Addressing Global Value Shifts: Commerce Ministry Assures Review of Key Policy Challenges for SEZs
SDG 9: Industry, Innovation and Infrastructure | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Commerce & Industry | Export Promotion Council for EOUs & SEZs (EPCES)
The Commerce Secretary Rajesh Agrawal, engaged with over 150 stakeholders assuring the industry that the Ministry of Commerce & Industry would detail each challenge raised regarding Special Economic Zones (SEZ) policy and operations with a view to strengthening the Ease of Doing Business. The interaction, organized by the Export Promotion Council for EOUs & SEZs (EPCES), highlighted that shifts in global value chains, increased domestic market demand, and the evolving impact of Free Trade Agreements (FTAs) necessitate SEZ policies that align with current economic realities.
Key Issues Raised by Industry Stakeholders:
SEZ–Domestic Tariff Area (DTA) Transactions: Industry sought pragmatic solutions for issues related to transactions with the Domestic Tariff Area (DTA), including:
Duty Foregone and challenges faced by MSMEs in reverse job work.
Operational inefficiencies due to the new Procurement Certificate process.
The need to review the applicability of Quality Control Orders (QCO) for SEZ-to-DTA sales, particularly in cases like KASEZ.
The lack of parity for SEZ units under concessional import duty and duty drawback schemes available to DTA units.
Operational and IT Constraints: Stakeholders pointed out operational hurdles that impede efficiency:
Connectivity constraints with ICEGATE and BSNL.
Challenges related to Import Monitoring Systems.
Concerns from IT/ITES stakeholders regarding rules on vacant built-up area classification, timelines for renewal of Letters of Approval (LoA), and procurement attestation requirements that differ from GST norms.
Global Competitiveness: The sector highlighted external challenges, specifically pointing to countervailing duties imposed by the US.
In response, the Commerce Secretary emphasized the importance of long-term vision and data-driven policymaking, urging the industry to submit structured analyses to support reform considerations. He concluded by reaffirming the government’s commitment to building a more flexible, efficient, and globally aligned SEZ framework.
The direct engagement between the Ministry and SEZ industry confirms the Government’s recognition that the current SEZ policy framework requires modernization to remain competitive in the face of shifting global value chains and increased demand for DTA market access. Prompt resolution of these operational and taxation disparities is critical to maximizing the SEZ ecosystem’s contribution to India’s export growth and job creation targets.
What is the Domestic Tariff Area (DTA) in relation to an SEZ?→ In India’s trade policy, a Special Economic Zone (SEZ) is treated as foreign territory for trade operations and customs duties, primarily for the purpose of promoting exports. The Domestic Tariff Area (DTA) refers to the rest of the country outside the SEZ . Transactions between an SEZ unit and a DTA unit are treated as imports or exports, and are subject to complex rules regarding duties and taxes, which were a key area of policy contention raised by the industry.
Relevant Question for Policy Stakeholders: What specific regulatory adjustments must the Ministry of Commerce and the Central Board of Indirect Taxes and Customs (CBIC) prioritize to streamline SEZ-to-DTA transactions and achieve parity with DTA units regarding import duty concessions?
Follow the full news here: Commerce Secretary Engages with Industry Stakeholders to Address Key SEZ Policy and Operational Challenges