"SEZs Ac­counted For A Third Of In­dia's Ex­ports" : Dr Vi­nay Sharma, Of­fi­ci­at­ing Chair­man, EPCES

India Business Journal - - CONTENTS -

More than a decade af­ter spe­cial eco­nomic zones (SEZs) were set up in the coun­try, in­vestors are los­ing in­ter­est in these zones of ex­cel­lence. With sim­pli­fied rules and busi­ness-friendly en­vi­ron­ment, SEZs can be an ideal plat­form for boost­ing the coun­try's man­u­fac­tur­ing, trade and com­merce. In a brief, yet in­for­ma­tive, in­ter­view, Dr Vi­nay Sharma, the vice-chair­man of the Ex­port Pro­mo­tion Council of EOUs & SEZs (EPCES) - the Cen­tral gov­ern­ment agency in­volved in pro­mot­ing ex­ports from the zones - and its of­fi­ci­at­ing chair­man, talks about SEZs and their chal­lenges and op­por­tu­ni­ties.

What is your take on the present sta­tus of SEZs in the coun­try, in gen­eral, and in Ma­ha­rash­tra, in par­tic­u­lar?

There are 223 func­tional SEZs in the coun­try as on March 31, 2018, and there are 5,146 units in these SEZs. Ex­ports from SEZs were 15 per cent higher in 2017-18 than their ex­ports in 2016-17. Be­sides, ex­ports from these spe­cial zones ac­counted for a third of In­dia's to­tal ex­ports in the past fi­nan­cial year. SEZs are still a bet­ter bet, and there is in­crease in ex­ports, em­ploy­ment and in­vest­ment due to sheer hard work and com­mit­ment of all the stake­hold­ers.

When we talk of Ma­ha­rash­tra, many of the SEZs have opted for de­no­ti­fi­ca­tion, and the ones that are still work­ing are do­ing well. But there could have been a bet­ter scene, if the State gov­ern­ment had en­sured a bet­ter ecosys­tem for SEZs.

De­spite tak­ing off in a big way over a decade ago, what were the rea­sons for SEZs los­ing sheen in the past few years?

SEZs have passed through good and bad times but have sur­vived the rough weather. In 2006, when the SEZ Act was in­tro­duced, every­one wanted to get in be­cause the Act was clear, and ben­e­fits were vis­i­ble. About 678 SEZs were ap­proved in prin­ci­ple. Then came bad times and the MAT (Min­i­mum Al­ter­nate Tax) and the DDT (Div­i­dend Dis­tri­bu­tion Tax) were im­posed. The down­fall started. It was not that the in­dus­try did not want to pay these taxes that were not in the orig­i­nal Act, but there were two main rea­sons. One, the new taxes put an ad­di­tional bur­den on SEZ pro­mot­ers as they were not fac­tored into the project cost ear­lier. As a re­sult, fund­ing the ad­di­tional cost of the project be­came dif­fi­cult. Two, SEZ de­vel­op­ers saw these two taxes as a breach of trust. If these two taxes could be in­tro­duced mid-way, what if there were more taxes in the fu­ture or ma­jor changes in the pol­icy, they feared. Thus started the down­wards jour­ney, and many pro­mot­ers opted out of the busi­ness.

Is there any move by the gov­ern­ment to ad­dress the griev­ances of SEZs?

The gov­ern­ment has con­sti­tuted a com­mit­tee of em­i­nent per­son­al­i­ties, con­sist­ing seven in­dus­tri­al­ists, who have stakes in SEZs to sug­gest ways and means to make these zones more vi­brant. This com­mit­tee is headed by Baba Kalyani (the CMD of Bharat Forge) from Pune. I am also a part of this com­mit­tee as a rep­re­sen­ta­tive of the trade as the chair­man of the council.

What role can SEZs play in the gov­ern­ment's Make In In­dia ini­tia­tive?

They can play an ex­cep­tional role. Union min­is­ters go abroad to seek in­vest­ments in In­dia. How­ever, land for projects can be al­lot­ted only by States, and there are ma­jor is­sues re­gard­ing land al­lo­ca­tion. But the same set of in­vestors can be brought to SEZs, where land is read­ily avail­able and can be al­lot­ted quickly to es­tab­lish man­u­fac­tur­ing set-ups.

"SEZs have passed through good and bad times but have sur­vived the rough weather."

DR VI­NAY SHARMA Of­fi­ci­at­ing Chair­man, EPCES

What are the ma­jor chal­lenges faced by SEZs, in­clud­ing the sunset clause of 2020 that is hanging like a De­mo­cles' sword?

There are many chal­lenges, but we all are hope­ful that the com­mit­tee's rec­om­men­da­tions will be ad­hered to by the gov­ern­ment. That could help SEZs be­come en­gines of growth to cre­ate more em­ploy­ment. This com­mit­tee will also rec­om­mend for re­moval of the sunset clause.

What are your views on the fu­ture of SEZs in In­dia un­der the GST regime?

The GST will help the in­dus­try grow. Align­ment of GST with SEZ rules is go­ing on, and we hope that there will be no ma­jor hur­dle for SEZs to grow un­der the GST.

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