Govt panel working on new SEZ norms for exporters to access domestic market, Pg15.

Key Highlights:

• A government panel is formulating new SEZ norms to boost manufacturing and help exporters access the domestic market.
• The move comes after SEZ units sought de-notification due to steep US tariffs impacting export competitiveness.
• India's exports from SEZs in FY25 stood at $172 billion from nearly 276 units, with domestic sales comprising 2% of total production.
• Exporters are seeking a 'reverse job work' policy to improve efficiency and utilize capacity in SEZ units.
• The gems and jewellery industry is strongly advocating for SEZ reforms, as 65% of India's studded jewellery exports originate from SEZs.

Detailed Insights:

• The proposed SEZ reforms aim to address challenges faced by exporters due to US tariffs and improve the efficiency of SEZ units.
• Reverse job work would allow SEZ units to perform work for the domestic market, addressing seasonality in export demand and underutilization of resources.
• Concerns exist regarding duty exemptions for SEZs, and discussions are underway to ensure fairness to domestic industries that pay duty on capital goods.
• The Finance Ministry's approval is pending due to revenue concerns, and alternative routes are being explored to implement changes in SEZs faster than the long-pending SEZ bill.
• The Gem and Jewellery Export Promotion Council (GJEPC) has requested measures like reverse job work, DTA sales, extended export obligation periods, and interest moratoriums to ease financial stress.
• ICRIER reports highlight concerns about negative trade balance in SEZs, declining share of gems and jewellery in total exports, low investment in R&D, and limited FDI in Indian SEZs.
• Addressing these issues is crucial for enhancing the competitiveness and attracting investments in Special Economic Zones.

Key Concepts Involved:

• Special Economic Zone (SEZ): Designated area with special economic regulations different from the rest of the country.
• Reverse Job Work: Allows SEZ units to perform work for the domestic market.
• Domestic Tariff Area (DTA): The area of a country that is not designated as a special economic zone.
• US Tariffs: Taxes imposed by the United States on imported goods and services.