The Telegraph
Since 1st March, 1999
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Special package for export units

New Delhi, March 31: The new Exim policy has introduced a special package for special economic zones (SEZs) and export oriented units (EOUs).

Sales from domestic tariff area (DTA) to SEZs will be treated as exports. This, in turn, will entitle domestic suppliers to duty drawback benefits and central sales tax and service tax exemption.

EOUs are now required to be only net positive foreign exchange earners and there will be no export performance requirement for these enterprises.

SEZ units and EOUs engaged in agriculture or horticulture processing will now be allowed to provide inputs and equipment to contract farmers in DTA to promote production of goods as per the requirement of importing countries.

This is expected to integrate production and processing and help in promoting SEZs specialising in agro exports.

As part of the increased liberalisation, foreign-bound passengers will now be allowed to take goods from SEZs or EOUs to promote trade, tourism and exports.

Commerce and industry minister Arun Jaitley said the government would introduce a central legislation to remove roadblocks in SEZs to enable them to emerge as engines of growth by attracting substantial foreign direct investment.

“We are considering a central legislation. The draft is ready,” Jaitley said, adding the purpose behind it was to free SEZs from certain statutory provisions and create a deemed foreign territory.

SEZs contribute 15-20 per cent of the country’s exports and in case of China it was as high as 40 per cent, Jaitley said emphasising the need for evolving a political consensus on the issue.

He said of the 18 SEZs only the one at Indore was ready to start operations. There have been serious concern about the tardiness in starting the SEZs where two vital issues remain to be resolved: the first relates to labour reforms on which the government has been temporising for long; the other relates to the creation of offshore banking units at the SEZs for which the guidelines have yet to be prepared by the finance ministry in consultation with the Reserve Bank of India.

Jaitley said the Centre could act only as a facilitator and it was for the state governments to help get the SEZs off the ground by helping tide over hurdles relating to land acquisition and making provisions for other infrastructural requirements since these zones would create jobs in the region.

The Exim policy has provided a range of incentives to SEZs. For instance, domestic sales by SEZ units have now been exempted from special additional duty and the one-year restriction for remittance of export proceeds has been removed.

SEZ units will also be allowed to take up jobs abroad and export goods from there. In order to help them to increase sales, the policy allows SEZ and EOUs to export or import products through post parcel or courier. They will also be allowed to sell all products, including gems and jewellry through exhibitions and duty-free shops or shops set up abroad.

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