Govt to introduce comprehensive policy measures for SEZ revival

The government is actively considering a series of measures to revitalise and promote growth in special economic zones (SEZs). Among the proposed measures are a flexible framework for the sale of products manufactured within SEZs in the domestic market, simplified de-notification norms, and streamlining approval processes for units operating within these zones. The overarching goal is to stimulate business transactions between SEZs and the domestic tariff area (DTA) or the broader domestic market.

To gather input from various ministries on these measures, the commerce ministry has circulated a note outlining a draft SEZ amendment bill for 2023. The bill is expected to be introduced in the upcoming Winter session of Parliament, scheduled to run from December 4 to December 22. This amendment bill is set to replace the initially proposed Development of Enterprise and Service Hubs (DESH) bill.

The key provisions of the amendment bill aim to invigorate SEZs and facilitate seamless business transactions. These provisions include allowing sales from SEZs to DTA on a duty-foregone basis, permitting partial de-notification of zones, introducing easier notification norms, and streamlining approval processes for SEZ units.

Easing restrictions to promote sectoral growth

Commerce and Industry Minister Piyush Goyal recently indicated the government's interest in easing certain restrictions for units within SEZs to promote the sector's growth. A report by the Global Trade Research Initiative (GTRI) recommended allowing the sale of products manufactured in SEZs in the domestic market on payment of duty foregone on inputs. This, according to GTRI, would encourage value addition.

Currently, units in SEZs are permitted to sell their products in DTA on payment of duties based on an output basis (finished goods). GTRI Co-Founder Ajay Srivastava proposed extending the same concession to SEZs for the sake of parity, encouraging value addition within the zones. The potential concession could stimulate value addition within SEZs, as in many cases, tariffs on finished products are higher than on inputs.

SEZs have emerged as major contributors to India's exports, with total exports from these zones reaching $155.8 billion in 2022-23. This figure includes $61.6 billion in merchandise exports and $94.2 billion in service exports. The proposed measures aim to further enhance the role of SEZs in driving economic growth, technological advancement, and skill development in India. The government's focus on creating a conducive regulatory environment reflects its commitment to fostering a thriving business ecosystem within SEZs.

(With PTI inputs)