Govt makes supplies to SEZ duty free

NEW DELHI: Granting a long-standing demand of the domestic industry and units located in special economic zones (SEZs), the government has decided to grant duty-free replenishment certificates (DFRC) for goods sold to SEZ units.

A public notice to this effect has been issued by the Directorate General of Foreign Trade (DGFT) and the facility will be available with effect from September 1, ’04.

With the decision to allow DFRC benefit, supplies to SEZ units will be treated on par with physical exports. Such supplies are already eligible for duty drawback, advance licence or duty entitlement pass book (DEPB) credit.

While DGFT issued the public notice here on Tuesday, commerce and industry minister Kamal Nath said in Mumbai that the domestic industry’s demand for this facility has been accepted to boost exports.

Addressing an open house meeting organised by the Export Promotion Council for EOUs and SEZ units, he said they should achieve more than 30% growth in exports. Currently, these units are clocking an export growth of 25%.

“The decision to allow DFRC to SEZ supplies fulfils a long-standing demand. Our argument was that this facility should have been there along with other export-promotion windows,� said Sharad Jaipuria, chairman of the EPC for EOUs and SEZ units.

There was a strong demand for this post-export licensing facility which allows suppliers to obtain import entitlement on the basis of supplies made to SEZs, he added.

The EPC was pushing for this facility since exporters from various regions were demanding permission to import on the basis of supplies made to SEZs. This window was is in demand since DFRCs are transferable, Mr Jaipuria said.

The commerce & industry minister has also promised early enactment of the proposed SEZ legislation to give stability to SEZ units and enhance confidence of investors. A bill for this purpose is likely to be introduced in Parliament during the forthcoming Budget session.