Government permits Special Economic Zones to outsource for up to 3 years
New Delhi: The first quarter of the current fiscal witnessed a decline of 4.1 per cent in exports from SEZs as compared to the 31 per cent growth during the entire fiscal of 2012-13. Due to the decline in export orders, few SEZ units are struggling to survive.
Manufacturing units within Special Economic Zones (SEZs) have now been permitted by the government to outsource production to units situated outside these exports enclaves for up to three years against the currently allowed one year.
The relaxation would provide SEZ units a longer time period to either subcontract part or their entire production processes to units within the Domestic Tariff Area (DTA). The government has adopted this measure to encourage and give a boost to manufacturing as well as augment exports.
Eligibility criteria:
As per officials of the Commerce Department, this measure targets manufacturing enterprises, which are good exporters and can get few parts of their production processed from the DTA. Howbeit, the concession would apply only to those manufacturing units, which have substantial exports. As per the government the average annual exports volumes should be at least of 1,000 crore or above within at least two out of the preceding four years.
Another eligibility criteria is that the SEZ unit should be a net foreign exchange earner. This means that the unit’s exports should exceed the value of imported inputs used within the manufacture of goods over the last five years. Besides, the unit ought to possess an annual average export of a minimum 51 per cent of its total turnover within the period of five years.
Effects on Real Estate:
The decline within export orders has driven up the idle capacities for the SEZs, which in turn has been having adverse affects on employment, as numerous units have had to severely cut down on their employee count.
SEZ units have been playing a significant role in the development of real estate. In accordance with the general trends observed within major cities, regions where SEZ units have been established have generically seen an increase in their real estate values. Measures such as these would boost the SEZs to perform better which in turn would result in more people migrating towards them, hence ushering in development as well as increasing the value of the real estate.
