New Delhi, Dec 1 (KNN) To arrest the exodus of investors from the SEZ scheme entirely benefitting the SEZs/FTZs/EZs in countries such as China, UAE, Malaysia, Thailand, Vietnam etc, the industry body ASSOCHAM has advocated for single window clearance mechanism, ease of doing business and fiscal incentives both direct and indirect.
 
In a note submitted to the Commerce and Industry Minister, the chamber said that currently there are 416 SEZs (Special Economic Zone) 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 nearly 12,39,845 persons. 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 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/ have exited from the SEZ scheme in 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, the industry body said.
 
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.
 
Insofar as the notified SEZs (which are not operational yet) are concerned, the required land has been already acquired by the Developers and is free from all encumbrances. 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. (KNN Bureau)