Trade minister Suresh Prabhu has said India should not be singled out just because it is growing faster, and should be given a chance to phase out export subsidies over a period of eight years, as was the case with other countries. File photo: Mint
Trade minister Suresh Prabhu has said India should not be singled out just because it is growing faster, and should be given a chance to phase out export subsidies over a period of eight years, as was the case with other countries. File photo: Mint

Commerce ministry sets up panel to make SEZ policy compatible with WTO rules

The panel, led by Bharat Forge chairman Baba Kalyani, will evaluate the SEZ policy, suggest measures to cater the needs of exporters and make it WTO compatible, says commerce ministry

New Delhi: The commerce ministry has set up a committee headed by Bharat Forge chairman Baba Kalyani to make its special economic zone (SEZ) policy compatible with World Trade Organisation (WTO) rules after the US challenged India’s export subsidy programme at the multilateral trade body.

“The group will evaluate the SEZ policy, suggest measures to cater to the needs of exporters in the present economic scenario and make the SEZ policy WTO compatible, suggest course correction in SEZ policy, make comparative analysis of the SEZ scheme and dovetail the SEZ policy with other similar schemes. The Group is required to submit its recommendation in 3 months’ time," commerce ministry said in a statement.

The US on 14 March challenged almost India’s entire export subsidy regime in the WTO including the merchandise exports from India scheme; export oriented units scheme and sector specific schemes, including electronics hardware technology parks scheme; special economic zones; export promotion capital goods scheme; and a duty-free imports programme for exporters.

Both sides engaged in consultations but failed to resolve the matter bilaterally. The WTO has set up a dispute panel to give its verdict on the matter. Trade minister Suresh Prabhu has said India should not be singled out just because it is growing faster, and should be given a chance to phase out export subsidies over a period of eight years, as was the case with other countries.

India’s SEZ Policy was implemented from 1 April, 2000. Subsequently the Special Economic Zones Act, 2005 was passed by Parliament in May, 2005 and received presidential assent on the 23 June, 2005 and the Special Economic Zone Act was enacted. The SEZ Act, 2005, supported by SEZ Rules, came into effect on 10 February, 2006. The commerce ministry has been consistently lobbying with the finance ministry to exempt units in the SEZs from the minimum alternate tax, or MAT, imposed on them in 2011.

The other members of the committee include Ravindra Sannareddy, MD, Sricity SEZ Ltd; Neel Raheja, group president, K. Raheja Group; Arun Misra, MD, Tata Steel SEZ Ltd; Anita Arjundas, MD, Mahindra Life Space Developer; Ajay Pandey, MD & group CEO, GIFT City SEZ Ltd; Srikanth Badiga, director, Hyderabad Phoenix Developer and government representatives.

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