NEW DELHI: The Budget 2022 could announce a few changes in the rules governing Special Economic Zones (SEZs), people who had pre-budget discussions with the government told TNIE. The commerce ministry has hinted in the past about simplifying SEZ rules to make them more attractive for businesses, and the budget could see some announcements on this front.
One of the likely announcements could be allowing SEZ to supply services to Domestic Tariff Areas (DTAs) in local currency. At present, SEZs could sell goods to DTAs in Indian currency, but any payment for the supply of services to DTAs needs to be in foreign currency.
This creates trouble for domestic entities looking to procure services from SEZs, which are considered foreign territories. In order to do business with SEZ, domestic units need to convert Indian currency into foreign currency and make payments for the services procured by SEZ units.
Industry experts say that if SEZ units don’t receive payments in foreign currencies they are sent notices by the revenue department and they are denied their SEZ status. This has been a long-pending demand of the SEZ units, and despite several assurances in the past, the demand remains unfulfilled.
However, of late the commerce ministry has been talking about simplification of SEZ rules to make them more attractive, and this gives the industry hope that the budget could see an announcement on this front.
Also, the government has been talking about allowing the SEZs to supply goods and services to DTAs without the need to pay customs duties.