Exports from SEZs grow 23% in April-June

Exports from Special Economic Zones (SEZs) grew by 23% during the first quarter of the fiscal 2011-12, slower than the expansion in the aggregate shipments from the country during the period.

Merchandise exports from 143 operational SEZs totalled Rs 72,255 crore in the April-June period.

Total consignments including those from outside SEZs averaged a growth of over 40%.

"Overall exports, outside the SEZs, were pushed during the first quarter of the fiscal because traders wanted to avail the benefit of tax refund DEPB scheme which is ending on September 30 this year," Federation of Indian Export Organisations President Ramu S Deora said.

Under the Duty Drawback Entitlement (DEPB) Scheme, exporters are given refunds of tax incidence on the import content of their export products.

During 2010-11, exports from SEZs jumped 43% to Rs 3.15 lakh crore compared to Rs 2.20 lakh crore in the previous fiscal., according to the data released by Export Promotion Council for EOUs and SEZs (EPCES) today.

Of the 585 formally approved SEZs so far, 381 SEZs have been notified as on July 15, 2011, it said.

There are 143 operational units as on June 30, the council added.

The sector provided employment to 7.14 lakh persons and attracted investments worth Rs 2.12 lakh crore, till  June end this year.

IT, IT-hardware, petroleum, engineering, leather and garments are the leading exports from the SEZs.

The SEZs, which were touted as major vehicles for investment and export promotion, were allowed a host of tax exemptions under a special SEZ Act of 2005.

Under the law, incentives for SEZ units include 100% income tax exemption on export profits earned for the first five years, a 50% for the next five years and another 50% exemption on re-invested profits in the following five years.

The initial phase saw developers lining up in big numbers for the projects. It was also seen as a real estate opportunity.

However, following concerns about loss of tax revenue by the Finance Ministry, the government has proposed phasing out the tax sops for the units commencing operations after 2014.

Moreover, farmers protests has made land acquisition a problem area.

The industry has also expressed concern over imposition of Minimum Alternate Tax (MAT) of 18.5% on the book profits of SEZ developers and units therein.