fdi in india and its growth linkages - Department Of Industrial Policy ...

FDI IN INDIA AND ITS GROWTH LINKAGES
� 100 per cent Foreign Direct Investment in manufacturing sector allowed through automatic route, barring a few sectors.
� Facility to realise and repatriate exports proceeds within 12 months.
� Commodity hedging by SEZ units permitted.
� No cap on foreign investment for SSI-reserved items.
� Exemption from industrial licensing requirement for items reserved for SSI sector.
� Profits allowed to be repatriated freely without any dividend-balancing requirement.
� Domestic sales on full duty, subject to import policy in force.
� No fixed wastage norms.
� Full freedom for sub-contracting, including sub-contracting abroad.
� Sub-contracting facility available to jewellery units.
� Duty-free goods to be utilised in five years.
� Job work on behalf of domestic exporters for direct export allowed.
� No routine examination by Customs of exports and import cargo.
� No separate documentation required for customs and EXIM Policy.
� Support services like banking, post office clearing agents, etc. provided in zone complex.
� Developed plots and ready to use built-up space.
� Exemption from customs/excise duty on goods for setting up units in the zone.
� The SEZ policies announced by some of the State Governments provide for exemption to SEZ’s units and developer
from payment of State sales tax and other local levies, electricity duty, and single-window approval for state-level
clearances and simplification of return and inspection system.
� Units in the Zone have to export their entire production and are granted certain entitlements such as duty deferment
on import & domestic procurement, simplified operational regime, and access to the DTA market. In order to
provide self-contained areas supported by world-class infrastructure oriented towards export production, the
minimum size of the SEZ shall not be less than 1000 hectares. This, however, does not apply to existing EPZs that
were converted into SEZs as such, or for notifying additional area as a part of such SEZ, or to product-specific SEZs,
or port/airport-based SEZs, on a case-by-case basis (www.sezindia.nic.in).
Facilities to the Developer
For development, operation and maintenance of infrastructure facilities in SEZs, the developer is eligible for certain
entitlements. These include income tax exemption for a block of 10 years under Section 80-IA of the Income Tax Act,
import/procurement of goods from the DTA without payment of customs/excise duty or import of specified goods at
concessional rates of duty as may be notified by the government for the development of SEZ. Further, supplies of goods
from DTAs for development, operation and maintenance of SEZs are exempt from payment of central sales tax (CST)
under the CST Act. Also, the developer is exempt from service tax. Even the DTA supplier has some entitlements such
as drawback/ DEPB (Duty Entitled Passbook Scheme), CST exemption, exemption from state levies, etc.
4.5 Performance of SEZs: Exports
Exports from Special Economic Zones have been showing a steady increase. Compared to exports of Rs. 34,615 crore
made by SEZs in 2006-07, exports to the tune of Rs. 66,638 crore have been effected in the year 2007-08, registering a
growth of 92 per cent. Moreover, the growth rate of exports from SEZs has been continuously increasing during the past
five years (Table 4.1).
The SEEPZ EPZ in Mumbai, Noida SEZ and Surat SEZ account for about 21, 32 and 23 per cent, respectively, of
exports originating from all the eight EPZs, followed by the Visakhapatnam, Kandla and Madras SEZs, which are far
behind and accounted for about 2-4 per cent of total SEZ exports in 2007-08. Although the share of the Cochin SEZ
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