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Indian Special Economic Zone (SEZ) - Salient Features and Facilities

Saturday, September 9, 2006

» A designated duty free enclave and to be treated as foreign territory for trade operations and duties and tariffs.

» No license required for import.

» Exemption from customs duty on import of capital goods, raw materials, consumables, spares etc.

» Exemption from Central Excise duty on procurement of capital goods, raw materials, consumable spares etc. from the domestic market.

» Supplies from DTA to SEZ units treated as deemed exports.

» Reimbursement of Central Sales Tax paid on domestic purchases.

»100% income tax exemption for a block of five years,50% tax exemptions for two years and upto 50% of the Profits ploughed back for next 3 years under section 10-A of Income tax Act.

»Supplies from DTA to SEZ to be treated as exports under 80HHC of the IT Act.

»carry forward of losses

»100% Income-tax exemption for 3 years & 50% for 2 years under section 80-LA of the Income-tax Act for off-shore banking units.

» Reimbursement of duty paid on furnace oil, procured from domestic oil companies to SEZ units as per the rate of Drawback notified by the Directorate General of Foreign Trade.

» SEZ units may be for manufacturing, trading or service activity.

» SEZ unit to be positive net foreign exchange earner within three years.

» Performance of the units to be monitored by a Committee headed by Development Commissioner and consisting of Customs.

» 100% Foreign Direct Investment in manufacturing, sector allowed through automatic route barring a few sectors.

» Facility to retain 100% foreign exchange receipts in EEFC Account.

» Facility to realize and repatriate export proceeds within 12 months.

» Re-export imported goods found defective, goods imported from foreign suppliers on loan basis etc. without G.R. Waiver under intimation to the Development Commissioner.

» "Write-off" of unrealised export bills upto 5%.

» Commodity hedging by SEZ units permitted

» Capitilization of import payables

» 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 subcontracting including subcontracting abroad.

» Subcontracting facility available to jewellery units

» Duty free goods to be utilized in 5 years.

» Job work on behalf of domestic exporters for direct export allowed.

» No routine examination by Customs of export and import cargo.

» No separate documentation required for customs and Exim Policy.

» In house customs Clearance.

» Support services like banking, post office clearing agents etc. provided in Zone Complex.

» Developed plots and ready to use built up space

» Exemption from Custom/Excise Duty on goods for setting up units in the zone.


For details please see chapter 7 of Export and Import Policy and chapter 7 Handbook of Procedure.

Source: Department of Commerce


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