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MMTC, the country’s premier trading company is proposing to set up six Free Trade & Warehousing Zones (FTWZs) in Kandla, NOIDA, Haldia, Ennore, Mumbai and Kochi. The minimum investment at each site would be Rs.100 crore with a size of 500,000 sq. mt. built up area. It is expected that some of the warehousing zones would be in place during the year 2006.
Keeping in view importance of enabling infrastructure for growth of the economy and foreign trade, Government had introduced concept of Free Trade Warehousing Zones in the Foreign Trade Policy 2004-2009. The scheme was started with a view to providing global standard warehousing zones in India. Such free trade zones are a well-established concept in global trade. This model has been widely accepted and has exhibited a history of providing substantial encouragement to foreign trade and warehousing activity.
What differentiates the FTWZ from standard warehouses is the integrated platform through which physical, regulatory, and other tangible and intangible services / benefits will be made available to individual users, thus helping them optimise their efficiencies and reduce operational costs. Such FTWZs score over traditional warehouse models since they integrate the benefits of a free zone with professionally handled, high quality physical infrastructure, thereby providing significant benefits to the individual users and the economy as a whole. These benefits include common facilities like cost effective skilled labour, transportation facilities, customised warehouses, sophisticated equipments etc.
This facility would provide to importers a chance to procure goods at competitive rates including small and medium industries which do not have capability/capacity to import large quantities by themselves, while exporters would be able to utilize these warehouses to store goods for export. Moreover, the FTWZ Scheme envisages duty free imports of all goods (except prohibited items) for warehousing. The FTW zones would also be exempted from Indian income tax and service tax. In these zones, it would be possible to undertake transactions in free foreign currency. Companies would have the freedom to pay duty at the time of taking the goods out of the zone, thereby decreasing costs and making Indian industry more competitive besides providing facility of maintaining minimum stock levels. Another major advantage accruing out of the FTWZ would be the possibility of Indian / foreign companies utilizing the superior infrastructure and operational dynamics available to hub their operations (i.e. service other countries’ needs from this base).
The warehouse zones would also provide allied support services like banking, Customs clearance, state of the art communication, insurance etc. within the zone for easy use by companies. Other than advantages to actual users of the FTWZ facility, there would be spin-off benefits to the economy also by way of backward and forward linkages by companies to the warehousing industry since trade volumes would in any case increase. An FTWZ development would generate employment opportunities both for operations and maintenance of the zone, as also within companies operating in the zone. Also, employment opportunities would be generated in industries having linkages to the trading and warehousing industry. Further, due to provision of shared infrastructure, the capital cost would be apportioned over a larger base which would reduce logistics costs per capita. Finally, with the provision of efficient infrastructure, superior operational dynamics and reduced logistics costs, the FTWZ would make companies located in India more competitive on a global scale and would help to make India an attractive destination for investments, trading and transshipment.
SB/MRS
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