Govt to announce new guidelines to revive SEZs

Profit-linked benefits were the main attraction of the SEZ scheme

PTI | June 5, 2012



The Indian government will come out with new guidelines to revive export hubs, special economic zones(SEZs), which have lost sheen after imposition of certain levies and proposal to take away tax incentives.

The government had imposed Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11, which were earlier exempted from almost all levies.

Admitting that due to imposition of MAT and DDT, there has been a "visible slowdown" in growth of export from SEZs, Commerce and Industry Minister of India Anand Sharma Tuesday said a new set of guidelines would be announced to make the SEZ policy more buoyant.

"We have undertaken a comprehensive assessment of the SEZ Scheme to re-visit certain aspects of the policy and operational framework and after concluding the inter- ministerial consultations, we will be able to come out with new guidelines to make the operation of the SEZ policy more buoyant," he said, while announcing the supplementary Foreign Trade Policy.

The Direct Tax Codes (DTC) being considered by Parliament proposes to do away with the income tax exemption given to them and instead link tax sops to investments made in them.

Profit-linked benefits were the main attraction of the SEZ scheme.

The initial phase of SEZ scheme, launched in 2006, saw developers lining up in big numbers for projects. It was also seen as a real estate opportunity.

At present, over 100 developers are seeking more time from the government to execute their projects and over 50 developers have surrendered the projects.

Exports from SEZs stood at Rs 3.65 lakh crore in 2011-12.

With investment of Rs 2.02 crore, these zones provide employment to over 8.45 lakh.

Overseas shipments from the 153 operational tax free havens have come down to 12 per cent in the country's total exports from about 30 per cent in the previous years.

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