| SEZ Bill – much to offer
After more than a year-long confusion over various components of the
Special Economic Zones (SEZ) Bill, the legislation was finally cleared much to the relief of all. And with the Act and rules in place, I see private developers finding new and viable opportunities in SEZs. A 10-year tax holiday has also been rightly provided on infrastructure development in SEZs.
I feel SEZs will drive exports, create employment and reduce regional disparities. Thus, a healthy balance of payment position will be created.
Moreover, the increase in the number of SEZs will lead to a migration of labour and capital which will consequently reduce regional inequalities. These zones will also increase FDI inflow which in turn will infuse advanced technology.
However the authorities will now have to see that the labour laws are made flexible in the context of WTO regime. Certain amendments need to be made in the labour policies to this effect. I will even say that the respective state governments too need to play a proactive role along with the Central government.
Duties paid on the finished products, which are sold from the SEZs to the Domestic Tariff Areas, also need to be brought down. Arbitration mechanism or certain legal proceedings should be resorted to in cases of arrears of payments by the unit to the developer.
Last but not least excise officials, I feel, need to be sensitized by the Development Commissioners about the SEZ rules. This will smoothen the entire process between the exporters and the customs officials.
But my major concern is the fact that the SEZ Act puts the long-standing players in a disadvantageous position. Tax exemption provided for a longer duration of up to 15 years for new entrants on the logic that they may need time to be cost-effective or techno-savvy, beats all rationale.
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