| Project High Light |
| Sector Specific Agro & Food Processing Products Special Economic Zone (SEZ) at Murthal (Sonipat) |
| Developer Company |
Ansal Colours Engg. SEZ Ltd. (promoted by Ansal Properties & Infrastructure Ltd.) |
| Total Area of the SEZ |
250 Acres |
| Processing Area |
175 Acres (70% gross) |
| Saleable Area |
105 acres (60% of 175 Acres) |
| Non Processing Area |
75 acres (30%) |
| Notified by Central Government (MoC) vide Govt. of India Gazette Notification No. S.O. 1626 (E) dated 7th July, 2008 (copy enclosed). |
| Approval for Agro and Food Products SEZ by MoC, Govt. of India on 22/12/2009 (copy enclosed) |
| Status of only SEZ for Agro & Food based products in Northern India |
| All Clearances/Approvals received from Central & State Govt. |
| Thrust Areas – Based on the share in exports, past performance and potential for growth, Basmati Rice, other varieties of Rice, Guar gum, Processed Foods including dried and preserved Vegetable, Mushroom, etc. have been identified as the thrust areas. |
| Prime Location |
- The SEZ is located at Murthal just about 50 KMs from Inter State Bus Terminus (ISBT), Kashmere Gate, Delhi on NH-1 (Delhi – Ambala GT Road).
- This SEZ has unparalleled linkages by road and rail.
- The Sonipat Railway Station located on New Delhi – Amritsar Northern Railway Broad Gauge is about 9 K.M from our site.
- The Indira Gandhi International Airport is situated at about 65 KMs from our SEZ site.
- Our SEZ site is also having locational advantage as being close proximity with the proposed Kundli – Manesar – Palwal (KMP) Express Highway being constructed by HSIIDC likely to be operational by early 2010.
|
| Physical infrastructure to be developed in the SEZ |
- External Connectivity (approach to the site) – external connectivity for SEZ being critical to the success of the SEZ, it has been planned by having access to the site from the NH-1 for which permission would be granted by the NHAI.
- Water Supply - adequate provision have been made for water supply to meet both residential and non-residential demand of water. Best practices would be adopted for conservation and recycling of water. The SEZ zone would have adequate facilities for rain water harvesting. The water would be available from the existing bore wells already available at site. The quality of water is potable.
- CETP – Common Effluent Treatment Plants are planned/designed in SEZ zone.
- Drainage: The drainage system shall be designed based on the soil conditions, ie. water absorption capacity of the soil and other non-residential uses.
- Sewerage: Adequate and appropriate sewerage system is planned in the SEZ zone in accordance with the developmental plan. Sewerage treatment plant facilities would be provided for the SEZ as a whole.
- Solid Waste management: Properly designed enclosures at suitable places in the SEZ zone shall be provided for depositing segregated solid waste.
- Power Supply: It has been proposed to set up 132 KV sub station alongwith feeding line and underlying distribution system for the power supply to the SEZ zone. The in-principle approval for setting up of the sub station (70 MW) from the State Government Agency – HVPNL – have already been obtained. We have already reserved sufficient space for setting up of 132 KV sub station at site. It is also proposed to arrange power from private power producers as permitted by the State Regulatory Authority for continuous power supply to SEZ units.
- Roads: 30/15 meters wide roads would be constructed in SEZ zone.
- Telecommunications: The requisite infrastructure for telecom facilities would be provided for the use of industrial units and other end users.
- Housing: The Board of Approval, Ministry of Commerce, Govt. of India have already permitted us to built up 3900 units of 100 sq. meters average size houses in the SEZ zone for providing housing facilities to the labours and staff of the SEZ units in the zone. It is also proposed to construct low cost housing as per the National Urban Housing Policy 2007
- Commercial and Social Infrastructure – Shopping Arcade/Retail Space, Business Convention & Exhibition Centre, offshore Bank Branch, ATM, ITI, School, Vocational Centre, Post Office.
- The BoA, MoC, GOI have already approved for 50000 sq. meters for providing shopping Arcade/Retail Space for the use of the working population of the SEZ units.
- Logistics – warehouse – Our SEZ have been declared as I.C.D by MoC, GOI and such logistics – warehouse facilities would be provided in SEZ zone.
|
| Financial /fiscal benefits and other advantages to the SEZ Units (Agro-Food Sector) |
| Under the relevant provisions of Central SEZ Act 2005 and Rules 2006, the SEZ unit will be extended the following fiscal and non fiscal benefits on the Exports like exemption from income tax, MAT, any custom or excise duty on procurement of raw material, machinery, any Cess being levied by Govt. of India. Further, State SEZ Act of every State has exempted SEZ units for the payment of any State Taxes, Duties, Fees, Cess and Levies. A detailed analysis on the benefits being extended to SEZ Units in comparison to Units in domestic area as given under would give you a broad idea about the numerous advantages of setting up your unit in SEZ area: |
| -:Central Government extended Benefits:- |
| |
SEZ Unit |
EOU |
Non SEZ/EOU |
| Income Tax |
100% Tax Exemption for first 5 years; 50% for next five years and 50% of ploughed back profit for next 5 years |
100% Tax Exemption upto 31-3-2009 or first 10 years whichever is earlier. |
Income Tax payable |
| Service Tax |
SEZ units are eligible for exemption from payment of Service Tax |
Not eligible |
Not eligible |
| Supply from DTA market |
Supplier from DTA to SEZ considered as physical exports |
Suppliers from DTA to EOU considered as deemed exports |
Not eligible |
| CST |
CST exempted |
CST is reimbursed |
CST Payable |
| Duty Free - Capital Good, Raw Materials |
Duty free material except CG to be utilized over a period of 5 years |
Duty free material except CG to be utilized over a period of 3 years. |
Not applicable |
| 100% FDI investment |
100% FDI investment permitted through Automatic Route for manufacturing SEZ unit |
FIPB approval required as per sectoral guidelines |
Not applicable |
| Minimum alternate tax (MAT) |
Exempted |
Applicable |
Applicable |
| All Taxes, Duties, Cess, Levies of Central Government under First Schedule |
Exempted |
Applicable |
Applicable |
| Duties on raw material for construction of factory building, building material, cement, steel, etc. |
15 – 20% cost reduction in the construction due to no taxes applicable |
Payable |
Payable |
| Capital Goods like Machinery & Plant for food processing industry and rice milling machinery (both indigenous and imported) |
No Import Duty
No Excise Duty |
No Import Duty
No Excise Duty |
Import Duty & Excise Duty payable |
| Packaging Material |
No Excise Duty |
Excise duty applicable |
Excise duty applicable |
| Commodity Hedging |
Permitted |
Not Permitted |
Not Permitted |
| Supply to DTA Market |
Since there is no import duty /excise duty applicable on import of rice, hence the unit can freely supply to DTA without any levy of duty. |
DTA sale upto 50% of FOB value of Exports permitted on concessional rate of duty |
Not Applicable |
| Agriculture Produce Cess |
Exempted |
Payable |
Payable |
| Single Window clearance |
Single Authority (Development Commissioner) |
Multiple Authority |
|
| Contract farming |
Permitted under Rules 54 of Central SEZ Rules, unit can supply duty free inputs to farmers (Seeds, Fertilizers etc.) |
Permitted |
Not permitted |
| On the spot Customs Clearance and ware housing facility |
Available |
Not available |
Not available |
| Social Infrastructure such as Post Office, Bank, ATM etc. |
Available |
Not available |
Not available |
| Import license for machinery plant, capital goods etc. |
Not required |
Required |
Required |
| -:State Government extended Benefits:- |
| Electricity Duty Exemption for 5 years |
Exempted |
Not available |
Not available |
| VAT |
Exempted |
Not available |
Not available |
| State Duties, Levies, Fees, Rural Development Tax, Purchase Tax, Mandi Tax |
Exempted (4% for paddy) |
Payable |
Payable |
| Exemption from Stamp Duty |
Exempted |
Payable |
Payable |
| -:Exemption from Stamp Duty:- |
| Under Haryana SEZ Act 2005 all transfer of immovable property or document related to within SEZ shall be exempted from payment of Stamp Duty. |
| Note: The above state taxes & levies are levied by State Government Bodies like marketing board, and may vary from State to State |
|
As per the provisions of Section 7 and 54 of Central SEZ Act, 2005 and SEZ Rules, 2006 exempting the SEZ unit from the provision of various Act falling in schedule A, no Cess, Duty, Levy to be imposed on incoming raw material (agricultural inputs in the SEZ zone) covering the following schedule:
- The Agricultural Produce Cess Act, 1940 (27 of 1940)
- The Produce Cess Act, 1966 (15 of 1966)
- The Agricultural and Processed Food Products Export Cess Act, 1985 (3 of 1986)
A Fact Sheet containing detailed analysis of operational benefits to the SEZ unit is enclosed herewith. |
| Targeting Industry (Profile) |
The following industry (profile) is permitted to set up units in the SEZ area:
- Basmati Rice
- Non-basmati Rice
- Other Rice
- Floriculture
- Dried and preserved vegetables
- Pickle and chutney
- Other processed fruits and vegetables
- Pulses
- Dairy Products
- Cocoa Products
- Alcoholic and non-alcoholic beverages
- Milled products, wheat
- Cereal preparations
- Maize (corn), other than seed
- Jaggery and Confectionery
- Guargum
- Biscuit manufacturing
|
| Pricing |
| On the basis of cost analysis of land acquisition including infrastructure development charges, sanction cost and saleable area (being only 60% of gross area as per Haryana Govt. norms), it would be offered to anchor units between 2.60 /3.10 crores per acre depending upon the quantum of developed land requirement. The payment of the developed land would be paid within a period of 12 months to 15 months in installments with only 20% as booking amount. Balance payment linked with approval of the project by Development Commissioner, NSEZ and linked with construction /laying of services in the SEZ area. |
| Allotment of Developed Industrial Land/Plots with Infrastructure |
| Allotment of industrial plots/land would be allotted on long lease basis to the entrepreneurs / units as per their requirement as the plotted development would range from 2 acres, 5 acres, 10 acres, 25 acres and above. The requirement of anchor/leading units for 40 and 50 acres would be considered with soft payment plan and other attractive rates as per policy of the management |
| Approval from D.C., NSEZ and other District and State Authority |
| All assistance and help would be provided for all approvals and sanctions required from Development Commissioner, Ministry of Commerce, Govt. of India, approval of project exceeding 30 crores by the State Government and upto 10 crores for medium industries from District Level (Single Window Clearance Committee) |
| Approvals Received from Central & State Governments |
- Formal Approval received from Central Government vide letter no. F.2/375/2006-SEZ Dtd. 18th June 2008
- Notified as SEZ by Central Government on 7th July 2008 vide Gazette notification No. S.O 1626 (A)
- Approval received from BoA, Ministry of Commerce, Govt. of India for change/ broad banding of sector from Engineering to Agro & Food Processing Products.
- Authorized Operations approved by Central Government vide letter No. F.2/375/2006-SEZ dated 6th October 2008
- Formal Approval received from State Government vide letter No. Exp/SEZ/Ansal/14215-A dated 24/9/2008.
- Master Plan Approval -approval granted by Zonal Development Commissioner cum Chairman, Unit Approval Committee, Ministry of Commerce, Govt. of India.
- Environmental Clearance – obtained from State Government (Environment Department).
- HVPNL approved for setting up of 132 KV/70MW sub station in the SEZ vide letter No. Ch-9/HSS-269/Vol.-II dated 4/12/2008 – power backup to be provided.
- Inland Container Depot status granted under section 7 of the Customs Act, 1962.
|
| Ansal Colours SEZFact Sheet |
- The construction cost of factory building is comparatively low to the SEZ Unit.
All the material procured including the construction material in SEZ will be duty free, the cost of construction will be substantially cheaper as compared to the construction in Domestic Market and as such substantial savings come an upfront /initial advantage to a unit situated in SEZ.
- Tax benefits available to SEZ units are applicable for the life time
All the input taxes i.e. Excise, Import duty, CST, Minimum Alternate Tax (MAT), Work Contact Tex, Service Tax, VAT (on inputs for manufacturing for export purposes) etc. are forever exempted in a SEZ. However, the Income Tax is exempted for a period of 15 years i.e. 100% of export profit is exempted from Income Tax for the first 5 years from the date of first exports. For the next 5 year, 50% of export profit is exempt. For the last 5 years, 50% of the ploughed back export profit is exempt from Income Tax.
Above benefits are available subject to attainment of positive Net Foreign Exchange (NFE) earning in a block of 5 years from the date of commencement of operations. NFE is calculated on a simple formulae i.e. Exports (FOB value of all exports) – Imports (CIF value of all imports) > 0. In simple words, if a unit is brining in “X” amount foreign exchange i.e. exports and is buying “Y” amount of foreign exchange from the Government and if X is > Y even by 1$, it has achieved a positive NFE.
- Supplies from Domestic Tariff Area (DTA) to SEZ units
Supplies from DTA to SEZ are treated as physical export. The DTA supplier would be entitled to:
- Drawback/DEPB
- CST Exemption
- Exemption from State Levies if provided through notification
- Discharge of Export Performance if any on the suppliers
- Income Tax benefit as applicable to physical export under section 80 HHC of the Income Tax Act.
- The Government of Haryana provides special incentives to SEZ Units:
Under Haryana SEZ Act 2005, the Government of Haryana provides package of concession and incentives for the SEZ units:
- Exemption from all State and local taxes, levies including VAT (for input material used for manufacturing for export purposes), purchase tax, contact tax, octroi, cess etc.
- 100% exemption on stamp duty
- Exemption from electricity duty is eligible as per State Government notification to Food Processing Industry.
- SEZ Exports are faster than DTA
Due to procedural ease as provided in the scheme and the on-site Customs Houses, the turnaround time for imports and exports in a SEZ is shorter. Customs examination is to the bare minimum. SEZ units function on self certification basis. Also, loading and unloading costs are cheaper due to service tax exemptions. A SEZ allows the following operation benefits:
- In-house Customs Clearance
- Self-declaration for Imports & Exports
- In-house logistics and warehousing zone
- Exports can be made directly from the sub-contactor’s premises located anywhere.
- No license required for imports
- Inter-SEZ units job-work and sale allowed
- SEZ units can operate both in the domestic tariff area (DTA) and SEZ area
In-fact a company can set up units both in the SEZ and DTA, provided separate accounting procedures are maintained by the units.
The recent changes in Section 10AA of the Income Tax Act in the recently announced Union Budget allow a business to have the same unit in DTA as well as SEZ. The amendment was made to rectify an anomaly in the wording of the Section that adversely affected SEZ units. As per the Section 10AA, export turnover of the unit is divided by the total turnover of the assess for calculation of exemption from income tax on export profit.
Now the total turnover of the undertaking i.e. unit located in the SEZ will be considered instead of total turnover of the business of the assesses.
The rectification of the anomaly will be a very big incentive for companies to move into the SEZs as they can keep the tax rebate earned on exports from SEZs separate from similar rebate earned from their units in DTA (or the area outside SEZs in the country where normal taxes and duties apply).
- Single authority govern a SEZ
The Development Commissioner appointed for the SEZ is a Nodal Officer and is the superseding authority in all the maters related to a unit situated in SEZ.
- Banks are liberal to provide finance to a SEZ unit
The application for setting up a Unit in SEZ is scrutinized by the Unit Approval Committee consisting of representatives from State Government, Income Tax, Excise & Customs, DGFT. If the application is approved by the committee, Banks and Financial Institutions are more than willing to finance the units as they consider the project to be viable and safe.
- Part shipment is possible from a SEZ
Part-shipment can be easily done from a SEZ. Cartons are sealed by the in-house customs and are then handed over to the clearing and handling agent (CHA) the CHA then sends it to the designated port. FI the seal is found in tact, the carton is exported to the desired destination.
- Used capital goods (machinery) can be transferred from DTA to a SEZ unit.
Units are now permitted to shift used capital goods into SEZ beyond the stipulated valuation limit of 20% by paying income tax. This move will be a big incentive for all the units coming into SEZs as they will now be able to shift expensive capital items, worth over 20 percent of total value of new capital goods installed in the SEZ unit (which is the current norm) provided they pay income tax on it.
- Trading is allowed in a SEZ
Trading activities (with zero value addition) are permitted in a SEZ. The profits earned on such trading activities are too exempted from Income Tax provided the goods are physically imported to the SEZ from outside India i.e. a foreign country for re-export. In case goods are procured from DTA and are exported, profits from such transactions are not subject to Income Tax exemption.
- Labour laws are liberal in SEZ
Labour laws in SEZ remains the same. SEZ is granted a Public Utility Status (PUS), it definitely is a no-strike zone, thus routine activities in SEZs are not hampered by labour unrest. |
| Disclaimer: The information provided in the document is not legally binding. This is just an interpretation of SEZ Act and information material for potential buyers |