FTZs could sell the remaining half in the domestic tariff area (DTA) in terms of the provisions in the revised exim policy, but that would attract full customs duties as prevailing in free zones in the UAE, he explained.Lakhanpal said in order to enable them to make a big dent in the global market, the FTZs would be freed from the botheration of fulfilling the prescribed export obligation, value addition and standard input-output norms.

Earlier, EPZs were committed to export 70 per cent oftheir production value by adhering to the above norms but were allowed to sell 30 per cent of finished goods in the DTA, subject to payment of applicable level of duties.

The DTA sale included rejects up to a maximum of 5 per cent. He said the Indian labour laws would apply to FTZs, though the commerce ministry's ultimate objective was to make these laws inapplicable. The practice the world over was to exempt FTZs from the purview of labour laws. The commerce ministry would also strive to make FTZs outside the customs ambit with checks only on the entry and exit points by customs officers, Lakhpanal pointed out.

Commerce secretary PP Prabhu had stated that FTZs would attract the country's labour laws while addressing Ficci last week.

On the other hand, commerce minister Ramakrishna Hegde had stated that labour laws would not apply to FTZs when he unveiled the revised exim policy on March 31.

In support of this, he had stated that "amendments to the existing labour laws are pending before thegovernment".

The new FTZ scheme follows the recent visit to UAE by a delegation headed by Lakhanpal. In his report, Lakhanpal had recommended that private sector participation in FTZs be encouraged and that they be set up nearer the ports.

Exports by EPZs increased from Rs.2,653.11 crore in 1994-95 to Rs 3,235.63 crore in 1995-96 to Rs 4,338.92 crore in 1996-97 and to Rs 4,809.35 crore in 1997-98, as per the data furnished to the Confederation of Export Units by Development Commissioners of the EPZs concerned.