| Date: |
17-12-2014 |
| Subject: |
No more new SEZs, focus on existing ones: ICRIER report |
NEW DELHI: After India's top government auditor picked holes in the special economic zone (SEZ) policy and questioned the underutilisation of vast tracts of land by developers, a study commissioned by the Department of Commerce has recommended putting an end to new SEZ approvals.
Instead, it wants to turn the focus on operationalising existing SEZs - just about half the SEZs with all approvals have at least one functional export unit inside them. The Comptroller and Auditor General ( CAG) had asked the commerce department to review the SEZ policy and procedures, especially since developers take vast tracts of land from the government in the name of SEZ but put just a fraction of it to use.
The developers often seek denotification of the unused land that will allow them to sell it for non-industrial purpose at higher rates.The study conducted by think tank Indian Council for Research on International Economic Relations (ICRIER) for the government has pointed out anomalies in the existing policy and made recommendations to facilitate revamp of these dutyfree zones. "ICRIER has submitted the draft report. We are examining it. They have made a lot of recommendations to improve performance of SEZs. We will be basing the process of SEZ revival on these recommendations," said a commerce department official.
"Land use is a concern in these zones. We are looking into how best to address it. "Just 192 of the 388 notified SEZs - those with all approvals - are operational.
There are another 200 which have most of the approvals but aren't notified. Out of 45,635.63 hectares notified for the development of SEZs, actual operations took place only on 28,488.49 hectares, or about 62% of the land. ICRIER said the Board of Approval for SEZs should investigate the intent of developers before granting approval.
While the study stressed on not giving fresh approvals, it also said any developer who has approval for an SEZ but not operationalised it, shouldn't be given a new one unless there is a strong reason for the delay.
It suggested the government select and focus on 50 good quality SEZs in economic corridors and support their development, which will help develop manufacturing in India and double the country's share in trade in goods.
The commerce department had last year asked ICRIER to conduct the study to review performance of SEZs and suggest ways to revive them. SEZ developers have largely blamed declining performance of these zones to the levy of minimum alternate tax and dividend distribution tax in the 2011 budget. While the commerce department has taken up the matter with its finance counterpart, ICRIER has argued against restoration of these tax benefits as they will be WTO actionable.
It said while the imposition of these taxes affected the business models of these units, "the commerce department should provide better business facilitation package and WTO non-actionable incentives to compensate for the withdrawal of MAT exemptions".
Source : economictimes.indiatimes.com
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