Cabinet clears SEZ law for pushing up exports

The government on Wednesday cleared a major central legislation to provide duty free environment, single window clearance and more tax incen...

The government on Wednesday cleared a major central legislation to provide duty free environment, single window clearance and more tax incentives to special economic zones (SEZ) to make exports the engine of economic growth. Encouraged by the exceptional growth in SEZs at 23 per cent this year compared to average national export growth less than half of this rate, the government has decided to promote SEZs in a big way to push exports and encourage investments in these areas. The legislation could be put into effect without waiting for Parliament approval especially in the event of Elections through the issuance of an Ordinance.

Addressing newspersons here Commerce Minister Arun Jaitley said that the SEZ legislation cleared by the Cabinet also aims at providing competitive fiscal package both at Central and State level with minimum regulatory regime and quality infrastructure and a stable long term policy to promote investment in these areas.

‘‘Finance ministry and the Finance Minister had extended to us a significant contribution by agreeing to include the revenue regime within the law itself,’’ he said.

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Existing incentives and facilities like exemption from customs and excise duty for development of SEZ and setting up of units, income tax, sales tax and service tax exemption would be incorporated in the new legislation to impart stability to the fiscal regime. Under the new legislation, SEZs would be treated as deemed foreign territory and supplies from domestic industry would be treated as exports.

Asked if the legislation gave SEZs the freedom to enforce existing labour laws, he said the Bill contained an enabling provision but as labour was a State subject they would have to bring in their own legislation. With the enactment of this Bill, commerce ministry would become the nodal agency for SEZs with all fiscal powers flowing from the Act itself. An authority would be set up in each zone by the Centre which will be the nodal point for all clearances.

Jaitley also said that 16 banks had been given approvals for setting up shop in the SEZs to promote export activity. On the export performance in the current year, Jaitley said that textiles and marine exports had suffered adversely owing to the depreciation of the dollar while in most other sectors growth was satisfactory. On being asked if the export growth would meet the 12 per cent growth target, Jaitley said that the Commerce Ministry was keeping a close watch on the situation.

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