What is FTZ:-
Free trade zone are designated geographical place within the national territory where goods may be landed, stored, handled, manufactured, or reconfigured and re-exported under specific customs regulation.FTZ is a type of SPECIAL Economic Zone and also called foreign trade zone. A Free Trade Zone is any area in a country where goods may be imported/exported without any barrier imposed by the host's customs authorities.
FTZ allows goods to be imported, manufactured, processed and re-exported without the payment of import taxes, which only fall due when the goods are removed from the zone and entered into the domestic economy. Free-trade zones are organized around major seaports, international airports, and national frontiers—areas with many geographic advantages for trade.
Purpose of Free Trade Zone: -
- To attract foreign direct investment
- To decrease unemployment
- To support economic reform strategies by developing and diversifying exports
- To test new approaches to foreign direct investment and to policies related to law, land, labour, and the pricing of goods.
Benefits of Free Trade Zone: -
- Duty Exemption
- Duty Deferral
- Duty Reduction or Inverted Tariff
- Streamlined Logistics
- Quota Avoidance
There are three Types: -
- Permanent FTZ (PFTZ)- PFTZ are also generally known as industrial parks. In PFTZ several and diverse industrial and commercial projects are established. PFTZ includes various industrial and commercial users.
- Single Enterprise FTZ (SEFTZ)-one single company is declared a Free Trade Zone, and thus is entitled to exercise industrial or service activities in a given limited area with tax, FX and customs benefits
- Transitory- It is one that is authorized for trade fairs, exhibitions, conferences and seminars of international importance for the economy and the country's international trade.
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