11 developers seek more time for SEZ projects; 5 to surrender
New Delhi: Reflecting developers' waning interest in special economic zones, 11 companies, including Posco-India Pvt Ltd and Raheja SEZ, have sought more time from the government for implementing their projects.
Besides, five special economic zone (SEZ) promoters, including Maharashtra Industrial Development Corporation (MIDC), wants to surrender their projects.
The Board of Approval (BoA), headed by Commerce Secretary S R Rao, will take decision on these requests in the forthcoming meeting scheduled on November 23, an official said.
The BoA is a 19-member inter-ministerial body that deals with special economic zone (SEZ) related matters.
The developers have cited global slowdown, imposition of minimum alternate tax and lack of response from infrastructure developers as major reasons for surrendering projects.
"Now, the developer has requested for de-notification of the SEZ on the following grounds - that due to implementation of proposed DTC and global slowdown it is not possible to develop SEZ ...," MIDC has said in its application. The developer has proposed to set up a multi-product SEZ in Amravati.
According to an industry expert, uncertainty over tax exemptions for new SEZs has also led to decline in interest in tax-free enclaves. Investors are very apprehensive about the new draft Direct Taxes Code (DTC).
According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to existing units.
The developers who have sought more time to implement their projects include Andhra Pradesh Industrial Infrastructure Corporation and Enfield Exports.
Under the SEZ Act, SEZ units get 100 percent tax exemption on profits earned for the first five years, a 50 percent exemption for the next five years and another 50 percent exemption on re-invested profits in the following five years.
SEZ developers, on the other hand, get 100 percent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.
Merchandise exports from the 160 operational SEZs in the country totalled Rs 2.39 lakh crore in the April-September period, an increase of 36 percent vis-a-vis the same period last year.