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03. INVESTMENT UPDATE |
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Special
Economic Zones: Simplifying Investment |
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India's
initiative on Special Economic Zones is picking up and making it easier
for investors by simplifying procedures . The wide-ranging and ambitious
the policy framework for the zones promises to provide simpler procedures
for setting up and conducting business. |
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According to Commerce Minister Kamal Nath these zones would attract
US$ 22.6 billion investment by 2009 and create 500,000 jobs by then.
“The rules have been vetted and are ready for notification. From
May last year, when the Special Economic Zones Act, 2005, was cleared,
we received over 600 suggestions of which 400 have been incorporated
in the rules," he said.
Exports from the zones are projected at US$ 5 billion in 2005-06,
from the 948 units operating in them. The rules provide for the creation,
within 15 days, of a Board of Approval, constituted by the Centre
and with
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representation from
agencies concerned and state governments.
Ranging from 10 hectares to 1,000 hectares and covering virtually
every sphere of economic activity a Development Commissioner will
oversee one or more such zones and act as the nodal authority and
single- window for all clearances.
Developers of SEZ's will get a 100 per cent tax exemption for 10 years
within a block of 15 years. The rules provide for up to 100 per cent
sale of SEZ products in domestic tariff areas after payment of Customs
duty.
The rules also provide for setting up of overseas banking units, which
will have to comply with Indian regulations. Such units will also
be exempt from income tax and NRI deposits in these banks will not
attract tax deduction at source on interest payments.
So far approvals had been given for the setting up of 117 zones, including
three free trade warehousing zones, |
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spread over 15
states and two Union Territories. Seven of these new zones have become
functional, including a US$271.3 million Nokia zone that has gone
into commercial production. 51 have been given final approval while
the rest have received clearance in principle.
Of the approved zones, seven are multi-sector while 43 are specific
to infotech, apparel, telecom, gems and jewellery and automobiles.
As a result of the enactment of the rules and provisions for large
land holdings--there is no restriction on the number of zones that
a single promoter can set up--many large, multi-product SEZ projects
will now move forward quickly.
The largest approved zone till date is the 6,000 hectare tri-party
consortium of SIDCO Maharashtra, Among the corporates to have already
received approvals are Mumbai. Reliance Industries, Reliance Energy,
Nokia, Mahindra & Mahindra, Wipro, Ranbaxy, Biocon and Adani Exports. |
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326
per cent increase in FDI
In January '06, FDI inflows skyrocketed
by a whopping 326 per cent to US$ 647 million, compared to just US$
152 million during January '05. According to preliminary estimates
by the commerce & industry ministry, FDI inflows from Germany,
the UK, Mauritius and the US were strong during January '06. The major
sectors attracting investments during the month included fertiliser,
energy, drugs and pharmaceuticals, services and agricultural machinery.
Commerce and industry minister Kamal Nath said that FDI inflows during
the third quarter of the current financial year stood at $4.34 bn.
This indicates a 60 percent increase over FDI inflows of $2.7bn received
during October-December '05. During the first 10 months of the current
fiscal, FDI inflows from Mauritius, the US, the UK, Germany and Singapore
were strong. The major FDI recipients during this period included
electrical equipment, cement, chemicals and transport sectors. |
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