Facing largescale cancellation of their global orders due to the spread of the Covid-19 pandemic, units in Special Economic Zones (SEZ) want the government to allow them to sell their products in the domestic market (Domestic Tariff Area) without payment of customs duties.

“..SEZ units should be allowed to make DTA sale on payment of duty in line with EOU (export-oriented units) i.e. equivalent to duty forgone on the raw material used in the manufacture of finished goods sold in DTA market. This will help these units to survive in the domestic market. Further, this will help the SEZ units to continue their manufacturing process, utilise their plant and machinery and engage the workforce, which is idle due to this pandemic situation,” the Export Promotion Council for EOUs and SEZs (EPCES) pointed out in a letter to Commerce & Industry Minister Piyush Goyal.

Not only are many export orders of SEZ units have been cancelled due to the spreading pandemic and manufactured products are lying idle in units, there will also be minimal export orders in the near future, the EPCES pointed out. At the moment, SEZs are also not able to sell their products in the domestic market, as payment of customs duty as per Section 30 of SEZ Act, 2005, was making their products uncompetitive, it said, adding that customs duties should soon be waived.

To attract potential investors in a world hit by the Covid-19 crisis, the government should consider extending the income tax exemption benefit for SEZs which were withdrawn in March 2020, said Anand Giri, Deputy Director-General, EPCES, speaking to BusinessLine .

“If an extension of tax exemption is not acceptable to the government, it should at least reduce the corporate income tax may for SEZs to 15 per cent and also pare the Minimum Alternate Tax rates,” he said.

The Ministry of External Affairs may also direct their foreign missions in various countries to find out potential investors and buyers and arrange buyer-seller meets or joint venture meets with foreign entities which are trying to shift their business into India or want to do business with Indian companies, he added.

Stressing on the need for support from the government, the letter pointed out that the EOU & SEZ sector was one of the biggest earners of foreign exchange, attracted foreign investment and generated large-scale employment and contributed about 34 per cent to the export basket of the country.

As per industry estimates, EOUs and SEZs provide direct employment to more than 25 lakh person and have attracted investments of more than ₹5.50 lakh crore.

In 2018-19, SEZ units exported goods worth ₹7.01 lakh crore while DTA sales were worth ₹1.2 crore.

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