THE Special Economic Zone Act of 2005 has provided private players an opportunity to invest in developing special economic zones (SEZs). The Visakhapatnam SEZ (VSEZ), a Central government SEZ, was set up to facilitate the development of all SEZs and 100 per cent export-oriented units (EOUs) and to promote exports from all SEZs in its jurisdictional area, which comprises Andhra Pradesh, Chhattisgarh and Yanam, says M.S. Rao, Development Commissioner for the VSEZ. Excerpts from an interview :
What steps have been taken to promote exports from the VSEZ?The VSEZ was originally notified in 1989 as the Visakhapatnam Export Processing Zone. In 2003, it was converted into the VSEZ. It has an area of 360 acres and offers well-developed plots with supporting infrastructure at concessional rates to investors from the export industry. It is close to one airport and two seaports. Space is available for more units and will be allotted on the basis of their export potential. It achieved an export turnover of Rs.920 crore last year, and this year we are hoping to cross Rs.1,000 crore.
Many new private SEZs are coming up in Andhra Pradesh. What is the role of the VSEZ in this regard?With the enactment of the SEZ Act, several new SEZs are coming up in the country. Investors, public or private, can now set up an SEZ if they meet the minimum area requirement. These investors, called SEZ developers, provide the requisite infrastructure and invite units into their SEZs. Presently, Andhra Pradesh has the highest number of private SEZs – 74 out of the 363 notified in the country so far. The APIIC [Andhra Pradesh Industrial Infrastructure Corporation Limited] is the largest developer in the State, with 19 SEZs. Permission for setting up units in these SEZs is given by the Approval Committee chaired by the Development Commissioner. The role of the VSEZ is to facilitate exports and promote the development of all SEZs in its jurisdictional area.
What is the current status of the private SEZs in the State?In Andhra Pradesh, there are five multi-product, 26 sector-specific and 43 IT [information technology] SEZs in which 165 units have been given approval so far. Of these, 23 SEZs have already become operational by commencing exports. Another 12 SEZs are likely to become operational soon. These SEZs have, so far, attracted an investment of Rs.11,000 crore and provided employment to 85,000 persons. Exports were to the tune of Rs.5,500 crore last year. This year, exports are likely to exceed Rs.10,000 crore.
What are the incentives available to investors in SEZs?Both SEZ units and developers have been offered various concessions, including exemption from all indirect taxes, duties and levies; income tax exemption for a specified period; and a single-window clearance mechanism.
What is the difference between EOUs and SEZ units?EOUs can be set up anywhere, whereas SEZ units have to be located within the notified SEZ processing area. The exemptions available to EOUs are for the specific manufacture or service activity allowed, whereas for SEZ units these are available for setting up the units, and for their operation and maintenance. EOUs are permitted to sell a certain proportion of their products in domestic markets on concessional duties.
