ADVANTAGES OF SETTING UP A BUSINESS IN A SPECIAL ECONOMIC ZONE (SEZ) IN INDIA

 ADVANTAGES OF SETTING  UP A BUSINESS IN A SPECIAL ECONOMIC ZONE (SEZ) IN INDIA

Setting up a business in a Special Economic Zone (SEZ) in India offers a variety of advantages, primarily aimed at promoting exports, increasing investment, and boosting economic activity.

Here are the key advantages:

1. TAX INCENTIVES

Income Tax Holiday: 100% income tax exemption on export income for the first 5 years, 50% for the next 5 years, and 50% of the ploughed-back export profit for another 5 years (under Section 10AA of the Income Tax Act).

EXEMPTION FROM GST:

Supplies to SEZs are considered zero-rated under GST, making SEZs exempt from GST on purchases.

NO MINIMUM ALTERNATE TAX (MAT):

MAT has been removed for SEZ units (since FY 2020–21).

CUSTOMS DUTY EXEMPTION:

No customs duty on imports of capital goods, raw materials, consumables, or spares.

2. SIMPLIFIED REGULATORY FRAMEWORK

·      Single-window clearance for central and state-level approvals.

·      Streamlined procedures for approvals, licensing, and documentation.

·      Operates under a separate SEZ Act (2005), offering more autonomy and regulatory ease.

3. INFRASTRUCTURE AND LOGISTICS BENEFITS

·      Developed infrastructure: reliable power supply, water, roads, telecom, and drainage.

·      Proximity to ports, airports, or logistic hubs in many SEZs ensures efficient connectivity for exports/imports.

4. SUPPORT FOR EXPORT-ORIENTED UNITS

SEZs are primarily designed for export promotion, offering several export-related incentives and support mechanisms.

Access to international markets and trade facilitation assistance.

5. FLEXIBILITY IN OPERATIONS

·      No requirement for a license for imports.

·      Easy repatriation of profits and dividends.

·      Exemption from routine inspections under company laws (with certain conditions).

·      100% Foreign Direct Investment (FDI) is allowed in most sectors under the automatic route.

6. EMPLOYMENT AND SKILL DEVELOPMENT INCENTIVES

·      SEZ developers and units may benefit from state-sponsored incentives for employment generation.

·      Access to a skilled labor force with support from government training programs.

7. OTHER STATE-LEVEL INCENTIVES

Many Indian states offer additional incentives for businesses setting up in SEZs, such as:

·      Land at concessional rates

·      Subsidies on power, water, or capital investment

 ·      Stamp duty exemptions