WHAT IS AN SEZ?

Government of India announced a Policy of setting up Special Economic Zones. Special Economic Zone is a specifically delineated duty free enclave , deemed to be foreign territory for purposes of trade operations and duties and tariffs. Goods going in to SEZ from Domestic Tariff Area (DTA) are treated as physical exports and those coming out of SEZ to DTA are treated as if imported from other countries, for all trading operations. Taking goods into and out of SEZ are mostly done with minimal Customs supervision and paper work, and on self-certification.

BENEFITS OF SEZ:

The benefits are numerous. . Material can be kept in Bond for a period of 3 to 5 years without need for periodical renewals and approvals. There will be minimal application of laws such as Customs, Income-Tax and Labour Laws. For manufacturing Units, 90% of income is tax-exempt. This is not applicable to trading units who enjoy tax benefits available to other export profits. Presently, 40% of export profits are exempt from Income Tax and this percentage will be brought down each year by 20% , therefore, within the next 2 years there will be no preferential treatment for export profits, except for manufacturing units in SEZ.

Manufacturing SEZ units have another added advantage. They are exempt from “SAD” (Special Additional Duty of Customs) on their exports to DTA. This, at current tariff level, gives 5.8% duty reduction compared to import duties leviable on imports from other countries.

SEZ units (both manufacturing and trading units) are exempted from "Service Tax".

Land is available on yearly concessional lease rentals. Similarly, ready-to-occupy built up space is available on concessional lease rentals. SEZ units enjoy concessional electricity tariff, compared to regular domestic units.

SEZ manufacturing units can get part of the manufacturing activities done on "job work" from DTA. Similarly, they can also undertake export production for DTA Units, subject to following and adhering to prescribed procedures.

WHAT ROLE CAN SPARES CORPORATION PLAY IN BUSINESS PROMOTION FROM ITS SEZ TRADING UNIT?

• To Customers in DTA: We can source, import, store in our warehouse and re-export at competitive prices, requirements of our present and prospective customers in our related fields.
• To prospective associates located in other countries: Our facilities can be used as a marketing base for Indian operations. We welcome proposals in our related fields from those wishing to enter in to the Indian Market . Our services not only include warehousing and distributing but can also extend to marketing and active promotional activities, thus help to reduce overheads and selling expenses.
• Assist prospective foreign firms intending to set-up manufacturing facilities in India using VSEZ as a base for export to other neighbouring countries as well as to DTA. We can "liaise" until the project comes to fruition.
• Services described in (B) and (C) above are presently confined to VSEZ (Visakhapatnam Special Economic Zone) only.

MORE BENEFITS:

INDIA is a vast country with plenty of skilled and talented labour force in all spheres of business activities. It has all the infra-structure such as communications, transport (air, sea road and rail). Labour costs are lowest in the world. Foreign manufacturers can take advantage of these potential, to reduce manufacturing and distribution costs so as to become more competitive in the global market.