Investment in SEZs

By Accommodation Times News Services

As per Rule 53 of SEZ Rules 2006 the SEZ units are under an obligation to achieve positive Net Foreign Exchange (NFE) earnings to be calculated cumulatively for a period of 5 years from the commencement of production. Under Rule 53 certain categories of sales/supplies have also been permitted to be counted towards NFE earnings. Value of transactions under such categories are a very small percentage of the total exports made from SEZs. The total exports from the SEZs outside the country and sales to Domestic Tariff Area from SEZs, during the financial years 2009-10 to 2012-13 are as under:

Financial Years Value of Exports Supplies which are treated towards positive NFE earnings. Sales to Domestic Tariff Area Total Exports Percentage shared of column III over column V
2009-10 2,20,711.39 13,937.04 19,200.92 2,53,849.35 5.49%
2010-11 3,15,867.85 29,093.05 13,881.20 3,58,879.07 8.11%
2011-12 3,64,477.73 32,472.70 29,664.83 4,26,615 8%
2012-13 4,76,158.93 27,884.80 27,545.46 5,31,589 5%

Requests for de-notification of notified SEZs and cancellation of approvals granted for setting up SEZs are received from time to time from the SEZ developers. The reasons for these requests, wherever indicated by the applicants, include global economic meltdown, poor market response, non-availability of skilled labour force and changed fiscal incentives regime for Special Economic Zones (SEZs) etc.

A statement showing cumulative investment made in SEZ during the financial years 2009-10 to 2012-13 is as under:-

Financial Years Total Investment Made (Rs in Crore)
2009-10 1,48,489
2010-11 2,02,810
2011-12 2,01,875
2012-13 2,36,717

After detailed stakeholders consultation the Government has recently announced a set of reform measures to revive investor interest in SEZs.

The fiscal concessions and duty benefits allowed to SEZs are in built into the SEZ Act, 2005.  The performances of SEZs are regularly monitored by the Unit Approval Committees of SEZs, headed by the Development Commissioner. In case of violation of fiscal concessions and duty benefits, Units are liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act, 1992.

As on 31st March, 2013, an investment of Rs.2,36,717 crore approximately has been made in SEZs and the total direct employment in SEZs is over 10,74,904 persons.  Physical exports from the SEZs has increased from Rs.3,64,477.73 crore in 2011-12 to Rs.4,76,159 crore in 2012-13, registering a growth of 31%. There is no reason to believe that these achievements are at the expense of business being carried on non-SEZ area. The GDP growth in recent years suggests that growth has been significant both within and outside SEZs.

This information was given by the Minister of State in the Ministry of Commerce and Industry, Dr. D. Purandeswari, in a written reply in the Lok Sabha today.

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