Shipping ministry eyes SEZ-like tax breaks to push coastal economic zones

To get investors for its ambitious Coastal Economic Zone (CEZ) scheme, the Ministry of Shipping is pitching for tax concessions on the lines of what is available for special economic zones. This, it is felt, could give a boost to the project after the government decided to give a push to the logistics and warehousing sectors by declaring them as infrastructure. 

The ministry is likely to approach the Prime Minister’s Office for the same. “We are in the process of seeking approval from various stakeholders including NITI Aayog, Department of Expenditure, DIPP and road ministry and would write to the PMO,” an official in the know told Business Standard. The Union government had proposed setting up CEZs, one each on the east and west coast of the country.

“The states which are ready with their set of clearances and land acquisition would get the first opportunity to execute the CEZ project,” the official said.

This is not the first time the government is selling the idea of these dedicated zones to industry. The ministry had thought of renaming the Coastal Economic Zones as Coastal Employment Zones with employment generation as the main criterion to give approvals to industries looking to set up businesses at these units. 

In July 2016, under its ambitious Sagarmala Programme, the government announced building 14 CEZs, to be aligned to relevant ports in the maritime states. These will house Coastal Economic Units for setting up manufacturing facilities. The focus of the economic zones would be towards providing employment and have a distinct identity from the existing SEZ (special economic zones). For promoting port-led industrialisation, 14 CEZs covering all the maritime states and Union Territories were identified as part of the National Perspective Plan under the Sagarmala Programme. The Perspective Plans for all 14 CEZs were prepared in consultation with relevant state governments and central ministries. 

The idea behind port-led industrialisation through the proposed development of CEZ under the Sagarmala Programme was to provide impetus to the government’s “Make in India” initiative.

The Sagarmala Programme has four essential features — port modernisation, port connectivity, port-led industrialisation and coastal community development, the zones fall under the third category. Ports handle 90 per cent of the country’s EXIM cargo by volume and 70 per cent through value. Gujarat alone caters to 25-30 per cent of the cargo traffic. Therefore, connecting the coastal areas to ports through port-led development was planned as proximity to the port brings down the logistics cost of a company substantially. 

The 14 proposed sites are Kachchh, Suryapur and Saurashtra in Gujarat; North and South Konkan in Maharashtra; Dakshin Kanara in Karnataka; Malabar in Kerala; Mannar, VCIC South and Poompuhar in Tamil Nadu; VCIC Central and North in Andhra Pradesh; Kalinga in Odisha; and Gaud in West Bengal. 

The inclusion of “Logistics Sector” in the Harmonized Master List of Infrastructure Sub-sectors in November 2017 brought in multi-modal logistics park comprising Inland Container Depot with minimum investment of Rs 500 million and minimum area of 10 acre, cold chain facility with minimum investment of Rs 150 million and minimum area of 20,000 sq ft, and/or warehousing facility with investment of minimum Rs 250 million and minimum area of 1 lakh sq ft.