Tariffs

Lease Rent:

Lease rent for land and built-up space is as follows. The tariff is liable for revision once in 3 years. The next revision is due in 1998. Revision will not exceed 25%

Rental concession for three years is available, if production is commenced within the prescribed period. The period is one year in case of SDF units and two years in case of developed plots. The concession is :

Water Charges       : Rs.10 per 1000 litres

Electricity charges: are payable to the Electricity Board. The current tariff rate for LT and HT are:

L.T.

• Rs.2.40 per unit consumed upto 1500 units.
• Rs.2.80 per unit thereafter plus taxes.

H.T.

• Rs.100 ;per KVA per month towards minimum demand charges plus
• Rs.2.50 per unit consumed and taxes.

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Incentives

Incentives offered by the Government of India

1. Import of capital goods, raw materials,spares, tools, consumables, components, packing materials etc.

• totally exempted from Customs duty
• no import licence is required;
• can be from preferred sources.
• second hand capital goods may be imported subject to conditions
• capital goods may also be leased from a domestic leasing company which can import the capital goods free of duty

2. Supplies of capital goods, raw materials etc. to the Zone units from the rest of the country i.e. Domestic Tariff Area (DTA) are

• exempted from Central Excise Duty
• eligible for reimbursement of Central & State sales taxes
• treated as "Deemed Exports" with associated benefits.

3. Income-Tax holiday for any five consecutive years within the first eight years of commercial production.

4. Foreign investment is

• permitted upto 100% of equity;
• profits , dividend and capital with appreciation can be repatriated after payment of taxes.

5. Liberal sanction of foreign exchange including blanket permits for business visits abroad.

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Incentives offered by the Tamil Nadu State Government

1. Capital subsidy of 15% on fixed assets with a monetary ceiling of Rs. 1.5 million (US $ 43,000 at exchange rate of Rs.35)
2. Capital subsidy to Electronic and Leather industrial units: 20% of the fixed assets upto a monetary ceiling of Rs. 2 million (US $ 57,000).
3. Capital subsidy to Automobile Spareparts, Drugs & Pharmaceuticals, Sports Goods, Gold jewellery and diamond processing Units : 10% of fixed assets, subject to a ceiling of Rs. 1.5 million (US $ 42,000)
4. Capital Subsidy for employing more than 30% Women in the work force : 5% of fixed assets with ceiling of Rs. 0.5 million (US $ 14,000)
5. Capital Subsidy for Effluent Treatment Plant : 10% of fixed assets with ceiling of Rs. 0.2 million (US $ 5,700)
6. Capital Subsidy for purchase of new generators for captive use at the rate of 15% with a monetary ceiling of Rs. 0.5 million (US $ 14,000).
7. Reimbursement of Tamil Nadu State Sales Tax paid on inputs used for export production.
8. Exemption from stamp duty and registration fees in respect of conveyances relating to lease of plots.

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Procedure for Clearance

Entrepreneurs who wish to set up a unit in the Zone have to apply in the prescribed form which can be obtained free of cost from the Development Commissioner's office.

Completed forms in 10 copies with a fee of Rs.1000/- alongwith a detailed project report and evidence of firm marketing arrangements made, have to be submitted to the Development Commissioner.

Decision on the application is taken within 14 days by the Development Commissioner under the Automatic Approval Scheme.

Criteria for Automatic Approval are :

• NFEP (Net Foreign Exchange Percentage) is as per prescribed norms
• Foreign exchange requirement for capital goods does not exceed Rs.100 million (US $ 2.78 millions)
• Exports are envisaged to General Currency Area only.
• Payment of fees for foreign technology and royalty is less than Rs. 10 million (US $ 0.28 millions) or 8% respectively.
• No sub-contracting of part production in Domestic Tariff Area.
• The proposed industry is non-polluting.

In respect of proposals not falling under the purview of Automatic Approval Scheme , the Board of Approval in the Ministry of Commerce, Government of India, takes a decision within 45 days.

After receiving the Letter of Approval , the promoter can apply for allotment of a vacant plot or built-up space. Allotment is made within a week. Power and water connections are provided immediately on allotment.

MEPZ will also assist the promoter in subsequent steps like obtaining clearance from the pollution control authorities, approval from local authorities and the Reserve Bank of India.

All customs clearances for import and export of goods are provided expeditiously by the Customs office located in MEPZ.

Some of the steps to be taken by the units before commencing production are :

• The company should be registered.
• A current account to be opened with a bank authorised to deal in foreign exchange.
• An Import-Export Code (IEC) number should be obtained from the Office of Development Commissioner.
• Sales tax registration from Commercial Taxes Department.
• Pollution Clearance certificate.
• Approval of building plan in cases where a building is proposed to be constructed.
• Registration as a small scale industrial unit, if applicable
• Registration under Factories Act.

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Units in the Zone

Any pollution-free industry which is not power-intensive or water-intensive can be set up in the Zone. Since the Zone is close to the airport, processing undertaken should be such as not to attract birds.

Presently 77 units are functioning in the Zone and another 24 are being setup. List of units can be seen in the Directory of Mepz UnitsThe units effected exports worth Rs. 9938 million ( US $ 291 million) during 1996-97. The industry-wise shares of exports in 1996-97 were :

Investments by units in the zone are currently as follows :

Foreign equity has come from USA , Japan , Germany , Singapore , Korea etc.

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Obligation of Zone units

1. Minimum FOB value of Exports during 5 years shall be :

US $ 1 Million for software units

US $ 6 Million for granite units

US $ 3.5 Million for others

2. Units in the Zone are required to export 100% of their production. However, sales in Domestic Tariff Area (DTA) are permitted as per the following guidelines :

i. Rejects are allowed upto 5% unless otherwise decided by the Board.

ii.Except in the case of jewellery , diamonds, gems and certain other items, requests for sale upto 25% in the DTA will be considered on merit, subject to fulfilment of export obligation and value addition.

iii. Electronic hardware units and Agro based units shall be eligible for 50% DTA Sale.

iv. Sales in DTA shall attract duty at 50% of the Customs duty leviable on import of the product. However, products manufactured wholly out of indigenous raw material, shall attract only the applicable Central Excise duty leviable on like goods manufactured in the DTA.

3. Industrial units are required to achieve the Net foreign exchange Percentage stipulated in the Letter of Approval. The minimum NFEP for some of the industries are :

4. NFEP is calculated on the following basis

NFEP = (X - Y) * 100 / X

Where X = FOB value of exports for 5 years
& Y = Sum total of c.i.f. value of imports of capital goods, raw materials and other items of foreign exchange outgo during the five year period.

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Contact Information

Names of senior Officers:

Mr. M B Pranesh , Development Commissioner
Mr. K Suresh, Joint Development Commissioner

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