Letter of Approval: conditions and renewal govern SEZ unit establishment, validity extensions and merger or transfer approvals. Letter of Approval authorises setting up a Unit in an SEZ or Free Trade and Warehousing Zone and must specify items of manufacture or service activity, corresponding trade classification, projected annual export and Net Foreign Exchange for the first five years, limitations on Domestic Tariff Area sales and other terms. It is valid for one year to commence operations with possible extensions; after commencement it functions as a licence valid for five years and may be extended. Renewal requires application and is evaluated on export performance, employment, statutory compliance, payment defaults and unsanctioned activities.