SEZ: Govt cancels approval of Posco, Lanco Solar projects

The government has cancelled in-principle approval given to South Korean steel major Posco for a special economic zone (SEZ) in Odisha.
The decision was taken by an inter-ministerial Board of Approval (BoA), chaired by the Commerce Secretary Rita Teaotia, in its meeting on on April 28.
The board examined the case for cancellation of formal approval and it noted that the progress made by the developer - Posco India Pvt Ltd - "was not satisfactory", the minutes of the BoA meeting said.
The board also noted the vehement objections made by the resident commissioner, government of Odisha against the proposal to cancel the in-principle approval and observed that the developer was free to apply for fresh approval once it had sorted out its problems.

"The board after deliberations decided to cancel in principle approval. The cancellation is subject to the DC (Development Commissioner) furnishing a certifcate...Certfying that the developer has not availed any tax/duty benefits including service tax exemptions, if any...Or has refunded any such benefits availed by it," it said.
The BoA also decided to cancel the formal approval given to Lanco Solar Pvt Ltd.

It had proposed to set up solar SEZ in Odisha.
Regarding permitting exports from SEZs to DTA at the most
favourable tariff rates, Chaturvedi said: "This would give a boost to Make in India and our import requirement can be met through manufacturing in SEZs rather than through imports of the same goods from FTA partners such as Japan, South Korea and Asean."

Another matter that needs a relook is the Free Trade and Warehousing Zones (FTWZs).
"I have been told to relook at the FTWZ policy regarding permission for keeping goods on behalf of foreign buyers," he said adding the proposal has been taken up with the Department of Revenue and is under active consideration of government.
On the issue of phasing out of exemptions, he said the Commerce Ministry has asked its finance counterpart and the CBDT is favourably looking into the matter.
The Central Board of Direct Taxes (CBDT) had last year proposed removal of facilities and incentives to SEZs by March 31, 2017.

SEZs, which are major export hubs, contribute about 16 per cent to the country's total exports. They provide employment to about 16 lakh people.
Of about 400 formally approved SEZs, 200 are in operation. Exports from these zones increased from USD 3.5 billion in 2005-06 to USD 65 billion in 2014-15.
He said there are many more urgent issues which need resolution and the commerce ministry will soon rollout a web platform to discuss problems of these zones and find ways to resolve them.