| Date: |
09-06-2015 |
| Subject: |
State govt officials likely to be posted at SEZs to boost domestic manufacturing |
NEW DELHI: State governments could soon get an active role in the special economic zones with the department of commerce mulling a state official posting at the duty free enclaves to expedite clearances and improve coordination. This is part of Modi government's proposed SEZ reforms to make these zones attractive and enhance domestic manufacturing.
The commerce department will also hold talks with various departments and states to operationalise the online single window approval mechanism for these zones. It is also discussing with the department of revenue a proposal to allow SEZ units to sell in the domestic market at concessional duty, like in the case of a free trade agreement.
Of the 352 notified SEZs only 168 are operational, defined as having at least one functional unit. "We are working on a comprehensive strategy to enhance performance of SEZs, which includes getting states on board, single window online system of clearances and integration of power plants and ports. We need to sell SEZs better and improve the clearance part," said a government official. This could help improve land utility in SEZs, given that of 45,635.63 hectares notified for the development of SEZs, actual operations has taken place only in 28,488.49 hectares or 62% of the notified land. Developers are struggling to attract units.
Commerce secretary Rajeev Kher is expected to hold a meeting with the state governments this month to discuss ways to enhance approvals and productivity of these zones. Commerce Department will likely propose that the joint development commissioner of the SEZ be a state government official to facilitate clearances. "We need to involve state governments more as we know that land, labor and environment is a state issue. State governments are not willing to give power to our development commissioners, so this could help," said the official.
Towards promoting ease of doing business in these zones, government will also come with integration of customs procedures on a single online window. "We are aiming for least interference of manpower in SEZs," he said.
The units in SEZs enjoy zero import tariff but can sell into a DTA at full customs duty of the final product, making their products uncompetitive. While India has free trade agreements with countries including Japan, Korea and Asean, sale from SEZs to the domestic tariff areas is charged full import duty. Commerce department has proposed a backward linkage of sorts, wherein units in SEZs get to sell into DTA at the best FTA rate.
Exports from SEZs fell 7.6% during 2014-15.
"Due to FTAs, benefits outside are better. Units should get the freedom to sell outside SEZs especially in times of economic slowdown. ," he said.
Operational SEZs are located in 10 out of 29 states in India. States such as Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Gujarat account for 75% of operational SEZs.
Unless government makes this linkage, the whole model becomes unviable. It counters the Make in India campaign of the government, said Arpita Mukherjee, professor, Icrier and author of a study on SEZs review.
"There is need for state support in matters related to land acquisition and the DCs office should have close cooperation with the state government in this issue. The Development Commissioner's (DC's) office is often not able to provide the support required for getting land or provide single-window clearances. This makes the institutional and administrative framework weak," Mukherjee says in her report.
Source : telecom.economictimes.indiatimes.com
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