Tax Sops Plan for Proposed Economic Hubs

India is likely to offer tax sops and concessions for the proposed economic hubs, which seek to transform export-focussed special economic zones, in its big push to become a part of global value chains and spur manufacturing into the country.

The finance and commerce and industry ministries have firmed up the contours of Development of Enterprise and Service Hubs or DESH, which could allow companies to defer their import duty liabilities among other concessions, officials’ privy to the deliberations.

The idea is to take advantage of the global supply chain shift and create the necessary ecosystem to draw investment and the entire supply chain that can also support development of msmes and create jobs.

The revenue and the commerce departments have had protracted deliberations on the contours of the DESH framework.

The DESH units will not face the compulsion to be Net Foreign Exchange positive or export and will be established as vehicles to attract investment and spur manufacturing in the country.

These hubs may be established by the centre or a state or jointly by them, or any person for the manufacture of goods or rendering services or for both.

Financial minister Nirmala Sitaraman said in her February budget speech that the SEZ Act will be replaced with new legislations that would enable states to become partners in development.

An expert panel, set up by the commerce department in 2019, had suggested SEZs be converted into employment and economic enclaves (EEE) with extension of tax sunset clauses, simplification of processes, tax benefits for the services sector, and extension of MSME schemes to these zones.