Procedure & Regulations

The Government of India introduced the Special Economic Zones (SEZ) policy in April 2000 to create world-class infrastructure, streamline regulatory procedures, and attract foreign investment. This led to the enactment of the Special Economic Zones Act in 2005, which provides a stable policy framework to encourage economic activity, create jobs, and develop infrastructure.

The MEPZ (Madras Export Processing Zone) in Chennai is a special economic zone (SEZ) focused on promoting export-oriented industries. It offers various benefits and incentives to companies operating within its premises, including tax exemptions and a streamlined regulatory environment designed to encourage international trade.

Key Features of the SEZ Policy

Simplified Procedures

Single-window clearance for establishing SEZs and units.
Simplified documentation and self-certification.
Simplified processes for approvals, compliance, and regulatory procedures.

Types of Permissible Activities

SEZ Units can engage in manufacturing, services and trading of goods. Activities includes R&D, IT services, Electronics, warehousing, education and more.

Investment & FDI Norms

No minimum investment in machinery required for SEZ units.
100% Foreign Direct Investment (FDI) allowed in most sectors

Labour Laws

Relaxed labour laws to protect the interests of SEZ units and prevent disruptions.

Export Performance

No minimum export condition, but units must achieve positive Net Foreign Exchange (NFE) over 5 years.

Benefits for SEZ Units

Duty Exemptions

Exemption from customs, excise duties, and GST on goods and services used in production.
Tax exemptions for export profits under the Income Tax Act (100% for 5 years, 50% for the next 5 years).

Financial & Banking Support

Banks can offer off-shore banking services with fewer regulatory constraints.
Foreign exchange earnings and repatriation are facilitated.

Infrastructure Support

Plug-and-play facilities for IT and ITES companies, ensuring a smooth start for operations.
Access to various fiscal incentives like Duty Drawback and EPCG benefits.

Key Exemptions and Incentives

Exemptions for capital goods, raw materials, and consumables used in production.
Facilities for contractors include exemptions on imported and indigenous goods.
Export benefits for raw materials and capital goods.

Exit Mechanism

SEZ units can opt-out with approval, subject to payment of applicable duties and taxes.

Obligations of SEZ Units

SEZ units must maintain proper accounting and achieve positive Net Foreign Exchange earnings.
Regular reporting to the Development Commissioner and Customs Authorities.

Madras Export Processing Zone

National Highway-45, Tambaram, Chennai