The Net Foreign Exchange (NFE) Rules need to be recalibrated to make Special Economic Zones (SEZ) attractive for new units and to make SEZ scheme WTO compliant, said Sunil Rallan, President, Tamil Nadu Association for SEZ Infrastructure Development.
There is no need for NFE in the current policy of the Ministry of Finance; Department of Revenue and Central Board of Indirect Taxes and Customs as per Circular No 34/2019 Customs issued on October 1, 2019. This will boost fresh investment and support government’s Make in India and Assembly in India initiatives, he told newspersons.
Under the NFE rule, a unit shall achieve positive NFE to be calculated cumulatively for a period of five years from the commencement of production.
The US Trade authorities have represented to the WTO that the existing NFE rule is tantamount to export subsidy since the upfront exemption of taxes are deemed to be export-linked and therefore a prohibited export subsidy, he said.
Rallan, who is chairman and managing director of J Matadee Free Trade Zone, said following the trade war between the US and China, and the Corononavirus outbreak, companies abroad are looking at alternative destinations for manufacturing. However, they are going to countries like Vietnam and Thailand due to favourable policies rather than coming to India, he said.
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