Centre sets up 17-member panel for SEZ policy reforms
It will submit a concept paper or roadmap, suggestions or amendments within 6 months along with recommendations
New Delhi: The government has set up a 17-member committee to suggest larger reforms in the policy for SEZs, an official said. It will submit a concept paper or roadmap or suggestions or amendments within six months along with its recommendations for broad-based and comprehensive reforms to formulate a SEZ 2.0 policy.
It will undertake a background study focused on the harmonisation of various prevalent export promotion schemes, including SEZs, export-oriented units (EoUs), MOOWR (Manufacturing and Other Operations in Warehouse), Advance Authorisation, EPCG (export promotion for capital goods), and Duty Free Import Authorisation (DFIA).
The committee’s composition includes representatives from commerce, customs, Niti Aayog, Department for Promotion of Industry and Internal Trade (DPIIT), Central Board of Indirect Taxes & Customs (CBIC), Directorate General of Export Promotion, export promotion council for SEZs, two development commissioners, and Department of Economic Affairs.
The terms of reference include examining the existing Special Economic Zones (SEZ) Act, 2005, with a view to assessing their effectiveness in the current global trade, investment environment and macro-economic landscape and harmonisation with other export promotion schemes so that policy distortion, if any, may be addressed.
It will evaluate the impact of recent and proposed reforms in SEZ policy, including measures relating to Domestic Tariff Area (DTA) sales, fiscal and non-fiscal incentives, compliance requirements, and operational flexibilities, on exports, investment, employment and ease of doing business.
It will also assess the effectiveness of SEZs in attracting domestic and foreign investment, promoting manufacturing generation, services, technology up-gradation, value addition, and employment, including for MSMEs.
The terms of reference also include identifying operational, procedural, and regulatory challenges faced by SEZ developers and units, including issues relating to customs, taxation, compliance burden, infrastructure, and coordination among stakeholders; and reviewing the fiscal impact of SEZs and related reforms on revenue including foregone duties and taxes, and assess the cost-benefit outcomes in terms of exports, investment and economic activity.
Besides, it will study international best practices and comparable SEZ/free trade zone models and assess their adaptability to the Indian context; and engage with key stakeholders, including center and state governments, SEZ authorities, developers, units, industry associations, and exporters to obtain inputs. The committee will recommend short-term, medium-term and long-term policy, legal and procedural reforms, including possible amendments to the SEZ Act/Rules, and suggest an implementation roadmap with clear timelines.
The government in the Budget announced a one-time measure to allow SEZ units to sell their goods in the domestic market at concessional import duty rates, subject to certain quantitative restrictions.
It was a long-pending demand of these zones as they were not able to sell their excess production due to global uncertainties and high import duties in India on labour-intensive sectors. At present, goods coming from units in SEZs in the DTA or domestic market attract high import duties.