Syllabus: GS3/ Economy
In News
- The Union government notified key amendments to the Special Economic Zones (SEZ) Rules, 2006, to ease the establishment of semiconductor and electronics component manufacturing units.
Major Reforms in SEZ Regulations
- Reduction in Minimum Land Requirement: Rule 5 has been amended to reduce the minimum land requirement for semiconductor and electronics component manufacturing SEZs from 50 hectares to 10 hectares.
- Impact: This change lowers the entry barrier for firms looking to set up operations in this crucial sector, making it easier for smaller players to enter the market.
- Relaxation on Land Encumbrance Requirements: Rule 7 now allows the Board of Approval to relax the condition of requiring SEZ land to be encumbrance-free.
- Impact: This flexibility will help overcome land acquisition challenges for companies.
- Inclusion of Free Goods in Net Foreign Exchange (NFE) Calculations: Amended Rule 53 to allow free-of-cost goods to be included in the Net Foreign Exchange (NFE) calculations for SEZ units.
- NFE is the net amount of foreign exchange that a company earns through its exports (such as the sale of goods or services to foreign markets) after deducting its imports (such as the purchase of goods or services from foreign countries).
About Special Economic Zones (SEZs)
- Definition: They are designated areas within a country that operate under different economic regulations compared to the rest of the nation.
- Purpose: The primary goal of establishing SEZs is to promote rapid economic growth by attracting domestic and foreign investment, boosting exports, and generating employment opportunities.
- Legalisation: India was one of the first countries in Asia to adopt the EPZ model in 1965 with the Kandla EPZ. The Special Economic Zones Act was passed in India in 2005 to provide a legal framework.
- Baba Kalyani Committee (2018): Formed to review the SEZ policy and make recommendations for its revitalization, including making it WTO-compatible, maximizing land utilization, and integrating it with other government schemes.
- Proposed DESH Bill (Development of Enterprise and Service Hubs): Aims to replace the existing SEZ Act.
| Key Initiatives for Semiconductor and Electronics Manufacturing – India Semiconductor Mission (ISM): Launched in December 2021, ISM is the nodal agency for the efficient and seamless implementation of semiconductor and display schemes. – Design Linked Incentive (DLI) Scheme: Offers financial incentives and design infrastructure support across various stages of development and deployment of semiconductor designs. – PLI for Large Scale Electronics Manufacturing: Notified in April 2020, it offers an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India. – Semi-Conductor Laboratory (SCL), Mohali: To enhance its efficiency and cycle time, contributing to indigenous R&D and specialized fabrication. |
Source: TH
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