Government May Allow SEZs to Sell Goods in Domestic Market

The Commerce and Industry Ministry may introduce a fresh Act in Budget 2022, regarding special economic zones (SEZs). According to which SEZs will be able to sell goods in the domestic market at low duties. The news rule will also allow easier exit for loss-making units and units to be able to accept payment in Indian currency.

As per the officials, a new Act or a revamp of the current SEZ Act is needed after India lost a dispute to the US at the World Trade Organization on these zones violating the global agreement on subsidies and countervailing measures. “We are taking all issues holistically… SEZ Act may be revamped or a new Act might be put in place because SEZs go against WTO rules,” said an official.

Regarding this, work has begun to ease the process of denotifying empty spaces of above 100 million sq. ft. built-up area, worth Rs 30,000 crore, in the 250-plus SEZs in the country. The government may also do away with a clause related to foreign exchange for SEZ units and replace it with a criterion based on investment in research and development (R&D), innovation and employment generation.

Further, the commerce department has proposed to replace the positive net foreign exchange for SEZ units, with a new eligibility criteria. “The finance ministry is keen to push their Manufacture and Other Operations in Warehouse scheme, and its overlaps with the SEZ Act are also being looked at,” said another official.


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