What is a ‘sunset’ clause?
- Sunset clauses require that certain provisions or laws will cease to be effective from a predetermined date unless they are reauthorized.
- Sunset clauses have been frequently used in India in fiscal and tax laws, e.g., tax holidays and exchange control regulations.
- The Constitution itself provides for a 10 year sunset for reservations to Parliament and legislative assembly seats (Article 334).
- Such provisions are an admission by the lawmakers that the law is not made for eternity and a recognition that circumstances change over time—whether it be one year or five years.
Why is it needed?
- By allowing specific time periods for the operation of laws, this tool could allow policymakers to push for new ideas to be implemented.
- Having a fixed tenure in effect also ensure certainty of law.
Why in News?
- NITI Aayog Vice-Chairman Rajiv Kumar recently said that any tariff protection to promote local manufacturing in India will come with an in-built sunset clause.
- He added that the government is set to extend the production-linked incentive scheme for manufacturing pharmaceuticals, medical devices and electronics announced under the AtmaNirbhar Bharat package, to six more sectors.
- He emphasised that India’s efforts towards self-reliance are not dissimilar to what other nations are doing to insulate themselves from global supply chain shocks and revive the economy. It will not imply in any sense, any form of isolation, closed economy or protectionism.
About PLI scheme
- The production-linked incentive scheme was announced in March 2020 as a part of AtmaNirbhar Bharat package.
- It aims to attract large investments in mobile phone manufacturing and specified electronic components. The scheme offers an incentive of 4-6% on incremental sales of goods manufactured in India and is expected to create a total of 8 lakh jobs.
- Later, the government announced the PLI scheme for promoting domestic manufacturing of bulk drugs and medical devices.