The Hindu Business Line : `SEZs offer best long-term I-T benefits for exporters'

INDIAN enterprises keen on export-import business have been urged to look more closely at the special fiscal incentives being provided by the Government in Special Economic Zones (SEZs).

The scheme, said to be an evolving one, is the only one where export units' turnover would continue to get income-tax exemption, at least for the next 20 years. There are already some 26 new SEZs in the private sector, and many more are in the offing.

Speaking at an interactive session on `Emerging export scenario through SEZs,' organised by the Bengal National Chamber of Commerce and Industry (BNCCI) here on Tuesday, Mr Manoj Kumar, Joint Director-General of Foreign Trade, Kolkata, and Development Commissioner, Falta SEZ, said the SEZ Bill, which proposes full I-T exemption for units in the zone for the next 10 years, has already received the Centre's approval, and was likely to be placed before the new session of Parliament.

He said several State Governments, including that of West Bengal, have already created suitable legislation for creation of new SEZs. He, however, admitted that the legal framework for SEZs was yet to get fully stable.

Pointing out that a large number of privately promoted SEZs have already been approved, he said many more were in the offing. Now that the SEZs have received a proper legal framework, entrepreneurs should view units in SEZs as a great opportunity. He described the SEZ system as a trust-based one.

Stressing the growing importance of SEZs in the emerging export scenario, Mr Kumar said the Shenzen zone alone in China commands a turnover of a staggering $25 billion, while all the SEZs in India put together account for only $2 billion (Rs 12,000 crore). There are some 500 SEZs/FTZs all over the world.

He said I-T relief for other exports units would get phased out soon. SEZs, deemed as foreign territory for purpose of external trade, are also effectively kept outside the purview of routine problems like customs delays, complex Exim procedures, clearances and export finance, he pointed out. A supplier to a SEZ is deemed to be an exporter.

Following the setting up of OBUs (Offshore Banking Units), one each in Mumbai and Delhi SEZs, the Government has now proposed to allow more OBUs in other SEZs. Falta EPZ in Kolkata is expected to get an OBU soon. OBUs can raise funds in foreign currencies (Libor plus) and are allowed I-T relief for three years.

Describing the SEZ scheme as the best bet for prospective exporters, as it was fully WTO compatible, and also designated by the Centre as a Public Utility Service under the Industrial Disputes Act, he said `fixed wastage norms' of the Government, as applicable to export units, would not apply to units in SEZs. The SEZ units can also avail themselves of the facility of sub-contracting. While 100 per cent FDI is allowed for new units in SEZs, the units can also fully write off export bills.

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