Special Economic Zones (SEZs) in India
Zero-rated supplies, customs reliefs, single-window clearances, and export-focused compliance for units inside notified zones.
Overview
A Special Economic Zone (SEZ) is a notified, demarcated area that operates under special economic laws and incentives to boost exports, attract FDI, and create employment.
SEZs offer GST and customs benefits, streamlined approvals, and plug‑and‑play infrastructure while requiring positive Net Foreign Exchange (NFE) over a 5‑year block and robust recordkeeping.
Objectives
- Promote exports of goods and services
- Attract foreign and domestic investment
- Generate employment
- Develop world‑class infrastructure
Documents Required
Basic Company Documents
- Certificate of Incorporation / Partnership Deed / LLP Agreement
- Memorandum & Articles of Association (for companies)
- PAN of the entity
- GST Registration (before operations)
- IEC (Import Export Code)
Application & Approvals
- Form F application (SEZ Rules, Rule 18(1))
- Project Report / Business Plan (products/services, process, employment, NFE)
- Board Resolution & Authorized Signatory
- Covering letter to Development Commissioner
- Filled checklist (DC format)
Infrastructure & Premises
- Lease Deed/Agreement with SEZ Developer (min. 5 years)
- Site/Factory Layout Plan (mark bonded area)
- Power connection proof / NOC (as required)
- Pollution Control Board NOC (if applicable)
Financial Documents
- Audited financials (last 3 years) for existing entities
- Net Worth Certificate (CA) for new entities / project cost > ₹5 crore
- Source of finance / project cost sheet (Equity/Debt/Accruals)
Promoter / Director KYC
- PAN, Aadhaar, Passport, DIN (as applicable)
- Passport photographs of authorized signatory
- Signature specimen
Legal & Compliance Undertakings
- Legal Undertaking (LUT) with DC (post‑approval)
- Application for bonding with Customs (Section 58, Customs Act)
- Insurance copy for premises (fire/all‑risk, if required)
Additional Certifications
- SEZ Act, 2005 (primary law)
- SEZ Rules, 2006 (procedural framework)
- FTP 2023 – Chapter 6 (SEZ/EOU/EHTP/STPI provisions)
- Customs Act, GST Act, FEMA (tax and forex implications)
Exemptions
- No IGST/customs duty on imports/procurements by SEZ units (subject to conditions)
- Supplies to SEZ treated as zero‑rated under GST
Penalties
- Shortfall in NFE may trigger action/regularization requirements
- Non‑maintenance of mandated registers can lead to adverse audit findings
- Incorrect DTA sales without duty payment may attract demand and penalties