Frequently Asked Questions
What is the procedure for consideration of proposals for authorized operations by the BoA?
All requests for carrying out authorized operations, whether covered in the default list or not, shall be initially made to the concerned DCs who will first consider and dispose the requests at their level within 15 days from the date of the receipt of
the request. The DCs will send only such requests/items for consideration by BoA, which are outside side their powers and that too with their specific comments/recommendation.
The requests of developers/co-developers, for authorized operations, received without the certification from the concerned DCs, to the effect that the authorized operation(s) is/are outside his powers and their specific comments on the same, will not be considered by the BoA. (Instruction no 42 of Department of Commerce).
What is the currency for calculation of NFE ?
NFE is to be calculated in rupee terms only. In case a unit is NFE negative and claims that it is due to foreign exchange fluctuation, the Approval Committee may consider such cases provided that the unit gets the computations certified by the Authorised Bank, on a case to case, basis. (Instruction no 41 of Department of Commerce)
What is the procedure for Clearance of used capital goods into Domestic Tariff Area ?
The capital goods which have been procured by the developer or co-developer for undertaking authorise operations in SEZ can be cleared back into DTA following the procedure as per the provisions of rule 49(3). (Instruction no 33 of Department of Commerce)
What is the requirement of lease agreement when Developer/ Co-Developer and unit are the same?
References have been received by Department of Commerce seeking clarification on Rule 18(2) on the issue of regarding requirement of lease agreement when the Developer/Co- Developer and the unit are the same legal entity.
The Department of Commerce vide instruction no.31 has clarified that in cases where Developer or Co-Developer setup a unit, there is no need for a separate lease agreement between the developer/Co- Developer an unit. An allotment letter from the Developer or Co-Developer to the unit would be sufficient.
Is Foreign Direct Investment permissible for setting up of units in SEZs?
FDI upto 100% is allowed through the automatic route for all manufacturing activities in Special Economic Zones (SEZs), except for the following activities: V * H • Arms and ammunition, explosives and allied items of defence equipment, defence aircraft and warships;
• Atomic substances;
• Narcotics and psychotropic substances and hazardous chemicals;
• Distillation and brewing of alcoholic drinks; and
• Cigarettes/cigars and manufactured tobacco substitutes
Sectoral norm as notified by Government shall apply to foreign investment in services.
The cases not covered by automatic route are considered and approved by the Board of Approval.
What are the major incentive available to Off-shore Banking Unit?
The major incentive available to Off-shore Banking Unit is 100% income tax exemption for 5 consecutive years and 50% for next 5 years under section 80LA of the Income Tax Act. (Second Schedule to the SEZ Act)
What are the guidelines for the operation of Off-shore Banking Unit?
The guidelines governing the operation of Off-shore Banking Units are indicated in the notification No. FEMA 71/2002-RB dated 7th September, 2002 issued by the Reserve Bank of India. (Rule 21)
What is the procedure for setting up an Off-shore Banking Unit in SEZ?
Application for setting up of Off-shore Banking Unit need to be made to the Reserve Bank of India in Form - VI prescribed under section 23 of the Banking Regulation Act, 1949. (Rule 21)
Is it actually a single window clearance ("SWC") approval process for a unit?
Yes. The State Government has nominees on the Approval Committee and they are expected to deal with State related issues thereby ensuring single window clearance. (Section 50 and Rule 17)
Can STP/EOU units continue in the non-processing areas of a SEZ?
No. The non-processing area is meant to support the activities in the processing area. Therefore, such an eventuality is not envisaged.