Special Economic Zone (SEZ) is a specifically delineated duty free enclave
and shall be deemed to be foreign territory for the purposes of trade operations
and duties and tariffs.

Any private/public/joint sector or State Government or its agencies can set
up Special Economic Zone (SEZ).

Yes. FDI upto 100% is allowed through the automatic route for all
manufacturing activities in Special Economic Zones (SEZs). The cases not covered
by automatic route are considered and approved by Board of Approvals

> A Multi Product SEZ shall have a contiguous area of five hundred hectares
or more but not exceeding 5000 hectares. Provided that in case a Special Economic
Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh,
Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and
Kashmir, Goa or in a Union Territory, the area shall be one hundred hectares or
more.
> Provided further that at least fifty per cent of the area shall be earmarked
for developing the processing area
> Provided also that the Central Government may consider on merit the
clubbing of contiguous existing notified Special Economic Zones notwithstanding
that the total area of resultant Special Economic Zones exceeds 5000 hectares.
> A Special Economic Zone for a specific sector or [for one or more services]
or in a port or airport, shall have a contiguous area of fifty hectares or more:
> Provided that in case a Special Economic Zone is proposed to be set up
exclusively for electronics hardware and software, including information technology
enabled services, the area shall be ten hectares or more with a minimum built up
processing area of one lakh square metres for cities falling under Category ‘A’, fifty
thousand square metres for cities classified under Category ‘B’ and twenty five
thousand square metres for cities classified under Category ‘C’.
> Provided further that in case a Special Economic Zone is proposed to be
set up exclusively for handicrafts, the area shall be ten hectares or more.
> Provided also that in case a Special Economic Zone is proposed to be set
up exclusively for bio-technology, non-conventional energy, including solar energy
equipments/ cell, or gem and jewellery sectors, the area shall be ten hectares or
more with a minimum built up area as under:
i) forty thousand square meters in case of a Special Economic Zone proposed
to be set up exclusively for biotechnology and non-conventional energy sectors,
including solar energy equipments/cells but excluding a Special Economic Zone set
up for non-conventional energy production and manufacturing;
ii) fifty thousand square meters in case of a Special Economic Zone proposed
to be set up exclusively for the gems and jewellery sector.
Provided also that in case a Special Economic Zone for a specific sector is
proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh,
Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and
Kashmir, Goa or in a Union territory, the area shall be twenty five hectares or
more for the Special Economic Zones not covered under the first and second
provisos.
> Special Economic Zone for Free Trade and Warehousing shall have an area
of forty hectares or more with a built up area of not less than one lakh square
metres.
> Provided that in a stand-alone Free Trade and Warehousing Zone at least
fifty per cent of the area shall be earmarked for developing processing area.
> Provided further that a Free Trade and Warehousing Zone may also be set
up as part of a Special Economic Zone for multiproduct:
> Provided also that in a Special Economic Zone for a specific sector, Free
Trade and Warehousing Zone may be permitted with no minimum area
requirement but subject to the condition that the maximum area of such Free
Trade and Warehousing Zone shall not exceed twenty per cent, of the processing
area.

In Principle Approval is considered when the minimum contiguous land area
required for setting up of the SEZ is not in possession of the developer

Formal Approval for setting up of SEZ and subsequent Notification of the SEZ
are considered if the land is owned by the Developer or has leasehold rights over
the land for a year not less than twenty years.

1) Application in the prescribed Form ‘A’ for Formal Approval for setting up of
SEZ (which can be downloaded from MEPZ-SEZ’s website: www.mepz.gov.in)
to be submitted to the Development Commissioner, MEPZ-SEZ, in case of SEZs
in Tamil Nadu, along with project report.
2) Recommendations of the State Government
3) Developer’s Certificate in the format enclosed.
4) Encumbrance certificates in Original Possession Certificate issued by Tahsildar
5) A-4 Size coloured map of the proposed SEZ certified by Tahsildar.
6) Copy of Registered Sale deed duly notarised
7) Statement indicating land details i.e. list of survey numbers and their
respective areas (in hectares) .

8. Other information/documents required as per prescribed check list

CHECK LIST

(1) Name of the Developer.
(2) Proposed area of the location of the SEZ.
(3) Status of recommendation of the proposal by the State Government
(if available).
(4) Whether proposal is for formal or in-principle approval? (In case
land is in possession of the promoter, it is considered for formal approval).
(5) Is it a multi-product SEZ?
(6) If it is a sector specific SEZ, the sector is.
(7) Whether it meets the area requirements?
(8) Area of the SEZ (in hectares).
(9) Whether Form-A has been filed?
(10) Whether undertaking and affidavit has been submitted

(11) Whether project report has been submitted?
(12) Whether land is owned/ leased and is in possession of the
Developer?
(13) Does the proposal meet the area requirements of the Rules?
(14) Whether the land has existing structures or is vacant?
(15) Whether the land is contiguous?
(16) Projected investment in the project.
(17) Projected exports from the project.
(18) Projected employment from the project.
(19) Share Capital and Reserves of the Developer
Company. (20) Source of funds for the project.
(21) Net worth of the Applicant (including Group companies) duly supported by
Audited Accounts of the Developer for last 3 years (for all the constituents in case
the Developer is a SPV). If the company is a new company, audited accounts of
Flagship Company/promoters may be provided.
(22) Extent of FDI (if any) in million U.S. Dollars.
(23) Source of FDI (Country and Company details may be provided.
(24) Whether provisions contained in the Press Note No. 5 (2005 Series),issued by
the Ministry of Commerce and Industry have been followed in respect of
Telecom/IT SEZ development?]
On receipt of the above details, site inspection of the above SEZ will be
undertaken by Development Commissioner/MEPZ officials, after which the
application will be forwarded to Ministry of Commerce, New Delhi, along with the
DC’s Inspection Report/Recommendations and other relevant documents for
consideration of Formal Approval by the Board of Approvals

The following exemptions are available for SEZ Developers:-
1. Payment of Customs duty for goods or services imported into SEZ for its
operations and goods exported or services provided from SEZ outside
India.
2. Payment of Excise duty for goods brought from Domestic Tariff Area to
SEZ for its authorized operations.
3. Provided the SEZ is operationalized by 31.03.2017, developers are
exempted from payment from Income Tax under the Income Tax Act as
per rules in force, as follows:-
Income Tax exemption for a block of 10 years in 15 years under Section
80-IAB of the Income Tax Act. Block of 10 years will be selected at the
discretion of the developer
4. Payment of Central Sales Tax for its authorized operations.
5. Payment of Service Tax under Chapter V of the Finance Act 1994 on
taxable services consumed for its authorized operation.
6. Payment of VAT for the purchases made within the State of Tamil Nadu
under TN VAT Act.

1. Payment of customs duty for goods or services imported into SEZ for its
operations and goods exported or services provided from SEZ outside India.
2. Payment of Excise duty for goods brought from Domestic Tariff Area to SEZ
for its authorized operations.
3. Provided that the unit commences commercial operations by 31.03.2020,
SEZ Units are exempted from payment from Income Tax and other taxes
under the Income Tax Act as per rules in force, as follows:-
• 100% Income Tax exemption for SEZ units under Section 10AA of the
Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of
the ploughed back export profit for next 5 years. Income tax benefit as
mentioned above is available on the profits out of exports made out of India.
4. Payment of Central Sales Tax for its authorized operations

5. Payment of Service Tax under Chapter V of the Finance Act 1994 ontaxable
services consumed for its authorized operation.
6. Payment of VAT for the purchases made within the State of Tamil Nadu
under TN VAT Act.
7. Units are also entitled for MEIS/SEIS scrips subject to fulfilment of
eligibility criteria prescribed for the scrips

For setting up a manufacturing, trading or service units in SEZ,
application, along with project report and required documents shall be
submitted to the Development Commissioner of the SEZ concerned which will
be then be placed before the Unit Approval Committee for consideration.
UAC will consider all applications for setting up a unit except those falling
under the purview of the Board of Approvals..
CHECK LIST OF APPLICATION FOR SETTING UP SEZ UNITS
1. Name & Address of the applicant:
2. Whether the application has been submitted in five sets and duly completed
in all respects:
3. Is project report submitted in five sets:
4. Whether application fee of Rs.10,000/- by way of DD in favour of Pay &
Accounts Office, Ministry of Commerce, Chennai have been submitted:
5. Is the application signed on all the pages:
6. Has the undertaking in the application been signed?
    Has the affidavit as indicated in the application form been furnished in
    Rs.20/- non-judicial stamp paper:
7. Whether IEC details are given in case of existing exporter?
8. Whether E Mail address is given?
9. Whether Income Tax Pan No. is given:
10.Whether Copy of Certificate of Incorporation along with Articles of
     Association & Memorandum of Association (in case of companies) and
     Partnership deed (in case of partnership firms) attached:
11.Whether a letter from the Developer confirming the allotment of space have
      been submitted:
12.Whether Dollar conversion rate is given:
13.Whether any sector specific restriction is there and the conditions as per
      SEZ Rules fulfilled:
14. Does the project cost and pattern of investment tally?
15.Is the list of imported/indigenous capital goods given?
16.Is the list of imported/indigenous raw materials given?
17.Is the evidence for buy/back/marketing tie-up furnished?
18.Are the names & addresses and bio-data of the Directors along with pro

19.Whether present activity of the applicant given?
20.Details of manufacturing process with flow chart given?
21.Whether projected profit and loss statement given?
22.Whether the Net Foreign Exchange Earnings projected is on the positive
      side?
23.Whether source of finance is indicated?
24. Whether audited balance sheet of the company for the last three years
      enclosed (In case of new companies, copies of IT returns of the Directors for
      last three years to be submitted

• SEZ units have to achieve positive net foreign exchange earnings as per
  the calculation provided under Rule 53 of SEZ Rules, 2006
• SEZ Units have to execute a Legal Undertaking . with the Development
  Commissioner
• The units have to submit Annual Performance Reports in the prescribed
  format, duly certified by a Chartered Accountant.
• The units are also to execute a bond with the Zone Customs for their
  operation in the SEZ

Production can be sub-contracted by an SEZ unit, upto the value of goods
produced by the unit in its own premises in the preceding financial year and for the
first year of operation, it shall be restricted to the value of goods produced by the
unit in its own premises during the first year of production.

Supplies from Domestic Tariff Area (DTA) to SEZ to be treated as physical
export. DTA supplier would be entitled to

• Drawback/DEPB
• CST Exemption
• Exemption from State Levies
• Discharge of EP if any on the suppliers
• Income Tax benefit as applicable under the Income Tax Act

The processing area is that portion of area in a SEZ where units can be
located for manufacture of goods or rendering of services. Duty and tax benefits
are available both for initial setting up of and for operation of maintenance of
facilities in the Processing Area of an SEZ.
The non-processing area of a SEZ is the area which is intended to support
the activities in the processing area may include commercial and social
infrastructure.
In terms of Rule 11-A to SEZ Rules, 2006, inserted vide Notification dated
02.01.2015 issued by Ministry of Commerce, New Delhi, the non-processing area
of a SEZ can be divided into two portions viz. where the social or commercial
infrastructure and other facilities are permitted to be used only by Special
Economic Zone entities: and where the social or commercial infrastructure and
other facilities are permitted to be used by both the Special Economic.Zone and
Domestic Tariff Area entities: The infrastructure, as may be approved by the
Board, used exclusively for SEZ entities, shall be eligible for exemptions,
concessions and drawback. However, in case of dual use of infrastructure, no
exemptions, concessions or drawback shall be admissible .
The processing and non-processing areas will be demarcated by the
Development Commissioner of the SEZ concerned

No import of duty free material is available for operation and maintenance of nonprocessing area of SEZ in terms of Rule 27(3) of SEZ Rules

The infrastructure facilities of the SEZs are normally provided by the
Developer. However, the developer may bring in a Co-developer for the purpose of
developing infrastructure by entering into an agreement with the co-developer.
The application for co-developer status has to be filed with the Development
Commissioner of the SEZ who will place the application for consideration of the
Board of Approvals .

No. Land or built-up space in a SEZ cannot be sold, but can only be leased
to a co-developer or unit holding a valid Letter of Approval.in accordance with
SEZ Act and SEZ Rules

Foreign Direct Investment, upto 100%, for setting up of SEZ is permissible
under automatic route. Wherever approval from Central Government is required,
the same can be given by Board of Approval. However, it should be ensured by the
promoter that his equity does not fall below 51%. In case the promoter decides to
decrease the shareholding below 51%, then prior approval of BOA must be taken.
(Instructions No:23 of Department of Commerce)

Consolidated list of default authorized operations which can be undertaken
by the developer/approved co-developer by default from the date of notification is
contained in the Department of Commerce Instruction No:50 dated 15.03.2010
available on the website sezindia.nic.in
The DC’s/UAC’s may allow Developer/approved Co-developers duty free
goods and services for these default authorized operations from the date of
notification of the SEZ. These authorized operations will, however, continue to be
subject to the various guidelines issued by Government from time to time.
Approval Committees while approving goods and services for such default
operation may look into the actual requirement of the SEZs for such operations.
For other authorized activities, not contained in the enclosed list to
Instruction 50 Developer/co-developer will have to obtain prior approval of Board of
Approval through the concerned DC.

A list of 66 specified services for service tax exemption, as indicated below,
has been identified for SEZs .which could be permitted by the Unit Approval
Committees as default specified services, which is uniformly applicable to SEZs
across the country. Services not covered under the default list of specified services
can be permitted by UACs on a case-to-case basis. The list of default specified
services for service tax exemption can also be viewed on the website of MEPZ-SEZ

S.No. Name of the Specified Service
1 Airport Authority Services
2 Architect’s Services
3 Asset Management Services
4 Advertising Agency Services
5 Airport Services
6 Banking and Other Financial Services
7 Business Exhibition Services
8 Cargo Handling Services
9 Chartered Accountant Services
10 Cleaning Activity Services
11 Clearing & Forwarding Agents Services
12 Commercial or Industrial Construction Services
13 Company Secretary Services
14 Computer Network Services
15 Consulting Engineer’s Services
16 Cost Accountant Services
17 Courier Services
18 Credit Rating Agency Services
19 Customs House Agent Services
20 Commercial Training & Coaching Services
21 Convention Services
22 Copyright Services
23 Design Services
24 Development & Supply of Content Services
25 Erection, Commission and Installation Services
26 General Insurance Business Services
27 Goods Transport Agency Services
28 Information Technology Software Services
29 Interior Decorator Services
30 Internet Communication Services
31 Intellectual Property Services
32 Legal Consultancy Services
33 Management, Maintenance or Repair Services
34 Manpower Recruitment and Supply Agency Services
35 Market Research Agency Services
36 Other Port Services
37 Outdoor Caterer Services
38 Packaging Activity Services
39 Port Services
40 Processing & Clearing House Services
41 Renting of Immovable Property Services
42 Security Agency Services
43Site Formation & Clearance, Excavation, Earth
Moving Services
44 Storage & Warehousing Services
45 Supply of Tangible Goods Services
46 Survey & Map Making Services
47 Scientific or Technical Consultancy Services
48 Sound Recording Studio or Agency Services
49 Technical Inspection and Certification Services
50 Technical Testing and Analysis Services
51 Telecommunication Services
52 Transport of goods by Air Services
53 Transport of goods by Rail Services
54 Transport of goods by Road Services
55 Works Contract Services
56 Transport of goods Services
57 Construction Services
58 On-line Information and Database Access Services
59 Rent-a-cab operator’s service
60 SEZ online service
61 Air Travel Agent Services
62 Rail Travel Agent’s Services
63 Travel Agent’s Services
64 Business Support Services
65 Transport Passengers by Air Services
66 Accommodation Services

There is no minimum investment criteria for setting up a SEZ Unit

There is no export obligation. However, the SEZ unit has to achieve positive
NFE during its 5 year period of operation, as per calculation prescribed under Rule
53 of SEZ Rules, 2006

The details of notified SEZs in Tamil Nadu (both operational SEZs and nonoperational SEZs along with the land vacancy position of each SEZ are available on
the website of MEPZ-SEZ:

With the recommendations of the Government of Tamil Nadu , SEZs have been set
up in several. parts of the State. As on date, there are 51 Notified SEZs in TamilNadu, out of which 36 SEZs are Operational. The total exports effected by these
Operational SEZs in Tamil Nadu during 2015-16 is Rs. 82717 crores. These SEZs
cover various sectors like IT/ITES, electronic hardware, engineering, footwear,
apparels, textiles etc.
The SEZ Units in Tamil Nadu are exempt from State taxes like Turnover
Tax, Sales Tax and Value Added Tax (VAT. The Government of Tamil Nadu has
accorded Public Utility Status to units in SEZs under the Industrial Disputes Act.
SIPCOT, a Government of Tamil Nadu Undertaking is the developer of 7
Sector Specific Special Economic Zones (SEZs) across Tamil Nadu out of which 5
are operational SEZs. SIPCOT also acts as a Nodal Agency of Government of Tamil
Nadu in the sanction and disbursement of Structured Package of Assistance to
large industrial units.
As per the policy directive of Government of Tamil Nadu, Electronics Corporation of
Tamil Nadu Limited (ELCOT) , a Government of Tamil Nadu Undertaking , is
engaged in the promotion of Information Technology Parks in Tier I and in the Tier
II cities such as Madurai, Tiruchirapalli, Hosur, Salem, Coimbatore, Tirunelveli, and
Vellore. ELCOT is the developer of 8 sector specific SEZs for Information
Technology / Information Technology Enabled Services , out of which 4 SEZs are
currently operational.
Single Window facilitation
Government of Tamil Nadu has designated Guidance Bureau as the
“Documentation and Clearance Centre” to accept common application form for
obtaining all pre-project state-level approvals and infrastructure support.
Government has notified that the common application designed by Guidance
Bureau will be effective from 1st January 2002 for all major investment proposals.
For additional information, please contact:
Mr.M Velmurugan IES
Executive Vice Chairman
Tamil Nadu industrial Guidance and Export Promotion Bureau
19-A, Rukmani Lakshmipathy salai,
Egmore, Chennai – 600 008, INDIA
Phone: (0091)-44-2855 3118, 2855 3866, 2855 3867
Telefax: (0091)-44-2858 836 e-mail: directorguidance@gmail.com
Contact address:
For additional details, please contact: www.investingintamilnadu.com

The Zonal Development Commissioner, MEPZ SEZ has Administrative
Jurisdiction and is the monitoring authority in respect of:-
SEZ Units located within the MEPZ-SEZ
SEZs developed by the State Government/ Private sector in the State of
Tamil Nadu, UT of Puducherry and Andaman & Nicobar Islands
EOUs located in the state of Tamil Nadu, UT of Puducherry and Andaman &
Nicobar Islands
MEPZ Special Economic Zone (formerly known as Madras Export Processing
Zone is a Multi Product SEZ located at Tambaram, Chennai set up by the
Central Government in 1984. The SEZ become operational in 1986. It was
converted as a Special Economic Zone with effect from 1.1.2003 in line with the
SEZ Policy of the Government. There are 125 units set up in the SEZ covering
various sectors.
For further details, please visit the website of MEPZ-SEZ