Free Zones in India (SEZs) in 2023
Since 2003, Healy Consultants has been assisting our multinational Clients set up companies in India. An increasingly attractive option for foreign investors is the India Special Economic Zone (SEZ) company. There are currently 238 SEZs across India in 15 states.
Advantages of setting up an India SEZ company
- 100% tax deduction on export profits for the first five years, 50% tax deduction for the next 10 years and a 50% tax deduction on re-invested export profit for the following five years;
- Exemption from i) minimum alternative tax ii) central sales tax (CST) iii) services tax (ST) and iv) dividend distribution income;
- Duty exemption for goods imported for development, operation and maintenance of the SEZs;
- Miscellaneous incentives, including exemption from custom duties, excise duties and value added tax (VAT), depending on the state in which the SEZ is located;
- Up to US$500 million annually can be borrowed without any restriction on maturity date through recognised financial institutions;
- Pro-business infrastructure, including simpler licensing and regulatory procedures.
Best uses of an India SEZ company
- Many foreign investors set up an India SEZ to conduct export activities;
- The India SEZ company is ideal for companies importing raw materials, due to favourable import duties;/li>
- Information Technology (IT) firms;
- The states of Tamil Nadu, Gujarat and Maharashtra are popular locations to set up an India SEZ company. Visit this page to view a comparison of the best Indian states in which to do business.
Comparison of major states operating SEZs in India
Summary at a Glance Tamilnadu Gujarat Maharashtra Number of SEZs? 36 20 26 FTZs used mostly by which industry? IT/ITES Multi-product, IT/ITES IT/ITES Average annual Industrial space rent / 1000 sq. m. US$10,000 US$10,000 US$18,000 How long to set the company up? 3 months 2 months 3 months How long to open company bank account? 4 weeks 4 weeks 4 weeks Quality of Utilities Good Good Satisfactory Can sign sales contracts with Indian Clients? Yes Yes Yes Allowed to invoice India Clients? Yes Yes Yes Corporate tax payable in India on export revenue? 0% 0% 0% Corporate bank account SBI HSBC Citibank Physical office space required? Yes Yes Yes Industrial space availability Many Many Many Allowed to import raw materials? Yes Yes Yes Allowed to export goods? Yes Yes Yes Wholly foreign owned? Yes Yes Yes Can the entity hire expatriate staff in India? Yes Yes Yes Minimum number of directors 2 2 2 Minimum number of shareholders 1 1 1 Individual shareholders allowed? Yes Yes Yes Corporate shareholders allowed? Yes Yes Yes Corporate director(s) allowed? No No No Public register of shareholders and directors Yes Yes Yes LLC company allowed? Yes Yes Yes Can apply for immigration visas? Yes Yes Yes Annual audited financial statements to be submitted? Yes Yes Yes
Frequently asked questions
How to register a company in an Indian free zone?A free zone company will be incorporated in the same way as a simple Indian LLC. However, there will be an additional step involved, whereby the company’s promoters submit an additional application for approval to the state government. The state government will then pass this application on to the Board of Approval in the Ministry of Commerce and Industry, which will give the final approval.