New Delhi: India has agreed to extend the benefits of special economic zones (SEZ) and National Investment and Manufacturing Zones (NIMZ) to the proposed industrial parks which would be developed in collaboration with China.
During the recent visit of Vice President Hamid Ansari to Beijing, India and China signed the memorandum of understanding (MoU) on the creation of industrial parks.
"The parties confirm that the cooperation on industrial parks shall enjoy the support that the Chinese government grants to overseas economic and trade cooperation zones, as well as the benefits not lower than that envisaged under the prevailing policy frameworks in India, such as SEZ, NIMZ, and existing policies of the state governments, as applicable," the signed MoU said.
The MoU would facilitate Chinese investments in India and it would help in bridging the ballooning trade deficit, which now average around USD 35 billion a year. The bilateral trade totalled to USD 65.47 billion last year.
SEZs and NIMZs enjoy tax related benefits. The SEZs enjoy 100 percent income tax exemption on export income for the first five years, 50 percent for the next five years thereafter and 50 percent of the ploughed back export profit for next five years.
Besides, NIMZ, under the National Manufacturing Policy, has provisions of tax incentives to small and medium enterprises (SMEs).
Further, the MoU said that both the sides have agreed for an Industrial Park Cooperation Working Group, which will review the progress of the parks.
The group will have equal number of representatives from both the countries.
Both the sides "will share mutually agreed relevant information on the regulatory framework and investment priorities/projects as may be needed during the preparation of investment proposals," it added.
According to sources, China is interested in setting up parks in Indian states like Uttar Pradesh, Haryana and Karnataka.