India Inc. Wants Single Window Clearances For SEZs

India Inc. is pushing for the single window clearance mechanism, ease of doing business and fiscal incentives both direct and indirect to stop the exodus of investors from the SEZ schemes, in favour of countries like China, UAE, Malaysia, Thailand and Vietnam.

In a note submitted to the Commerce and Industry Ministry, Assocham says that currently there are 416 SEZs (Special Economic Zone) which have been formally approved, out of which 330 SEZs have been notified. Out of 330 notified SEZs, only 202 SEZs were operational as on March 31, 2015. Nearly 3,900 companies have set up their operations in these operational SEZs by making cumulative investment of Rs 2, 88,477 crore.

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.

“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 2013, there were nearly over 150 SEZs have been de-notified from the SEZ scheme in last 2 years.

The massive exodus from SEZs is mainly attributable to 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, 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 SEZ Act that came into effect on 10 February 2006 seeks to provide 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.

As far as the notified SEZs (which are not operational yet) are concerned, the required land has been already acquired by the developers and free from all legalities. 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.