SEZ body says denotification fine if duty benefits refunded

The Export Promotion Council for EOUs and SEZs today said cash-starved realty major DLF should be allowed to denotify its special economic zones if the developer is willing to refund the duty-free benefits claimed, even as the Government will take the final call on the matter on June 2.

"In my opinion in such cases (DLF), we should not have any issue in de-notification...If the SEZ developer is willing to refund the entire duty-free benefits to the Government... because whatever duty was foregone by the Government would be recovered from the developer," the council's Director-General L B Singhal said on the sidelines of a PHDCCI seminar here.

DLF has sought the denotification of four of its IT/ITeS SEZs that were to come up in Haryana, Gujarat, Orissa and Kolkata, due to slowdown in the economy and liquidity crunch in the overall industry.

The decision on the denotification would be taken on the June 2 meeting of the Board of Approval (BoA) in the Commerce Ministry.

Singhal further said, "If no activity has taken place from the developer's side and no duty-free benefits have been claimed by the SEZ developer, in that case too, we should not have any issue in denotification."

He, however, added that the final decision lies with the BoA.

Stating that SEZ development in the country was not immune to the impact of global slowdown, Singhal said for this reason, companies were seeking extension of time for the development of the tax-free enclaves.

"Unavailability of cheap funds to SEZ developers and lack of demand for projects led to delay in implementation of some of SEZ projects," he reasoned.

He said total 18 cases have been received in which time extension has been sought by the developers due to slowdown.

The Director General also expressed concern over several states not providing single window clearance mechanism to SEZ developers required for faster approval and implementation.

"We have found that some of states are not providing single window mechanism for SEZ projects and we are taking up the matter with them to have it so as to speed up SEZ development across the country," he said.

He asserted that single window clearance is the single most important factor in bolstering exports and creating employment opportunities.

Total exports from operational SEZ units stood at Rs 90,316 crore in 2008-09 against the targeted Rs 1,25,000 crore due to the slowdown, he said.

However, he said the exports in the last fiscal grew 36 per cent from Rs 66,638 crore in 2007-08.