The government will rewrite a new law to replace the existing Special Economic zones (SEZ) Act that will include large existing and new industrial enclaves, Finance Minister Nirmala Sitharaman said on Tuesday.
“The Special Economic Zones Act will be replaced with a new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’. This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports,” Sitharaman said in her Budget speech.
SEZs are areas within the country that have different economic regulations and are considered foreign territory. They not only aid foreign investment, but are export hubs. Companies operating in such zones get tax sops from the government and also pay lower tariffs when the goods are exported and not sold outside these zones.
To enable the 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. “This reform shall be implemented by 30th September 2022,” the finance minister said.
An expert committee led by Bharat Forge Chairman Baba Kalyani, that was formed in 2018 to review the SEZ policy, has already submitted its report, recommending significant changes in the SEZ policy, including the formulation of separate rules and procedures for manufacturing and service SEZs.
To incentivise exports, the finance minister also said that exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather
footwear and other goods.
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