Amity School of Business Module 5 EPZ SEZ

Amity School of Business Module- 5 EPZ, SEZ, EOU & Trading Houses 1

EPZ Amity School of Business The concept of Export Processing Zones (EPZ) was introduced to enhance exports in India with the help of tax holidays and lucrative incentive packages to India’s exporters. The concept of Export Processing Zones in India has gone through four significant stages of development. The initial stage witnessed the establishment of the Kandla Free Trade Zone in the State of Gujarat in the year 1965 and the subsequent establishment of the Santacruz Electronics Export Processing Zone. 2

EPZ Amity School of Business The second stage witnessed during 1985 -90, and it led to the establishment of a number of Export Processing Zones to boost the export sector. Thus, Export Processing Zones were set up in West Bengal, Tamil Nadu, Kerala, Uttar Pradesh and in Andhra Pradesh 3

EPZ Amity School of Business The third stage was witnessed post 1991, during economic reforms period. The objective being to broadbase and encourage India’s exports. Following measures were undertaken: • Fiscal Incentives • Simplification of Policy Provisions • Incorporation of more industries like horticulture, re-engineering, agriculture, aqua culture 4

SEZ Amity School of Business • The fourth stage witnessed the introduction of the concept of Special Economic Zones (SEZs) in the EXIM policy of 1997 -2002. Presently, most of the export-processing zones have been transformed into SEZs. • SEZs were permitted to be set up by both government and private parties; • Special Economic Zones (SEZs) Policy was announced in April 2000. 5

SEZ Amity School of Business • 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. • Further the Government of India passed the SEZ Act, 2005 to strengthen the concept of SEZ. 6

Amity School of Business Objectives of SEZ in India – generation of additional economic activity – promotion of exports of goods and services – promotion of investment from domestic and foreign sources – creation of employment opportunities – development of infrastructure facilities 7

Amity School of Business Major incentives offered to firms under SEZ: 1. Duty free import / domestic procurement of goods for development, operation and maintenance of SEZ units 2. 100% Income Tax exemption on export income for SEZ units under Section 10 AA of the Income Tax Act for first 5 years, 50% for next 5 years. 8

Amity School of Business Major incentives offered to firms under SEZ 3. Exemption from Central / State Sales Taxes and other levies. 4. Exemption from Service Tax. 5. Single window clearance for Central and State level approvals. 9

EOU Amity School of Business By EOU we mean Export Oriented Units, i. e. those units which are established mainly/solely for the purpose of exporting their output. The government of India, for the purpose of encouraging India’s exports brought out Export Oriented Units (EOUs) scheme in 1981. This scheme is complementary to the SEZ scheme. It accords same incentives to EOUs as those granted to export units located in SEZs. 10

EOU Amity School of Business • The main objectives of the EOU scheme is to increase exports, earn foreign exchange for the country, transfer latest technology to the country, stimulate direct foreign investment and to generate additional employment. • EOUs Obligations: The EOUs are required to achieve minimum EP (Export Performance) as per the provisions of EXIM Policy which vary from time to time, and sector to sector. 11

Status Holders/ Trading Houses Amity School of Business The classification of status holders among exporters in India is as follows: Ø Export house Ø Star export house Ø Trading house Ø Star trading house Ø Premier trading house Such status is granted on achieving aggregate exports of Rs. 20 crore, Rs. 100 crore, Rs. 500 crore, Rs. 2500 crore and Rs. 10000 crore respectively over a period of four years. Status holders are entitled to privileges such as, fast track clearances, exemption from furnishing bank guarantees, consideration under target plus scheme etc. 12

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