Assocham seeks single window clearance for SEZs

01 Dec '15

3 min read

To arrest the exodus of investors from the Special Economic Zone (SEZ) scheme entirely benefitting the SEZs/FTZs/EZs in China, UAE, Malaysia, Thailand, Vietnam etc, industry body Assocham has advocated a single window clearance mechanism, ease of doing business and fiscal incentives both direct and indirect.

In a press release, Assocham said it has submitted a note to the Commerce and Industry Minister. Assocham said that currently there are 416 SEZs which have been formally approved, out of which 330 SEZs have been notified. Further, out of 330 notified SEZs, only 202 SEZs are were operational as on March 31, 2015. Nearly 3,900 units/ companies have set up their operations in these operational SEZs by making cumulative investment of Rs 2,88,477 crores.

The SEZs have created direct employment for more than 12 lakh people. It is estimated that nearly double the number of indirect employment is generated outside SEZs by the Domestic Tariff Area (DTA) units which are doing business with SEZ Units and/ or Developers. All this has been delivered by only 202 operational SEZs.

“If the entire 416 SEZs become operational, there will be quantum jump in exports from SEZs, development on industrial infrastructure and foreign investment into India”, said D S Rawat, Secretary General of Assocham.

There has been massive exodus from SEZs of late. In fact, until 2013, there were nearly formally approved 580-SEZs, of which over 150 SEZs have been de-notified or have exited from the SEZ scheme in the last 2 years.

This massive exodus from SEZs is mainly attributable to the factors like unstable policies relating to availability of fiscal benefits promised under the SEZ Act (particularly, policy relating to taxation), challenge of maintaining attractiveness of the SEZ Policy after imposition of Minimum Alternate Tax (MAT) on SEZ Units and Developers, and imposition of Dividend Distribution Tax (DDT) on SEZ Developers, evident lack of pro-business stance of the Government (instead, Government's stance has been predominantly pro-revenue most of the times), lack of clarity about implication of proposed Goods and Services Tax (GST) on SEZs, issues relating to effectiveness of the Single Window Mechanism and lack of coordination across departments at the Central and State Government level.

SEZs have already a legislation in place (SEZ Act, 2006), which lends tremendous credibility to the SEZ policy and instils confidence amongst the domestic and global investors. The entire ethos and purpose of the SEZ Act/ Rules were to provide to the foreign investors simplified procedures for development, operation, and maintenance of the SEZ and for setting up units and conducting business in SEZs.

The SEZ Act that came into effect on February 10, 2006, seeks to provide for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments and most importantly simplified documentation with an emphasis on self-certification making it convenient for foreign investors to come and set up their businesses in India.

According to Assocham, these SEZs could be the best bet for the Government's “Make in India” policy, as sizeable land is already available for generating economic activity.

“The Government could support the operational SEZs to optimally utilize their potential/ capacities by creating supportive business environment”, said Rawat. (SH)

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