Embassy of India

Hungary and Bosnia & Herzegovina

Over the last decade or so, India is witnessing increasing  interest to promote the export-oriented manufacturing sector through   Economic Zones (EZs). 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. In order words, EZs is a geographical region that has economic laws different from a country's typical  economic laws. FTZs, also known as commercial-free zones, are fenced-in,  duty-free areas, offering warehousing, storage, and distribution  facilities for trade, transhipment, and re-export operations. EOUs are  units undertaking to export their entire production of goods. EOUs can  be engaged in manufacturing, services, development of software, repair,  remaking, reconditioning, re-engineering including making of gold /  silver / platinum jewellery and articles. Further, units involved in  agriculture, agro-processing, aquaculture, animal husbandry,  bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites can also obtain the status of EOU.

The Government of India provides several incentives and facilities to  the units in EZs for attracting investments into the EZs, including  foreign investment. Presently, units in EZs enjoy 100 per cent income  tax exemptions on export income for the first five years, 50 percent for  the next five years thereafter, and 50 percent of the ploughed back export profit for another five years. Other benefits include a refund of  integrated goods and services tax (IGST) on goods imported by units and  developers of EZs, easy refund procedure of input GST paid on  procurement of goods and services if any, and minimal compliance  requirement and return filing procedure. Units in EZs also receive additional benefits from respective state governments in the form of  stamp duty exemption, VAT exemption or refund, and electricity duty  exemption.

Objective: 

With India poised to be the third largest global economy  by 2030, a key  policy of the Ministry of Commerce and Industry  (Government of India) is to establish  Economic Zones (EZs) in the  country    

• Attract foreign and domestic investment        
• Boost production for domestic consumption, and for exports            
• Develop India as a host nation for global manufacturing under the Make in India programme            
• Deliver long-term, sustainable growth based on cutting-edge technology and enterprise            
• Build supply chains        
• Create skilled jobs        
• Build well-functioning infrastructures        
• Be the driving force of local economies as they unlock key development site         
• Play a critical role in developing international markets, etc.       

Importance of FTZs/SEZs/EOUs 

• Are important components of cross country economic corridor development and trade agreements            
• Foster technological learnings and innovation         
• Facilitate trade and investment          
• Support development of global production networks and value chains          
• Lead to the growth of manufacturing           
• With the Make in India campaign, the manufacturing  sector, which generates employment and drives the Indian economy, has  staged a comeback as smaller Indian companies are taking a second look  at operations, and incorporating domestic production to boost exports.