FREE TRADE & WAREHOUSING

ZONES
 Presentation outline
™ FTWZ Genesis

™ FTWZ Concept

™ FTWZ – Facilities and Utilities

™ FTWZ – Positioning

™ FTWZ – Relevant Laws

™ FTWZ – Benefits

™ FTWZ – Approval procedure

™ IIDC Role play

™ FTWZ transactions by IIDC

 FTWZ Genesis

9 The Government of India had announced in the Foreign Trade Policy

2004-09 to set up Free Trade and Warehousing Zones (FTWZ) to create
trade related infrastructure to facilitate the import and export of goods
and services with freedom to carry out trade transactions in free
currency.

9 On June 23, 2005, the Parliament of India passed the Special Economic
Zones Act 2005 and on February 10, 2006 Government of India notified
Special Economic Zones Rules 2006.

9 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 - Concept

9 FTWZ is a ‘Sanitised’ zone designated as Foreign Territory for carrying on business

9 FTWZ’s are envisaged to be Integrated Zones to be used as ‘International

Trading Hubs’

9 Each Zone would provide ‘World Class’ Infrastructure for :

¾ Warehousing for various kinds of products
¾ Handling and Transportation Equipment
¾ Commercial office space
¾ All related utilities – telecom, power, water, etc
¾ One stop clearance of Import and Export of goods

9 FTWZ would be a key Link in Logistic and Global Supply chains – servicing both

India and the Globe

 FTWZ - Facilities
Key product offerings that would be potentially available in a FTWZ are:

9 Customised categorised warehouses ~ chemicals, food, electronics, oil,

etc.

9 Sophisticated freezer / cooler facilities

9 Break bulk, containerised, and dry cargo storage facilities

9 Controlled humidity warehouses

9 Enhanced transportation facilities

9 World-class information system for cargo tracking etc.

9 Office space

9 Support facilities and amenities like medical facility, canteen services,

business centres
 FTWZ - Utilities

•Administrative
building and office
•Ancillary building
•Canteen
•Services building
•Covered parking
•Rain water and storm •Roads •Security huts
water drainage •Container stacking
•Effluents disposal area pavement
system •In plant maintenance
•Telecom cables workshops
•Power supply system •General high mast
lighting
•Horticulture and
landscaping
•Boundary wall
•Water supply and
sewerage
 FTWZ - POSITIONING

Logistics and
Distribution Centre

Provides “Free Zone” Enables efficient Integrates various

environment operational environment aspects of logistics
for trade facilitation operations

Provision of high
quality infrastructure
 FTWZ - Relevant Laws
9 Principally governed by the SEZ Act 2005 and SEZ Rules 2006

9 100% Foreign Direct Investment is permitted in development and

establishment of FTWZ

9 FTWZ is a deemed foreign territory and all equipments and materials

sourced from the Domestic Tariff Area will be considered as Imports by the
FTWZ and vice versa

9 Minimum size of the warehousing stipulated at 1 lakh sq mtrs

9 All benefits available to the SEZs shall be applicable to the FTWZs

9 The FTWZ shall be under the administrative control of the Development

Commissioner (DC)
 FTWZ - Benefits

Fiscal and Regulatory Benefits

9 Duty Deferment Benefits – Custom Duty deferment benefits for products requiring

longer storage time

9 Income tax (section 80IA) and Service Tax exemptions for developers and users of

the zone ~ reduces logistics costs for users of the zone

9 Excise Duty Exemptions – Excise duty exemption for products sourced from the

domestic markets, including goods, spares, DG sets, packing materials, etc

 FTWZ - Benefits
Infrastructure Benefits

9 Single Product Storage Facilities - Assist in meeting specific warehousing

requirement for each product category e.g. different sections for storage of tea and

coffee, etc

9 Shared warehousing – Availability of temporary storage facilities to enable users to

meet short term demand without incurring significant costs (e.g. leasing space for a

year to meet 2/3 months demand)

9 Shared Equipments – Ability of users to save on capital investments by leasing

equipments provided by the zone

 FTWZ - Benefits

Administration Benefits

9 Delivery Time – Reduction in custom clearance time and better logistics

connectivity leading to improved delivery time

9 Support Facilities and Effective Management – Provision of efficient

management services and international expertise along with support facilities

such as banking, insurance etc.

 FTWZ – Benefits to Region / State

9 Export oriented

9 FDI inflow

9 Employment potential

9 Competitiveness of industries

9 Attractiveness of support/ancillary industries

9 Boost to all-round economic activity

 FTWZ – Approval Procedure
9 Step 1
– Application to Board of Approvals / State Government to set up FTWZ in
Form A format

9 Step 2
– State Government recommends / forwards the proposal to the Board of
Approvals along with recommendations

9 Step 3
– Board approves with or without modifications / rejects the proposal. May
also accord In-Principle approval pending land acquisition

9 Step 4
– Issuance of Letter of Approval by GoI in Form B format; LOA validity 3
years during which time Developer shall take effective steps to implement
the approved proposal
 FTWZ – IIDC Role Play
The project development activities encompass the entire gamut for setting
up and operating the FTWZs.
Project Preparatory Activities: Project Feasibility & Business Plan:
•FTWZ In-Principle and Formal approval •Conducting feasibility study
•FTWZ Notification •Business plan and financial modeling
•State support assistance •Risk management framework
•Other regulatory and statutory approvals
•Proposal for Government grants (if required)

Project Implementation structure:

•Project execution and O&M arrangements
•Financial structuring
•Development of detailed term sheet
•Legal assistance, marketing/ organization structure/
strategy

Project Financing: Project Execution:

•Financial closure of projects, both debt and equity •Engineering and Procurement
•Project management and supervision
 FTWZ – Transactions by IIDC
9 Joint Venture initiative with MMTC under Free Trade Warehousing
Private Limited (FTWPL)
– To undertake development of FTWZs at Greater Noida (UP), Kandla
(Gujarat), Haldia (WB), Mumbai (Maharashtra) and Ennore (TN)

9 Joint Venture initiative with CONCOR to undertake project

development of FTWZs at various identified locations

9 Other FTWZ initiatives which are part of larger Integrated Logistic

Hubs
 Contact us

Mr. Umesh Soni Mr. Manish Tripathi

Vice President Senior Manager
IL&FS Infrastructure Development Corporation Ltd IL&FS Infrastructure Development Corporation Ltd
Core 4B, India Habitat Centre Core 4B, India Habitat Centre
Lodhi Road, New Delhi-110003 Lodhi Road, New Delhi-110003
Ph-011-24682060-64 Ph-011-24682060-64
Fax-011-24682070 Fax-011-24682070
Email- umesh.soni@ilfsindia.com Email- manish.tripathi@ilfsindia.com

Mrs. Shilpi Sharma

Asst. Manager
IL&FS Infrastructure Development Corporation Ltd
Core 4B, India Habitat Centre
Lodhi Road, New Delhi-110003
Ph-011-24682060-64
Fax-011-24682070
Email- shilpi.sharma@ilfsindia.com