Plastic recycling, used-clothing units in SEZ get 18 months-5 year extension

Existing plastic recycling units and worn and used-clothing manufacturers in special economic zones (SEZs) have got a fresh lease of life with the government coming up with a revised policy favouring an extension of approval up to eighteen months for plastic recyclers and five years for used-clothing units provided all specified conditions including the net foreign exchange (NFE) earnings requirement are met.

The Board of Approval for SEZs, in its meeting on May 28, decided to grant further extension of five years to the worn and used-clothing units beyond June 30, 2021 and for 18 months for plastic recycling units from the date of notification of the Hazardous and Other Waste Amendment Rules, 2021 by the Ministry of Environment, Forest and Climate Change on January 27, 2021, according to the minutes of the meeting.

A total of 30 plastic recycling units and 18 used-cloth units in SEZs in Kandla, Falta and Noida SEZs are expected to benefit from the decision.

Decision based on revised policy

The decision, taken after a series of interim short-term extensions of approval, was based on the revised policy for plastic recycling and used-clothes units in SEZs, firmed-up after extensive consultations between the Department of Revenue, Department of Commerce, the Ministry of Environment, Forest & Climate Change and the Development Commissioners of the SEZs concerned, an official following the developments told BusinessLine . The revised policy was circulated by the Department of Commerce on May 27 2021.

“The DCs concerned should ensure that the units fulfil all other criteria and there is no violation of SEZ Act/Rules….Further, it may also be ensured that the policy conditions are strictly adhered to,” the BoA observed, as per the minutes of the meeting.

According to the revised policy circulated by the Commerce Department, setting up of new units for used-clothing will not be allowed, the minutes noted. Extension of letter of approval for existing units will be considered for five years provided the units comply with certain obligations including being NFE positive (value of exports have to be more than imports). They shall be allowed to make clearance in DTA, to other SEZ units as well as EoUs as long as they fulfil the NFE and other conditions. Clearance to other SEZ units/EOUS will not be counted towards mandatory minimum physical export obligations.

Tougher terms for plastic recycling

For plastic recycling units, the terms of extension are tougher as there is an overall ban on plastic recycling in the country and there are restrictions on import of raw material also on existing units in SEZs. In January this year, some relaxations on imports of raw material were granted for SEZ units for a limited period.

The revised policy circulated by the Commerce Department laid down that the extension of approval of existing plastic recycling units will be considered by the BoA for a period of 18 months in adherence to the Ministry of Environment & Forests notification on January 27, 2021 as well as the conditions laid down in it. “The above condition that the present permission to import the raw material is only for 18 months will be declared upfront so that the existing units may seek extension/renewal factoring-in this condition into their business proposal,” the revised policy indicated.

It also laid down that the Department of Commerce will propose suitable amendments in SEZ Rules and the Foreign Trade Policy to provide for setting up of new units engaged in recycling of plastic as SEZ units.

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