India is planning to expand its limited Special Economic Zones (SEZs), which are presently focused on exports, into all-encompassing economic hubs with the motive to draw in more foreign investment.
According to a draft released for consultation and industrial units situated in these hubs, which would be known as Development of Enterprises and Services Hubs (DESH), may be permitted to sell in the domestic market and contract manufacture for those outside of these zones as well.
These hubs may be created by the Center and State individually or jointly or by any individual for the production of commodities, the provision of services, or both.
The package to convert SEZs into comprehensive economic zones will likely include some financial incentives and measures to make conducting business hassle-free.
“The SEZ Act will be replaced by new legislation that will allow states to collaborate on development,” said Finance Minister Nirmala Sitharaman addressing February Budget.
States that want to create these zones will be allowed to set up boards that would be under supervision. In addition, it is suggested to lose the requirement for foreign exchange payments for supplies purchased from domestic tariff areas and to allow subcontracting for products and services for DTA Units.
On this matter, the expert suggests shifting the emphasis away from exports and toward economic activity, investment, and global value chain interlinkage, among other things, will strengthen government participation.
This industry has also previously raised its voice about the proposed equalization levy, claiming it will cause instability. It also urged that there should be one hub director for each DESH instead of several directors.