India developed federal, state, and private special economic zones (SEZs) to boost foreign investment and encourage manufacturing and exports. Here, India Briefing introduces the benefits of SEZs as well as the SEZs and warehouses that can be found in the Delhi National Capital Region.
Special economic zones (SEZs) are an ideal investment destination for many foreign investors coming to India. Businesses that locate in an SEZ can realize a number of incentives, in addition to greater access to competitive infrastructure, labor pools, and suppliers.
In the Delhi National Capital Region (NCR), which is made of the capital Delhi and parts of the neighboring states, there are 14 operational SEZs. Delhi NCR's SEZ are mainly located in the satellite cities of Gurugram or Gurgaon, (Haryana state) and Noida (Uttar Pradesh state)
More than 70 percent of Gurgaon's state and private SEZs are located in micro-markets, such as the Golf Course Extension Road and Sohna Road areas, while Noida SEZs constitute one federal government SEZ and several private SEZs that are mainly concentrated along Noida expressway.
All these SEZs are well connected to India's main ports via railway network, expressways, and dry ports. Delhi NCR has five main railways stations, an international airport, and India's biggest inland container dry port (ICD) in Tughlakabad, an area is south Delhi.
The ICD at Tughlakabad has daily train services to India's major ports, including Jawaharlal Nehru Port Trust (JNPT) in Mumbai (Maharashtra state), and Mundra Port Trust (MDPT) (Gujarat state).
It has new state of the art equipment and facilities, coupled with excellent rail linkages to the gateway ports. It also touches the National Highway (NH)-2 and is conveniently located, having approach to major roads in Delhi connecting all national highways leading out of the state.
Together, these factors mean that investors have a lot of options within the NCR. Business people should first examine the incentives on offer to begin to understand the value of SEZs, before examining the variety of SEZs that have been established in the NCR.
Incentives for SEZ developers and SEZ units
The SEZ Act, 2005 offers several financial incentives to developers and tenants of SEZs.
In addition, foreign direct investment (FDI) equity caps are not applicable to companies operating from SEZs. The companies are exempted from the requirements of industrial licenses and are allowed to retain 100 percent of their foreign exchange earnings in special export earnersforeign currency exchange accounts.
SEZ located businesses are also free to sell goods in the domestic tariff area (DTA) on payment of applicable duties.
While SEZs' advantages make picking an investment destination a lot easier, business people that would like to set up in the Delhi NCR should carefully examine each SEZ on paper before making a shortlist of locations to visit.
Federal Government SEZ
There are seven federal government SEZs that were set-up across India before the enactment of the SEZs Act, 2005. Out of these, only one is located in Delhi NCR region – New Okhla Industrial Development Authority (NOIDA) SEZ (NSEZ).
Noida Special Economic Zone
The SEZ is located in Noida, which borders Delhi, and connects into greater India via the Noida-Greater Noida Expressway.
The NSEZ houses businesses that are primarily engaged in software or gems and jewelry. Jewelry and software development units account for about 75 percent of the export turnover from the NSEZ. Other industrial units comprise manufacturers of garments, electrical goods, pharmaceuticals, leather, and sports products.
The NSEZ has 202 developed plots, 13 factory complexes that can accommodate 208 units, including one exclusive block for trading service units.
The region receives power from the integrated grid of Uttar Pradesh state power systems and the northern regional grid. All units in the SEZ receive a continuous supply of water; water charges are INR 2054 (US$30) per standard design factory (sdf) per quarter.
- Hazrat Nizamuddin railway station –12.4 miles (19.9 km);
- Anand Vihar Railway station –14.4 miles (23.1 km);
- New Delhi Railway Station –15.9 miles (25.7 km).
- ICD Tughlakabad –12.24 miles (19.7 km).
- Indira Gandhi International Airport, Delhi –21.12 miles (34 km).
Distance from key cities:
- Delhi, Meerut, Faridabad, Aligarh, and Mathura falls within the 62.1 miles (100 km) radius;
- Jaipur, Bareilly, Agra, and Gwalior falls within 186.4 miles (300 km) radius of the SEZ.
State government and private sector SEZs
Since the enactment of the SEZs Act, 2005, the state governments of Delhi, Haryana, and Uttar Pradesh, as well as the private sector have set up several SEZs across the Delhi NCR. Most of these SEZs are sector specific and focus on information technology (IT) and IT enabled services (ITeS).
Operational SEZs in Noida
Noida and greater Noida region has 21 notified SEZs; 18 are for IT or ITeS sector, one for agro and food processing products, one for biotechnology, and one for handicrafts. Out of these the following SEZs are currently operational:
- HCL technologies
Located at sector 3, Noida, HCL technologies is an IT and ITeS SEZ. It is spread over 16.91 hectares of land.
- Moser Baer SEZ
Moser Baer SEZ focuses on the production of non-conventional energy including solar energy equipment. It is located in greater Noida and covers an area of 11.9 hectares.
- Aachvis Softech Private Limited
Located at sector number 144, the SEZ is for IT and ITeS companies. Aachvis Softech covers an area of 10 hectares.
- Wipro Limited
Wipro Ltd. SEZ is located in Greater Noida and is spread over 20 hectares of land. Its focus sector is IT and ITeS.
- NIIT Technologies Limited SEZ
NIIT is a sector specific SEZ for IT and ITeS. It is located in greater Noida and is spread around 10.12 hectares of land.
Greater Noida connectivity
- Hazrat Nizamuddin railway station – 21.4 miles (34.5 km)
- Indira Gandhi International Airport, Delhi – 31.25 miles (50.3 km)
Operational SEZs in Gurgaon
SEZs have emerged as major export hubs in Gurgaon. Total 28 SEZs have been notified in Gurgaon district. Out of these, two zones are multi-service, 20 are for IT and ITeS, two are for biotechnology, two are for electronics and hardware, one is for textiles, and one is for engineering. The following SEZs are currently operational in the district:
- DLF Cyber City Hub
Located at sector number 24 and 25A, Gurgaon, DLF cyber city is an ITeS SEZ. It is spread over 14.97 hectares of land.
- DLF Limited
DLF Limited is located just off the National Highway-8 and in close proximity to Indira Gandhi International Airport. The SEZ is spread across 10.3 hectares of land.
- Gurgaon Infospace Limited
Gurgaon Infospace is located at Dundahera village, Gurgaon district. The SEZ covers an area of 11.202 hectares. It is a sector specific SEZ for IT and ITeS businesses.
- ASF Insignia SEZ Private Limited
ASF Insignia SEZ (also known as Canton Buildwell Private Limited) is located in Gurgaon adjoining the Faridabad-Gurgaon road. The project is spread over 19.302 hectares. It is an IT sector specific SEZ.
- Unitech Reality Projects Limited
Unitech Realty Projects Limited is located at Tikri village in Gurgaon. Unitech Reality Projects is spread over an area of 10.041 hectares. It is an IT sector specific SEZ.
- New Delhi Railway Station –23.1 miles (37.1 km);
- ICD Tughlakabad –17.7 miles (28.6 km).
- Indira Gandhi International Airport, Delhi –11.74 miles (18.9 km).
Warehousing clusters in Delhi NCR
Warehouses form a vital part of the supply chain for companies distributing goods manufactured in SEZs to other parts of the country. Companies might own or lease spaces, but all of them need well-oiled warehouses to keep their supply chain efficient.
Instead of storing imported goods in regular warehouses, companies trading and manufacturing in SEZs can use bonded warehouses to stock their products.
Bonded warehouses accept imported goods before payment of customs duties. By storing his goods in a bonded warehouse the importer gains some control without paying the duty. However, they are not allowed to take away the goods until such duty is paid.
Bonded warehouses are owned, managed, and controlled by the government as well as private agencies.
In Delhi NCR, there are several private agencies that offer bonded warehousing services. These are mostly located in the region's major industrial and warehousing clusters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.