Baba Kalyani committee Report on SEZ Policy 

Baba Kalyani committee Report on SEZ Policy . The Baba Kalyani led committee constituted by the Ministry of Commerce& Industry to study the existing SEZ policy of India submitted its report recently.
  • Context : India is going to become a USD 5 trillion economy by 2025 then the current environment of manufacturing competitiveness and services has to undergo a basic paradigm shift.The success seen by services sector like IT and ITES has to be promoted in other services sector like health care, financial services, legal, repair and design services.The Government of India has set a target of creating 100 million jobs and achieving 25% of GDP from the manufacturing sector by 2022, as part of its flagship ‘Make in India’programme. Furthermore, the Government plans to increase manufacturing value to USD 1.2 trillion by 2025. While these are ambitious plans to propel India into a growth trajectory, it requires evaluation of existing policy frameworks to catalyse manufacturing sector growth. At the same time, policy needs to be compiled with the relevant WTO regulations. To meet these ambitious plans to propel India into a growth trajectory, it requires evaluation of existing policy frameworks to catalyse manufacturing sector growth.
The key recommendations of the Group are as under:
  • Framework shift from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves3Es).
  • Formulation of separate rules and procedures for manufacturing and service SEZs.
  • Shift from supply driven to demand driven approach for 3Es development to improve efficiency of investment-based on certain industries, current level of existing inventory in the region.
  • Enabling framework for Ease of Doing Business (EoDB) in 3Es in sync with State EoDB initiatives. One integrated online portal for new investments, operational requirements and exits related matters.
  • Enhance competitiveness by enabling ecosystem development by funding high speed multi modal connectivity, business services and utility infrastructure. Critical to provide support to create high quality infrastructure either within or linked to the zones eg. High Speed Rail, Express roadways, Passenger/Cargo airports, shipping ports, warehouses etc.
  • Promote integrated industrial and urban development– walk to work zones, States and center to coordinate on the frame work development to bring linkages between all initiatives.
  • Procedural relaxations for developers and tenants to improve operational and exit issues.
  • Extension of Sunset Clause and retaining tax or duty benefits.
  • Broad-banding definition of services/allowing multiple services to come together.
  • Additional enablers and procedural relaxations.
  • Unified regulator for international financial services centre (IFSC).
  • Utilizing Multi Services SEZ IFSC for all the inbound and out bound investment of the country.
  • Incentives for availing services from IFSC SEZ by domestic institutions.
  • Extension of benefit under services Export incentives scheme.
  • Allowing alternate sectors to invest in sector specific SEZs/ 3Es.
  • Flexibility of long term lease for developers and tenants.
  • Facility of sub-contracting for customers outside 3Es/SEZs without any restriction or cap at any level.
  • Specified domestic supplies supporting ‘Make in India’ to be considered in NFE computation.
  • Export duty should not be levied on goods supplied to developers and used in manufacture of goods exported.
  • Flexibility in usage of NPA by developers and sale space to investors/ units.
  • Infrastructure status to improve access to finance and enable long term borrowing.
  • Promote MSME participation in 3Es and enable manufacturing enabling service players to locate in 3E.
  • Dispute resolution through arbitration and commercial courts.

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