Trade zones for storage cleared

Kandla, Noida get nod

The country's first Free Trade Warehousing Zones are set to kick-off with the department of commerce approving in-principle two such zones in Kandla and Noida earlier this week.

Both the zones will be developed by Free Trade Warehousing Private Ltd, a 50:50 joint venture of MMTC Ltd and IL&FS. The joint venture would invest Rs 100 crore each in developing the zones.

Sources involved with the joint venture told Business Standard the joint venture would rope in a strategic partner for the FTZs.

"The venture will soon invite Expression of Interest for selecting a strategic partner for the zones through the process of international competitive bidding," said a source adding that the entire process of finalising the equity structure in the zones was expected to be completed in the next two months.

Both the zones will be used for specialised multi-product warehousing services. The department of commerce has laid down the condition that the zones should not be less than 500,000 sq metres in terms of area.

The approval norms also require a minimum outlay of Rs 100 crore for the creation and development of infrastructure facilities.

The supply of goods from the Domestic Tariff Area to these zones will be exempt from state sales tax, octroi and other taxes like the mandi tax.

MMTC had asked IL&FS to work out a blueprint for setting up of warehouses in the Free Trade Zones envisaged in the Foreign Trade Policy to stock ferrous and non-ferrous metals.

It had identified five potential areas around the country for the purpose including Noida in north India, Cochin or Chennai in the South, Kandla or Mumbai in the West and Haldia in the East. MMTC intends to set up six such zones in the country.

The commerce and industry ministry had in the five-year foreign trade policy announced last year, introduced a new scheme to establish free trade and warehousing zones to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free curency. The scheme is aimed at making India a global trading hub.

Under the scheme, upto 100 per cent foreign direct investment (FDI) would be permitted in the development and establishment of the zones and their infrastructure facilities. Units in these zones would qualify for all other benefits as applicable for the units located in Special Economic Zones.

Zone of progress

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• The zones would be developed by Free Trade Warehousing Private Ltd, a 50:50 joint venture of MMTC Ltd and IL&FS
• The process of finalising the equity structure in the zones was expected to be completed in the next two months
• Kandla and Noida zones will be used for specialised multi-product warehousing services
• The approval norms also require a minimum outlay of Rs 100 crore for infrastructure facilities
• Supply of goods from the Domestic Tariff Area to these zones would be exempt from state sales tax, octroi and other taxes like the mandi tax