Govt. mulls allowing SEZ occupants to sell locally; sales not to be treated as imports

It is also reviewing the exclusion of export-oriented units (EOUs) and SEZs from the recently notified tax refund scheme for exports.

The government is considering a proposal to allow producers in Special Economic Zones (SEZs) to sell their output to the domestic market without treating them as imports. It is also reviewing the exclusion of export-oriented units (EOUs) and SEZs from the recently notified tax refund scheme for exports.

Commerce Secretary B.V.R. Subrahmanyam has also assured the top brass of the Export Promotion Council for EOUs and SEZs (EPCES) of a resolution of the massive container shortages afflicting exports at a meeting on Monday, EPCES chairman Bhuvnesh Seth told The Hindu.

“At the moment, thousands of containers are held up at SEZs for shipments. That is a big issue. The Commerce Secretary said that it will be resolved in a week or so,” Mr. Seth said, adding that freight rates and input costs had gone up, but SEZ and EOU units had not been given any benefits under the Remission of Taxes and Duties on Export Products (RoDTEP) scheme.

Stressing that SEZs are governed by an Act of Parliament, not a scheme, and most benefits that were offered to units in these zones had expired, including the erstwhile export incentive schemes for merchandise and services (MEIS and SEIS), the EPCES has urged the government to bring them under the RoDTEP as well.

“It will be absolutely harsh on industry when you start distinguishing the units producing the same thing approaching the same overseas customer, just because they’re located in an SEZ or outside. For an export market, a 4%-5% difference in price matters,” Mr Seth pointed out.

“With the MEIS gone, it is a double whammy for SEZs. We also pay duties on purchase of raw material and we have emphasised that if SEZs are not given the scheme, it will be against the AtmaNirbhar Bharat programme, because then, by force, SEZ units are incentivised to import rather than procure domestically,” he emphasised.

The Commerce Ministry has informed EPCES that they have made a reference to the Revenue Department in the Finance Ministry to consider those cases that had been left out of RoDTEP.

Mr. Seth also indicated that the government is favourably viewing the request to allow SEZs to sell goods and services in the domestic market. “We feel that the Ministry of Commerce will agree to our proposal that you can sell in the DTA on payment of duties foregone on raw material. That will be an advantage for them to expand production with the world-class infrastructure in private SEZs,” he said.

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