Aug. 5 – Foreign investors wishing to take advantage of development zones for export-related manufacturing and assembly, and obtaining tax incentives when doing so, may consider India’s special economic zones (SEZs). Indian SEZs closely follow the successful Chinese
SEZ model and, like China, foreign-invested businesses may be established in SEZs for the manufacturing of goods, the provisioning of services, and other activities including processing, assembling, trading, repairing and reconditioning.
India’s SEZ sectors are classified into four types:
- Special Economic Zones for Multiple Sectors
- Special Economic Zones for Specific Sectors
- Special Economic Zones for Free Trade and Warehousing
- Special Economic Zones for IT/ITES/Handicraft and Other Industries
Tax Incentives for Investors
Incentives and facilities offered to units located within an SEZ can include:
- Duty free importation of required machinery, production lines and related equipment
- Duty free import and domestic procurement of component parts as required for the final product
- 100% VAT rebates on exported India sourced components;
- Income tax breaks – depending on the scope of business and where the business is located
India has a number of SEZs located around its coastline, including Gujarat (Northwest), Mumbai (West coast), Noida (Delhi), Kolkata (Bay of Bengal), Chennai (East Coast) and Visakhapatnam (Southeast Coast). All of these are sited close to significant ports with excellent shipping and rail infrastructure. Common usages for SEZs are manufacturing and assembly with combined Indian and globally-sourced components, and the final product can be sold both domestically and/or exported.
Portions of this article came from India Briefing Magazine’s current issue, “Trading with India,” which is immediately available as a complimentary PDF download on the Asia Briefing Bookstore. In this issue, we focus on the dynamics driving India as a global trading hub. Within the magazine, you will find tips for buying and selling in India from overseas, as well as how to set up a trading company in the country. India is poised to become a major global sourcing center, and we hope this issue both educates and informs our readers how best to approach this growing market.
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Source : india-briefing.com