NEW DELHI: The commerce department is reopening the debate on having a unique labour law for special economic zones in what is seen as the latest attempt to breathe life into the once bustling sector.
Sources said that the department is scheduled to kick off discussions on a special dispensation for SEZs later this week and has already flagged the issue to development commissioners along with looking at ways to simplify the procedures in the zones.
Citing the Chinese model, the Atal Bihari Vajpayee government had originally proposed to exempt SEZs and units in these zones from the country's labour laws, arguing that they were technically outside Indian jurisdiction. But at the time of the enactment of the
SEZ law, the UPA government succumbed under pressure from the labour ministry and merely treated these zones to be outside India for customs purposes. A similar model was tried in case of the national manufacturing zones but the labour ministry blocked the move.
But with the change of government at the Centre, the commerce department is sensing fresh opportunity in pushing through a new labour regime for SEZs but sources said that these are preliminary discussions and there is no decision on the issue.
As a first step, the department intends to consult the development commissioners of the zones before initiating a larger debate involving other ministries. "Finally, it's a political call," said an official, while pointing out that none of the demands for special zones, including doing away with the minimum alternate tax and dividend distribution tax, were met by FM Arun Jaitley although his deputy Nirmala Sitharaman had publicly stated that the policy is being reviewed.
The commerce department sees SEZs as one of the key elements of the government's manufacturing strategy to boost exports and also increase the sector's share in overall economic activity.
Apart from labour laws, the department is also looking at simplifying the policy on development of units and allotment of land in addition to the exit policy. The moves are meant to make life simpler in SEZs and ties in with the government's overall push on ease of doing business.
Officials said that there is discussion around a long-pending demand from Nasscom on treating services exports into the domestic tariff area, or to the non-SEZ area within the country, eligible for benefits. While goods sold to the DTA, even on rupee payment, are treated as exports, the SEZ Act mandates that services exports will be treated as eligible exports only if they earn foreign exchange.
Source : timesofindia.indiatimes.com