in these
zones. “The main activity here
would be trading. however activities
like repackaging would be permitted”.
Pillai said two such zones could come
up on the east and west coast of the
country.
“The announcement will give a
fillip to warehousing in the country,”
said FICCI Director General Amit Mitra.
It would also build pressure to develop
infrastructure like roads and ports
in order to service the warehouses,
he added.
On EOUs, the government has made a
number of announcements in the five
year foreign trade policy announced
today. They have been exempted from
service tax in proportion to their
exported goods and services, in line
with the thinking that the country
should not export its taxes and make
its goods and services uncompetitive
in international markets.
They have also been permitted to retain
100 per cent of their export earnings
in Export Earners Foreign Currency
(EEFC) accounts and import of capital
goods has been allowed on self-certification
basis for them. Income Tax benefits
on plant and machinery have been extended
to domestic tariff area units which
convert to EOUs.
For EOUs engaged in textile and garments
manufacture, leftover materials and
fabrics up to 2 per cent of cost in
freight value or quantity of import
shall be allowed to be disposed of
on payment of duty on transaction
value only. Minimum investment criteria
shall not apply to brass hardware
and hand-made jewellery EOUs. This
facility already exists for handicrafts,
agriculture, floriculture, aquaculture,
animal husbandry, IT and services.
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| New
SEZ rules come into effect |
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Friday, 10 February
, 2006, 08:05
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New Delhi: The much-awaited Special
Economic Zones Act 2005 would come
into effect from Friday with the requisite
SEZ rules providing for simplification
of procedures, single window clearance,
easy compliance procedures and documentation
and the number of services to be rendered
from SEZs and areas governing SEZ
all having been put in place.
Announcing this at a news conference
here, the Union Commerce & Industry
Minister, Kamal Nath, said investment
of Rs 1,00,000 crore over the next
three years with an employment potential
of over five lakh would be likely
from the new SEZs, besides indirect
employment during the constructing
period of the SEZs. He said heavy
investments would be likely in sectors
such as information technology, pharma,
biotechnology, textiles, petro-chemicals
and auto components.
The SEZ rules announced today provide
for, among others:
- Simplification of procedures for
development, operation and maintenance
of SEZ and for setting up and conducting
business in SEZs.
-
Single window clearance for setting
up of an SEZ and a unit in SEZ
and on matters relating to Central
as well as State Governments.
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Documentation for various activities
of the units cut to the barest
minimum with a stress on self-certification.
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No requirements for providing
bank guarantees in a bid to reduce
transaction cost.
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Contract manufacturing for foreign
principals allowed. Option to
obtain sub-contracting permission
at the initial approval stage.
- Import-Export of all items, through
personal baggage allowed.
Fiscal incentives: Nath also
spelt out the various fiscal incentives
being extended to units in SEZ as
also SEZ developers, including tax
holidays.
He said that for the first time such
fiscal incentives for exporters have
been put into the Act and any changes
need to be brought only through an
amendment to the Act, giving stability
of policy regime to units.
Provision for OBUs: He further
said the Act provides for setting
up offshore banking units (OBUs),
which would be governed by the RBI
regulations.
The OBUs would also qualify for tax
exemption on the lines of the SEZ
units and non-resident Indian deposits
in these banks would not attract tax
deduction at source on interest income.
On flexible labour laws for SEZs,
the Minister clarified that the Act
or rules framed, though do not extend
any such flexibility, it was up to
the State Governments to do so to
attract investment, including foreign
direct investment.
Minimum area requirements:
On the question of minimum area requirements
stipulated for various categories,
he said multi-product SEZs would have
an area of 1,000 hectares or more.
Service-sector SEZs must have an area
of 100 hectares or more.
To bolster sectors where the country
commands competitive advantage such
as gems and jewellery, IT, bio-technology,
sector-specific SEZs in these sectors
could be set up over an area of 10
hectares or more, he said adding that
for all other sectors, the area must
be at least 100 hectares. He clarified
that the area requirement for multi-product
SEZ has been relaxed to 200 hectares
and for sector-specific SEZs to 50
hectares for certain special category
States of North East, Himachal Pradesh,
Uttaranchal, Jammu & Kashmir,
Goa and Sikkim and all Union Territories
keeping in view the difficulty in
finding large tracts of adjacent land
in such places.
New SEZs: Nath said so far
approvals had been granted for setting
up 117 SEZs, including three free
trade warehousing zones spread over
15 States and two UTs, of which seven
new SEZs have become functional, with
the rest of them being in various
stages of implementation. The seven
new SEZs, currently operational, have
areas ranging from 5 acres in the
case of Manikanchan SEZ (West Bengal)
for gems and jewellery to 2,600 acres
(first phase 132 acres) SEZ at Indore.
The Mahindra City SEZ in Chennai has
an area of 665.68 acres specialising
in IT, hardware and bio-informatics.
The Minister said exports from the
SEZ last year were $4 billion and
during the first three quarters of
the current fiscal $3.5 billion. Currently,
948 units are in operation in the
SEZ, providing employment to more
than a lakh.
Source
Sify Business
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