No basic customs duty relief to SEZ solar manufacturing units yet; govt mulling equalisation levy

Source: The Economic Times, Aug 10, 2020

NEW DELHI: Solar equipment manufacturers who have their units in special economic zones (SEZs) said that they might have to shut shop if the government continues its proposal which would levy a basic customs duty on the value addition done at these plants.

However, in the last couple of interactions that the Ministry of New and Renewable Energy (MNRE), this issue has not moved beyond the government taking cognisance of this concern, said people present at the meetings.

“In the absence of a level playing field, domestic manufacturers in SEZs will have to shut shop and may see job losses to the tune of 15,000 people,” said Saibaba Vutukuri, CEO of Vikram Solar. These units can provide up to 400,000 more jobs in the country moving forward as the focus shifts to domestic manufacturing, Vutukuri added.

Per industry estimates, 63% of solar cell and 43% of solar module manufacturing capacity are located in SEZs.

While setting up their plants, SEZ units were allowed a one-time exemption on import duty on capital goods required to manufacture solar gear. They also enjoyed a rebate on the duty levied on electricity that was consumed for the operation of their manufacturing units which will not be affected by the basic customs duty. The electricity duty rebate works out to be Rs 17 per kilowatt peak (kWp). One solar panel with a peak power of 1kWp functioning at its maximum capacity will produce 1kWh.

To level the playing field, the government is mulling an “equalisation levy” between 1 to 2% on SEZ units, in case they are exempted from the customs duty.
“While BCD is a welcome move, the government must take necessary steps to protect the investments already made by the manufacturing facilities located in SEZ, hence ‘equalization levy’ was a fair solution,” said SL Agarwal, MD, Webel Solar.

In June, power and new & renewable energy minister RK Singh told reporters that the government plans to levy 15-20% duty that would rise to 40% in a year’s time, to reduce the solar industry’s dependence on China. About 80% of solar imports come from China.

GIFT SEZ provides approval to 28 entities

Source: The Economic Times, Jul 06, 2020

CHENNAI: Around 28 entities bagged approval for setting up units in the Gujarat International Finance Tec-City (GIFT City)’s SEZ virtually, as part of a new approval process was created for unit approval in special economic zone (SEZ) in time of Covid-19.

GIFT city, which is located between Ahmedabad and Gandhinagar, has been touted as the template for all the other Smart Cities announced by the government.

The Development Commissioner of GIFT SEZ along with GIFT SEZ authorities met up with all the members of unit approval committee via teleconference. All the application documents and the details were submitted online by the units, with the entire agenda prepared and circulated online to all the committee members. The expected employment generation by these entities in 2-3 years time is around 2000 jobs, a statement from GIFT SEZ confirmed.

To facilitate single window clearance, the government established the International Financial Services Centres Authority to regulate all financial services in International Financial Services Centres (IFSCs) in Gandhinagar.

Currently, banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators — the RBI, Securities and Exchange Board of India (Sebi), and Insurance Regulatory and Development Authority of India (IRDAI).

The central government through a notification appointed April 27, 2020 as the date of the establishment of the International Financial Services Centres Authority and the head office of that authority should be at Gandhinagar, Gujarat.

On May 8, 2020, Finance Minister Nirmala Sitaraman launched INR-USD Futures and Options contracts on the two International Exchanges, viz BSE’s India INX and NSE’s NSE-IFSC, at GIFT International Financial Services Centre at Gandhinagar through video conference.

Representatives of GIFT City said the new reform will enable India to become a net exporter of financial services, being in sync with the vision of GIFT City as a platform for onshoring financial services business, presently being lost to other financial centres across the world.

With the launch of INR-USD derivatives, the trades that have migrated to other international financial centres will now return, the statement said.

In the light of the pandemic, the challenge for policy planners is how to evolve a mechanism for building cities of the future and it is here that GIFT is the ideal example that can be emulated, the representative said.

“India has great growth stories but where it lacks is in world-class infrastructure. The existing cities namely Mumbai, Delhi, Bangalore, etc. are scrambling to achieve the scale of infrastructure required for its current population. However, after a certain limit these cities cannot develop or upgrade the required infrastructure. Therefore, the solution/answer to this problem is the development of smart cities, especially with economic activity. This will make smart cities self-sustainable as people can work and live in the city,” he said.

He explained that Smart Cities use various technologies to simplify urban operations on a large scale. Technological ecosystems collect traffic noise, air quality, energy consumption and data on the movement of people. All this collectively can help the authorities make informed decisions.

Also, Smart Cities have complete data on the number of people residing and working in the city and this helps when there is a crisis as every person can be accounted for. Another key feature is that Smart Cities are self-sustainable and everything is available at close proximity. Similarly, GIFT City has a vision to provide quality of life with walk-to-work facility. This is even more important when movement is restricted due to a lack of transportation. This ensures business continuity and trade and commerce is not hampered, the representative said.

Govt approves TCS, DLF proposals to set up SEZs

Source: The Economic Times, Mar 06, 2020

New Delhi: The government has approved the proposals of software firm TCS and realty major DLF to set up special economic zones (SEZs) for IT sector in Haryana and Uttar Pradesh. The approval was given by the Board of Approval, the highest decision-making body for SEZs, in its meeting on February 26 here. The inter-ministerial body is chaired by the commerce secretary.

TCS has proposed to set up an IT/ITeS SEZ in Noida, Uttar Pradesh, on 19.9 hectares land. The total proposed investment for the project is Rs 2,433.72 crore.

In a major boost to electronic giants, SEZs clear local sourcing test

Source: Business Standard, Feb 27, 2020

New Delhi: In a major boost to consumer electronic giants like Apple and Xiaomi, the government has relaxed the local sourcing norms. Issuing a clarification, the Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday said, foreign retailers can now meet their local sourcing requirements by buying goods produced in units based in Special Economic Zones (SEZs).

While 100 per cent foreign direct investment (FDI) is allowed in single-brand retail, if the foreign investment exceeds 51 per cent, the 30 per cent mandatory local sourcing norm kicks in.

“As regards, sourcing of goods from units located in SEZs in India, it may be clarified that sourcing of goods from such units would qualify as sourcing from India for the purpose of 30 per cent mandatory sourcing from India for proposals involving FDI beyond 51 per cent, subject to SEZ Act, 2005,” DPIIT said in the clarification.

This is seen as a move to further entice original equipment manufacturers (OEMs), especially for the mobile phone industry. Taiwanese OEMs such as Wistron and Foxconn, who supply to tech giant Apple are expected to benefit.

Electronics major Apple that is willing to set up its flagship Apple Stores here, has long been struggling to meet the local sourcing norms. With its key manufacturing partners – Foxconn & Wistron – having their India facilities located in SEZs, the relaxation will boost its fortunes. Currently, it procures iPhone XR from Foxconn’s Tamil Nadu plant, while Wistron assembles iPhone 7 from Bengaluru.

Others like Xiaomi & Oppo — both are working to expand their branded offline store networks — source from Foxconn.

The SEZ sourcing issue was not clearly defined earlier and the industry had argued that the government was considering SEZ procurement made by retailers on a case-by-case basis, a senior functionary of the Federation of Indian Export Organisations, said. The DPIIT clarification has laid the matter to rest.

In August last year, the government had agreed to a long-standing industry demand to make things easier for foreign retailers. With the change, purchases made by foreign retailers for export purposes were allowed to be factored in to meet the 30 per cent domestic sourcing norm. Companies in the single-brand space were also allowed to start online retailing without opening brick-and-mortar stores first, something that was not allowed earlier.

After continuing to push for an exemption from the minimum alternate tax, SEZ developers have continued to clamour for more reforms, arguing that the provisions make SEZs unfavorable in terms of investment. This has resulted in only 234 of the 370 notified SEZs being operational, according to official statistics. The commerce department has also said that many SEZs are operating at sub-par levels with the number of current units being much lower than the original expectation. The commerce department has again floated the idea that duties be reduced when goods are cleared by SEZs to domestic areas, considering that these goods could be imported through the free trade agreement (FTA) route at nil rate, sources said.

TCS, DLF seek govt nod to set up SEZs

Source: The Hindu Business Line, Feb 24, 2019

New Delhi: Software firm TCS and realty major DLF have sought government nod to set up special economic zones (SEZ) for IT sector in Haryana and Uttar Pradesh.

The proposals will be taken up by the Board of Approval, the highest decision-making body for SEZ, in its meeting on February 26 here. The inter-ministerial body is chaired by the Commerce Secretary.

TCS has proposed to set up an IT/ITeS SEZ at Noida in Uttar Pradesh in an area of 19.9 hectares, according to the agenda paper of the board meeting. The total proposed investment for the project is ₹2,433.72 crore.

Development Commissioner of Noida SEZ has recommended the proposal for grant of formal approval for setting up the zone. On the other hand, DLF has proposed to set up two SEZs in Haryana. The proposed investments for the projects are ₹793.95 crore and ₹761.54 crore. The requests of the two companies have been placed before the Board of Approval for consideration, it said.

Govt rejects plea for extension to SEZ units for importing plastic scrap

Source: Business Standard, Dec 24, 2019

Mumbai: The Ministry of Environment, Forest and Climate Change (MoEF) has rejected a proposal to grant six-month extension to recycling units in three special economic zones (SEZs) for importing plastic scrap.

The proposal was put forth for final approval earlier this month by the Board of Approval (BoA) for SEZs under the chairmanship of Anup Wadhawan, Secretary, Department of Commerce, and with members from all leading departments involved in the monitoring of imports.

The BoA has already granted an import extension for six months from the date of the expiry of the existing import licence, i.e. November 30.

An official memorandum, dated December 18 and signed by Manoj Kumar Gangeya, director, MoEF, said, “The import of plastic waste is prohibited according to a notification issued on March 1. Therefore, the recommendation of the committee constituted by the BoA for all issues related to plastic recycling units in SEZs is not agreeable.”

In order to consider issues related to plastic recycling and used clothing units in SEZs, a committee was constituted by the BoA, Ministry of Commerce and Industry. The committee had given recommendations on procedure to be followed for renewal of letters of agreement (LoAs) of these units. These units import plastic waste. The three SEZs where recycling units are allowed to import plastic scrap include Kandla Special Economic Zone (Kasez), Falta SEZ in Kolkata, and Noida Special Economic Zone (NSEZ).

“The board decided to grant an extension of validity of LoA for a period of six months beyond November 30 (i.e. to May 31, 2020) to the listed plastic recycling units in KASEZ, Falta SEZ and NSEZ. The board directed to call a meeting with the committee on the policy for plastic recycling to discuss the policy matter and while the policy provisions are deliberated, the physical exports of the units shall be assessed on annual basis,” said the minutes of the meeting of the BoA.With this, around a dozen plastic recycling units engaged in processing imported scrap in the three SEZs would have to shut their factories.

All existing notified SEZs deemed to be multi-sector SEZs: Government

Source: Business Standard, Dec 22, 2019

Chennai: The central government has notified that all notified and existing Special Economic Zones (SEZs) shall be deemed to be multi-sector economic zones. This would release land parcels in single commodity SEZs for other sectors.

The aim is to get more entities to set up manufacturing facilities in SEZs and to help developers to monetise their unutilised land, say sources. This amendment to the SEZ rules of 2006 ensures units from two or more sectors can start operations in any, including trading and warehousing.

Besides, the minimum area required for an SEZ or Free Trade Warehousing Zone (other than for information technology, IT-enabled services, biotech or health services) has been fixed as 50 hectares; in some northern and northeastern states, 25 hectares.

For IT, ITeS, biotech or health (other than hospital) services, there is no minimum area requirement for an SEZ. The requirement for minimum built-up area has been brought down from 100,000 sq metres to 50,000 sq m in Category A cities, from 50,000 sq m to 25,000 sq m in Category B and from 25,000 sq m to 15,000 sq m in Category C cities.

Senior officials from the state government here took the credit for the change to their continuous lobbying in this regard. The Tamil Nadu government has been raising the issue continuously with the Union ministry of commerce, said one.

Business representatives say in the 13 years since the rules were made, much has changed. Sector-specific SEZs did not have enough takers. Besides, technology has entered many sectors, making units sector-agnostic and breaching the standard definitions at earlier sector-specific SEZs.

Tripura SEZ with investment of Rs 1550 crore to create 12,000 jobs

Source: Business Standard, Dec 18, 2019

New Delhi: Tripura’s first special economic zone (SEZ) with an estimated investment of Rs 1,550 crore, which will generate 12,000 skilled jobs, will come up at Paschim Jalefa, Sabroom, the central government said on Wednesday.

The Ministry of Commerce and Industry has notified the setting up of the first-ever SEZ in the state.

The sector-specific economic zone for agro-based food processing is being set up at Paschim Jalefa, Sabroom, South Tripura District, which is 130 km away from Agartala.

“The estimated investment in the project will be around Rs 1,550 crore,” the government said.

The developer of the SEZ will be Tripura Industrial Development Corporation.

Rubber-based industries, textile and apparel sectors, bamboo and agri-food processing industries will be set up in the SEZ.

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 that is underway, it added.

After it is set up, 100 per cent income tax exemption will be provided on export income for SEZ units for the first 5 years.Also, 50 per cent exemption will be provided for the next 5 years and 50 per cent of the ploughed-back export profit for another 5 years.

Govt amends SEZ rules to include value addition, tighter norms for renewal, work from home

Source: The Economic Times, Mar 10, 2019

NEW DELHI: The government has amended the rules governing special economic zones (SEZ) to include value addition earning norms along with the existing positive net foreign exchange earning requirement to setup a unit, and prescribed criteria while renewing its validity.

As per the updated rules, the “prescribed value addition earning requirement” will apply in the proposal to setup a unit in an SEZ, besides the positive net foreign exchange earning requirement.

The government also said that in case an application is submitted after a period of two months, “reasonableness of the delay shall be examined on the merits and circumstances of the case”.

RIL leased 4,000 acre land from Navi Mumbai SEZ for economic hub

Source: The Economic Times, Mar 07, 2019

Reliance Industries Thursday said it has leased 4,000 acres of land from Navi Mumbai SEZ (NMSEZ) for an initial payment of Rs 2,180 crore to develop a global economic hub. NMSEZ, as part of a tender process was allotted this land in 2006 to develop a world class SEZ.

NMSEZ, which is promoted by Reliance Industries Chairman Mukesh Ambani, Jai Corp India, SKIL Infrastructure Ltd and City and Industrial Development Corp (CIDCO), was supposed to open to industrial units in 2019.

“RIL through a wholly owned subsidiary has entered into an MoU with NMSEZ to sub-lease land of about 4000 acres along with the associated development rights by making an initial payment of Rs 2,180 crore subject to fulfilment of certain conditions,” the company said in a regulatory filing.