Special economic zone (SEZ) developers on Wednesday urged the government to either withdraw the minimum alternate tax (MAT) and dividend distribution tax (DDT) from the tax-free enclaves or reduce the rates in order to make the zones financially viable.
In its suggestion for the coming Budget to Finance Minister Arun Jaitley and, subsequently, the Foreign Trade Policy, the Export Promotion Council for export-oriented units (EOUs) and SEZs (EPCES) made a number of recommendations to make SEZs and EOUs potential hubs for manufacturing and exports in line with Prime Minister Narendra Modi’s ‘Make in India’ campaign.
Read our full coverage on Union Budget
“SEZ sector is not growing properly because implementation of MAT and DDT has adversely affected the growth, investments, employment and exports from SEZs in India, resulted in loss of valuable foreign exchange for the country and has also sent wrong signals to the international investment community which is looking at India for its resources of skills and manpower. As a matter of fact more and more investors have opted out of SEZ development due to uncertain economic policy of the central government,” said PC Nambiar, chairman, EPCES.
Urging the finance minister to reduce the rate of MAT to 7.5 per cent from 18.5 per cent presently, Nambiar said companies that are making small profits are not able to adjust the credit within the prescribed time-limit of 10 years.
The EPCES has also suggested giving the same treatment to the exports from SEZ in line with exports made under various free trade agreements (FTA) and other trade deals, under the new Foreign Trade Policy that is expected to be unveiled soon after the budget.
There are presently 491 SEZs in the country that have received formal approval, out of which 352 are notified. There are 196 SEZs in operation , as on January 21.
Total number of units operating in these SEZs is 3,864 as on September 2014.
In last three years and current year, 224 developers have sought extension of time for the execution of their projects. Out of this, 211 developers have been granted extension of time after the expiry of three-year period from the date of formal approval, minister of stare (independent charge) for commerce and industry Nirmala Sitharaman told the Rajya Sabha.