APPENDIX - 16G

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GUIDELINES FOR SETTING UP PRIVATE/STATE/JOINT SECTOR EXPORT PROCESSING ZONES

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With a view to augmenting infrastructural facilities for export production it has been decided to permit the setting up of Export Processing Zones (EPZs) in the Private/Joint/State sector. The following guidelines will apply to such proposals:

1. An Export Processing Zone (EPZ) can be developed and managed either privately or jointly by State Government and a private agency or exclusively by the State Government or their agencies.
   
   
2. The policy, procedures and entitlements applicable to units in the EPZ will also apply to the units to be established in the private/joint/State sector EPZ.
   
   
3. Private/Joint/State sector investment in the manner brought out at para 1 above may also be utilised to develop additional infrastructure facilities including construction of Standard Design Factory buildings in the existing Export Processing Zones(EPZs)/Special Economic Zones (SEZs). For this purpose, land already available in the EPZs/SEZs may be leased or sub-leased to developers, inter alia, on the terms and conditions indicated below:
   
   
   1. Units approved by the Development Commissioner of the Zone under the EOU/EPZ/SEZ scheme, are only eligible to occupy space in the infrastructure so created.
      
      
   2. The land would, ordinarily, be leased or sub-leased by the Zone administration to the developer for a period of 30 years and to be renewed for a similar period.
      
      
   3. A legal agreement shall be entered into between the Zone Administration and the developer before the land is handed over.
      
      
   4. The developer shall pay the lease or sub-lease rent for the land to the Zone administration from the date of possession.
      
      
   5. Private sector participation could be in either of the two ways: (i) Build and Own basis; and (ii) Build and Operate basis; or in combination of both:
      
      
      1. The developer operating under the first category, shall construct the premises and transfer the same on outright sale basis to the units. The pro-rata lease or sub-lease rent for the land shall be payable annually in advance by the units to the Zone administration from the date of possession. The period of lease or sub-lease shall not exceed 30 years and to be renewed for a similar period.
         
         
      2. The developer operating under the second category, shall construct the premises and rent out the same to the units. The period of lease or sub-lease shall not exceed 15 years.
      
      
      
   6. Transfer or sub-lease of the constructed premises by the units would not be permissible.
      
      
   7. Selection of the developer would be done by way of open competitive bids and the parameters for evaluation would be clearly spelt out in the bid document.
      
      
   8. Development Commissioner of the EPZ/SEZ shall have the right to accept or reject any of the bid.
      
      
   9. Any change in the parameters/pattern of execution of the work, if necessary, will be effected only with the prior consent of Ministry of Commerce and Industry, Department of Commerce.
      
      
   10. During the period of construction of a private Standard Design Factory (SDF) in an EPZ/SEZ, the Zone administration will normally not undertake construction of any other SDF in the Zone.
   
   
   
4. Proposals for setting up EPZs in the private/joint/state sector are required to meet the following conditions:
   
   
   1. The EPZs and units therein will abide by local laws, rules, regulations or bye-laws in regard to area planning, sewerage disposal, pollution control and the like. They shall also comply with industrial and labour laws and such other laws/rules and regulations as may be locally applicable.
      
      
   2. The EPZ promoters shall bear the Custom bonding charges and also provide appropriate office accommodation for such Government officers whose regular presence may be necessary in the zone.
      
      
   3. Such EPZs shall make security arrangements and fulfil all the requirements of the Customs laws, rules and procedures.
      
      
   4. Only units approved under the EPZ Scheme would be permitted to be located in these EPZs.
   
   
   
5. Procedure for approval:
   
   
   1. Proposal for establishing Private/Joint/State Sector EPZs, will be considered by an Inter-Ministerial Committee (IMC), set up for this purpose, in the Department of Commerce,
      
      
   2. Applications (ten copies) indicating the name and address of the applicant, status of the promoter (whether Individual/Private Company/State Government/ NRIs, etc.), along with a project report covering the following particulars may be submitted to the Development Commissioner (jurisdictions of the Development Commissioners are given in Appendix 27 to the Handbook of Procedures, 1997-2002):
      
      
      1. Location of the proposed zone with details of existing infrastructure and that proposed to be established, its area distance from the nearest Sea Port/Airport/Rail etc.
         
         
      2. Financial details including investment proposed, mode of financing the project and viability of the projects.
         
         
      3. Details of foreign equity and repatriation of dividends etc., if any.
         
         
      4. Whether the zone will allow only certain specific industries or will be a multi-product zone.
   
   
   
6. On acceptance of the proposal, a Letter of Permission will be issued to the applicant. The approval will be subject to cancellation in the event of any abuse or violation of the conditions of approval.
   
   
7. RBI guidelines on real estate ownership/development by NRI and Foreign/Indian companies, will also apply to the establishment of these EPZs.
   
   
8. Applications of units proposed to be located in such Zones, will be entertained only after requisite notifications have been issued by Central Board of Excise and Customs.