Financial Daily from THE HINDU group of publications
Monday, Jan 28, 2002
Financial Daily from THE HINDU group of publications Monday, Jan 28, 2002 |
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Industry & Economy
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Imports & Exports Government - Policy Commerce Ministry mulls SEZ Act
Shaji Vikraman
NEW DELHI, Jan. 27 WITH a little over two months to go for the EXIM policy announcements, the Commerce Ministry is firming up a separate legislative framework for Special Economic Zones (SEZ). The broad objective of the proposed SEZ Act is to give greater degree of functional autonomy to the authority manning the SEZ (in this case the Development Commissioner) by bringing all laws and agreements relating to SEZs with various Ministries under one umbrella. The proposal to have a separate legislative framework has, however, triggered off a turf war between the Commerce and various other Ministries, particularly Finance. The Finance Ministry, which is empowered to grant fiscal and tax incentives for SEZs, opposed the enactment of a separate legislation even during the preliminary rounds of discussion, said officials. "One of the objectives of formulating a separate legislation for SEZs is to benchmark it against the existing international practices. This, in turn, would help build confidence amongst investors setting up shop in SEZs,'' said a senior Commerce Ministry official, adding that the intention was not to circumvent rules or usurp the powers of other departments. For instance, the powers of arbitration vested with Labour Commissioners have been delegated to the Development Commissioners in the export processing zones in Maharashtra and Uttar Pradesh (Noida). An arrangement on similar lines is envisaged in the proposed Act which, according to officials, will be a "self contained'' Act. The Export Promotion Board (EPB), chaired by the Cabinet Secretary, Mr T.R. Prasad, is expected to resolve the issue, besides settling some of the other disputes between the Commerce and Finance Ministries on implementing the EXIM policy pronouncements. One of the unresolved issues relates to the duty concession to be extended to developers of SEZs. Although the Commerce Ministry had announced that developers would be entitled to concessional duty for procurement of goods for setting up of SEZs, the proposal was yet to be operationalised. Finance Ministry officials contend that the Commerce Ministry has been unable to specify the list of goods which developers will be allowed to import at concessional rates of duty for building infrastructure in these designated enclaves. Yet another contentious issue is the Commerce Ministry's proposal to grant Duty Entitlement Pass Book (DEPB) credit in lieu of deemed export benefits to supplies from Domestic Tariff Area (DTA) to SEZs. The case made out for according DEPB credit to DTA suppliers is, in fact, linked to another important proposal mooted by the Commerce Ministry on changing the very definition of export. Export is currently defined as "taking out of India any goods by land, sea or air'' under the existing Foreign Trade (Development and Regulation) Act, 1992. The Commerce Ministry is of the view that DTA supplies to SEZs should also be included in the definition.
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