The Centre’s move, official sources said, comes in the wake of significant reduction in the number of proposals to set up SEZs in recent times, withdrawal of several proposals at in-principle/formal approval stage itself, besides increasing requests for denotification as also reduced interest in setting up SEZ units.

Issues of availability of adequate land and their acquisition, attractiveness of SEZ scheme in the wake of impending Direct Tax Code regime, effectiveness of the single window mechanism, lack of a pro-active SEZ Policy in several states are some of the major challenges SEZs are facing. The other problems are:  slow pace of development of infrastructure within SEZs and unattractive incentive package.

The new proposal has suggested review of all land related aspects of SEZ policy, reworking of optimal land requirements specified for different categories of SEZs, taking a relook at non-processing zones and putting in place clear norms and guidelines in this regard. It also wants broad banding of sector specific SEZs to allow for broader category of types of units that can be set up in sector specific SEZ. 

Greater participation
Besides exhorting greater participation by state governments to encourage SEZs through attractive policy push and incentives, the new proposals want change of SEZ Acts, clearances, connectivity, exemptions from taxes. It is also being examined if SEZs can be allowed to be DTA units thereby creating a level, distortion free environment.

Further, allowing SEZS to compete in a FTA (free trade agreement) regime with India entering into number of regional, bilateral, and multi-lateral arrangements with several countries and leverage country’s domestic market by encouraging manufacturing sector units set up shop in SEZs, are among policy prescriptives seriously being looked into, they added.

Incidentally, as on October 31, 2011, while 583 SEZs were formally approved, only 381 have been notified with only 143 SEZs exporting. Exports from SEZs across various sectors for fiscal year 2010-11 being Rs 3,15,867.85 crore registering growth of 43 per cent.

The SEZs have so far attracted investments of Rs 21.29 lakh crore as of June 30, 2011 providing direct employment to over 7,14,412 persons. Sources said, the purpose of the present overhaul exercise, was to see how best SEZs can build upon their significant achievements and contribute towards achieving the national objective of doubling country’s exports to US$500 billion by 2013-14 and to US$750 billion by 2016-17.