Free Trade and Warehousing Zones

by Seek Academy Training Institute

The Free Trade and Warehousing Zones (FTWZ) is a special category of Special Economic Zone and is governed by the provisions of the SEZ Act and the Rules. FTWZ is designated as a deemed foreign territory and are envisaged to be integrated zones and to be used as International Trading Hubs.

Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on. It is a deemed foreign territory within the geography of India for the purpose of tariff and trade.

The Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 are the legal framework for FTWZ. Instructions are also issued by the Ministry of Commerce & Industries from time to time to clarify various operational aspects of FTWZ.

What are the activities allowed inside the FTWZ?

· Warehousing of goods on behalf of foreign or domestic clients

· Trading with or without labeling

· Packaging and repacking

· Re-sale, re-invoice, or re-export of goods

· Assembly of complete and semi-knockdown goods

· Kitting and various value optimization services on the goods/cargo

UNIQUE BENEFITS

FTWZs provide immense benefits in various operations to all kinds of industries

For Imports:

· Flexibility towards end distribution in India

· Duty deferment benefits

· Quality control capability prior to duty-payment

· Exemption of Excise, VAT & CST purchases for FTWZ operations. Service tax exemption on all services, including transportation.

· Availability of Temperature controlled area for medicines & other human consumption Products

· Lowered product costs, foreign exchange transaction capability

For Exports:

· Products from India entering the FTWZ are treated as deemed export providing immediate benefits to suppliers

· Local Tax Exemption (e.g. CST, Sales Tax, and Excise & VAT) on all activities like packaging material for VoS carried inside the zone.

· Increased efficiency through lowered reverse logistics through quality control before dispatch from India.

· Foreign exchange transactions capabilities

· Increasing supply chain efficiencies (forward & reverse) while enhancing capital flow

For Re-Exports:

· Service tax exemption on all activities conducted inside the FTWZ including rental & labor

· Exemption from custom and stamp duty on products imported into FTWZ meant for re-export out of India

· Income tax rebate on profit earned through export transaction

· Hassle free re-export process

· Permission of 100% FDI for the set up of units

· Ability of leverage India’s cost, skill & geographic positioning advantage as a hub for regional/global distribution post Value Optimizing Services.

ADVANTAGES

· Duty deferment benefits: free up working capital, reduction of buffer stocks, initiate volume discount and ensure higher inventory visibility.

Unlocking of capital facilitates postponement distribution which allows deeper penetration of the Indian market, thus enhancing within the budgetary ceiling.
24/7 customs clearance facilitates enhanced speed and efficiency of distribution.
Service tax exemption can be claimed on services availed — including primary transportation.
No regulatory implications for re-export.
Income tax exemption on the re-export margins.
A business environment that allows prompt clearances of legal and regulatory compliances.
Foreign exchange transactions allowed.
24x7 security services with CCTV cameras, guards and dog squads.
Excellent security solutions to ensure maximum safety of products.