State could soon get an active role in the functioning of special economic zones, with the commerce department considering posting a state government official at the duty-free enclaves to address clearance related hurdles.
The contemplated move is part of the government's proposed SEZ reforms, which are aimed at making these enclaves attractive for business and enhancing domestic manufacturing. A senior official said the commerce department will also hold talks with other departments and states to operationalise the online single-window approval mechanism for these zones.
It is also pushing for optimal utilisation of infrastructure and excess manufacturing capacities in SEZs by the outside units. The matter is being discussed with the revenue department as it will require duty exemption benefits. "Units in SEZs are not functioning. This will ensure optimal utilisation of machinery and related infrastructure," said the official. Earlier this year, the government allowed SEZ developers to open infrastructure facilities like schools, colleges, housing and banks to those living outside the zones to ensure optimum utilisation of SEZs and help developers get early returns.
Of the 352 notified SEZs, only 168 are operational, which is defined as having at least one functional unit. "We are working on a comprehensive strategy to enhance the performance of SEZs, which includes getting states on board, singlewindow online system of clearances and integration of power plants and ports. We need to sell SEZs better and improve the clearance part," the official told ET.
This could help improve land utility in SEZs, given that of 45,635.63 hectares notified for the development of SEZs, actual operations have taken place only in 28,488.49 hectares, or 62% of the notified land. Developers are struggling to attract units. Commerce secretary Rajeev Kher is expected to hold a meeting with the state governments this month to discuss ways to enhance approvals and productivity of these zones. The commerce department will likely propose that the joint development commissioner of the SEZ be a state government official to facilitate clearances.
"We need to involve state governments more as we know that land, labour and environment is a state issue. State governments are not willing to give power to our development commissioners, so this could help," said the official.
Towards promoting ease of doing business in these zones, the government will also come out with integration of customs procedures on a single online window. "We are aiming for least interference of manpower in SEZs," he said. SEZ units enjoy zero import tariff but can sell in a domestic tariff area (DTA) only at full customs duty of the final product, making the products uncompetitive.