Government of India have introduced SEZ (Special Economic Zone) Scheme, about 2 years ago. Initially four places were notified, and from January 1, 2003, another 4 places have been added. In the Notification effective 01.01.2003, Visakhapatnam has been included.

Units can be set up in the SEZ for manufacturing, and/or trading. What comes into SEZ is considered an “import” and what goes out is an “export”. Trading units in SEZ can supply goods to Domestic Tariff Area (DTA) (considered as export) after paying applicable duties. In other words, when a Trading Unit in SEZ sells its products to someone in the DTA, the goods receive the same treatment as if they were imported from abroad, subject to clearance from Customs authorities and payment of applicable import duties..

Here comes the opportunity for reputed manufacturer-exporters to penetrate into the Indian Market by storing materials for distribution and then promote sales. With customers having advantage of ready accessibility to stocks and possibility to get goods immediately, would give the manufacturer-exporter a competitive edge over his competitors. With bulking of requirements – say for a period of six months potential sales – the manufacturer exporter can save considerable amount on freight and thus make available his products to Indian market at more competitive prices.

We on our part can undertake storage, (duty-free) and sell to prospective import customers at suggested prices determined by you ex-warehouse. There is one condition to this, and that is, we have to show a positive Net Foreign Exchange addition. This means we cannot import at 100 and again sell at 100, but must be at a higher price. There is no minimum value addition stipulated for Trading Units. Where a commission on sales is received, that constitutes a value addition.
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Goods can be exported to neighbouring countries as well or for that matter to any part of the world. For those using this as a base for export to neighbouring countries, to effect savings on freight a and transit time, this facility would also prove useful.

Labour costs being much cheaper in India compared to other parts of the world, processing costs of an order could be achieved at much lower levels. For all these advantages, and to cover our costs of management, administration, rental, insurance, reporting, and remittance of sale proceeds periodically, we expect the manufacturer-exporter to compensate us at 10% of the sale value, which is treated as our service charges. This 10% too is negotiable where volume turnovers are envisioned.

We expect several manufacturers to join in such a set up, and in such a situation, another advantage is the import customer can source all his requirements from our Warehouse, thus reducing his overheads in clearing through customs several consignments. This mmay not be possible right from the start of our operations, since we cannot mobilize all the manufacturer-exporters at one and the same time, for is a possibility for future.

We have already established our trading unit in SEZ, Visakhapatnam, and have obtained necessary permissions and approvals. Against each import, we have to furnish a Bank guarantee or a Bank Deposit - only a certain percentage of the duty amount involved. In addition we have to give a General Bond valid for a period of 5 years with surety and security. The Bank guarantee/Cash deposit will be operated similar to pass book system. For example if we import material worth 10 lakhs and if the duty amount involved is say 50%, we need to deposit 5 to 10% of the duty amount by way of Bank Guarantee/Cash Deposit, or make a lump sum deposit to take care of several consignments. .For each import the pass book is debited with the required percentage of duty and similarly for each export, it is credited.

Goods in SEZ trading unit can remain warehoused for a period of 5 years. Any unsold material can be re-exported.

The foregoing, will be, in a nutshell, the modus operandi of our SEZ operations. Of course some of it will be on our own account too.

Since we are experienced in spare parts trade for over 36 years, we have decided to make available the above facility to manufacturer-exporters engaged in related fields, especially spare parts for Caterpillar, Komatsu, etc. Warehoused stocks will be fully insured at our expense.

Only FCL (full container load) shipments are accepted by Steamer Agents for discharge at Visakhapatnam Port. Air freight can be booked directly to Visakhapatnam with routing (via Mumbai) only.

Since you have been trading in India on customer to customer basis, we offer you our services on the lines suggested above. One need not doubt about our integrity, and for the frank and straight-forward methods of dealings. You can judge this from our track record with you also, since we are addressing this only to our past suppliers/shippers.