A free-trade zone (FTZ) is a specific class of special economic

zone. They are a geographic area where goods may be landed,

handled, manufactured or reconfigured, and reexported without
the intervention of the customs authorities. Only when the goods
are moved to consumers within the country in which the zone is
located do they become subject to the prevailing customs
duties. Free trade zones are organized around
major seaports, international airports, and national frontiers
areas with many geographic advantages for trade. [1] It is a region
where a group of countries has agreed to reduce or
eliminate trade barriers.[2]
Definition[edit]
The World Bank defines free trade zones as "small, fencedin, duty-free areas, offering warehousing, storage, and distribution
facilities for trade, transshipment, and reexport operations."[3] Free-trade zones can also be defined
as labor-intensive manufacturing centers that involve the import
of raw materials or components and the export
of factory products.

A special economic zone (SEZ) is an area in which business and

trade laws differ from the rest of the country. SEZs are located
within a country's national borders, and their aims include:
increased trade, increased investment, job creation and effective
administration. To encourage businesses to set up in the zone,
financial policies are introduced. These policies typically regard
investing, taxation, trading, quotas, customs and labour
regulations. Additionally, companies may be offered tax holidays,
where upon establishing in a zone they are granted a period of
lower taxation.
The creation of special economic zones by the host country may
be motivated by the desire to attract foreign direct
investment (FDI).[1][2] The benefits a company gains by being in a
special economic zone may mean it can produce and

trade goods at a lower price, aimed at being globally competitive.

[1][3]
In some countries the zones have been criticized for being
little more than Chinese labor camps, with workers denied
fundamental labor rights.[4][5]

"Deemed Exports" refers to those transactions in which the goods

supplied do not leave the country and the payment for such
supplies is received either in Indian rupees or in free foreign
exchange.

Categories of
Supply

8.2

The following
categories of supply of
goods by the main/
sub-contractors shall
be regarded as
"Deemed Exports"
under this Policy,
provided the goods are
manufactured in India:

(a) Supply of goods

against Advance
Licence / Advance
Licence for annual
requirement/DFRC
under the Duty
Exemption
/Remission
Scheme;

(b) Supply of goods to

Export Oriented
Units (EOUs) or
Software
Technology Parks
(STPs) or
Electronic
Hardware
Technology Parks
(EHTPs) or Bio
Technology Parks
(BTP);

(c)

Supply of capital
goods to holders
of licences under
the Export
Promotion Capital
Goods (EPCG)
scheme;

(d) Supply of goods to

projects financed
by multilateral or
bilateral
agencies/funds as
notified by the
Department of
Economic Affairs,
Ministry of Finance
under
International
Competitive
Bidding in
accordance with
the procedures of

those agencies/
funds, where the
legal agreements
provide for tender
evaluation without
including the
customs duty;

(e) Supply of capital

goods, including in
unassembled/
disassembled
condition as well
as plants,
machinery,
accessories, tools,
dies and such
goods which are
used for
installation
purposes till the
stage of
commercial
production and
spares to the
extent of 10% of
the FOR value to
fertilizer plants;

(f)

Supply of goods to
any project or
purpose in respect
of which the
Ministry of
Finance, by a

notification,
permits the import
of such goods at
zero customs
duty;

(g) Supply of goods to

the power projects
and refineries not
covered in (f)
above;

(h) Supply of marine

freight containers
by 100% EOU
(Domestic freight
containersmanufacturers)
provided the said
containers are
exported out of
India within 6
months or such
further period as
permitted by the
customs;

(i)

Supply to projects
funded by UN
agencies; and

(j)

Supply of goods to

nuclear power
projects through
competitive
bidding as
opposed to
International
Competitive
Bidding.

The benefits of
deemed exports shall
be available under
paragraph (d), (e), (f)
and (g) only if the
supply is made under
the procedure of
International
Competitive Bidding
(ICB).

Benefits for
8.3
Deemed Exports

Deemed exports shall

be eligible for any/all of
the following benefits
in respect of
manufacture and
supply of goods
qualifying as deemed
exports subject to the
terms and conditions
as given in Handbook
(Vol.1):-

(a) Advance Licence

for intermediate

supply/ deemed
export/DFRC/
DFRC for
intermediate
supplies.

(b) Deemed Export

Drawback.

(c)

Exemption from
terminal excise
duty where
supplies are made
against
International
Competitive
Bidding . In other
cases , refund of
terminal excise
duty will be given.