1. SEZ Manual

2. Contents 1 Key Stakeholders Overview SEZ – An overview Note: Hyperlinks have been marked with blue text Key Regulators 2 Benefits of SEZ Condition for availing exemption Nature of Benefits Issues Legislative Framework Transition Provisions

3. Contents Basic Concepts 3 Setting up of SEZ Approval Process Approval Criteria Note: Hyperlinks have been marked with blue text 4 Operation & Maintenance of SEZ Role of Developer Operation & Maintenance Timelines Issues

4. Contents Note: Hyperlinks have been marked with blue text 5 Import/ Procurement of Goods Procedure for Importation Removal of Goods Monitoring Requirement Procedure for procurement from DTA Removal of Goods & Performance Monitoring 6 Basic Concepts General Conditions for importation/ procurement 7 Financial Modeling Investment (with case of IT-ITeS SEZ) Revenue (with a case study of IT-ITeS SEZ)

5. Contents Note: Hyperlinks have been marked with blue text Annexure Annexure 1: SEZ – An overview Annexure 2: Benefits of SEZ Annexure 3: Setting up of SEZ Annexure 4: Operation & Maintenance of SEZ Annexure 5: Import/ Procurement of Goods Annexure 6: Removal of Goods & Performance Monitoring 8 Execution & Project Management Implementation Contracts Approvals Operation & Maintenance

6. Section 1 SEZ – An Overview

7. Overview

9. Legislative Framework

12. Key Stakeholders

15. Key Regulators

16. Considers proposals for setting up SEZ and Units in SEZ Considers proposals for setting up of Units in SEZ, monitoring performance, and supervises import / procurement by Developer/ Units in SEZ Development Commissioner Board of Approval For administrative control of the SEZ Approval Committee Key Regulators SEZ Authority State Government Receives and forwards the proposal with recommendations to the Board of Approval Overall authority for governing, notifying the SEZ and granting the letter of approval Central Government Undertakes measures for the development, operation and management of the SEZ

17. Transition Provisions

20. Section 2 Benefits of SEZ

21. Nature of Benefits

24. Benefits to Developer

28. Benefits to Supplier

31. Conditions for Availing Exemptions

33. Issues

35. Section 3 Setting up of SEZ

36. Basic Concepts

37. Key Concepts Infrastructural Facilities Infrastructure facilities means industrial, commercial or social infrastructure or other facilities necessary for the development of a Special Economic Zone or such other facilities which may be prescribed Infrastructure Infrastructure means facilities needed for development, operation and maintenance of a Special Economic Zone and includes industrial, business and social amenities like development of land, roads, buildings, sewerage and effluent treatment facilities, solid waste management facilities, port, including jetties, single point moorings, storage tanks and interconnecting pipelines for liquids and gases, Inland Container Depot or Container Freight Station, warehouses, airports, railways, transport system, generation and distribution of power, gas and other forms of energy, telecommunication, data transmission network, information technology network, hospitals, hotels, educational institutions, leisure, recreational and entertainment facilities, residential and business complex, water supply, including desalination plant, sanitation facility

38. Role of Developer

40. Approval Criteria

46. Approval Process

51. Issues

53. Section 4 Operation & Maintenance of SEZ

55. Timelines

57. Timelines (Contd…) 7 working days (of submission of Bond- Cum-Legal Undertaking) Deemed acceptance of the Bond- Cum-Legal Undertaking if no communication from the office of the Development Commissioner 10 No time period prescribed Demarcation of processing and non processing area by Development Commissioner 9 No time period prescribed BOA to approve authorised operations 6 No time period prescribed Notification of SEZ by Central Government 7 No time period prescribed Grant of approval by Approval Committee for procurement of goods and services 8 30 days of the end of the period (i.e. by 30 th April & 30 th October) Developer to submit half yearly certificate for periods ending 31 st March & 30 th September of every financial year from a Chartered Engineer to Development Commissioner and Specified Officer 11 7 years (from the end of the relevant financial year) Maintenance of records 12 Prescribed Time Description S No

58. Section 5 Import / Procurement of Goods

60. General Conditions for Importation/ Procurement

65. Procedure for Importation

66. Import of goods by Developer Developer Authorized officer AC/DC at Port BoE in quintuplicate Assessed BoE Assessed BoE Goods Verification Fifth copy of BoE Goods (out of charge) Endorsement 1 6 5 2 3 7 8 4 Procedure for import of goods without payment of customs duty

68. Procedure for Domestic Procurement

70. Procurement of goods from DTA (contd..) Procurement of goods from DTA without payment of duty Developer Authorized Officer Officer at DTA Bill of Export Assessed Bill of Export Assessed Bill of Export Goods, Bill of Export & Form ARE - 1 Verification Endorsement DTA Unit Bill of Export & Form ARE – 1 to Central Excise Superintendent Goods 1 2 3 4 5 7 8 6

72. Procurement of goods from DTA (contd..) Procurement of goods from DTA without claiming drawback / DEPB by DTA unit Developer Zone officer Central Excise Superintendent Application for pre-authenticated domestic procurement certificate Certificate Certificate Goods & Form ARE - 1 Verification Endorsement DTA Unit Form ARE – 1 Goods 2 4 3 1 5 6 7 8

74. Issues

76. Section 6 Removal of Goods & Monitoring Requirements

77. Removal of Goods

80. Monitoring Requirement

82. Section 7 Financial Modeling

85. Section 8 Execution & Project Management

89. Initiative Community attitude Cleaner & greener facilities Cleaner & greener facilities Labor safety & medical care Cleaner & greener facilities Zero tolerance for pollution To maintain natural resources Creating opportunity for local people

90. Thank You

91. Annexure

92. Annexure 1 SEZ- An Overview

98. Transition provision - Applicant 44 hectares Leather Products West Bengal 60 hectares Footwear Tamil Nadu 32 hectares Pharmaceuticals Punjab 8 hectares Information technology Madhya Pradesh 21 hectares Pharmaceuticals and biotechnology Maharashtra 12 hectares Food processing 9 hectares Information Technology Kerala 4 hectares Information technology Karnataka 36 hectares Automobiles and components Jharkhand 3 hectares Information Technology Haryana 48 hectares Pharmaceuticals 38 hectares Apparel Gujarat 6 hectares Information Technology Delhi 6 hectares Information Technology Andhra Pradesh Minimum Area Sector Name of the State

99. Annexure 2 Benefits of SEZ

101. Benefit to Developer

106. Benefit to Supplier

110. Conditions for Availing Exemptions

113. Annexure 3 Setting up of SEZ

114. Annexure “ person ” includes an individual, whether resident in India or outside India, a Hindu undivided family, co-operative society, a company, whether incorporated in India or outside India, a firm, proprietary concern, or an association of persons or body of individuals, whether incorporated or not, local authority and any agency, office or branch owned or controlled by such individual, Hindu undivided family, co-operative, association, body, authority or company Section 2(v)

115. Annexure Special Economic Zone for multi-product “means a Special Economic Zone where Units may be set up for manufacture of two or more goods in a sector or goods falling in two or more sectors or for trading and warehousing or rendering of two or more services in a sector or rendering of services falling in two or more sectors” Rule 2(1)(zb)

116. Annexure Special Economic Zone for specific sector “means a Special Economic Zone meant exclusively for one or more products in a sector or one or more services in a sector” Rule 2(1)(zc) Sector “means one or more products or one or more services falling under a category such as engineering, textiles and garments, pharmaceuticals and chemicals, handicrafts, gem and jewellery, electronics hardware and software, including information technology enabled services and bio-technology” Rule 2(1)(x)

117. Annexure Free Trade and Warehousing Zone “means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on” Section 2(1)(n)

127. Step 8b Processing/ Non processing area

136. Annexure 4 Operation & Maintenance of SEZ

137. Annexure 5 Import/ Procurement of Goods

140. Annexure 6 Removal of Goods & Performance Monitoring

141. Annexure Section 6 The areas falling within the Special Economic Zones may be demarcated by the Central Government or any authority specified by it as- (a) the processing area for setting up Units for activities, being the manufacture of goods, or rendering services; or (b) the area exclusively for trading or warehousing purposes; or (c) the non-processing areas for activities other than those specified under clause (a) or clause (b).

142. Annexure Rule 11 Processing and non-processing area – (1) The Development Commissioner of the concerned Special Economic Zone shall be the authority for demarcating the areas falling within the Special Economic Zone under the provisions of section 6. (2) The processing area and Free Trade and Warehousing Zone shall be fully secured by boundary wall or wire mesh fencing having a height of at least two meters and forty centimeters above plinth level with top sixty centimeters being barbed wire fencing with mild steel angle with specified entry and exit points. (3) The Development Commissioner shall ensure compliance of the requirements of sub-rule (2). (4) The authorized persons shall only be allowed to enter the processing area of a Special Economic Zone. (5) The land or built up space in the processing area or Free Trade and Warehousing Zone shall be given on lease only to the entrepreneurs holding a valid Letter of Approval issued under rule 19 and the lease period shall be co-terminus with the validity of the Letter of Approval:

143. Annexure Rule 11(Cont…) Provided that the Developer may, with the prior approval of the Approval Committee, grant on lease land or built up space, for creating facilities such as canteen, public telephone booths, first aid centres, creche and such other facilities as may be required for the exclusive use of the Unit. (6) The developer holding land on lease basis shall assign lease hold right to the entrepreneur holding valid Letter of Approval. (7) Any transfer by way of sub-lease or any other mode by the Developer shall be valid only if the same is made to a person holding a valid letter of approval issued by the Development Commissioner. (8) The Developer may allot land in the processing area on lease basis to a person desiring to create infrastructure facilities for use by the prospective Units. (9) The Developer shall not sell the land in a Special Economic Zone. (10) The Developer may allot the land in the non-processing area for business and social purposes such as educational institutions, hospitals, hotels, recreation and entertainment facilities, residential and business complexes:

144. Annexure Rule 11(Cont…) Provided that infrastructure for business or social purposes in the Special Economic Zone, as may be approved by the Board, shall be eligible for exemptions, concessions and drawback. (11) The Special Economic Zone shall be deemed to be a port, airport, inland container depot, land customs station under section 7 of the Customs Act in accordance with the provisions of section 53 from the date notified in this behalf: Provided that Specified Officer may designate any area or area(s) in the Special Economic Zone as an area for loading and unloading of import or export cargo: Provided further that in case the said port, airport, inland container depot, land customs station area is to be used for loading and unloading of import or export cargo meant for Domestic Tariff Area importers and exporters also, storage for such cargo shall be in a separate enclosure and deliveries for such cargo shall be allowed by the Authorized Officer of the Special Economic Zone based on Bill of Entry, assessed by the Assistant or Deputy Commissioner of Customs having jurisdiction over the said Customs Station.

145. Annexure Rule 40 Movement of goods to and from non-processing area The movement of goods to and from non-processing area to a processing area and from one processing area of Special Economic Zone to a different processing area of the same Special Economic Zone shall be under serially numbered challans pre-authenticated by the owner or Managing Director or working partner or the company secretary or by any person duly authorized in this behalf by the company or firm, as the case may be, and the challans shall contain complete description of goods.

146. Annexure Rule 70 Identity Cards (1) The entry of persons to the processing area of the Special Economic Zone shall be regulated by the Development Commissioner through issue of identity cards. (2) The identity card shall be valid upto a period of five years and shall be issued, in the format given in Form K, to the entrepreneurs and regular employees of the Units: Provided that when any employee who has been issued an identity card ceases to be in employment of the Unit or Developer, the said identity card shall be surrendered forthwith and shall be deemed to be invalid from such date; (3) Temporary identity card may be issued by the Development Commissioner to the casual visitors and contractors and a proper record of such entries shall be maintained at the Special Economic Zone Gate