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The Government of India introduced the Special Economic Zone Scheme on 1.4.2000. The Scheme has been extended to the existing EPZs effective from 1.1.2003. The scheme offers wider scope for hassle-free business operations. Simplified documentation, procedural ease, self-certification by the units for all import and export cargo are some of the features that make the scheme attractive. Besides, the Scheme extends a package of benefits to the developers/promoters of SEZs.

The Development Commissioner is the nodal officer for Visakhapatnam SEZ and is the designated authority for implementation of the Scheme. The salient features of SEZ Scheme are :

SEZ is a designated duty free enclave and treated as foreign territory for trade operations, duties and tariffs.

Units can be set up for manufacturing, trading or service activity.

Net Foreign Exchange (NFE) is only positive which the SEZ units is required to achieve within three years.

Exemption from customs and central excise duty on import of capital goods, raw materials, consumables, spares etc.

Supplies from DTA to SEZ units treated as deemed exports. Domestic supplier may claim DEPB in lieu of drawback.

100% Income Tax exemption for 5 years and 50% exemption for 2 years thereafter.

100% foreign direct investment (FDI) and full and free repatriation of export proceeds permitted.

Exemption from payment of central sales tax.

Reimbursement of duty paid on furnace oil procured from domestic oil companies.

Part of production or production process maybe undertaken in the domestic area including jewellery units. Sub contracting part of production is also permitted.

No routine examination of import and export cargo by customs/central excise authorities.

Goods can be brought to or removed from SEZ premises on self-certification basis.

Performance of the units to be monitored by a Committee headed by the Development Commissioner and consisting of Customs officials.

SEZ Scheme allows private individuals or firms to participate by way of creating infrastructure in the zone.

The developer of infrastructure is allowed duty free (customs and central excise) import/procurement of goods for development, operations and maintenance of SEZ.

Income Tax exemption for 10 years in first 15 years is allowed.

Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis. 

Full authority to provide services like water, electricity, water, security, restaurants, recreation etc., on commercial lines.

Facility to develop township within SEZ with residential areas, markets, play grounds, clubs, recreation center etc.

Investment subsidy of 20% of fixed capital invested subject to a maximum of Rs.20 lakhs is given as subsidy. Of this, 50% is given in cash and the balance is given for the following purposes: 

Import of new and second hand machinery.

Testing and certification facilities for raw material and finished products.

An additional cash subsidy of 10% on capital investment subject to a limit of Rs.10 lakhs will be given to SC/ST entrepreneurs in eligible SSI and tiny units.

Exemption from payment of APGST on the inputs procured from within the State of Andhra Pradesh.

Exemption from payment of stamp duty and registration fee on registration of lease deeds for plots/built up space in the zone.

25% rebate on power tariff for eligible software and IT enabled service units.