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Mfg units in SEZs can outsource work for up to three years now

Mfg units in SEZs can outsource work for up to three years now
31 10 2013 

Mfg units in SEZs can outsource work for up to three years nowNew Delhi, Oct 31 (KNN) In a move that would give a boost to the shipments from SEZs, the Commerce Ministry has allowed the manufacturing units in the Special Economic Zones (SEZs) to sub-contract work for up to three years from the existing one year.

“The requests have been received from the large manufacturing units that permission may be granted to sub-contract for longer periods as against one year at a time so as to facilitate the manufacturing process and thereby augment exports,” the Commerce Ministry said in a letter to the Development Commissioners of SEZs.

"It has been decided that sub-contracting of production or any production process by large manufacturing SEZ units to domestic tariff area (DTA) units may be granted for a period up to 3 years at a time," the letter added.

However, there are certain criteria for manufacturing units to get the benefit.

The first criterion is that the SEZ should be a manufacturing unit, excluding the Gems and Jewellery sector units.

Further, the relaxation would apply to only those manufacturing units that have substantial exports with average annual shipments of Rs 1,000 crore or more in at least two out of four years.

"The units should have an annual average export of not less than 51 per cent of its total turnover in the block of 5 years. The units should have an un-blemished track record and no penalties against the unit for any violations under the Customs Act, FTDR Act should have been imposed," it said.

It also said that the DTA unit (unit outside SEZ) to which the sub-contract is to be awarded should be registered with the central excise department.

Meanwhile, the Ministry also said that no sub-contracting will be permitted for restricted goods, goods which attract anti-dumping duty as per the EXIM policy. Such permission will be granted with the approval of the Development Commissioner of SEZ.

With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the SEZs Policy was announced in April 2000.

This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations.