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With a view to augmenting infrastructure facilities for export production, the Government of India is permitting to set up SEZ in the country by public, private, joint sector or by the State Governments. The minimum size of the Special Economic Zone shall not be less than 1000 hectares. This measure is expected to promote self-contained areas supported by world-class infrastructure oriented towards export production.

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• Procure goods from the Domestic Tariff Areas(DTA) without payment of duty or import specified goods at concessional rate of duty, as may be notified by the Government for the development of SEZ.
• Entitlement as provided for in the Income-Tax Act, 1961.
• Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis.
• Full authority to provide services like water, electricity, security, restaurants, recreation centres etc. on commercial lines.
• Facility to develop township within the SEZ with residential areas, markets, playgrounds, clubs, recreation centres etc.

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For setting up a manufacturing, trading or service unit in the SEZ, 3 copies of project proposal in the format prescribed at Appendix 16/16A of the Handbook of Procedures, Vol.1 of Exim Policy be submitted to the Development Commissioner of the SEZ, who after scrutiny will consider grant of the permission.

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All approvals will be given by the Development Commissioner. Clearance from the Department of Policy and Promotion/Board of Approvals, wherever required will be obtained by the Development Commissioner, before the Letter of Permission/Letter of Intent is issued.

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• SEZ units may import or procure from the domestic sources, duty free, all their requirements of capital goods, raw materials, consumables, spares, packing materials, office equipment, DG sets etc. for implementation of their project in the Zone without any licence or specific approval.

• Exemption from Customs/Excise duty for Import/Domestic procurement of goods for setting up of units.
• Supplies from the domestic sources to SEZ units are treated as deemed exports and the domestic suppliers are eligible for deemed export benefits.
• Central Sales Tax paid on domestic purchases are reimbursed to the units by the Development Commissioner.
• SEZ units are eligible for a Corporate tax holiday up to 2010 as per the provisions of Section 10A of the Income Tax Act, 1961.
• SEZ units may sell their products in the domestic market in accordance with the prevalent import policy on payment of applicable duties.
• SEZ units could dispose of rejects and waste/scrap generated during the manufacturing process in the domestic market on payment of applicable duties.
• Part of production or production process may be permitted to be undertaken in the domestic area by SEZ units, including jewellery units.
• SEZ units may also sub-contract part of their production process abroad.
• 100% foreign direct investment is freely allowed in manufacturing sector in SEZ units under automatic route, except arms and ammunition, explosives, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and manufactured tobacco substitutes.
• Goods imported/procured locally duty free could be utilized over a period of 5 years.
• Customs services available in the Zone to SEZ units at no extra charge.
• All support facilities like banking, post office, clearing agents provided in the Service Centres located in the Zone.
• Developed plots and ready built-up space available for establishing units in SEZs.

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The labour laws of the land will apply to all units inside the Zone. However, the respective State Governments may declare units within the SEZ as public utilities and may delegate the powers of the Labour Commissioner to the Development Commissioner of the SEZ.

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• No minimum export performance (EP) or Net Foreign Exchange earning as Percentage of exports (NFEP), for EPZ units.
• Monitoring of performance of SEZ units by a Committee headed by Development Commissioner and consisting of Customs authorities.
• Duty to be recovered in case of failure to achieve positive EFE under the Customs Act in proportion to shortfall unlike in EPZ.
• Unlimited DTA sales on payment of full duty in SEZ. For EPZ, maximum 50% of DTA sale after payment of duty is permitted.
• No linkage with positive NFE for domestic sale for SEZ units. In EPZ, sales are subjected to achievement of NFEP as per criteria laid down in Appendix-I of Exim Policy.
• Exemption from Customs/Excise duty for import/domestic procurement of goods for setting up of units in SEZ. This facility is not available to EPZ units.
• Duty free material to be utilized over five years for EPZ units, unlike in EPZ, where it is two year.
• Subcontracting facility available to SEZ jewellery units which is not available to EPZ units.
• All imports on self-certification permitted to SEZ units unlike in EPZ where attestation of Development Commissioner is required for import of Capital Goods.
• No routine examination by Customs for export and import cargo in SEZ.
• 100% FDI investment through automatic route available to manufacturing SEZ units. In EPZ, FIPB approval required.
• Retention of 100% of export earning in EEFC account permitted to SEZ units. For EPZ units, it is 70%.
• Export proceeds to be realized and repatriated within 12 months for SEZ units, while for EPZ units it is 6 months.
• Procedural simplification for operations like record keeping, inter-unit transfer, subcontracting, disposal of obsolete material and waste and scrap.

SEZ is a Scheme of recent evolution and more features would be added later, as required.

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SEZ unit shall be a positive Net Foreign Exchange Earner. Net Foreign Exchange Earning (NFE) shall be calculated cumulatively for a period of five years from the commencement of production according to the following formula :

Positive NFE = A-B> 0

Where :

A : is the FOB Value of exports by the SEZ units; and

B : is the sum total of the CIF value of all imported inputs and the CIF value of all imported capital goods, and the value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings during the first five year period or any other charges. “Input” means raw materials, intermediates, components, consumables, parts and packaging materials.

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Government of India, Ministry of Commerce & Industry, Deptt. Of Industrial Policy & Promotion vide an office memorandum No.14/21/2001-DBA-I dated the 10 th December, 2003, decided to offer assistance for operating and maintaining the infrastructure facilities created in the industrial location. Recently Government has taken an initiative to make industry clusters/industrial locations globally competitive.

The illustrative list of eligible activities under the scheme include: I) Physical infrastructure (water, transport, road, communication), ii) Common Facilities for fuel/gas supply system, effluent treatment, solid waste disposal, product design, captive power generation, iii) Information and Communication Technology Infrastructure (ICT), iv) R&D infrastructure v) Quality Certification and Benchmarking Centre vi) Common Facilities Centre vii),Information dispersal/ International Marketing Infrastructure viii) ICT-induction & process re-engineering & management consultancy service centre and any other physical infrastructure identified by the cluster association and approved by the Apex Committee.

Financial Assistance

Central assistance will be offered by way of one time grant-in-aid (not equity) to the Special Purpose Vehicle (SPV) formed by the cluster association for development of the infrastructure. The assistance will be restricted to 75% of the project cost subject to a ceiling of Rs. 50 crore. The remaining 25% will be financed by other stakeholders of the respective cluster/location with a minimum industry contribution of 15% of total project cost. Administrative expenses will be restricted to 3% of the central assistance in the project.
 

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Yes. There are two schemes under which assistance is offered by Government of India. Viz. (i) Marketing Development Assistance (MDA) Scheme and (ii) Market Access Initiative (MAI) Scheme. The details of the activities covered and the assistance offered are given in the EXIM Policy. Information can also had from iNDEXTb by sending e-mail to jsshah@indextb.com.

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As a part of the medium term strategy for export, Directorate General of Foreign Trade, GoI identified certain focused countries for exporting Indian products. For example, USA – the major importer of Indian goods imports petroleum items, electronic items, engineering and automobile goods besides textiles, gems & jewellery and leather from India. Of them, Gujarat has a good strength in the manufacture of textiles, gems & jewellery, engineering goods and petroleum products. Likewise, European Union is another major importer of Indian products. The export profile covers computer components, passenger cars, office machine parts, integrated circuits, gas turbines and diamonds, telephone instruments, etc. Therefore, exporters from Gujarat can penetrate the American and European markets accordingly.

In the recent past, iNDEXTb also carried out a survey for the products currently exported from Gujarat and further potential for exports. The items identified were gems & jewellery, textile and garments, petroleum products, chemicals including pharma and plastics besides food and agro products, engineering products and minerals.

While understanding the export scenario, the exporters should study medium term strategy for exports announced by Government . of India. From time to time, Government . of India provides information on focus market – focus products. Recently, Government . of India have announced extreme focus product groups for Latin American Countries (LAC). Under Focus LAC programme following countries are covered:

Argentina, Brazil, Chile, Columbia, Mexico, Peru, Trinidad & Tobago, Venezuela. They have identified specific focus products of exports for each of the countries and the information is available on their website www.dgft.delhi.nic.in.

As a part of strategy, Commonwealth of Independent States (CIS) has been identified as most potential for exports of Indian products. Presently, out of 15 countries, 12 countries namely Russian Federation, Ukraine, Moldova, Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan and Tajikistan are the members of Commonwealth of Independent States and rest of the three countries namely, Latvia, Lithuania and Estonia are known as Baltic States. Based on potential for trade, Indian government identifies the areas and offers special facilities for exporting the products from India. India’s major items for exports to these regions are plantation crops, cotton yarn, fabrics, made ups, RMG cotton including accessories, RMG man made fibres, RMG wool, drugs and pharmaceuticals and fine chemicals, coffee, tea, tobacco unmanufactured, rice (other than Basmati), machinery & instruments, processed minerals, electronic goods, footwear of leather and other leather goods, agriculture products, plastic & linoleum products, cosmetics/toiletries, ayurvedic/herbal products, packaged and miscellaneous processed items. They have identified technology/service sectors i.e. telecom and information technology, food processing, oil and gas sector, professional services, construction and related engineering services, educational services, environmental services, health related and social services, tourism and travel-related services, recreational, cultural and sporting services and other business generating services.

Considering the potential that CIS regions offers, Government . of India has launched focus CIS programme. Further information in this regard can be available from

Joint Secretary (CIS & B)
Department of Commerce
Room No.41, Udyog Bhavan
New Delhi 110 011
Telefax: 91-11-223012262
The Executive Director

Indian Trade Promotion Organisation (ITPO)
Pragati Maidan
New Delhi 110 001
Tel: 011-2233183741 Fax: 91-11-223371292

With a view to enhancing India’s trade with African region, recently, Govt. of India has launched a programme “Focus Africa”. Under the programme, they have covered 24 countries from North Africa, East Africa, South Africa and West Africa. From North Africa, Algeria, Egypt, Libya, Morocco, Sudan and Tunisia, from East Africa, Ethiopia, Kenya, Madagascar, Mauritius, Seychelles, Tanzania and Uganda, From South Africa, Angola, Botswana, Mozambique, Namibia, South Africa, Zambia and Zimbabwe are covered and from West Africa, Ghana, Ivory Coast, Nigeria and Senegal are identified as potential countries.

Thus Government of India has launched a focus-marketing programme for deep penetration of Indian products in focused regions. Further information can be had from their website www.commerce.nic.in.

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The Bureau of Indian Standards operates a product certification scheme. The certification allows the licensees to use the popular ISI Mark

The procedure for grant of BIS Certification Marks Licence begins with filing an application in the prescribed application form (FORM I) by the manufacturer desirous for obtaining the licence. A licence is granted for a variety of products covered under a given Indian Standard. The forms along with application fee of Rs 1000/- is required to be submitted to the Branch Office under whose jurisdiction the manufacturing unit is located.

For application form and further details, please refer to the BIS website www.bis.org.in

Anti-Dumping and other Legal Issues

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Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti-dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti-dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti-dumping measure as an instrument of fair competition is permitted by the WTO. In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry. It provides a possible relief to the domestic industry against the injury caused by dumping.

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Broadly, injury may be analysed in terms of the volume effect and price effect of the dumped imports. The parameters by which injury to the domestic industry is to be assessed in the anti-dumping proceedings are such economic indicators having a bearing upon the state of industry as the magnitude of dumping and the decline in sales, selling price, profits, market share, production, utilisation of capacity etc.

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Anti-dumping and anti-subsidies & countervailing measures in India are administered by the Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the Dept. of Commerce in the Ministry of Commerce and Industry and the same is headed by the “Designated Authority”. The Designated Authority’s function, however, is only to conduct the anti dumping/anti subsidy & countervailing duty investigation and make recommendation to the Government for imposition of anti dumping or anti subsidy measures. Such duty is finally imposed/levied by a Notification of the Ministry of Finance. Thus, while the Department of Commerce recommends the Anti-dumping duty, it is the Ministry of Finance, which levies such duty.

Safeguard measures, on the other hand, are administered by another Authority namely, Director General (Safeguard), which functions under the Dept. of Revenue, Ministry of Finance. The Standing Board of Safeguards (chaired by the Commerce Secretary) considers the recommendations of the DG (Safeguards) and then recommends the impositions of the Safeguard Duty as it deems fit, to the Ministry of Finance which levies the duty.