Lok Sabha Question No. 11 (STARRED), answered on 2022-02-02
Subject: SEZ Policy
Ministry: COMMERCE AND INDUSTRY
Asked by: Ajay Nishad

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

## LOK  SABHA STARRED QUESTION NO. 11(H) TO BE ANSWERED ON 02 nd  FEBRUARY, 2022

## SEZ POLICY

## *11(H). SHRI AJAY NISHAD:

Will the Minister of COMMERCE & INDUSTRY ( वाणिज्य एवं उद्योग मं त्री ) be pleased to state:

- (a) the main features of the present Special Economic Zone (SEZ) policy;
- (b) whether shortcomings have been detected in the said policy which has caused huge revenue loss to the Government;
- (c) if so, the details thereof;
- (d) whether the Government has reviewed the SEZ policy and carried out or proposes to carry out any amendment in the rules, laws and procedures related to the said policy; and
- (e) if so, the details thereof?

## 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.

*****

## STATEMENT   REFERRED   TO  IN   REPLY   TO   PARTS  (a) to (e)  OF  LOK  SABHA STARRED    QUESTION    NO.  11      FOR    ANSWER    ON    02 nd  FEBRUARY,  2022 REGARDING   ' SEZ POLICY'.

(a): The Special Economic Zones (SEZs) policy was launched in April, 2000 as part of the extant Foreign Trade Policy, 2000-05 (FTP 2000-05).  The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005.  The SEZ Rules, 2006 came into effect on 10th February, 2006. The salient features of the SEZ Act, 2005 are:-

- (i) A designated duty free enclave to be treated as a territory outside the Customs territory of India for the purpose of authorised operations in the SEZ;
- (ii) No licence required for imports into SEZ;
- (iii) Single  Window  Clearance  at  the  level  of  Board  of  Approval  (BOA)  and  Unit  Approval Committee (UAC);
- (iv) SEZ Units are required to achieve Positive Net Foreign Exchange (NFE) to be calculated cumulatively for a period of five years from the commencement of production;
- (v) Supply of goods from SEZ units to Domestic Tariff Area (DTA) is allowed on payment of Customs    duties    including  anti-dumping,  countervailing  and  safeguard  duties  under  the Customs Tariff Act, 1975, where applicable, as leviable on such goods when imported;
- (vi) No routine examination by Customs authorities of export/import cargo;
- (vii) Dedicated Customs wing for fast clearance.
- (viii) SEZ Developers /Co-Developers and Units enjoy Direct Tax and Indirect Tax benefits as prescribed in the SEZ Act, 2005.

(b) and (c): No Sir.

(d) and (e): Review  of  SEZ  policy  is  an  on-going  process  and  on  the  basis  of  inputs/suggestions received  from  stakeholders  on  the  policy  and  operational  framework  of  the  SEZs,  Government periodically takes necessary measures for facilitating smooth and effective implementation of the SEZ Act/Rules. Amendments carried out in the SEZ Act, 2005 and SEZ Rules, 2006 during the last three years are at Annexure.

*****

## Annexure to the Lok Sabha Starred Question No. 11 for 2 nd February, 2022

Amendments carried out in the SEZ Act, 2005 and SEZ Rules, 2006 during the last three years:

## 1. Amendments carried out in the SEZ Act, 2005:

Amendments carried on 8 th  July, 2019 for enabling Trusts and any other entity notified by the Central Government to set  up  units,  definition  of  persons  in  Section  2(v)  has  been  amended  through  the  Special Economic Zones (Amendment) Bill, 2019. The bill got assent of President of India on 06.07.2019.

## 2. Amendments carried out in the SEZ Rules, 2006:

## (a) Amendment carried out on 31st January, 2019 :-

In Rule 42(1)(ii)(h) of the SEZs following amendment has been made:

Provided further that in case of a gems and jewellery unit, studded gold jewellery, silver jewellery and imitation jewellery, the finished goods requiring further processing or semi-finished goods, taken outside the Special Economic Zone for sub-contracting by the unit, shall be brought back into the unit within forty-five days.

## (b) Amendment carried out on 7 th  March, 2019:-

In the backdrop of amendment carried on 19th September, 2018, suggestions from stakeholders were received to  further  amend  the  SEZ  Rules  and  accordingly,  the  amendment  were  carried  out including the amendment in rule 53 regarding method of calculation of Net Foreign Exchange (NFE) for the Units in SEZs.

## (c) Amendment carried out on 17 th  December, 2019:

For utilization of the vacant spaces in SEZs, removal of distinction between sector specific and multi sector requirement, an amendment vide notification G.S.R. 940(E) dated 17th December, 2019 has been carried out for encouraging more investment and growth in exports.

## (d) Amendment carried out on 31 st  December, 2019:

Rule 53A has been inserted to facilitate the calculation of net foreign exchange for a unit in an International Financial Service Center in view of its special nature.

## (e) Amendment carried out on 23 rd  October, 2020:

In Rule 24(3) of the SEZs following proviso has been made:

Provided further that in case of supplies from Domestic Tariff Area to foreign suppliers in Free Trade and Warehousing Zone, the drawback or any other similar benefit Scheme shall be admissible where the payments are made in foreign currency by the foreign supplier to Domestic Tariff Area subject to sub-rule (5) of rule 18 of the said rules.

## (f) Amendment carried out on 16 th  June, 2021:

After Rule 21 of the SEZs following rule has been inserted, namely:-

## 21A. Setting up of Unit by Multilateral or Unilateral or International agencies in International Financial Services Centre:-

- (1) A Multilateral  agency  or  Unilateral  agency  or  International  agency  notified  under  the  United Nations (Privileges and Immunities) Act, 1947 (46 of 1947) shall be allowed to set up their local or regional office in the International Financial Services Centre as an Unit.
- (2) The application for setting up and operation of such Unit in the International Financial Services Centre  shall  be  made  before  the  Board  of  Approval  through  the  concerned  Development Commissioner.
- (3) The terms and conditions for setting up and operations by such Units shall be laid down by the Board of Approval based on the recommendation of the Development Commissioner.
- (4) Notwithstanding anything contained under these Rules, the Board of Approval may exempt such Units from any provisions of these Rules including provisions relating to positive Net Foreign Exchange  earning  or filing  of  Annual  Performance  Report  or  such  other  exemption,  based  on  the recommendation of the Development Commissioner.
- (5) The proposal for extension of the Letter of Approval of such Units shall be considered by the Board of Approval.

*****