‘Tweak in SEZ rules can attract companies exiting China’

G Balachandar Chennai | Updated on May 15, 2020 Published on May 15, 2020

Tamil Nadu Association of SEZ Infrastructure bats for easier access to DTA, efficient exports

With policy interventions in the SEZ (special economic zone) rules, India can attract manufacturing supply chains that are relocating from China, according to the Tamil Nadu Association of SEZ Infrastructure developers.

In a communication to the Prime Minister, Sunil Rallan, the president of the Association, has requested for a few policy interventions in SEZ schemes and shift to digital mode for approval processes.

“All trends indicate that Indian domestic demand will remain strong while the global markets will take longer to pick up. Export-led growth from India is going to face demand contraction and slow growth for the next 2-3 years. We need to incentivise foreign supply chains to relocate into SEZs with easy access to DTA as well the ability to export efficiently,” he said in his letter.

He highlighted that the Covid-19 outbreak and the consequent turmoil in global economy has led to realignment of global supply chain with about 50 per cent of the units seeking to move out of China.

In this process, Vietnam has become more attractive than India to these relocating units due to former’s friendly policies.

Transparency in processes

India’s fiscal policy requires the manufacturing units to set up discrete factories for DTA markets and exports, thereby making it very unattractive to consider India as a destination. This is further compounded by several other issues on ground. ‘Make in India’ must result in more transparency and create an environment that makes our units compete with the rest of the world.

Foreign companies must be attracted to come and take advantage of our manufacturing ecosystem, he said.

For this, the association has sought recalibration of SEZ rule 53 in order to give parity to the SEZ units with the scheme operated by CBIC (Central Board of Indirect Taxes & Customs),

“We urge the government to provide parity to the SEZ units with the scheme operated by the CBIC and the EOU scheme under the FTP (foreign trade policy). This will make it very attractive for the overseas entities setting up manufacturing units in India and provide for ease of doing business,” Rallan said.

The association wants the SEZ Rule 18 (6) which covers the concept of manufacturing services, should be revised to cover the prevailing business models. Rule 76 must be amended to include manufacturing services in the list of services.

Rallan also pointed out that transactions such as Form F application, shipping bill filings, filing of commencement of operations, renewal of LOA etc could move online.

“All approval processes at various stages must be done online from the submission until approval. The integration of SEZ online with the Customs ICEGATE System must be completed.This matter has been under review now for several years without any outcome. This will expedite the entire process resulting in greater ease of doing business, he added.

Published on May 15, 2020

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