Special Economic Zones (SEZ):
Context:
A government panel is currently working on new Special Economic Zone (SEZ) norms to boost manufacturing
This comes as multiple SEZ units have sought to be de-notified due to steep US tariffs that have made their exports uncompetitive
Exporters are seeking a reverse job work policy.
It is a proposed policy that would allow manufacturing units located inside Special Economic Zones (SEZs) to perform work for the domestic market (also known as the Domestic Tariff Area, or DTA)
This would allow SEZ units to perform work for the domestic market.
This would help utilize labour and equipment capacity that is often idle due to the seasonality of export demand
Salient Features of the SEZ Scheme
An SEZ is a designated duty-free area treated as a territory outside the customs territory of India for authorised operations
No licence is required for import
Both manufacturing and service activities are allowed
Net Foreign Exchange (NFE):
Units must achieve Positive Net Foreign Exchange, which is calculated cumulatively for a period of five years
Domestic sales are permitted but are subject to full customs duty and the import policy in force
SEZ units have the freedom for subcontracting
There is no routine examination of export/import cargo by customs authorities
Baba Kalyani Committee Recommendations:
Shift the framework from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves - 3Es)
Create an integrated online portal for new investments, operational requirements, and exits
Enhance competitiveness by funding high-speed multi-modal connectivity (rail, roadways, ports, airports
Recommended the extension of the Sunset Clause and the retention of tax or duty benefits
NFE Calculation:
Suggested that specified domestic supplies supporting Make in India be included in the NFE computation
Allow alternate sectors to invest in sector-specific SEZs and permit sub-contracting for customers outside SEZs without restriction.