The DESH Bill, aimed at helping generate more employment opportunities and revenue apart from preventing migration of key business functions to other countries including China and Philippines, was introduced in the Union Budget this year.
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However, the implantation of the bill is taking longer despite all the stakeholders already convinced about its benefits to the economy and businesses.
Institutional investors with exposure to SEZs, and realty developers have reached out and held multiple meetings with the central government especially the Ministry of Commerce and Industry.
They have also made presentations to the government with regards to the department’s apprehension over the revenue loss. The DESH Bill or amendments to SEZ rules will allow domestic businesses to operate from these economic hubs.
Lack of clarity on final implementation of the bill has delayed effective developments in SEZs leading to gross under-utilisation of space.
“A paradigm shift in the way business is conducted for the service units is required, which can come from implementation of recommendations of the Baba Kalyani Committee constituted for the SEZ review. Modifications such as co-existence of export oriented and domestic business units within common premises will be a definitive game changer for India,” said Sigrid Zialcita, Chief Executive Officer, Asia Pacific Real Assets Association (APREA).
According to her, an early implementation of the suggestions with minimal financial implications, will aid in boosting the economy’s growth trajectory along with assuring jobs for the educated youth.
APREA represents global real estate investors including prominent pension, insurance and sovereign wealth funds, investment managers, family office platforms, developers, and professional firms.
Industry experts are of the view that the DESH Bill is poised to be a win-win for all including the government, businesses, and job seekers. With it, more employment can be created, leading to more revenue and all stakeholders including technology companies will get more flexibility.
“We have not asked for any concession, all we need is co-existence of SEZ and non SEZ in the same unit, and rupee billing so that the unit can start doing domestic business. There is a need for flexibility to choose, without any revenue loss,” said CEO of an SEZ development company.
While the inter-ministerial discussions with regards to the final implementation of the bill are currently going on, the investors and developers are optimistic that it will get tabled in the upcoming winter session of the parliament.
“The canvas for the supply chain is undergoing a tectonic shift globally. The time is now for India to grab the opportunity of global leadership from China, ensuring maximum investments as an attractive destination for the global players seeking new geographies. For this prospective favourable makeover, the extant policies require immediate amendments,” said a senior executive of industry body the Confederation of Indian Industry (CII).
Over the last two decades, SEZ’s have generated significant forex earnings for the country along with employment opportunities through growth in the information technology sector. In the absence of the DESH Bill, increasingly SEZ’s may consider denotification that will lead to loss of revenue and jobs.
The available inventory for the service sector will remain idle if not optimised soon and be a waste of resources and a stress on the financial system, industry experts said.
Migration of businesses from China, is seeing Vietnam and Philippines as the biggest beneficiaries due to favourable tax regime and incentive policies. India has an opportunity to both attract these businesses, and generate revenue and employment.