Lot of export orders of SEZ units cancelled due to COVID-19 pandemic; govt support needed: EPCES

A lot of export orders of units in special economic zones (SEZs) are cancelled that are lying with them due to the COVID-19 pandemic and the government should consider steps to support the sector, EPCES said on Thursday.

In a letter to Commerce and Industry Minister Piyush Goyal, Export Promotion Council for EOUs and SEZs Vice-Chairman Bhuvnesh Seth has requested that SEZ units should be allowed to sell goods in domestic market on payment of duty in line with export-oriented units (EOUs), that is, equivalent to duty forgone on the raw material used in the manufacture of finished goods sold in the domestic market.

"This will help these units survive in the domestic market. Further, this will also help the SEZ units continue their manufacturing process, utilise their plant and machinery and engage the workforce, which is idle due to this pandemic situation," Seth said.

He said EOUs are permitted to sell their products in DTA (domestic tariff area or domestic market) on payment of duty foregone subject to fulfilment of positive net foreign exchange earning.

SEZs are treated as foreign territory in terms of customs laws. They are developed as exclusive export zones. Selling of goods by these manufacturing units in the domestic market or outside these zones are treated as imports and, therefore, the units have to pay full import duty.

"One of the major issues that SEZ units are facing is that due to this pandemic, a lot of export orders of SEZ units are cancelled which are lying with them and further there will be minimal export orders in the near future. If SEZs sell their products in DTA, payment of customs duty as per...SEZ Act, 2005, is making their products uncompetitive," he added.

Seth said the sector is the biggest tool for the government to earn foreign exchange, attract investment and generate employment.

The sector contributes about 34 per cent in the country's export basket.