Amendments underway to revamp the SEZ Act and to provide for establishment of Development Hubs including existing SEZs for promoting economic activity, generating employment, investment, R&D etc

A Bill on the Development (Enterprise and Services) Hubs Act, 2022 (“Bill”) to revamp the Special Economic Zones (SEZ) into Development of Enterprise and Service Hubs (DESH) is underway in the Indian Economy market.

Background – Earlier, while presenting the Union Budget speech for the Financial Year 2022 -2023 the finance minister Smt. Nirmala Sitharaman mentioned that “The Special Economic Zones Act will be replaced with a new legislation that will enable the States to become partners in Development of Enterprise and Service Hubs”. She added that this would cover all large existing and new industrial enclaves to optimally utilize available infrastructure and enhance competitiveness of exports.

Key Highlights:

1. 1. According to the draft released for consultation, industrial units situated in these hubs, will be known as Development of Enterprise and Service Hubs (DESH). These hubs may be created by the Centre, a State, or both separately or together, or by any individual for the production of commodities, the provision of services, or both.
   2. Procedure for making proposal to establish Development Hub–
      1. Any person, who intends to set up a Development Hub, may, after identifying the area, make a proposal to the relevant Regional Board for the purpose of setting up the Development Hub. Every proposal shall be made electronically through the integrated online portal set up in such form and manner containing such particulars as may be prescribed.
      2. Every person or a State Government whose proposal has been approved by the Board, and who, or which, has been granted a letter of approval, shall be considered as a Co-Developer of the Development Hub.
      3. The Developer shall, after the grant of letter of approval submit the exact particulars of the identified area to the Central Government, within such time period and in such manner as may be prescribed.
      4. Any person, who intends to set up a Unit for carrying on the authorised operations in a Development Hub, should submit a proposal to the Regional Board in such form and manner containing such particulars as may be prescribed.
   3. Review of proposal by Board–
      1. The Board, after receipt of the proposal, may approve the proposal subject to the terms and conditions as it may deem fit to impose, or modify or reject the same. The Board on approval of a proposal and within such time as may be prescribed, grant a letter of approval on such terms and conditions and obligations and entitlements as may be specified by the Board, to the Developer, being the person or the State Government concerned.
      2. The Board should take any targeted measures it deems necessary for the growth and promotion of Enterprise Hubs like measures to enable Enterprise Hubs to transact with businesses outside Development Hubs and measures for the inclusion of specified domestic supplies critical for projects in the public interest, etc.
      3. The Board should establish and maintain an online portal, within a period of six months from the date of commencement of this Act. The online portal should serve as the single window clearance mechanism for the grant of time-bound approvals for the establishment and operation of Development Hubs, including the single application forms and returns.
   4. The Central Government can–
      1. prescribe a single application form for obtaining any license, permission, registration or approval by a Developer, or Unit under one or more Central Acts;
      2. prescribe a single form for furnishing returns or information by a Developer or Unit under one or more Central Acts;
      3. authorise the Board, the Regional Board or the Hub Director, to exercise the powers of the Central Government on matters relating to the development of a development hub, or the setting up and operation of units
   5. Exemptions – Every Developer and Unit must be entitled to the following exemptions, drawbacks, and concessions, namely –
      1. Any duty of customs, under the Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or services rendered in a Development Hub or a Unit, to carry on the authorised operations by the Developer or Unit.
      2. exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services rendered , from a Development Hub or from a Unit, to any place outside India.
   6. Every development hub under this Act must be deemed to be a Special Economic Zone for the purposes of the Integrated Goods and Services Tax Act, 2017 and every Developer, including a Co-Developer must l be deemed to be a Special Economic Zone Developer for the purposes of the Integrated Goods and Services Tax Act, 2017

[Please note that the official release of this Bill is awaited. We have drafted this update based on the draft copy of the Bill which is being circulated in various legal community forums. Once the same is put up in the official sources we will let you know].

Source : Press Information Bureau

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“Board” means the Integrated Development Hub Board

“Development Hub” means each Development Hub notified under Section 12, including an Enterprise Hub, Services Hub, and any existing Special Economic Zone;

“Developer” means a person who, or a State Government or its agency which, has been granted by the Board a letter of approval under Section 11, and includes a Co-Developer;