The Union commerce ministry has issued a number of helpful clarifications/instructions regarding Special Economic Zones (SEZ).
It has clarified that SEZ units can be set up by transfer of used capital goods from the Domestic Tariff Area (DTA) and the only deterrent is not getting exemption under the Income Tax Act when the value of used goods exceeds a fifth of the total capital goods installed by the unit in a year. For detailed guidelines, the ministry has referred to and reiterated its instruction no 11 dated August 12 last year.
Rule 47 (3) of the SEZ Rules, 2006 deal with sale/transfer to DTA of the surplus power generated in a SEZ developer’s power plant in the SEZ or a SEZ unit’s captive power plant or diesel generating set on payment of duty on consumables and raw materials used for generation of power, subject to certain conditions. The said rule has now been kept in abeyance, as the finance ministry has notified the customs duty payable on such import (sale/transfer from SEZ), based on the type and source(imported/local) of fuel used for generating the electricity.
In the last week of October, the commerce ministry issued guidelines for development of SEZs. The idea is to ensure environmentally sustainable and well planned development. The ministry says a number of approved SEZs are at various stages of implementation. And, based on the experience, formulation of certain broad guidelines were considered appropriate.
The guidelines cover site identification, policies relating to land acquisition, resettlement and rehabilitation of affected people, the aspects to be noted while making an SEZ development plan, role of the state government, physical infrastructure to be provided, priority for small scale units, declaration of SEZ as an industrial township, etc. The developer and state government should take a long-term view for developing infrastructure facilities within the Zone, particularly in case of multi-sector SEZs, says the ministry.
The commerce ministry has also issued guidelines for energy conservation in SEZs. All individual buildings coming within the SEZ should follow all the applicable green guidelines which can be implemented in such buildings. Individual buildings within the SEZ can also adopt appropriate rating programmes, based on the building types. Compliance with the guidelines would be certified by organisations like the Indian Green Building Council, Green Rating for Integrated Habitat Assessment and other national and international agencies.
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The ‘Green’ guidelines cover optimisation of use of energy, power, water, waste management, plantation, site preservation and restoration, local internal transportation, materials, indoor air quality in individual buildings, information technology infrastructure, etc. Besides, the green guidelines’ compliance and certification process.
Another set of guidelines, issued by the ministry last week, related to regulation of units engaged in recycling of plastic waste and scrap and reprocessing of used garments or used clothing or secondary textile material or recovery of textile materials. Some of these plastic/used clothing units, instead of exporting the product, were supplying in the DTA but achieving the Net Foreign Exchange criteria by exporting unrelated products, by broad-banding the Letter of Approval. The aim of the latest guidelines is to check such irregularities.
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