New Delhi: The commerce ministry has sought views from different departments on proposed measures to revive special economic zones and facilitate trade transactions between SEZs and the domestic market, a senior official said on Monday.
The official said the ministry has suggested allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market by paying unpaid duty on inputs as that would help promote value addition.
"The main problem in SEZs is that we cannot get economies of scale. The connection between SEZs and the domestic tariff area (DTA) or the domestic market needs to be improved. There are also problems if the DTA sells to SEZs." the official said.
"That's why we have suggested duty-free sales. There are also issues regarding labour. For example, if an IT company has to get work in the domestic market, it needs permission. We have sent a draft note to the Cabinet," he said he. added the official.
Currently, SEZ units can sell their products in the DTA upon payment of duty on production (finished products) basis.
For these changes, the Ministry of Commerce has proposed amendments to the SEZ law.
The government is considering several measures, such as a flexible framework for the sale of products manufactured in SEZs in the domestic market and streamlining unit approval processes.
The objective is to help revive the SEZs and facilitate trade transactions between the SEZs and the DTA.
SEZs are areas that are treated as foreign territories for trade and customs duties, with restrictions on duty-free sales outside these zones in the domestic market.
Last year, Commerce and Industry Minister Piyush Goyal said the government is considering easing certain restrictions for units in SEZs to promote growth of the sector.
The think tank Global Trade Research Initiative (GTRI) in a report suggested that the government allow the sale of products manufactured in SEZs in the domestic market against payment of unpaid duties on inputs, as this would help promote the addition of worth.
GTRI co-founder Ajay Srivastava had said the government already allows DTA sales on payment of duty waived on input basis to companies operating under the Manufacturing and Other Warehouse Operations Regulations (MOOWR) scheme.
Exports from special economic zones grew more than 4 percent to $163.7 billion in fiscal 2024, despite a 3 percent decline in the country's overall exports.
According to data from the Ministry of Commerce, exports from these areas amounted to $157.24 billion in 2022-23 and $133 billion in 2021-22.
SEZs are key export hubs that contributed to more than a third of the country's total outbound shipments in the last fiscal year.
The government has approved as many as 423 such zones, of which 280 are operational as of March 31 this year. In these areas, up to 5,711 units have been approved until December 31, 2023.
Top export destinations include the United Arab Emirates, the United States, the United Kingdom, Australia and Singapore.
The official said the ministry has suggested allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market by paying unpaid duty on inputs as that would help promote value addition.
"The main problem in SEZs is that we cannot get economies of scale. The connection between SEZs and the domestic tariff area (DTA) or the domestic market needs to be improved. There are also problems if the DTA sells to SEZs." the official said.
"That's why we have suggested duty-free sales. There are also issues regarding labour. For example, if an IT company has to get work in the domestic market, it needs permission. We have sent a draft note to the Cabinet," he said he. added the official.
Currently, SEZ units can sell their products in the DTA upon payment of duty on production (finished products) basis.
For these changes, the Ministry of Commerce has proposed amendments to the SEZ law.
The government is considering several measures, such as a flexible framework for the sale of products manufactured in SEZs in the domestic market and streamlining unit approval processes.
The objective is to help revive the SEZs and facilitate trade transactions between the SEZs and the DTA.
SEZs are areas that are treated as foreign territories for trade and customs duties, with restrictions on duty-free sales outside these zones in the domestic market.
Last year, Commerce and Industry Minister Piyush Goyal said the government is considering easing certain restrictions for units in SEZs to promote growth of the sector.
The think tank Global Trade Research Initiative (GTRI) in a report suggested that the government allow the sale of products manufactured in SEZs in the domestic market against payment of unpaid duties on inputs, as this would help promote the addition of worth.
GTRI co-founder Ajay Srivastava had said the government already allows DTA sales on payment of duty waived on input basis to companies operating under the Manufacturing and Other Warehouse Operations Regulations (MOOWR) scheme.
Exports from special economic zones grew more than 4 percent to $163.7 billion in fiscal 2024, despite a 3 percent decline in the country's overall exports.
According to data from the Ministry of Commerce, exports from these areas amounted to $157.24 billion in 2022-23 and $133 billion in 2021-22.
SEZs are key export hubs that contributed to more than a third of the country's total outbound shipments in the last fiscal year.
The government has approved as many as 423 such zones, of which 280 are operational as of March 31 this year. In these areas, up to 5,711 units have been approved until December 31, 2023.
Top export destinations include the United Arab Emirates, the United States, the United Kingdom, Australia and Singapore.
