Lok Sabha Question No. 5363 (UNSTARRED), answered on 2023-04-05
Subject: SEZ Act
Ministry: COMMERCE AND INDUSTRY
Asked by: Bhavana Gawali (Patil), Krupal Balaji Tumane

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

## LOK SABHA UNSTARRED QUESTION NO. 5363 TO BE ANSWERED ON 05 th  APRIL, 2023

## SEZ Act

## 5363.   SHRIMATI BHAVANA PUNDALIKRAO GAWALI: SHRI KRUPAL BALAJI TUMANE:

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

(a) whether the Government proposes to amend the Special Economic Zones (SEZs) Act to enable the  State  to  become  a  partner  in  enterprise  development  and  service  sectors  and  if  so,  the  details thereof;

(b) whether  there  is  a  provision  for  optimum  utilization  of  infrastructure  available  in  all  major existing  and  new  industrial  enclaves  and  to  increase  competitiveness  in  exports  if  so,  the  details thereof;

(c) whether the Government has proposed to improve the Customs Administration of SEZs and henceforth it will be fully IT driven and it is likely to work on the Customs National Portal;

- (d) if so, the details thereof; and
- (e) the other reforms being undertaken by the Government for SEZs in the country?

## ANSWER

okf.kT; ,oa m|ksx ea=ky; esa jkT; ea=h ¼Jherh vuqfiz;k iVsy½

## THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SMT. ANUPRIYA PATEL)

(a)  and  (b):    As  announced  in  Union  Budget  2022-23,  Special  Economic  Zones  Act,  2005  will  be replaced  with  a  new  legislation  that  will  enable  the  State  Governments  to  become  partners  in Development  of  Enterprise  and  Service  Hubs.  It  would  cover  all  large  existing  and  new  industrial enclaves  to  optimally  utilise  available  infrastructure  and  enhance  competitiveness  of  exports.    The legislation is currently under inter-ministerial consultations.

(c) and (d): The project is under implementation on pilot basis in MEPZ SEZ, Chennai and GIFT SEZ, Gandhinagar. After successful completion of the pilot, the same shall be implemented across all Zones.

(e): SEZ  reform  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. Several measures have been initiated to enhance ease of doing business for SEZ Developers/Units as detailed in Annexure.

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## Annexure referred to in reply to part (e) of Lok Sabha Unstarred Question No. 5363 for 5 th  April, 2023

## Measures for enhancing Ease of Doing Business in SEZs:

1. DoC letter dated 28.01.2019 regarding formalize 'de-notification' process for enclaves and delink its present mandatory usage for SEZs purpose only.
2. Method of calculation for Net Foreign Exchange earning criteria was reviewed and modified vide Notification dated 07.03.2019.
3. An amendment to the SEZ Rules in 7 th March, 2019 to allow employees of IT/ITeS SEZ units to work for home.
4. Instruction No. 94 dated 08.05.2019 relating to uniform list of services to SEZ, 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.
5. Instruction No. 95 dated 08.05.2019 relating to setting up of cafeteria, gymnasium, creche and other similar facilities / amenities allowed to SEZ units.
6. Amendment vide Notification dated 8 th July,  2019 in SEZ Act, 2005 [Section 2(v)] for enabling Trusts and any other entity notified by the Central Government to set up units in SEZ.
7. Instruction  No.  96  dated  31.07.2019  relating  to  guidelines  for  clearance  of  abandoned  goods/ uncleared cargo laying in Free Trade Warehousing Zones (FTWZs.)
8. Instruction No. 98 dated 29.08.2019 Developer are allowed flexibility to enter into a long term lease agreement with stakeholders in Zones in line with the State policies.
9. Instruction No. 101 dated 01.11.2019 relating to delegation of powers to Development Commissioner for shifting of SEZ unit from one SEZ to another within their jurisdiction.
10. Rule 53A inserted to facilitate the calculation of net foreign exchange for a unit in an International Financial Service Centre in view of its special nature vide Notification dated 31.12.2019.
11. Support to enable servicification of manufacturing zones. Allowing manufacturing enabling services companies e.g. Research and Development (R&D) services, engineering design services, logistics service.
12. Enabling provisions for transfer of approval from one co-developer to other co-developer.
13. Vide amendment dated 23.10.2020, a proviso in Rule 24(3) of the SEZs Rules inserted regarding admissibility of Drawback and any other similar benefit on supplies from Domestic Tariff Area to foreign suppliers in Free Trade and Warehousing Zone, where the payments are made in foreign currency by the foreign supplier to Domestic Tariff Area.
14. A new rule 21A inserted in SEZ Rules, 2006 vide Notification dated  16.06.2021 which enables setting up of Unit by Multilateral or Unilateral or International agencies notified under United Nation (Privileges and Immunities) Act, 1947 (46 of 1947) in International Financial Services Centre.

15. Power  Guidelines,  2016  amended  vide  OM  dated  07.06.2021  allowing  a  unit  to  set  up  nonconventional power plants within their premises for the exclusive purpose of captive consumption subject to the condition that non tax/duty benefits stipulated under Section 26 of SEZ Act, 2005.
16. Instruction no. 106 relating to the policy for worn/used clothing and plastic recycling units in SEZs was issued on 27.5.2021.
17. Instruction No. 107 dated 26.08.2021 was issued for minimizing regulatory compliances for Pharma Industry. Further, integration of Food Standards and Safety Authority of India (FSSAI) with SEZ Online System has been made live.
18. Instruction No. 108 dated 11th October, 2021 was issued pertaining to alternative method of transfer of space by an existing unit under Rule 74 of SEZ Rules, 2006.
19. Instruction  No.  109  dated  18th  October,  2021  was  issued  which  provides  that  reorganization including change of name, change of shareholding pattern, business transfer arrangements, court approved  mergers  and  demergers,  change  of  constitution,  change  of  Directors,  etc.  may  be undertaken  by  the  Unit  Approval  Committee  (UAC)  concerned  subject  to  the  condition  that Developer/Co-developer/Unit  shall  not  opt  out  or  exit  out  of  the  Special  Economic  Zone  and continues to operate as a going concern.
20. A rule amendment has been carried out in Rule 41 and 42 of SEZ Rules, 2006 vide notification no. G.S.R 288(E) dated 8th April, 2022 to include precious metals while carrying out job-work from SEZs.
21. A new rule 19A was inserted in SEZ Rules, 2006 which enables any Unit authorised under rule 19 to store bullion as the underlying asset for the purpose of issuance of a bullion spot delivery contract or bullion depository receipt with underlying bullion that is traded in a bullion exchange shall be deemed to be in an International Financial Services Centre.
22. A policy for used/worn clothing and plastic recycling units in SEZs/ EOUs has been issued on 5th May, 2022 thereby extending the LoAs of the plastic recycling units in SEZs/ EOUs for a term of 5 years instead of 18 months as prescribed in the policy guidelines dated 27.05.2021.
23. A new rule 29A was inserted in SEZ Rules, 2006 vide notification dated 03.10.2022 in respect of International Financial Services Centre (IFSC) dealing with providing provisions for procedures of import,  removal  of  aircraft  by  an  aircraft  leasing  units  in  an  IFSC  to  an  importer  in  India, procurement/return of aircraft from Non Scheduled Operator Permit (NSOP) or Scheduled Operator Permit (SOP) or any other Domestic Tariff Area (DTA) supplier by /to IFSC unit upon expiry of lease period and export of aircraft by IFSC unit to outside India respectively.
24. A rule amendment has been carried out in Rule 43A of SEZ Rules, 2006 vide notification dated 08.12.2022 to allow certain category of employees to work from home upto 31.12.2023.
25. A new rule 21B was inserted in SEZ Rules, 2006 vide notification dated 23.02.2023 to allow an aircraft leasing unit in an International Financial Services Centre (IFSC), to utilise office space or manpower or both, of another unit set up in IFSC authorised to undertake aircraft leasing activity.

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