PIB – January 11 , 2020


General Studies-III

Topic- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Baba Kalyani committee on SEZ

Context

Commerce & Industry Minister reviews implementation of recommendations of Baba Kalyani committee on SEZ.

About

  • Commerce and Industry Minister examined the revamp of the SEZ policy with a view to meeting the global challenges being faced by Indian exporters.
  • It was to find a way out for implementation of the remaining recommendations in order to facilitate the ease of doing business in the present global market scenario.

About Baba Kalyani committee on SEZ

  • India’s SEZ Policy was implemented from April 1, 2000.
  • Subsequently, the Special Economic Zones Act, 2005 was enacted.
  • The Baba Kalyani led committee was constituted by the Ministry of Commerce and Industry to study the existing SEZ policy of India and had submitted its recommendations in November 2018.
  • The committee was tasked to make 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.

Objectives

The objectives of the committee were:

  • To evaluate the SEZ policy and make it WTO compatible,
  • Suggest measures for maximizing utilization of vacant land in SEZs,
  • Suggest changes in the SEZ policy based on international experience and
  • To merge the SEZ policy with other Government schemes like coastal economic zones, Delhi-Mumbai industrial corridor, national industrial manufacturing zones and food and textile parks.

Key recommendations

  • Framework shift from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves-3Es).
  • 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.
  • Enhance competitiveness by enabling ecosystem development by funding high speed multi modal connectivity, business services and utility infrastructure.
  • 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.
  • Unified regulator for IFSC.
  • 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.
  • Promote MSME participation in 3Es and enable manufacturing enabling service players to locate in 3E.
  • Dispute resolution through arbitration and commercial courts.

Why the review was required?

  • 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 the flagship Make in India programme.
  • Further, the Government plans to increase manufacturing value to USD 1.2 trillion by 2025.
  • While these plans are intended 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 compliant with the relevant WTO regulations.

Way forward

  • If India is on the path to become a USD 5 trillion economy by 2025 then the present environment of manufacturing competitiveness and services have to undergo a basic paradigm shift.
  • The success seen in services sector like IT and ITeS have to be promoted in other services sectors like health care, financial services, legal, repair and design services.

Special Economic Zone (SEZ)

  • Special Economic Zones (SEZs) are geographically delineated ‘enclaves’ in which regulations and practices related to business and trade differ from the rest of the country.
  • SEZ are set up under Special Economic Zones Act, 2005.
  • SEZ are allowed for manufacturing, trading and service activities.
  • A single window SEZ approval mechanism by Board of Approval.
  • Application recommended by states/UTs are approved by BOA.

SEZ Policy in India

The main objectives of the Special Economic Zones Act, 2005 are:

  • generation of additional economic activity.
  • promotion of exports of goods and services.
  • promotion of investment from domestic and foreign sources.
  • creation of employment opportunities.
  • development of infrastructure facilities.

Key features of SEZ

  • SEZ is a designated duty free enclave to be treated as foreign territory for the purpose of trade operations and duties and tariffs.
  • SEZ does not require a license for imports.
  • The units must become net foreign exchange earners within 3 years,
  • SEZ are allowed manufacturing, trading and service activities.
  • They have full freedom for subcontracting.

Duties

The domestic sales from the SEZ are subject to fulfill custom duties and import policy is in force, when they sell their produce to domestic markets.

  • There was no routine examination by the custom authorities.
  • The corporation in SEZs will not have to pay any income tax on their profits for the first five years and only 50% of the tax for 2 more years thereafter.
  • If half of the profit is reinvested in the corporation, the concession of 50% tax is extendable for next 3 years.
  • For SEZ developers , the raw material from cement to steel to electrical parts are subject to zero tax and duty.

Conditions for Land Allotment

For the SEZ, the Government acquires vast land tracts and gives to the developers.

  • The basic condition involves that 25% of the area of the SEZ must be used only for export related activities.
  • Rest 75% area can be used for economical and social infrastructure.
  • However, all SEZ benefits are applicable over the entire SEZ area. here were provisions for sector specific SEZs and Multiproduct SEZs.

Facilities in SEZ

  • The Sector specific SEZ may have 7500 houses, hotels with 100 rooms, 5 bed hospital, schools and other institutions, a multiplex in 50000 sq. meters.
  • Multiproduct SEZ are allowed to build 25000 houses. 250 room hotel and 100 bed hospital along with a multiplex with 2 lakh sq. meters.

General Studies-III

Topic- Conservation, environmental pollution and degradation, environmental impact assessment.

State Energy Efficiency Index 2019

Context

Union Power Minister releases State Energy Efficiency Index 2019

About

  • ‘State Energy Efficiency Index 2019’, tracks the progress of Energy Efficiency (EE) initiatives in 36 states and union territories based on 97 significant indicators.
  • The index is developed by Bureau of Energy Efficiency (BEE) in association with Alliance for an Energy Efficient Economy (AEEE).
  • For a rational comparison, the States or Union Territories are grouped into four groups.
  • The Index categorises states as ‘Front Runner’, ‘Achiever’, ‘Contender’ and ‘Aspirant’ based on their efforts and achievements towards energy efficiency implementation.

 Why this index is developed?

  • ‘State Energy Efficiency Index 2019’ will help states contribute towards national goals on energy security and climate action.
  • To help in driving EE policies and program implementation at the state and local level,
  • To track progress in managing the states’ and India’s energy footprint,
  • To institutionalise the data capture and monitoring of EE activities by states.

Performance of the states

For rational comparison, States/UTs are grouped into four groups based on aggregated Total Primary Energy Supply (TPES) required to meet the state’s actual energy demand (electricity, coal, oil, gas, etc.) across sectors.

Under four categories based on TPES:

  • Haryana, Kerala, Karnataka, Maharashta, Himachal Pradesh, Uttarakhand, Puducherry and Chandigarh have been evaluated as progressive states/UTs.
  • Manipur, Jharkhand, Rajasthan and Jammu and Kashmir were the least performers.

Significance

  • India plans to reduce its carbon footprint by 33-35% from its 2005 levels by 2030.
  • States EE Index 2019 shows that majority of the initiatives taken by states are related to Policies and Regulations.
  • Such an index assumes significance in a country that is now the biggest emitter of greenhouse gases after the US and China, and which is among the countries most vulnerable to climate change.

For Prelims

World Hindi Day 2020

Highlights

  • World Hindi Day is celebrated on January 10 every year.
  • It marked the anniversary of first World Hindi Conference held in 1975 by then Prime Minister Indira Gandhi.
  • World Hindi Day was first observed on January 10, 2006.

National Hindi Diwas

  • National Hindi Diwas is celebrated every year on September 14.
  • On that day in 1949, the constituent assembly adopted Hindi, written in Devanagari script, as the official language of the Union.