INzone is a Crucial Driver of Indiana's Economic Growth and Global Competitiveness

Indiana's Foreign Trade Zone (FTZ) program is a crucial driver of the state's economic growth and global competitiveness. Established by a 1934 Congressional Act to enhance and bolster the U.S. economy, the FTZ program has become an integral part of Indiana's business landscape, offering unique benefits to companies engaged in international import and export.

INzone, a 501(c)6 non-profit organization covering 41 counties, assists manufacturers and distributors in accessing FTZ benefits, potentially leading to significant financial savings. The Indianapolis Airport Authority (IAA) is the grantee that sponsors companies seeking access to the import/export benefits offered through the program.

A Foreign-Trade Zone is a designated U.S. area, such as a warehouse or production facility, where imported goods can be stored or processed without immediate customs duties. This flexibility allows businesses to delay or reduce the costs associated with importing raw materials or finished products. Nationally, more than 550,000 Americans work in FTZ environments, importing nearly $949 billion in merchandise, according to the 85th FTZ Board Annual Report.

What is unique about having your site activated with FTZ benefits? Companies based in America can import items, reduce operational costs, create immediate bottom-line savings, and improve import efficiencies. Imported merchandise held or manufactured within an FTZ environment can be indefinitely stored, exhibited, inspected, produced, or assembled. This initiative helps businesses and supports local communities by retaining jobs, capital, and infrastructure that might otherwise be outsourced.

The FTZ program enhances companies' competitiveness by offering several potential advantages to businesses involved with importing and exporting. These benefits include, but are not limited to:

1.      Duty Deferral: Businesses defer paying import duties until the raw materials or goods are removed from the zone and enter the U.S. commerce stream, significantly improving cash flow.

2.      Duty Reduction: Duty reduction lowers import duties, often realized in an active FTZ when imported materials or components are used to produce a finished product. If the duty on inputs is higher than on the output, users benefit from inverted tariff relief, encouraging domestic production and job retention.

3.      Duty Elimination: Any imported raw material, parts, or finished product stored or manufactured within an FTZ environment will have no import duty collected if exported outside the U.S.

4.      Customs Benefits: Customs and Border Protection (CBP) filing procedures for FTZ users often result in quicker goods movement, efficient electronic paperwork clearances, and streamlined logistics.

5.      Merchandise Processing Fee (MPF): MPF is 0.3464% of the declared cargo value, capped annually. As of October 1, 2023, the cap is $614.35 for values over $177,350. FTZ users filing single weekly entries benefit by paying only the maximum MPF, resulting in significant savings compared to filing separate entries.

Indiana’s FTZ program also attracts foreign direct investment (FDI), positioning the state as a competitive destination for multinational corporations. This creates jobs and stimulates economic growth, further cementing Indiana’s role as a critical player in the global market. Indiana ranks in the top 3.5% of states for exports and the top 8% for imports through the FTZ program, demonstrating its effectiveness in boosting international trade. This success underscores the program's importance in supporting Indiana’s economic prosperity, job creation, and retention. Nationally, over 550,000 Americans are directly employed in FTZ environments, importing almost $949 billion in merchandise, according to the 85th FTZ Board Annual Report filed with Congress.

Strategically located in the Midwest, the state is fully designated for Alternative Site Framework (ASF) under the Foreign Trade Zone program to bolster its standing as a global hub for manufacturing, logistics, and distribution. This ASF framework allows Grantees (public entities authorized by state legislation) to quickly and efficiently designate FTZ status to companies across their jurisdiction through a simple application process.

In addition to this logistical advantage, the state's low cost of doing business and supportive regulatory environment have made it a leading destination for foreign direct investment, ranking first nationally for job creation through FDI. Its central location and advanced transportation infrastructure enhance its attractiveness, facilitating seamless import/export operations. Coupled with a large and highly skilled workforce, the state presents compelling opportunities for domestic and international businesses.
 

For businesses interested in participating in Indiana’s FTZ program, INzone offers a cost/benefit analysis to help make informed decisions. INzone covers the cost of this analysis, up to $2,500 for distribution reports and $5,000 for manufacturing reports. This confidential analysis can help businesses understand the potential savings from participating in the FTZ program.

For more information and to connect with an INzone staff member or a qualified FTZ consultant, visit www.inzone.org.