Metal & Mineral SEZ in Odisha
Metal & Mineral SEZ in Odisha

Export of minerals such as Iron ore, Chromite and Manganese ore have declined on the grounds of mining restriction, compliance and many other factors. Along with it, some major Greenfield investments were planned in the existing ports under the BOOT format. This is a difficult situation from an investor point of view as well as from the government’s. It doesn’t appears that much change is to happen in the near future, as the Supreme Court and other authorities are rigid about adhering to compliance and clearance, particularly with regards to mineral resources.

To make best use of the situation and its location advantage, the Central & the State Government should identify
some of the existing and upcoming ports as ‘Metals & Minerals Processing Zone’ or SEZ.

sezAdvantages offered by a SEZ

Apart from the warehousing & storage, connectivity to major national highways, availability of railway siding, tipplers & other equipments, solid waste disposal facility, common effluent treatment plant, scope for importing minerals by the user industries within SEZ, conveyor systems from port to user industry within SEZ and other support infrastructure such as nationalized & private sector banks with SEZ, post office & telephone exchange, offices of departments like mining, sales tax, excise etc, some Odisha specific advantages are below.

1. Location advantage: Keonjhar, Barbil, Joda, Chhattisgarh & Jharkhand are hubs of important minerals viz. Iron ore , Lime stone, Bauxite, Manganese, Coal, China clay, Granite & Chromite, which are mined within 200-350 km from Odisha coast.
2. Scope for coastal shipping for its processed products like Iron ore, Manganese, Chromite, Bauxite & others.
3. Common Iron ore crusher & Chrome ore beneficiation plant
4. Port capable of handling cape sized coal vessels
5. Coke ovens units can be built in vicinity of SEZ, this’ll support the steel industry
6. Reduced logistics cost for large quantum of minerals due to port based SEZ
7. Availability of low cost & reliable power from the nearby power plant
8. Availability of large quantity of normal i.e. potable or industrial water as well as brackish i.e. sea water

Fiscal Advantages

Units located in SEZ get a host of fiscal advantages over those located in domestic area. The SEZ Policy of the Government of India offers a number of financial benefits for manufacturing units in the SEZ. The broad advantages could be

Direct Tax Benefits – Income Tax on Export Profit

1. 100% exemption for the first 5 years
2. 50% exemption for the sixth to tenth (next 5) years
3. 50% exemption on the ploughed back profits, for an additional 5 years, after ten years

Indirect Tax Benefits – Perennial exemption in all taxes including

1. Excise Duty, Service Tax, Value Added Tax (VAT), Stamp Duty / Lease Tax
2. External Commercial Borrowings up to a limit, without any specific approval
3. Cost competitive financing can be availed from Offshore Banking Units (OBUs) Custom Duty
4. Entry Tax and various other state levies that would otherwise be applicable on operations
a. Domestic Tariff in which, the supplier is eligible for export benefits on SEZ sales making the sourcing cost competitive.
b. Benefits from the State Government
c. VAT – Zero Rate Procurement
d. Exemption from Stamp duty and Registration fees on lease of land/mortgage deed.
e. Exemption from Electricity Duty for 10 years from the date of operation

Operational Advantages offered by the Authorities

SEZs can offer a host of benefits that facilitate operations for in-zone industrial units. In addition to the Government of India benefits, the Odisha State government can also design a policy that offers added incentive to the SEZ industrial units.

1. Single window clearance for statutory requirements
2. Waiver of routine customs examination of import & export
3. Clearance of export consignments on self-certification
4. 100% FDI permitted through the automatic approval route, except the negative list
5. Relaxed labor policy especially for SEZ units, as per Odisha State Labour Policy for SEZ
6. Freedom to realize and repatriate export proceeds within 12 months
7. No limit on quantum of DT sales
8. Foreign investments allowed for items generally reserved for the small scale sector
9. Contract manufacturing permitted with units outside the SEZ or in other SEZs

While Odisha value adds its mineral resources, there will be an inflow of investment, increase in revenue, economic growth & employment generation.