Regulatory Bill in the offing

Terming special economic zones (SEZs) "growth engines to boost manufacturing, exports and employment", Finance Minister P Chidambaram said the government would soon introduce a Bill to regulate such zones.

"The commerce minister will, shortly, introduce a Bill for regulating SEZs, and it is my belief that the passing of such a law will be a significant milestone in our quest to become a major hub for manufacturing and exports," the minister said, while presenting the Budget for 2004-05.

The finance minister also gave significant relief to units in SEZs by exempting them from the payment of central sales tax (CST) for setting up, operating and maintaining such units.

The benefit of the exemption from CST has also been extended to developers of SEZs for the purpose of development, operation and maintenance of SEZs.

In addition to these benefits, the finance minister gave clear indications that the new National Foreign Trade policy, to be unveiled soon, could contain more measures to boost the growth of such zones.

"My colleague, the minister of commerce and industry, will place before Parliament by the end of this month a new trade policy. The government is of the view that Special Economic Zones (SEZs) are growth engines that can boost manufacturing, exports and employment. The private sector has shown considerable interest in the development of SEZs. Five SEZs have started functioning. SEZs require a special fiscal and regulatory regime," Chidambaram said.

Commerce and Industry Minister Kamal Nath has already said the proposed law on special economic zones will cover all services in addition to manufacturing.

At present, the SEZ scheme covers manufacturing activities and limited services such as trading and information technology services, including research and development.

The minister has also indicated that sector specific SEZs for gems and jewellery, health and education can be earmarked to hasten growth of such zones.