Commerce ministry weighing import duty parity for SEZs and FTA countries

The commerce ministry is considering duty concessions to units in the Special Economic Zones (SEZs) selling products in the domestic market on a par with the rates applicable to countries with which India has signed free trade agreements.

The apex body of SEZ developers and units operating in these zones is preparing a list of items and the extent of duty concessions that could be given to each unit, vis-à-vis duty relaxations given to other countries.

A delegation of the Export Promotion Council for Export Oriented Units and Special Economic Zones (EPCES) had earlier urged the government to rectify certain policies that impact the functioning of these units.

EOUs and SEZs have consistently contributed to nearly one-third of the country's exports and it was imperative that certain steps were immediately taken to support SEZs, director-general of EPCES Sanjeet Singh said at a performance review meeting of EPCES.

He had suggested certain steps, including extension of benefits under Chapter III of Foreign Trade Policy to SEZs, which include `Focus Product' and `Focus Market Scheme', `VKGUY' etc.

Such incentives that are available to all other exporters, are not made available to SEZ units, he said. 

''We are looking at the products that are gaining access into the Indian market at concessional duties from other countries because of FTAs signed. I think if we work out an average and are given concessions based on that, it would be helpful,'' reports quoting Export Promotion Council for EoUs and SEZs (EPCES) chairman PC Nambiar said.

''We have been assured that the commerce ministry will consider the proposal once we are able to give it a more concrete shape,'' Nambiar added.

The EPCES delegation had also met commerce secretary Rajeev Kher earlier this week to discuss the concessions that could be given to SEZs to boost exports.

The sops are also designed top incentivise SEZs investments that have reduced to a trickle because of imposition of the minimum alternate tax and dividend distribution tax on developers and units operating in these zones.

The commerce ministry has moved the finance ministry seeking to lower the 18.5 per cent minimum alternate tax (MAT) imposed on SEZ units and developers.

SEZs have also demanded benefits on par with those given to exporters outside the zones for exporting targeted products and to specific markets under the Focus Product and Focus Market schemes.

At present, units in SEZs have to pay full customs duty to sell in the domestic tariff area (DTA) outside these zones.

India has FTAs and economic partnership agreement with countries such as Singapore, Malaysia, Japan, South Korea, Sri Lanka and the ASEAN.

These FTAs cover a number of products, including textiles, machinery, iron and steel, electronic goods, transport equipment and project goods that are being imported to India at lower duties.