IIFT campus at SEZ area in Kakinada District. Express
Center-Center-VijayawadaIndustry representatives from India’s Special Economic Zones (SEZs) on Tuesday held a meeting with the Ministry of Commerce to officials, urging the government to allow rupee-denominated payments for services supplied to the domestic market.
They also asked the government to align SEZ rules with other export promotion schemes, and position Free Trade Warehousing Zones (FTWZs) as global logistics hubs.
The SEZs also highlighted that with India signing several Free Trade Agreements (FTAs), the current framework has become even more restrictive for the SEZs , that is leading to loss of competitive edge.
They requested to allow payments in Indian rupees for services provided by SEZ units to entities in the Domestic Tariff Area (DTA). While such payments are already permitted for goods supplied from SEZs to the domestic market, services must still be paid for in foreign currency.
“Allowing rupee settlement for SEZ services, along with amending the definition of services under the SEZ Act, will remove an avoidable compliance burden, support high-end job work in sectors such as aerospace, defence and MRO, and reduce dependence on imported services. There are no such requirement in US, China, UK, Indonesia, Thailand,” industry told the Ministry. The industry requested to allow sell of imported goods into the domestic market at zero or preferential duty rates available under India's FTAs, especially for products currently imported from China and FTA partner countries.
The industry proposed developing FTWZs on the lines of GIFT City to attract global warehousing business from hubs such as Dubai, Singapore and Hong Kong. It
has sought recognition of warehousing as an export of services under the GST framework, extension of RoDTEP benefits for exports routed through FTWZs, and withdrawal of restrictions imposed through a 2024 government instruction.
“SEZ also asked for RoDTEP to be allowed for export of goods through FTWZs,” said source aware of the matter.
Industry also sought for harmonisation of SEZ provisions with schemes such as Advance Authorisation, Export Promotion Capital Goods (EPCG), Export Oriented Units (EOUs) and the Manufacture and Other Operations in Warehouse Regulations (MOOWR). Another demand of the industry was to allow SEZ-to-DTA sales on a duty-foregone basis, that will permit unrestricted job work for domestic units, and extend fiscal benefits for rooftop solar installations within SEZs. The industry seeks exemption of SEZ imports from import monitoring systems and other procedural compliances.