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SEZs to be revamped, allowed to sell in domestic market

2022-07-05

India plans to reorient its Special Economic Zones (SEZs) into industrial hubs that will focus on boosting manufacturing for the domestic market rather than only selling abroad. The SEZs were conceived as vehicles to attract foreign investment and boost exports.

Now aiming to increase manufacturing and employment rather than just exports, the revamped SEZs will be renamed Development of Enterprise and Service Hubs (DESH), according to a draft bill to be introduced in the monsoon session of parliament.

They will be freed from many of the rules that burden SEZs: for instance, they will no longer be required to be net foreign exchange positive and will be allowed to sell in the domestic market much more easily, according to a report in the Mint. Moreover, the units operating in these hubs will no longer benefit from direct tax incentives, which will be scrapped, making the hubs compliant with World Trade Organization (WTO) rules.

According to the draft DESH Bill reviewed by Mint, the development hubs will be allowed to sell outside the demarcated area or in the domestic market with duties only to be paid on the imported inputs and raw materials instead of the final product.

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