SEZ to be opened for manufacturing of non-export unit
- The Ministry of Trade and Industry is trying to convince the revenue department to allow non-export production units produced only to the domestic market to operate within SEZs to take advantage of the available infrastructure in zones.
- It also was on recommendations of the Baba Kalyani committee set up by the Ministry of Trade and Industry to examine the existing SEZ policy in India.
Committee’s objectives :
- To evaluate SEZ policy and make it compatible with WTO.
- Propose measures to maximize the utilization of vacant land in SEZs
- Propose changes to SEZ policy based on international experience
- Merge SEZ policy with other governmental arrangements such as coastal economic zones, Delhi-Mumbai industrial corridor, national industrial production zones and food, and textile parks.
- The committee had made its recommendations in November 2018.
Special Economic Zones (SEZs):
- They are geographically delineated ‘enclaves’ in which regulations and practices related to business and trade differ from the rest of the country and therefore all the units therein enjoy special privileges.
- SEZ Policy was announced for the very first time in 2000 in order to overcome the obstacles businesses faced.
- The Parliament passed the Special Economic Zones Act in 2005 after many consultations and deliberations.
- The Act came into force along with the SEZ Rules in 2006.
SEZs Facilities & Incentives:
- Duty-free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
- Income tax exemption on export income for SEZ units under the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
- Single window clearance for Central and State level approvals.
- Exemption from Minimum Alternate Tax (MAT).
- In the manufacturing sector, barring a few segments, 100% FDI is allowed.
Advantages of SEZs:
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Increased economic activities
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Boost export
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Generate employments
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Increase domestic and foreign investments
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Improve infrastructure and business environment
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About 64% of the SEZs are located in five states i.e Tamil Nadu, Telangana, Karnataka, Andhra Pradesh and Maharashtra.