Page 253 - DMGT401Business Environment

Business Environment

Notes 4. External commercial borrowing by SEZ units up to US $ 500 million in a year without any
maturity restriction through recognized banking channels.
5. Exemption from Central Sales Tax.

6. Exemption from Service Tax.
7. Single window clearance for Central and State level approvals.
8. Exemption from State sales tax and other levies as extended by the respective State
Governments.
The major incentives and facilities available to SEZ developers include:
1. Exemption from customs/excise duties for development of SEZs for authorized operations
approved by the BOA.
2. Income Tax exemption on income derived from the business of development of the SEZ in
a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.

3. Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
4. Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
5. Exemption from Central Sales Tax (CST).
6. Exemption from Service Tax (Sections 7, 26 and Second Schedule of the SEZ Act).

11.3 Summary

When the Eighth Plan commenced, the three-year Import-Export policy (1990-93), valid
until March 1993 was in operation. With a view to reinforcing the trade policy reforms and
complementing the fiscal, industrial and investment measures, the new five-year Export-
Import Policy (1992-97) was introduced with effect from April 1992.

The new 5-year Export and Import for the period 1997-2002 aims at giving a major thrust
to acceleration of India's exports through restructuring and revamping of various export
promotion schemes and wide ranging measures for simplification and streaming of
procedures with a view to making them more transparent and easy to administer.
The standard definition applied by international organisations states that an Export
Processing Zone (EPZ) is an industrial area that constitutes an enclave with regard to
customs' tariffs and the commercial code in force in the host country.

Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be
deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
The SEZ Rules provide for different minimum land requirement for different class of
SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come
up and the non-processing area where the supporting infrastructure is to be created.

11.4 Keywords

Canalisation: Erstwhile import of certain commodities was allowed only through specific
government agency. This is called canalisation, where the import of these goods is canalised
through government agency.
Import substitution: It means decreasing the dependability on imports i.e. is to produce goods
that we import. It was a policy followed by India after independence.

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