Why in news?
The government on 11th May said the lease rent for units in the government-owned Special Economic Zones (SEZs) will not be increased for 2020-21 due to the COVID-19 pandemic.
This move which will provide relief to these facilities in SEZ.
- The commerce and industry ministry said that after consulting the proposal with Department of Expenditure, these relief measures were decided for SEZ units on account of Covid-19 outbreak.
- It asked development commissioners of other SEZs to advise SEZ developers of state governments and privately-owned zones to consider similar relief measures.
- There are seven government-owned SEZs in the country and are under the supervision of a development commissioner (DC).
- A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.
- SEZs are located within a country’s national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration.
- To encourage businesses to set up in the zone, financial policies are introduced.
- These policies typically encompass investing, taxation, trading, quotas, customs and labour regulations.
- Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.
SEZ Policy in India
India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965.
The Special Economic Zones (SEZs) policy was launched in April, 2000. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005
The salient features of the SEZ scheme are:
- A designated duty-free enclave to be treated as a territory outside the customs territory of India for the purpose of authorized operations in the SEZ
- No License required for import;
- Manufacturing or service activities allowed;
- The Unit shall achieve Positive Net Foreign Exchange to be calculated cumulatively for a period of five years from the commencement of production;
- Domestic sales subject to full customs duty and import policy in force;
- SEZ units will have freedom for subcontracting;
- No routine examination by customs authorities of export/import cargo;
- SEZ Developers /Co-Developers and Units enjoy Direct Tax and Indirect Tax benefits as prescribed in the SEZs Act, 2005.
-Source: Economic Times