Q. What is Free Trade Warehousing Zone?
A. Free Trade Warehousing Zone or FTWZ is a Special Economic Zone (SEZ) wherein storage, re-packaging, kitting, labeling, and other permitted activities can be carried on without inviting customs duties. The FTWZ is considered a foreign territory for trade and tariff – even if it is within the geography of the country.
Q. What activities are permitted inside the FTZs?
A. The activities that are allowed inside a free trade zone include warehousing and storage of goods (of domestic or foreign clients), re-exporting your commodity duty-free, trading with/without labeling, packing, quality checking, lashing, strapping, shrink wrapping, consolidation, clubbing, bottling, palletization, kitting, testing, combination packing, assembling of semi-knockdown and finished goods and other operations.
Q. Are the imports into FTWZ exempt from customs duty?
A.Customs duty doesn’t apply on imports/re-exports of the commodity via FTZWs. Duty is only charged on the part of shipment moved out of FTWZ for DTA (Domestic Tariff Area) Sales
Q. When does the customs duty come into effect in the FTZ?
A. Customs duty, other taxes, and GST in India become payable when the goods are being cleared into DTA (Domestic Tariff Area). If the clearance is done bit-by-bit, then the customs duty will become payable on the bit-by-bit quantity that is cleared into DTA and not on the whole quantity imported into FTWZ. Hence, the customs duties and taxes are deferrable by importing the merchandise into the FTZ /FTWZ.
Q. For how long can the goods be kept inside the FTZ without paying customs duty?
A. Imported goods can be kept inside the free trade warehousing zone for a duration of 3 years extendable to 5 years with a special permission request.
Q. How are the goods that are moved from DTA (Direct Tariff Area) to FTWZ (Free Trade Warehousing Zone) treated in India?
A. Goods according to the SEZ act that is moved from DTA to FTWZ are considered exported and thus export benefits that are available for export from India are also available for merchants that move goods from DTA to FTWZ.
Q. Which activities are not allowed inside the free trade warehousing zone?
A. Manufacturing, changing the ingredients, manufacturing date, expiry date, and country of origin cannot be performed inside the FTWZ.
Q. Are goods stored inside FTWZ fully exempted from customs duties?
A. Yes, customs duties are deferred as long as goods are stored inside FTWZ, which means merchants/traders/distributors don’t need to block their money and can utilize it as an opportunity cost till they decide to move the goods out of the free trade warehousing zone for DTA Sales.
Q. Can the goods be kept forever inside the FTWZ without paying taxes and customs duty?
A. Goods can be warehoused inside the free trade warehousing zone for 3 years which is extendable up to 5 years in special permissions. Post that the cargo is either auctioned or can be cleared/re-exported by paying custom duties.
Q. Is FTWZ expensive for warehousing imported goods?
A. No. You end up saving more if you choose the services of FTWZ providers such as OSV. The costs are highly competitive, so you don’t need to worry about it. You can seek the quote here
Q. What types of licenses are required for stocking goods inside the free trade warehousing zones (FTWZs)?
A. There is no need for drug licenses/FSSAI/BIS/certifications for importing or re-exporting goods in or from the free trade zone (FTZ). These licenses and certifications are required only for DTA (Domestic Tariff Area) sales.
Q. Is the confidentiality of our buyers/suppliers maintained in FTWZs?
A. Yes, your consignment is fully secured inside the FTWZ. No information about your suppliers/buyers is ever shared with anyone except the authorized people who have your written permission.
Q. What are the benefits of OSV FTWZ?
A. Apart from all the advantages that Free Trade Warehousing Zones offers, OSV gives you an experience of the state of the art infrastructure, avails you with various storage types such as Pallet Racking System, Block Storage, Space for over-dimensional cargo, temperature, and cold storage spaces ranging from -30ºC to +26ºC and dedicated space for warehousing/showcasing as per the requirements of its clients, 24*7 CRM Support, Advanced Warehouse Management System, In house CHAs for rapid custom clearance and a knowledge center backed by a cadre of Industrial Experts, EX-IAS, EX-IRS, IRS Officers, and Industry Veterans who are ready to optimize your supply chain on the go.
Q. What are the unique benefits offered by the FTZs for Indian importers?
A. Flexibility in end distribution, quality control, excise exemption, GST & VAT exemption, service tax exemption, duty deferment, reduced buffer stocks, lowered product costs, capability to do transactions in freely convertible foreign currency, temperature-controlled area for storing temperature-sensitive cargo such as medicines, pharmaceuticals, chemicals, cosmetics, etc. are the unique benefits that Indian importers enjoy on choosing the OSV’s FTZs.
Q. What are the unique benefits of free trade zones for foreign suppliers that do business with India?
A. The unique benefits foreign suppliers that do business with India should expect on using FTZs include doing business with the country without any permanent establishment, deferment of customs duty, minimized costs, reduced compliance, and management of business remotely.
Q. What are the differences between free trade warehousing zones and custom bonded warehouses?
A. Free Trade Warehousing Zone (FTWZ) is not a customs bonded warehouse. Here are the differences –
|Function||Customs Bonded Warehouse||Free Trade Warehousing Zone|
|Requirement of IEC Code||Mandatory||Not Required|
|Requirement of GST No||Mandatory||Not Required|
|Prior Bill of Entry to be filed||Mandatory||Mandatory|
|Permissible Cargo for Warehousing||Foreign Cargos Only||Foreign & Domestic Cargos Only|
|Paper Work and Delay||Complex delays may occur||Simple and express clearance|
|Prior NOC||Mandatory relevant participating agencies||Not Required|
|Customs Bond||Triple Duty Bonds required for all warehouse entries from the consignee||Not Required|
|Payment of Duty||Duties are due prior to release from bonded warehouse||Payment of duty is only for & applicable at the time of DTA Clearance|
|Interest on Applicable Duty||15% P.A. applicable after 90 days on duties||Not Applicable|
|Storage Period||Maximum up to 3 months (Extendable only on payment of interests limited to 1 year)||3 Years (Extendable up to 5 years)|
|Permitted Activity||Sorting and Repacking only after cumbersome procedures & special permissions||Labeling, Re-labelling, Packing, Re-packing, Kitting, Consolidation, De-consolidation, Testing, Bottling, Palletization, etc. is freely permissible|
|Acceptable Payment Against Sale||Indian Rupee only||Foreign Exchange and Indian Rupees|
Q. How long does customs clearance take via FTWZs?
A. Typically, it doesn’t require more than 24 to 48 hours for customs clearance of imported goods via a free trade zone/free trade warehousing zone.
Q. Which specific industries benefit from Free Trade Warehousing Zones?
A. Pharmaceuticals, Luxury Goods, Chemicals, Medical Devices, Liquor, Auto Parts, Aviation, Electronics, IT (Servers), Food, Electricals (Appliances), Polymers, Pulses, Edible Oil, Sugar, Fruits, Dry Fruits, Industrial machinery, Electric machinery, and equipment are the most suited industries that utilize FTWZ for trading and business purposes.
Q. Who can use Free Trade Warehousing?
A. Although it is not limited to a specific category of people/business, International Traders who want to keep sellers and buyer’s information confidential, Bulk Importers, Traders and Foreign Buyer Consolidators of Indian goods meant for export purposes, Foreign Company who want to target the Indian market but doesn’t have any entity in India and want to set up an international transit warehouse for Indian and Overseas markets, Foreign Company that wants to compete with Indian Suppliers, Contract Manufacturing Company getting contract manufacturing done in India, and Company Sourcing from multiple suppliers in India are some of the major segment of business that utilizes FTWZ for their businesses.