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Seeking Inputs: Reimagining Special Economic Zones (SEZs) Policy Framework
Seeking Inputs: Reimagining Special Economic Zones (SEZs) Policy Framework

March 3, 2022

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Dear Members,

As you are aware, Special Economic Zones (SEZs) are viewed as an engine of industrial and economic growth worldwide as it has played a critical role in the regional development of various economies. In India, SEZ Policy has been a significant growth driver for the Information Technology – Business Process Management (IT-BPM) industry and exports and also an important enabler for additional investments. The success of SEZ is dependent on multiple factors such as the strategic focus, the regulatory framework, the governance, and the value proposition.

Since its introduction, the SEZ regulation have also gone through several amendments to align them with the changing business requirements, however, over the period of time, the SEZs have started to lose its attractiveness due to onerous procedural and compliance requirements, and also due to the fact that sunset clause for availing income tax benefits for setting up of units in SEZs has expired on March 31, 2020.

Further, with onset of pandemic, there has been a paradigm shift in the way industry or trade used to operate. The major change can be seen in the way of operation of service sector which has adopted itself to the culture of Work from home (WFH) on account of the pandemic coupled with lockdowns induced over past two years. In fact, WFH is no longer seeing as a BCP measure, rather has become critical for the business growth.

Acknowledging the new business realties, the Hon’ble Finance Minister in this year Budget announced replacing the existing SEZ Act with a new law that will enable the states to partner in ‘Development of Enterprise and Service Hubs’. This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports. Based on the media report, it is expected that new SEZ framework will be ready in 4-6 months.

Given nearly 60% of all operational SEZs are IT/ITeS, NASSCOM is working towards suggesting recommendations to the Government to ensure the new SEZ framework is supportive of industry requirements.  The idea is to approach the Government with policy level changes in the SEZ law or propose new ideas altogether that will help boost and provide the right impetus for companies to continue to operate in SEZs.  We therefore solicit your valuable inputs in this regard.

We request you to kindly share your inputs with us latest by March 28, 2022. Kindly email your inputs to deepak@nasscom.in and tejasvi@nasscom.in
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