Govt mulls package to revive economic zones

The Commerce Ministry today indicated that a "package", including roll back of minimum alternate tax, could be announced to revive special economic zones.
"SEZ revival in our view is very very important tool of reviving our export capacities," Commerce Secretary Rajeev Kher said here at a CII function.
"We do expect and look forward to a package which will take care of the ongoing issues such as withdrawal of MAT (Minimum Alternate Tax) and DDT (Dividend Distribution Tax) and many more substantive and significant issues over the next few months," he said.
All the concerns of the SEZ developers and units have been flagged with the Finance Ministry and "I am confident it (package) will happen sooner", Kher added.

While presenting the Budget 2014-15, Finance Minister Arun Jaitley had said the government is committed to reviving SEZs and making them effective instruments of industrial production, economic growth, export promotion and employment generation.
"For achieving this, effective steps would be undertaken to operationalise the SEZs, to revive the investors' interest to develop better infrastructure and to effectively and efficiently use the available unutilised land," he had said.

Of the total 47,803 hectares of SEZ land notified, only 17,689 has been put to use so far, according to the data of the Ministry of Commerce and Industry.
Once major export and manufacturing hubs, SEZs started losing sheen after the imposition of MAT and DDT in 2011 on them.

Industry had asked the government to roll-back the MAT on SEZs. They had said that the levy has suppressed the potential of these zones as a tool to promote exports and generate employment.
In 2011, government had imposed 18.5 per cent MAT on book profits of special economic zone developers and units.
Although government last year announced an incentive package to revive these zones, several developers have surrendered their projects as imposition of taxes has eliminated the incentives for setting up SEZs and units in those zones.
SEZs contribute about one-third to the country's total exports. They provide employment to about 15 lakhs people.

The Commerce Ministry is struggling to increase exports as the country's shipments in the last three years have been hovering around USD 300 billion.
Of the 566 formally approved SEZs, only 185 are in operation. Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.