Lok Sabha Question No. 58 (STARRED), answered on 2020-02-05
Subject: Special Economic Zones
Ministry: COMMERCE AND INDUSTRY
Asked by: Pradyut Bordoloi

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

## LOK SABHA STARRED QUESTION NO. 58 TO BE ANSWERED ON 05 th FEBRUARY, 2020

## SPECIAL ECONOMIC ZONES

## *58. SHRI PRADYUT BORDOLOI:

Will the Minister of COMMERCE & INDUSTRY ( वािण�य एवं उ�ोग मं�ी ) be pleased to state:

- (a) the details of the Special Economic Zones (SEZs) in the country, State/UT-wise along with the share of SEZs in the total export from the country during the last four years;
- (b) whether the Government has set up or has any proposal to set up any SEZ in the North Eastern Region (NER) and if so, the details and the locations thereof, State-wise;
- (c) whether the Government has explored setting up of such zones in various States in the NER to boost trade with neighbouring countries and if so, the details thereof and if not, the reasons therefor;
- (d) whether  the  Government  has  appointed  any  Panel  for  this  purpose  and  if  so,  the  details thereof; and
- (e) whether the said Panel has suggested any changes in the SEZ Rules and if so, the details thereof along with the decision taken, if any, by the Government in this regard?

## ANSWER

okf.kT; ,oa m|ksx ea=h ( Jh ih;w'k xks;y ) THE MINISTER OF  COMMERCE AND INDUSTRY (SHRI PIYUSH GOYAL)

(a) to (e):  A Statement is laid on the Table of the House.

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## STATEMENT REFERRED TO  IN REPLY TO PARTS (a) to (e) OF LOK SABHA STARRED  QUESTION  NO. 58 FOR  ANSWER  ON  05 th FEBRUARY,  2020 REGARDING ' SPECIAL ECONOMIC ZONES '.

- (a): In  addition  to  Seven  Central  Government  Special  Economic  Zones  (SEZs)  and  12 State/Private Sector SEZs, which were set-up prior to the enactment of the SEZs Act, 2005, approvals have been accorded to 422 proposals for setting up of  SEZs in the country by State Governments/private  investors.  Presently,  out  of  372  notified  SEZs  a  total  of  238  SEZs  are operational. States/UTs-wise details are available at www.sezindia.nic.in . The export data of country vis-à-vis SEZs during the last four years is as under:-
- (b) and (c): SEZs being setup under the SEZ Act, 2005 and SEZ Rules, 2006 are primarily private investment driven initiatives and no funds are sanctioned by the Central Government for setting up the SEZ. Permissible fiscal/duty benefits are available to SEZ developers and Units. The Board of Approval (BoA) in Department of Commerce approves a proposal for establishment of a Special Economic Zone (SEZ) subject to the terms and conditions prescribed in the SEZ Act, 2005 and Rules, 2006  as  amended  from  time  to  time.  The  approval  is  granted  only  after  the  concerned  State Government recommends the setting up of the SEZ. Central Government had notified 4 SEZs in North Eastern Region. The details of SEZs are at Annexure.
- (d) and (e): Central Government has not appointed any panel for this purpose. However, a Group of  eminent  persons  under  the  Chairmanship  of  Shri  Baba  Kalyani  was  formed  by  the  Central Government vide Department of Commerce Order dated 04.06.2018 to study the SEZ Policy of India. The Group submitted its report to Hon'ble CIM on 19.11.2018. A number of recommendations of the Group have already been implemented which are enclosed as Appendix .

| Financial Year   |   Total exports (goods + services) of the Country (INR-Crs) * |   Total exports (goods + services) of the SEZs (INR-Crs)* |   %share of the SEZs exports in the total exports of the country |
|------------------|---------------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------------|
| 2015-16          |                                                       2726635 |                                                    467337 |                                                            17.14 |
| 2016-17          |                                                       2950736 |                                                    523637 |                                                            17.75 |
| 2017-18          |                                                       3213959 |                                                    581033 |                                                            18.08 |
| 2018-19          |                                                       3746613 |                                                    701179 |                                                            18.72 |

*Source: DGCIS & RBI website and NSDL

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## APPENDIX TO LSSQ 58 FOR ANSWER on 05.02.2020

The recommendations of the Group which have already been acted upon are as follows.

- Review  specific  exclusions  proposed  in  NFE  computation  in  light  of  'Make  in  India' initiative, especially projects of economic importance - The recommendation sought that the status quo prior to 19.09.2018 should be retained. Accordingly, the same was implemented through a suitable amendment to the SEZ Rules in March-2019.
- Sharing of duty exempted assets/ infrastructure between units to be allowed against specific approval - This recommendation was implemented through a suitable Clarification issued on 11.06.2019 for allowing usage of common infrastructure like canteen / datacenters etc among SEZ units against specific approval.
- Inclusion of indigenous goods in NFE computation should be excluded as there is no foreign exchange outflow on procurement of indigenous goods and same is contrary to the objective of NFE and principles followed for EOUs  -  The same was implemented through a suitable amendment to the SEZ Rules in March-2019.
- Formalize 'de-notification' process for enclaves and delink its present mandatory usage for SEZs purpose only - This recommendation was implemented through a suitable Clarification dated 28.01.2019 issued to all DCs with copy to State/UTs which relaxed the mandatory usage requirement that stipulated that the denotified land shall be used for SEZ purpose only.
- Support to enable servicification of manufacturing zones. Allowing manufacturing enabling services companies e.g. R&D services, engineering design services, logistics service - This recommendation has been implemented through a suitable amendment to Rule 5 of the SEZ rules on 17.12.2019 which rendered all existing and future SEZs as multi-sector SEZs thereby allowing for the co-existence of SEZ units of any sector with any other sector.
- Broad-banding  definition  of  services/allowing  multiple  services  to  come  together -    This recommendation has been implemented through a suitable amendment to Rule 5 of the SEZ rules on 17.12.2019 which rendered all existing and future SEZs as multi-sector SEZs thereby allowing for the co-existence of SEZ units of any sector with any other sector.
- Review/relax  minimum  land/built-up  area  requirement -This  recommendation  has  been implemented through a suitable amendment to Rule 5 of the SEZ rules on 17.12.2019 which relaxed  the  minimum  land  area  requirement  for  setting  up  a  multi-sector  SEZ  from  the erstwhile requirement of 500 hectares to 50 hectares.
- Developer  should  be  allowed  flexibility  to  enter  into  a  long  term  lease  agreement  with stakeholders in Zones in line with the State policies  - This  recommendation was implemented through  an  instruction  No.  98  dated  29.08.2019  which  relaxed  the  earlier  stipulation  of maximum lease period of 30 years to allow flexibility in lease tenure which would be in line with the maximum tenure allowed under the state / local government law / regulations.
- The  application  for  constructing  minimum  built  up  area  by  Developer  or  Co-developer beyond a period of ten years from the date of notification of the Special Economic Zone to be considered by BOA on merits of each case - This recommendation has been implemented through a suitable amendment to Rule 5 of the SEZ rules on 17.12.2019 thereby empowering

the  Board  of  Approval  to  consider  proposals  for  extensions  for  period  beyond  earlier stipulated ten years based on the merits of each case.

- Enabling provisions for transfer of approval from one co-developer to other co-developer This recommendation has been examined and is being implemented through the mechanism of Board of Approvals which examines and approves  such proposals on the merits of each case.
- Funding mechanism for last mile connectivity for SEZs  -  A mechanism for funding such requirement of last mile connectivity infrastructure has enabled through the existing scheme of TIES which has been clarified through suitable instruction to Development Commissioners in Jan-2020.

Besides the recommendations of the Group, the following further steps have been taken towards enabling ease of doing business and enhancing flexibility.

- Delegation of powers to Development Commissioner for shifting of SEZ unit from one SEZ to another within their jurisdiction - Earlier such proposals for shifting of SEZ units from one SEZ to another were processed and approved at the level of Commerce Secretary which has now been delegated to the level of jurisdictional Development Commissioners.
- Enable a trust to be considered eligible to set-up a unit in a SEZ, including a unit to be set-up in the International Financial Services Centre (IFSC). This will also provide flexibility to GoI to include any entity that may be required to be notified from time to time to set-up a unit in a SEZ
- Setting up of cafeteria, gymnasium, creche and other similar facilities / amenities allowed to SEZ units - The request of SEZ units to set up facilities such as cafeteria, gymnasium, creche and other similar  facilities  /  amenities  were  allowed  through  a  suitable    Instruction  dated 11.06.2019.
- Revised  guidelines  for  Work  from  Home  policy  The  revised  guidelines  were  enabled through an amendment to the SEZ Rules in March-2019 to allow for employees of SEZ units to work for home.
- Uniform list of services to SEZ - This provides for a broad list of input services that could be utilized by SEZ units for their day-to-day operations thereby avoiding the requirement of the units to seek permission of Development Commissioners for each such instance.

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