Govt mulls lower levy for SEZs to boost sales: Piyush Goyal

The plan is aimed at helping Covid-hit SEZs better utilise their idle capacities and improve sales.

Commerce and industry minister Piyush Goyal on Tuesday said his ministry is in talks with the finance ministry to allow firms in the special economic zones (SEZs) to sell goods in the domestic market by paying just an “equalisation levy”.

This levy, analysts say, is expected to be lower than the regular customs duties that SEZ units are currently mandated to pay while supplying to the domestic tariff area (DTA). However, it will neutralise the advantages that SEZs, being specifically delineated duty-free enclaves, enjoy vis-à-vis domestic manufacturers to ensure a level-playing field, Goyal indicated.

The plan is aimed at helping Covid-hit SEZs better utilise their idle capacities and improve sales.

Goyal said it could take about 4-6 months to come out with a final framework of a proposed piece of legislation to govern SEZs, which will replace the extant law. The commerce ministry is holding extensive consultations with various stakeholders, including states, for this purpose, he added.

SEZs sold manufactured goods worth 50,033 crore in the domestic market last fiscal, down from53,831 crore in FY20.

Their domestic sales would soar substantially if the tax incidence drops, industry executives reckon.

Presenting the Budget for FY23, finance minister Nirmala Sitharaman on Tuesday proposed the new SEZ law to enable states to become partners in ‘development of enterprise and service hubs’.

The idea behind the new law, said Goyal, is to enable optimum utilisation of all the vacant land and buildings in the SEZs and industrial parks.

Currently, there are over 250 special economic zones and 1,000s of industrial parks in India.

“We should use all this infrastructure to the maximum and, therefore, we are looking at converting SEZs to somewhat a plug-and-play industrial park ecosystem,” the minister said.

Asked if the new law would involve tax sops, Goyal said the government has been supporting industrial parks and areas through incentives. “I do not see any need for any further incentives… The government’s effort is to provide infrastructure support and the back-end connectivity and the industry is not demanding more than that,” he added.