In News
- In a move to enhance exports, the government will rewrite a new law to replace the existing Special Economic zones (SEZ) Act.
Objectives and need
- The current legislation is over 16 years old and the legislation was framed under different circumstances and a lot has changed since then.
- Rules are complicated and there is also a need to make it World Trade Organisation (WTO) compatible.
- The new legislation will enable the states to become partners in ‘Development of Enterprise and Service Hubs’ and will cover all large existing and new industrial enclaves to optimally utilise the available infrastructure and enhance the competitiveness of exports.
- To enable ease of doing business in SEZ units, the government will also undertake reforms in customs administration of SEZs and make it fully IT-driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks.
Special Economic Zone
- It is an area in a country that is subject to different economic regulations than other regions within the same country.
- The economic regulations of SEZs tend to be conducive to and attract Foreign Direct Investment (FDI).
- It facilitates rapid economic growth by leveraging tax incentives to attract foreign investment and spark technological advancement.
- The functioning of the SEZs is governed by a three-tier administrative setup. The Board of Approval is the apex body and is headed by the Secretary, Department of Commerce.
- The Special Economic Zones (SEZs) policy was launched in April 2000.
- SEZs Act, 2005, was passed by Parliament in 2005.
- Salient features: A designated duty-free enclave to be treated as a territory outside the customs territory of India for the purpose of authorised operations in the SEZ.
- No licence is required for import.
- Manufacturing or service activities allowed.
- The Unit shall achieve Positive Net Foreign Exchange to be calculated cumulatively for a period of five years from the commencement of production.
- Domestic sales are subject to full customs duty and import policy in force.
- SEZ units will have freedom for subcontracting.
- No routine examination by customs authorities of export/import cargo.
Source: BS
