Patkar & Sons Shipping Agencies Pvt. Ltd.

FTWZ (Free Trade Warehousing Zone) is deemed as a territory outside the Customs Territory of India.

FTWZ is governed by the provisions of Special Economic Zones Act, 2005 and the Special Economic Zone Rules, 2006 made thereunder. Further, the Ministry of Commerce & Industries also issues directions/clarifications from time to time.

Both trading and warehousing operations can be carried on in a FTWZ with deferred Customs Duty liability. Other processing activities can also be done subject to the applicable procedures and permissions, which includes:- (The client needs to check rules in their country)

1. Packaging and repacking.
2. Labelling, re-labelling.
3. Assembling and de-assembling etc.

All transactions by a FTWZ unit shall only be done in convertible FOREX.

The Ministry of Commerce and Industry has clarified that FTWZ units can hold goods on behalf of foreign suppliers and buyers and DTA suppliers and buyers as well. It is further clarified that Trading and Warehousing units located within FTWZ can carry out DTA to FTWZ and vice-versa transactions.

In case of DTA clearances by FTWZ, all the import regulations/restrictions and permissions would be applicable as applicable to imports into India. However, in case of DTA clearances by FTWZ, all import related specific permissions (under any law) can be taken from the Board of Approvals, Ministry of Commerce and Industry, Government of India.

Yes, if Sales are made in foreign currency. Sales made to DTA are considered as export.

Normal Labour Laws are applicable to FTWZs and are enforced by the respective State Governments. The State Governments have been requested to simplify the procedures/returns and introduce a single window clearance mechanism by delegating appropriate powers to Development Commissioners of FTWZs/SEZs.

DTA clearances by FTWZ units are possible only on payment of applicable Customs Duties as in the case of import into India.

DTA clearances by FTWZ Units are subject to importability of the subject products under the ITC (HS) Classification as per FTP. Otherwise the provisions of SEZ Act and the subordinate legislation only would apply.

Normal import and Customs procedures including filing of Bill of Entry and assessment would have to be followed for DTA clearances by FTWZ Units.

For DTA clearances to a related unit/branch, the Customs Valuation shall be subject to applicable law governing related party transactions, including the SVB valuation.

As per RBI Circular dated 16th June 2003, DTA clearances by a SEZ (which includes FTWZ) unit can be against freely convertible FOREX.

No. In terms of the express provisions under the Central Excise Act, no Central Excise Duty is payable by FTWZ units for any manufacture.

No Central Excise registration and compliances will be applicable.

In case of DTA clearances by FTWZ, standard import procedure and conditions will apply.

Merely using the warehouse for storing the goods in FTWZ will not make the foreign entity a PE in India.

Major differences between FTWZ & Customs Bonded Warehouse are listed below :-

1. Time limit for storing the goods without paying the Customs Duty in Customs bonded warehouse is 90 days, post this interest is levied and needs to be paid at applicable rates. However, in FTWZ, goods can be stored for longer period of time with deferred Customs Duty liability.
2. More value added services are allowed inside FTWZ as compared to Customs Bonded warehouse.

Following are the benefits :-

1. The foreign party needs no presence or registration in India.
2. The ownership of goods always remains with the foreign party until the sales are committed from the FTWZ.
3. Flexibility of working capital management as Customs Duty is payable on a deferred basis only when the goods are ultimately cleared from the FTWZ to the ultimate Indian customer of the foreign party.
4. Goods can be stored in FTWZ for reasonably long periods of time.
5. There is also flexibility of re-directing the goods from the FTWZ to other geographical locations outside India, without incurring any import duty liabilities.
6. Roll back of transactions from FTWZ is also possible without incurring any regulatory or tax hurdles.
7. In case of reverse transactions of procurement of goods from India, the ownership and possession is transferred to the foreign party the moment the goods are received by FTWZ on their behalf.
8. Consolidation and de-consolidation hub within India, but in FTWZ territory, which is deemed to be a place outside India and also a notified deemed port.
9. World-class warehousing and storage infrastructure to meet all short, medium and long term demands.
10. Dependable logistical services are available at very reasonable cost.
11. Highest standard of value added services like packing, re-packing, labeling, re-labeling etc.
12. Efficient MIS and updation services in respect of goods stored or held on behalf of clients of FTWZ.
13. Taking advantage of the statutory benefit of exemption from coverage of various indirect tax laws, as long as the goods remain within the FTWZ.

A minimum five years lease period is required between FTWZ Developer and the Unit Holder.

In our view, 6 weeks to 8 weeks from the date of proposal submitted to the approval committee.

Yes.

Letter of Approval is the permission granted by the Committee to an entrepreneur to set up a unit in the FTWZ to carry on authorised operations.

Customs duty is exempt when goods are imported into FTWZ for authorised operations.

Stamp duty is not applicable for import in to FTWZ

The unit has to achieve positive Net Foreign Exchange (NFE). There are no such obligations for clients who are warehousing their goods with a service unit in FTWZ.

The NFE is to be calculated as per the provisions provided under SEZ Rules.