The proposed Development of Enterprise and Service Hubs (DESH) Bill will go through further refinement with the incorporation of views of stakeholders, including existing SEZ units and developers, before it is presented to Cabinet and introduced in Parliament, senior officials have said.

Deliberations are underway around the revamped fiscal framework, including indirect taxes and direct taxes benefits, non-fiscal incentives and benefits, alternative dispute resolution mechanisms and rules for transition of existing SEZ units into the DESH fold.

Stakeholders’ relevance

“We will improve upon the (draft) Bill presently in circulation. Discussion with stakeholders is very valuable. We need to strengthen the country’s service and manufacturing and make us global players,” Commerce Secretary BVR Subhramanyam said at a workshop on DESH Bill 2022 organised by the Commerce Department and EPC for EOUs and SEZs on Monday.

The Centre proposes to replace the existing SEZ Act with a legislation on ‘Development of Enterprise and Service Hubs’ (DESH) where focus on exports will be replaced by stress on creation of manufacturing and services hubs that will also cater to the domestic market.

The new legislation will also be compatible with WTO rules, unlike the SEZ Act that has faced trouble at the multilateral forum for its incentives directed at promoting exports. The SEZ Act has also lost much of its allure with dilution of tax benefits and setting in of the sunset clause on income tax exemption.

Transition challenge

“The SEZ Bill is work in progress. The workshop will add to the process of its finalisation. We will continue to work with existing SEZs till they transform into DESH. The transition element could pose challenges and the processes and rules need to address that,” said Amit Yadav, Additional Secretary, Commerce Department.

Some of the fiscal benefits being discussed include freezing the tax rate of 15 per cent for greenfield ventures and extending enabling power for Central and State Governments to notify fiscal and non fiscal incentives, including Production Linked Incentive scheme and financial schemes and incentives, another official pointed out.

Ease of doing business

Proposals for streamling procedures include auto-renewal of LoAs (letters of approvals), provisions  for conversion of existing industrial estates/parks as development hubs, subject to meeting the required eligibility criteria, provisions for de-notification of development hubs, including partial de-notification of certain floors in services hubs, the official said.

“Cumulatively, these measures lead to ease of entry and exit for businesses, and are intended to enhance ease-of-doing-business in development hubs,” he added.

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