A free trade warehousing zone such as FTWZ in India comes under the special category of SEZ or special economic zone. It can be a single or stand-alone facility or an area providing a multi-product warehousing facility. It is also deemed a foreign territory enjoying unique status and myriad benefits. 

Special Features of Free Trade Warehousing Zones (FTWZ)

Free trade zones in India operate on a global scale. Such a zone encourages international trade patterns and warehousing activities for foreign and domestic businesses. Providing a superior integrated platform for sourcing, storage, transportation, and distribution of goods, products, or services, the activities include trading operations in and out of the country. This helps reduce operational costs, especially for those companies without their own warehouses. 

Proximity to the country’s borders or foreign gateways can facilitate direct deliveries straight from a port, airport, or roadways, effectively decreasing the cargo-hold period. Shipments are directly sent to a free trade warehousing zone from an international gateway with customs interference on a flexible currency payment model (payment is allowed in FOREX). Without assessment of customs officers, shipments can be moved from foreign gateways to a free trade zone area without any issues. An FTWZ in India also offers tax benefits like exemption on GST, duty interest, licensing, and regulatory compliance (allied acts) 

The Activities Allowed Inside A Free Trade Zone Includes:

• Storage of goods
• Handling of goods 
• Transportation facilities 
• Warehouse receipts and documentation 
• Cutting, bagging, and tagging 
• Packing and bubble wrapping
• Labeling and painting
• Crafting, strapping, and washing 
• Bottling
• Quality assurance 
• Consolidation, repairs, and maintenance 
• Packing in cartons and refurbishment 

FTWZ-based Advantages for Imported Goods 

• Flexibility and freedom for end-phase distribution within India 
• Duty deferment and freeing up of business capital 
• Quality control operations before duty fee payment 
• Exemption of various taxes like VAT and CST on imported goods via FTWZ
• Tension-free re-exports related to duty implications 
• Less buffer stocks 
• Exemption on GST for services rendered by FTZ employees 
• Reduced product costs 
• Flexible foreign exchange transaction abilities 

FTWZ-based Advantages for Exported Goods 

• Products from our country, when they enter an FTWZ in India, are considered deemed exports and suppliers can gain many benefits thereof.
• Export goods are allowed local tax exemptions like sales tax, excise, VAT, GST, and more. 
• Export quotas are given for export goods entering into the free trade zone. 
• Increased work efficiency due to low costs and reverse logistics work wonders for the companies involved
• Quality control is conducted before dispatching goods from India. 
• Foreign exchange transactions are fully permitted in an FTZ. 
• The capital cash flow is flush and increased due to reverse logistics. 
• Supply chain efficiency is enhanced. 
• Re-exports are facilitated 
• GST is exempted from all activities happening within the Free trade zones in India including GST on rental and labor 
• There is no customs or stamp duty on domestic goods exports into the FTWZ, which are held for re-export outside the country. 

Simple & Uncomplicated Re-export Process 

• Foreign direct investment is permitted 100 percent and units set up by the unit holder of a warehousing zone are allowed. 
• A free trade zone in India is a hub for regional and global goods distribution, thanks to the leverage of costs and skill sets along with the ideal geographical positioning. 

Other Salient Features 

Free trade zones do not typically need a customs bond, they can suffice with an FTZ bond that covers all entries into the FTWZ in India, whereas in the case of a bonded warehouse, they will need a customs bond for products stored and operated inside a bonded warehouse. Similarly, users of a free trade zone can place foreign as well as domestic goods and merchandise within the facility. Bonded warehouses, on the other hand, only allow storage of foreign merchandise inside their facility. Free trade zone users can store merchandise indefinitely inside a free trade zone in India. However, a bonded warehouse only allows users to store merchandise only for a limited period of five years. 

Manufacturing Goods Inside An FTZ

Users are free to use foreign trade zones for manufacturing purposes. The FTZ board can approve manufacturing of goods and these companies can benefit immensely from inverted tariff rules and scrap elimination, thus reducing the duty amount to be paid later. Bonded warehouses do not allow manufacturers to use their warehouses for manufacturing and the merchandise value when the goods enter their warehouses remains the same even for customs duty calculation. Bonded warehouse users pay customs duty on the value of the shipment as a whole, which also includes damaged goods and scrap. 

Full Control of Merchandise Via FTZ Permitting Seamless Access  

In free trade zones in India users have the freedom to move their goods in and out of the facilities without interruptions. This is not the case in a bonded warehouse, wherein the customs play a pivotal role in controlling goods within the bonded warehouse. Users of bonded warehouses can move or inspect goods only during regular work hours. Such regulations stop the workflow and goods movement as the users require authority and approval of the customs officers for the movement of goods. 

Cost Features of Free Trade Zones in India  

The cost features of using a free trade zone in India (FTWZ) are mentioned below: 

• The Indian government estimated that every free trade warehousing zone (outlay) can cost around INR 100 crores and must have a built-up area of around 5 lakh square feet space. 
• The FDI or the foreign direct investment plan can be fully implemented for developing and establishing free trade zones in India. 
• For GST purposes, suppliers must show registration proof under the GST Act if their yearly turnover exceeds INR 20 lakhs. 

A reputed free trade zone in India such as OSV FTWZ can help all kinds of businesses by reducing their overall costs, lowering customs duty fees, allowing relaxed entry procedures, and facilitating the production of goods within the warehouse units and closer to the domestic markets.