Sez incentives

The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
100% Income Tax exemption on export income 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.
Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
External commercial borrowing by SEZ unitsupto US $ 500 million in a year without any maturity restriction through recognized banking channels.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State level approvals.
Exemption from State sales tax and other levies as extended by the respective State Governments.

Foreign Direct Investment:

100% foreign direct investment is under the automatic route is allowed in manufacturing sector in SEZ units except arms and ammunition, explosive, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes , cigars and manufactured tobacco substitutes.
No cap on foreign investments for SSI reserved items.

Banking / Insurance/External Commercial Borrowings:

Setting up Off-shore Banking Units allowed in SEZs.
OBU's allowed 100% Income Tax exemption on profit for 3 years and 50 % for next two years.
External commercial borrowings by units up to $ 500 million a year allowed without any maturity restrictions.
Freedom to bring in export proceeds without any time limit.
Flexibility to keep 100% of export proceeds in EEFC account. Freedom to make overseas investment from it.
Commodity hedging permitted.
Exemption from interest rate surcharge on import finance.
SEZ units allowed to 'write-off' unrealized export bills.

Environment:

SEZs permitted to have non-polluting industries in IT and facilities like golf courses, desalination plants, hotels and non-polluting service industries in the Coastal Regulation Zone area

Exemption from public hearing under Environment Impact Assessment Notification

Sub-Contracting/Contract Farming:

SEZ units may sub-contract part of production or production process through units in the Domestic Traiff Area or through other EOU/SEZ units
SEZ units may also sub-contract part of their production process abroad.

Agriculture/Horticulture processing SEZ units allowed to provide inputs and equipments to contract farmers in DTA to promote production of goods as per the requirement of importing countries.