44 SEZ developers seek more time to implement projects

Reflecting a lack of enthusiasm in special economic zones (SEZ), 44 developers, including Tata Consultancy Services (TCS) and Parsvnath SEZ, have sought more time from the government for implementing their projects.

DLF Commercial Developers, Navi Mumbai SEZ and Raheja SEZ have also requested additional time for project implementation from the Board of Approval (BoA), headed by Commerce Secretary Rahul Khullar, as per an agenda note for the BoA's forthcoming meeting.

The BoA, a 19-member inter-ministerial body that deals with SEZ-related matters, is scheduled to meet on September 19.

The board would also revise guidelines regarding power generation, transmission and distribution in SEZs.

Further, the BoA would discuss issues related to dilution of equity in the developer company, transfer of promoter?s equity.

DLF has sought approval from the board for SEZs to sell the shares of its IT SEZ in Pune to a foreign investor.

The company is in talks with Blackstone to sell the SEZ in Pune for Rs 900 crore. DLF has a 70% stake in the SEZ.

According to sources, JV partner Ackruti, too, is selling its stake.

The promoters which wants to surrender their projects, have cited reasons like the imposition of minimum alternate tax and a lack of response from infrastructure developers.

According to an industry expert, uncertainty over the tax exemptions for new SEZs has also led to declining interest in the tax-free enclaves. Investors are very apprehensive about the new draft Direct Taxes Code (DTC).

According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to already existing units.

The developers who have sought more time to implement their projects include Wockhardt Infrastructure Development and Bangalore International Airport.

The board will also take up three applications for setting up new zones.

Under the SEZ Act, SEZ units get 100% tax exemption on profits earned for the first five years, a 50% exemption for the next five years and another 50% exemption on re-invested profits in the following five years.

SEZ developers, on the other hand, get 100% tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.

Merchandise exports from the 143 operational SEZs in the country totalled Rs 72,255 crore in the April-June period, an increase of 23% vis-a-vis the same period last year.