The Hindu Business Line : Special package for SEZ, EOUs on the cards

THE Government is working out a special package for export units in the Special Economic Zones (SEZs) and the 100-per cent Export Oriented Units (EOUs) as part of the Export-Import (Exim) Policy to be announced next month, the Union Commerce and Industry Minister, Mr Kamal Nath, said.

Taking part at an open house with EOUs and SEZs, organised by the Export Promotion Council for EOUs and SEZ units, (EPCES), Mr Kamal Nath said the very fact that there was a single council for both EOUs and SEZs showed that the convergence of benefits for both these segments would be arrived at before a comprehensive Bill on the proposed SEZ Act was introduced in Parliament.

"Our Government is considering the proposal for enactment of SEZ Act to provide stability of regime and single window clearance to SEZs. Since it may take some time, in the meantime, we would like to extend some of the benefits indicated in the proposed SEZ Act in the Exim Policy. Similarly, I would request the Finance Minister to consider extending the income tax package as indicated in the proposed SEZ Act to the SEZ units in the next Budget," Mr Kamal Nath said.

Allaying apprehensions of EOUs about any discrimination against them, Mr Nath assured that both in the Exim Policy and the Budget, the Government would like to work out a package for the EOUs, which would take into consideration some of the major issues raised by them like exemption from central sales tax and service tax.

The minister said that he would also take up the matter with the Finance Minister on extending the benefit of income tax under Section 10-B beyond 2010 as well as extending the benefits of income tax for domestic units converted into EOUs without any conditions. He said that it would plead with the Revenue Department to consider requests of the EOUs like exemption from bank guarantee, working out a golden EOU scheme and carrying out other procedural simplification. The minister shared the concerns of exporters over the transaction cost and appreciating rupee vis-à-vis the dollar.

The Chairman of EPCES, Mr Sharad Jaipuria, highlighted the macro issues plaguing the sector. He sought the merger of the EOU scheme with the SEZ scheme and rechristening EOUs as virtual SEZ units so that no discriminatory treatment existed between the SEZ and EOU units.

Mr Jaipuria also said that domestic tariff area (DTA) sale from EOUs should be allowed based on the principle of duty foregone on imported inputs.

Duty foregone can be computed on the basis of standard input and output norms on a self-declaration basis.

Where raw material is procured indigenously, DTA sale might be allowed on the payment of normal excise duty. This may be allowed for both EOU and SEZ units.

Most exporters representing EOUs and SEZs highlighted the micro problems they faced particularly in the gem and jewellery sector, the rubber industry and the operational difficulties in bonded areas, and also in their sales to the DTA.

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Special package for SEZ, EOUs on the cards