FTWZ - FAQs
The Free Trade and Warehousing Zones (FTWZ) is the special category of Special Economic Zones, where in mainly trading & warehousing activates are performed. It is also a ‘Sanitized’ zone designated as a deemed foreign territory and are envisaged to be integrated zones and to be used as International Trading Hubs.
Free Trade and Warehousing Zone is a Special Economic Zone wherein mainly trading and warehouse and activities related thereto are carried on. lt is a deemed foreign territory within the geography purpose of tariff and trade.
The Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 are the lead to FTWZ. Instructions are also issued by the Ministry of Commerce & lndustries from time to time covering the operational aspects of FTWZ.
The following activities & operations are allowed in the FTWZ:
Warehousing of goods on behalf of foreign or domestic clients
Trading with or without labeling
- Quality checking
Packaging and repacking
Re-sale, re-invoice, or re-export of goods
- Wrapping & Strapping
- Processing Units
Assembly of complete and semi-knockdown goods
Kitting and various value optimization services on the goods/ cargo
The benefits of FTWZ can be availed by:
Goods imported through FTWZ can benefit in various aspects such as facility to store goods for 5 yrs, duty deferment, unlocking working capital, help in reducing buffer stock, etc.
Supply of goods from DTA to FTWZ is considered as export under SEZ Act. Hence, benefits available for export are also available for supplies from DTA to FTWZ. Such benefits are: 24/7 customs clearance, hassle-free business environment, etc.
There are a lot of advantages & benefits that can be availed when goods are re-export through FTWZ which are - income tax & service exemption, exemption on customs & stamp duty on imports into FTWZ which are meant for re-export purpose, 100% FDI, ability to consider FTWZ as global distribution hubs or value added hub, etc.
lmported goods can be stored in FTWZ for 5 years without payment of customs duty. FTWZ scheme in India allows deferment of customs duty without incurring interest or penalty.
Customs duty is exempted when goods are imported into FTWZ for authorized operations, but it becomes payable at the time of clearance of goods into DTA. In case of piecemeal, customs duty would be payable on such piecemeal quantity cleared into DTA and not on the full goods received into FTWZ. Therefore, the customs duty can be deferred by importing the goods into FTWZ.
Trading profit earned on re-export of imported goods from FTWZ is exempted from lncome Tax.
All transactions by the unit in FTWZ have to be in convertible foreign currency. Therefore, the sale and purchase by a trading unit and transactions of service by service unit have to be in foreign currency.
Yes. 100% FDI is allowed in FTWZ.