Government Schemes & Policies
- Tripura gets its first SEZ
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Government Schemes & Policies
Tripura gets its first SEZ
The Ministry of Commerce and Industry has notified the setting up of the first ever Special Economic Zone (SEZ) in Tripura, at Paschim Jalefa, Sabroom, South Tripura District.
ABOUT THE SEZ IN TRIPURA
- It will be a Sector Specific Economic Zone for Agro-Based Food Processing. Rubber based industries, textile and Apparel Industries, bamboo and Agri-food Processing Industries will be set-up in the SEZ.
- The developer of the SEZ will be Tripura Industrial Development Corporation (TIDC) Ltd.
- Apart from creating jobs, setting up of the SEZ in Sabroom will open up new avenues to attract private investment considering the proximity of the Chittagong Port and construction of the bridge across Feni River in South Tripura.
SPECIAL ECONOMIC ZONE (SEZ)
- Special Economic Zones (SEZs) are geographically delineated ‘enclaves’ in which regulations and practices related to business and trade differ from the rest of the country and therefore all the units therein enjoy special privileges.
- SEZs can generate both static and dynamic benefits. Static benefits include employment creation, export growth and rise in government revenues; whereas dynamic benefits include economic diversification, innovation and transfer of technology through foreign direct investment (FDI), and skills upgrading.
SALIENT FEATURES OF THE SEZ SCHEME
- No licence required for import;
- Manufacturing or service activities allowed;
- The Units are only required to 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;
- Full freedom for subcontracting;
- No routine examination by customs authorities of export/import cargo;
- Enjoy Direct Tax and Indirect Tax benefits as prescribed in the SEZs Act, 2005.
Major incentives and facilities available to SEZ developers
- Exemption from customs/excise duties for development of SEZs for authorized operations
- Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
- Exemption from Central Sales Tax (CST) and Service Tax
ISSUES WITH SEZ
- The standards of infrastructure and business environment within SEZs have to be up to the global standard. Delays in implementation and unsatisfactory delivery of services would make the SEZs unsuccessful.
- If there are vast differences in the quality of business environment between SEZs and rest of the economy, then excessive and continued external support would be needed for the survival of SEZs, which can have large financial implications.
- SEZs would need to be connected to ‘efficient’ sea and land ports. Otherwise, many of the benefits of the SEZs would be lost.
- It has to be ensured that the institutions governing the operations of SEZs are competent enough.
CHALLENGES OF SEZ IN INDIA
India, which built Asia’s first SEZ (at Kandla in Gujarat), has not been able to use its SEZs as well as several other countries in Asia have.
- Most of India’s new generation SEZs came up not for exporting, but for avoiding taxes. The best example of the tax avoidance is the large number of IT zones that have come up in India. Many of these simply relocated from Technology Parks for continuing to enjoy tax exemptions.
- SEZs acted against a system desperately trying to increase its revenues. The biggest example is the Nokia SEZ at Sriperumbudur, that shut down following tax disputes with both the Centre and the state government.
- Most manufacturing SEZs in India have performed below par due to their poor linkages with the rest of the economy. Weak connections of coastal SEZs with their hinterlands inhibited these zones from utilising their full potential.
The current policy of integrating existing coastal SEZs into the overarching plan of coastal development under ‘Sagarmala’ can lead to a turnaround for SEZs. Sagarmala’s focus on back-end connectivity with the hinterland is what many of these zones desperately need.
- Major SEZ in near India: Shenzhen in China, Incheon in Korea, East Coast Economic Region in Malaysia, Bintan in Indonesia, Subic Bay Metropolitan Authority in Philippines, Payam in Iran, Jebel Ali in UAE, and Chittagong in Bangladesh.