1.  What is a Special Economic Zone ?  

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.

2.  Where is Visakhapatnam SEZ located ?

Visakhapatnam SEZ is located at Visakhapatnam on the East Coast of India on the shores of Bay of Bengal in the state of Andhra Pradesh.    Can be reached by Air, Train and Road. Connected to all major cities of India .  Major Port handling record export/import cargo to/from  all corners of the world.

3. How to set up a unit in  VSEZ ?  

For setting up a manufacturing, trading or service unit in VSEZ, 5 copies of  application in prescribed format(Form-F) to be submitted along with detailed techno economical feasibility  report(Project report) to the Development Commissioner, VSEZ along with following enclosures

• (i)              Fee of  Rs.5000/-  drawn in f/o PAO,  Visakhapatnam Special Economic Zone payable at Visakhapatnam  
• (ii)            Residential proof in respect of proprietor/partners/Directors                             
• (iii)           Income Tax returns for the last 3 years in r/o proprietor/partners/Directors
• (iv)           PAN 

• (v)                Certificate of Incorporation & articles of association in case of pvt ltd/ltd companies and  partnership deed/firm registration in case of  partnership firms

4.  What is the approval mechanism for the units  ?

All the approvals will be given by the Unit approval committee headed by the Development Commissioner.   Wherever necessary clearances will be obtained by the Development Commissioner from Department of Policy & Industrial Promotion/Board of Approvals.  

5.  What is the obligation of the unit under the Scheme ?  

•  SEZ units have to achieve positive Net Foreign Exchange earning as per the formula    given in the SEZ Rules, 2006.  

•  i..e. A-B>0 where  A is  FOB value of Exports and  B is  CIF value of imports including 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

6.  Any undertakings or bonds to be executed by a SEZ unit  ?  

•          A simple Land-Cum-Legal Undertaking on Rs.100/- non judicial stamp paper  needs to be executed  as per the format  given in Form-H - 3 copies need to be submitted
•           Periodic reports needs to be submitted i.e. Quarterly Progress Report and Annual Progress Report . These can be submitted online at www.vsezonline.com  or download forms from www.vsez.gov.in

7.      What are the incentives/facilities available for SEZ units  ?  

•    SEZ units may import or procure from the domestic sources without payment of duty, all their requirements of Capital goods, raw materials, consumables, spares, packing material, office equipment, DG sets etc for implementation  and maintenance of their project  in the zone without any license or specific approval

• Duty free import/procurement is even available for setting up of the unit i.e. on construction, interiors etc
• Goods imported/procured locally could be utilized over the approval period of 5 years
• Central Sales Tax(CST)  exempted  on  domestic procurements made by SEZ units against Form-I
• Service Tax exempted  on the services availed  by SEZ units for production, maintenance and setting up of unit

INCOME TAX:  

• 100% IT exemption (10A) for first 5 years and 50% for next 5 years and 50% of ploughed profits in profits for next 5 years
• Carry forward of losses  

FOREIGN DIRECT INVESTMENT:

• 100% Foreign direct investment under the automatic route is allowed in manufacturing sector in SEZ units except arms and ammunition, explosive, atomic substance, narcotics and hazardous chemicals, distillation and brewing of aloholic drinks and cigarettes, cigars and manufactured tobacco substitutes
• No cap on foreign investments for SSI reserved items
• Any company set up with FDI has to be incorporated under the Indian Companies Act with the Registrar of Companies for undertaking Indian operations

BANKING/INSURANCE/EXTERNAL COMMERCIAL BORROWINGS:  

• SEZ units can get finance from OBU’s(off-shore banking units)  at LIBOR rates.  In the SEZs where OBUs not available,  the units in those SEZs may avail the finance facility from other OBU’s situated in other SEZs .  At present OBUs are available at SEEPZ-SEZ and Noida SEZ

• External commercial borrowings by units up to $ 500 million a year allowed without any maturity restrictions
• Freedom to bring in export proceeds without any time limit
• Flexibility to keep 100% of export proceeds in EEFC account. Freedom to make overseas investment from it
• Commodity hedging permitted
• Exemption from interest rate surcharge on import finance
• SEZ units allowed to ‘write-off’ unrealized export bills

 Companies Act:  

• Enhanced limit of Rs.2.4 crores per annum allowed for managerial remuneration
• Exemption from requirement of domicile in India for 12 months prior to appointment as Director  

Drugs and Cosmetics:  

• Exemption from port restriction under Drugs & Cosmetics Rules/Act  

8      Whether SEZ units allowed to sell in Domestic Market(DTA)  ?   

•    SEZ manufacturing units are allowed to sell finished goods/ rejects/ wastage  in Domestic Market on payment of full duties without any limit  subject to achievement of positive Net Foreign Exchange Earning at the end of  third year
•    SEZ trading units are also allowed to sell in domestic market on payment of full duties subject to achievement of Positive NFE at the end of the last year
•    SEZ units having both  manufacturing  and  Trading  in a single LOP are allowed to sell in Domestic Market subject to achievement of positive NFE at the end of last year

9  What are the benefits/facilities for Domestic Supplies to SEZ  ?

    Supplies from Domestic Tariff Area(DTA) to SEZ to be treated as physical export and the DTA supplier  entitled to:

                   Drawback/DEPB

                   Discharge of EP if any on the supplier

                   Income Tax benefit  as applicable to physical export under section 80 HHC

                   Of the Income Tax Act  

10  Are there any supplies by SEZ unit   which are treated  for NFE purpose  ?  

•    Yes, the following supplies  are treated for the purpose of counting towards NFE

11  Is sub contracting/contracting   of production allowed   ?  

•    SEZ unit may sub-contract part of production or production process through units in Domestic Tariff Area or through other EOU/SEZ units
•    SEZ units may also sub-contract part of their production process abroad
•    Agriculture/Horticulture processing SEZ units allowed to provide inputs and equipments to contract farmers in DTA to promote production of goods as per the requirements of importing countries

12  What are the  facilities/exemptions   given by Govt. of AP to SEZ units  ?

         Facilities/Policy:  

•    The Govt. of  AP has pronounced a separate SEZ policy  wherein several enactments have been made to the state laws and regulations
•    Development Commissioner has been delegated with the powers of Commissioner of Labour,  Inspector of Factories and made nodal authority for various clearances
•    One officer from each concerned department has  been deputed for effective maintenance of  single window clearance mechanism 
•    Development Commissioner is the certifying authority for availing incentives available for Software/IT units

Exemptions:

•    Exempion of Service Tax - Only to SEZ Units in India
•    Exemption from payment of Central Sales Tax (CST)
•   Complete exemption from payment of Income Tax for the first 5 years. 50% for the next five years and 50% of ploughed in profits for next 5 years

13 What are the sizes of plots available  ?  

•    The normal sizes of  plots  are 1/4th acre to  1 acres.  However, as per the requirement of the entrepreneur, plots can be allotted of any size

14  What are the sizes of  SDF sheds    ?

•    The ready built RCC Sheds are available in the sizes of  400 Sqm to  1100 Sqm   and smaller sizes can also be allotted depending on the requirement.  A separate Trading Units block is under construction and sizes of 100Sqm are available in this

15  What is the lease rent  and lease period for Plots/SDFs   ?

*        The lease rent for  developed plots is Rs.45/- per Sqm per year,  Rs.500/- per Sqm per year for  SDF sheds and Rs.750/- per year for Industrial Sheds

•             The initial lease period is  15 years for Plots,SDFs and Industrial Sheds and can be renewed   
•             thereafter  

16  Who monitor the functioning of the units in SEZ  ?

Performance of the SEZ units monitored by the Unit Approval Committee headed by the Development Commissioner with customs and state government representatives  on annual basis

17  What are the special features  if you come to  VSEZ  ?

  The strengths of Visakhapatnam SEZ  lies in  its positive administrative set up and true maintenance of single window mechanism.  The entrepreneur has to submit application and rest is taken care by the VSEZ’s  core team

18  Are there any customs examinations and  prolonged procedures for clearances of  

      import/export consignments  ?

 All the customs clearances are on self certification basis and no routine physical examination of  imported/export goods

•   All the clearances are done within the SEZ premises

SEZ scheme allows private firms and individuals to participate in the development of the zone  by way of creating additional infrastructure facilities in the existing zone

20  What are the benefits available for a developer  ?

• Duty free import/procurement of goods for development, operation     and maintenance
• Income tax exemption for 10 years in first 15 years
• Exemption from service tax
• Full freedom in allocation of developed plots/sheds to approved SEZ units purely on commercial basis.
• They can either sell, lease or rent the created facility