Govt Could Discard Proposed DESH Bill, Amend SEZ Act

As it examines the need for new legislation to refurbish the country’s special economic zones (SEZ), the Centre could discard the proposed Development of Enterprise and Service Hubs (DESH) Bill.

Instead of putting in place new legislation, discussions are on to make changes to the existing SEZ Act. The government could decide on the matter before the winter session of the Parliament.

ET reported that the Ministry of Commerce and Industry is eager to permit units in these zones to sell in areas outside SEZs, called domestic tariff areas (DTA), without the payment of customs duties.

Discussions are taking place on whether the DESH bill will be passed or the SEZ Act will be amended. Another source said that the commerce department is preparing a cabinet note on the suggested changes.

The proposed amendment would deal with the demand for SEZs to be allowed to sell in the domestic market and that all duties relinquished on raw materials should be paid back. Business Standard had earlier reported that the finance ministry had objected to offering any tax concessions, fearing it could kick-start a debate about extending the incentive for companies outside SEZs.

The finance ministry was also against the clause allowing units to sell in the domestic market with duties to be paid only on imported raw materials and inputs instead of final products. Finance Minister Nirmala Sitharaman made the announcement of the DESH Bill in the Union Budget in February 2022.