Lok Sabha Question No. 515 (UNSTARRED), answered on 2017-02-06
Subject: Exports from SEZs
Ministry: COMMERCE AND INDUSTRY
Asked by: DILIP PATEL

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 515 TO BE ANSWERED ON 06 th  FEBRUARY, 2017

## EXPORTS FROM SEZS

Will the Minister of COMMERCE & INDUSTRY ( वािणÏय एवं उɮयोग मंत्री ) be pleased to state:

## 515. SHRI DILIP PATEL:

- (a) whether the exports from SEZs has declined/got affected during the last three years and if so, the details thereof and the reasons therefor along with total exports from SEZs during the said period, State/ UT-wise;
- (b) whether imposition of Minimum Alternate Tax (MAT)/Dividend Distribution Tax on SEZs has affected the growth, investments, employment and exports from SEZs and if so, the details thereof along with the reaction of the Government thereto;
- (c) whether  the  goods  manufactured  in  SEZs  when  sold  in  the  domestic  market  are levied  an  import  duty  which  places  them  at  a  disadvantage  compared  with  goods imported through free trade agreements and if so, the details thereof along with its impact on SEZs both domestically and in its exports;
- (d) whether the Government has any proposal to bring down the tariffs and MAT levied on SEZ units that sell goods in the domestic market and if so, the details and the present status thereof;
- (e) whether  the  Government  has  given  more  time  to  certain  developers  of  SEZs  to complete their projects and if so, the details thereof and the reasons therefor; and
- (f) the measures taken or being taken by the Government/Export Promotion Council for Export Oriented Units and SEZs to boost exports from SEZs and resolve the issues therein?

## ANSWER

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## THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (INDEPENDENT CHARGE)

(SMT. NIRMALA SITHARAMAN)

- (a): There was a decline of around 7% in exports in 2014-15 when compared to exports during 2013-14. However, there has been a marginal increase of 0.77% in the exports during 2015-16 when compared to exports during 2014-15. Performance in respect of exports from SEZs has been better as compared to overall exports from the country. Exports have been affected adversely due to general decrease in demand from major export markets. The details of total exports from the Special Economic Zones (SEZs) in various States/UTs of the country during the last three years and current financial year, year-wise are at Annexure.
- (b): Ministry of Finance has withdrawn the exemption from Minimum Alternate Tax (MAT) to SEZ Developers and Units with effect from 1 st April, 2012, and also the exemption of Dividend Distribution Tax (DDT) in the case of SEZ Developers under the Income-tax Act

for dividends declared, distributed or paid after 1 st June, 2011.  Details of investment made, employment generated and exports from SEZs during the last three years and current financial year are shown below:

| Financial Year(s)                    | Investment* (Rs. in crore)   | Employment* (Persons)   | Exports (Rs. in crore)   |
|--------------------------------------|------------------------------|-------------------------|--------------------------|
| 2013-14                              | 2,96,663                     | 12,83,309               | 4,94,077                 |
| 2014-15                              | 3,38,794                     | 14,42,316               | 4,63,770                 |
| 2015-16                              | 3,76,494                     | 15,91,381               | 4,67,337                 |
| 2016-2017 (April to September, 2016) | 4,06,690                     | 16,88,337               | 2,35,900                 |

In order to boost exports from SEZs Government periodically reviews the policy and operational framework of SEZs and takes necessary measures so as to facilitate speedy and effective implementation of SEZs. Further, open house meetings with SEZ stakeholders, road shows have been organised in various places of the country to give wide publicity of SEZs.

- (c): The goods manufactured in SEZs when sold in the domestic market are treated as imports and hence levied an import duty. SEZs are primarily meant for exports and are deemed to be a territory outside the customs territory of India. No significant impact of FTAs has been observed on SEZs both domestically and in its exports.
- (d): No Madam.
- (e): In  terms  of  Rule  6(2)(a)  of  the  Special  Economic  Zones  Rules,  2006,  the  letter  of approval granted to a SEZ developer is valid for a period of three years within which time effective  steps  are  to  be  taken  by  the  developer  to  implement  the  approved  proposal.  The Board of Approval (BoA) may, on an application by the developer, extend the validity period of the letter of approval. Some SEZs developers have sought extension of validity period of the letter of approval granted to them for the execution of their projects for various reasons including adverse business climate due to global recession, delay in approvals from statutory State  Government  bodies,  delay  in  environmental  clearance,  lack  of  demand  for  space  in SEZs, unstable fiscal incentive regime for SEZs etc. During the last three years and current financial year (upto January, 2017), BoA has granted more time to 143 developers of SEZ across the country to complete their projects.
- (f): The following initiatives have been taken in recent years to boost exports from SEZs and resolve the issues therein:
- i. Minimum  Land  Area  requirement  for  setting  up  of  new  SEZs  has  been reduced to 50% for Multi-product and Sector-specific SEZs.
- ii. Sectoral  broad-banding  has  been  introduced  to  encompass  similar  /  related areas under the same Sector.
- iii. A  new  sector  'agro-based  food  processing'  sector  has  been  introduced  to encourage agro-based industries in SEZs.
- iv. Dual  use  of  facilities  like  Social  &  Commercial  infrastructure  by  SEZs  and non-SEZs entities has been allowed   in order to make SEZ operations more viable.
- v. Online processing of various activities relating to SEZ Developers and Units has been introduced  for improving ease of doing business

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| States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   | States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   | States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   | States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   | States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   | States/UTs-wise details of Exports from SEZs during the last three years and current financial year, year-wise   |
|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
|                                                                                                                  |                                                                                                                  | Exports (Rs. in Crore)                                                                                           | Exports (Rs. in Crore)                                                                                           | Exports (Rs. in Crore)                                                                                           | Exports (Rs. in Crore)                                                                                           |
| Sl. No.                                                                                                          | States/UTs                                                                                                       | 2013-14                                                                                                          | 2014-15                                                                                                          | 2015-16                                                                                                          | 2016-17 (as on 30.9.2016)                                                                                        |
| 1                                                                                                                | Gujarat                                                                                                          | 225042                                                                                                           | 179791.75                                                                                                        | 135719.65                                                                                                        | 67191.88                                                                                                         |
| 2                                                                                                                | Karnataka                                                                                                        | 51372.88                                                                                                         | 55197.83                                                                                                         | 54307.07                                                                                                         | 23532.64                                                                                                         |
| 3                                                                                                                | Tamil Nadu                                                                                                       | 71417                                                                                                            | 68103.63                                                                                                         | 79296.62                                                                                                         | 37970.79                                                                                                         |
| 4                                                                                                                | Maharashtra                                                                                                      | 56399.23                                                                                                         | 62535.90                                                                                                         | 71618.53                                                                                                         | 34739.83                                                                                                         |
| 5                                                                                                                | Kerala                                                                                                           | 8003.64                                                                                                          | 6540.2                                                                                                           | 10386.99                                                                                                         | 8258.78                                                                                                          |
| 6                                                                                                                | Andhra Pradesh                                                                                                   | 33291.07 *                                                                                                       | 7887.61                                                                                                          | 10843.94                                                                                                         | 5973.24                                                                                                          |
| 7                                                                                                                | Telangana                                                                                                        | 0                                                                                                                | 37108                                                                                                            | 46944.76                                                                                                         | 25129.55                                                                                                         |
| 8                                                                                                                | Uttar Pradesh                                                                                                    | 16282.42                                                                                                         | 16516.77                                                                                                         | 19756.72                                                                                                         | 10569.64                                                                                                         |
| 9                                                                                                                | West Bengal                                                                                                      | 16204.27                                                                                                         | 9872.79                                                                                                          | 11832.13                                                                                                         | 6831.68                                                                                                          |
| 10                                                                                                               | Haryana                                                                                                          | 8740.43                                                                                                          | 11139.50                                                                                                         | 15673.53                                                                                                         | 8110.96                                                                                                          |
| 11                                                                                                               | Madhya Pradesh                                                                                                   | 2984.23                                                                                                          | 4009.46                                                                                                          | 4970.05                                                                                                          | 3740.70                                                                                                          |
| 12                                                                                                               | Rajasthan                                                                                                        | 2036.59                                                                                                          | 2091.34                                                                                                          | 2233.9                                                                                                           | 1199.60                                                                                                          |
| 13                                                                                                               | Chandigarh                                                                                                       | 1778.15                                                                                                          | 2084.24                                                                                                          | 2561.54                                                                                                          | 1335.05                                                                                                          |
| 14                                                                                                               | Odisha                                                                                                           | 386.09                                                                                                           | 596.66                                                                                                           | 879.11                                                                                                           | 1149.70                                                                                                          |
| 15                                                                                                               | Punjab                                                                                                           | 136.72                                                                                                           | 290.79                                                                                                           | 312.58                                                                                                           | 165.64                                                                                                           |
| 16                                                                                                               | Chhattisgarh                                                                                                     | 1.84                                                                                                             | 3.19                                                                                                             | 0.11                                                                                                             | 0                                                                                                                |
| TOTAL                                                                                                            | TOTAL                                                                                                            | 494077                                                                                                           | 463770                                                                                                           | 467337                                                                                                           | 235900                                                                                                           |

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* Including Telangana.