DESH Bill may let companies have obligation of choice: Govt official

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Source: The post is based on the article “DESH Bill may let companies have obligation of choice: Govt officialpublished in the Business Standard on 26th December 2022. 

What is the News?

The Development of Enterprises and Services Hub (DESH) Bill, 2022 will ensure better economic performance, spur economic growth and people awareness.

About the Development Enterprise and Services Hub (DESH) Bill 2022

The Bill seeks to replace the existing special economic zone (SEZ) law.

Announced in the Union Budget earlier this year, the DESH Bill seeks to set up “development hubs” for promoting economic activity, generating employment, integrating with global supply and value chains and maintaining manufacturing and export competitiveness. Such hubs will also include existing SEZs.

Read here: Draft Development of Enterprise and Service Hubs (DESH) Bill: SEZs to be turned into mfg hubs for domestic markets
What are the benefits associated with the DESH Bill?

Compliance with WTO: The Bill ensures that there is no “single” mandatory export obligation for the Enterprise and Service Hubs.  This makes the Bill compliant with World Trade Organization (WTO) rules,

Flexibility for firms to choose: Companies setting up units will either have to give commitments towards making a certain amount of investment, creating a certain number of jobs, exporting goods worth a certain value or introducing new, or breakthrough technology. The government will give them the flexibility to choose any of these.

Clears confusion: The Bill put an end to the finance ministry’s concern that units may declare themselves SEZs to postpone Customs duty payments in the absence of any export obligation or NFE(Net Foreign Exchange Earning) criteria. The self-declaration.

This created a challenge as the firms declare themselves to postpone Customs duty payments in the absence of any export obligation or NFE criteria.

Note: Under the existing law, it was mandatory for units in SEZs to achieve positive net foreign exchange earnings. Further, the value of exports has to be more than the value of imports. This resulted in a dispute at the WTO over three years ago.

Read more: The DESH bill is going to improve the investment environment in India or enhance export competitiveness


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