India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. The main objectives of the SEZ Act are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities;
(e) development of infrastructure facilities;
It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.
Incentives and facilities offered to the SEZs The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:- * Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units * 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years. * Exemption from minimum alternate tax under section 115JB of the Income Tax Act. * External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels. * Exemption from Central Sales Tax. * Exemption from Service Tax. * Single window clearance for Central and State level approvals. * Exemption from State sales tax and other levies as extended by the respective State...