Synopsis Think tank Global Trade Research Initiative (GTRI) has suggested that the government of India should consider allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs. This will enable promotion of value addition, the organization suggested. Agencies The government should consider allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs as that would help promote value addition, think tank GTRI said on Tuesday. At present, units in SEZs are allowed to sell their products in the Domestic Tariff Area ( DTA or domestic market) on payment of duties on an output basis (finished goods). The Global Trade Research Initiative (GTRI) said the government already allows DTA sales on payment of duty foregone on input basis to firms operating under the ‘Manufacturing and Other Operations in Warehouse Regulations (MOOWR)’ scheme. The government can “extend the same concession to the SEZs for parity sake. This will encourage value addition within the SEZ , as in most cases, the tariff on finished products is higher than on inputs,” GTRI Co-Founder Ajay Srivastava said. He added that SEZ units could be incentivised to increase value addition to avail the benefit of DTA sales, which could further enhance technological advancement and skill development. These zones are treated as foreign territories for trade and duties, with restrictions on duty-free domestic sales. Companies operating within SEZs are allowed to import materials and components duty-free, with the condition that the finished goods produced are meant to be exported out of India and sold in the Indian domestic market on payment of applicable duties on the output. On demand of units in SEZs that they should be permitted to sell their products in the domestic market without paying import duties, the GTRI said and added that this would distort the export focus as well as lead to a loss of revenue for the government. “SEZ units are intended to be export-oriented. If goods from SEZs are allowed into the DTA on the same terms as free trade agreement imports, this might disincentivise exports and turn these zones into back doors for importing goods duty-free for the domestic market, defeating the purpose of having export-focused zones,” it said. Such a move would also adversely affect the domestic industry by the influx of SEZ-made goods sold at lower prices due to duty exemption. “This could lead to unfair competition and potential job losses in domestic manufacturing sectors,” Srivastava said. According to him, the government will lose customs revenue if SEZ-produced goods are sold in the domestic market without import duties. Unlike FTA imports, which are expected to be balanced by reciprocal benefits from partner countries, allowing duty-free DTA sales from SEZs does not offer such a balance, he added. SEZs have emerged as an important contributor to India’s exports. Total exports from these zones stood at USD 155.8 billion in 2022-23. These included USD 61.6 billion of merchandise and USD 94.2 billion of service exports. Experience Your Economic Times Newspaper, The Digital Way! Tuesday, 07 Nov, 2023 Read Complete ePaper » Digital View Print View Wealth Edition India Looks to Fast-Track Tesla Approvals by Jan India is pulling out all the stops to get Elon Musk’s Tesla to the country with government departments working to provide all the required approvals by January 2024. Big-Bang Luxury Sales Add to Diwali Shine What are you gifting your loved ones this Diwali? High-end stuff is hot, apparently. From desserts to bags and jewellery, sales of luxury items are surging, driven by a flourishing economy, according to retailers and companies. IT Pays? Now Not Much Higher for the New Hire Salary hikes for technology workers switching jobs have dropped by nearly half from the previous financial year as top IT exporters reduce intake amid slowing demand for tech services globally. Read More News on SEZs allowed gtri sez dta domestic market global trade research initiative fta (Catch all the Business News , Breaking News Events and Latest News Updates on The Economic Times .) Download The Economic Times News App to get Daily Market Updates & Live Business News. … more less Prime Exclusives Investment Ideas Stock Report Plus ePaper Wealth Edition Building a behemoth: All about the likely Reliance-Disney Star deal and its impact. Banks in China are turning to AI to cut costs, improve efficiency ‘Jimny is not for volumes’: Away from the mass market, Maruti takes a road it never took before Is Oberoi a realty laggard? The big picture hides behind the camouflage of volumes and valuations. 3 insights to kick-start your day, featuring ban on illegal betting apps Stock Radar: Nearly 30% rally in 3 months! What should investors do with CDSL – buy or book profits? 1 2 3 View all Stories