SEZ Policy review committee suggests a liberal SEZ policy

The review of the policy on Special Economic Zones submitted by a group of eminent persons constituted by the government has suggested a shift in the policy framework from export growth to broad-based employment and economic growth.

The group under the chairmanship of Baba Kalyani, chairman of Bharat Forge Ltd, has suggested an enabling framework for Ease of Doing Business (EoDB) in 3Es (Employment and Economic Enclaves-3Es) in sync with state EoDB initiatives.
The report suggests formulation of separate rules and procedures for manufacturing and service SEZs.
The approach, according to the report, should focus on demand, shifting away from supply driven approach for 3Es development to improve efficiency of investment - based on certain industries, current level of existing inventory in the region.
It also suggested the creation of an integrated online portal for new investments, operational requirements and exits related matters.
To enhance competitiveness, it proposed the creation of an enabling ecosystem development by funding high speed multi modal connectivity, business services and utility infrastructure. Critical to provide support to create high quality infrastructure either within or linked to the zones, such as high speed rail, express roadways, passenger/cargo airports, shipping ports, warehouses etc, the report points out.
The report suggests integrated industrial and urban development- walk to work zones, coordinated by the states and center on the frame work development to bring linkages between all initiatives.
Besides, the report suggests:
  • Procedural relaxations for developers and tenants to improve operational and exit issues;
  • Extension of sunset clause and retaining tax or duty benefits;
  • Broad-banding definition of services/allowing multiple services to come together;
  • Additional enablers and procedural relaxations;
  • Unified regulator for IFSC;
  • Utilising multi services SEZ IFSC for all the inbound and out bound investment of the country;
  • Incentives for availing services from IFSC SEZ by domestic institutions;
  • Extension of benefit under services export incentives scheme;
  • Allowing alternate sectors to invest in sector specific SEZs/ 3Es;
  • Flexibility of long term lease for developers and tenants; and
  • Facility of sub-contracting for customers outside 3Es/SEZs without any restriction or cap at any level.
  • Specified domestic supplies supporting ‘Make in India’ to be considered in NFE computation;
  • No export duty on goods supplied to developers and used in manufacture of goods exported;
  • Flexibility in usage of NPA by developers and sale space to investors/ units;
  • Infrastructure status to improve access to finance and enable long term borrowing;
  • Promote MSME participation in 3Es and enable manufacturing enabling service players to locate in 3E; and
  • Dispute resolution through arbitration and commercial courts.
The group constituted to review the government’s Special Economic Zone (SEZ) Policy submitted its report last month, minister of state for commerce and industry C R Chaudhary informed the Rajya Sabha in a written reply.