The Hindu Business Line : Fresh fiscal sops for SEZs likely by month-end: Commerce Secy

THE Central Government intends to soon introduce fresh fiscal incentives for developers and units in special economic zones (SEZ). These incentives are to form part of a legal package that is likely to be unveiled before the end of the month through a Bill or other Central Government mechanism, according to the Commerce Secretary, Mr S.N. Menon.

The Law Ministry is currently vetting the SEZ Bill prepared by the Commerce Ministry.

"We will try to introduce the Bill in the Winter Session of Parliament itself," Mr Menon told newspersons on the sidelines of the India Economic Summit (IES) here. He was responding to queries from mediapersons on whether the Bill would be introduced in the ongoing winter session or during the Budget session.

Earlier, in his address at a session on `India's special economic zones strategy' at the IES, Mr Menon outlined the salient features of the draft central SEZ legislation. He said that SEZ units would be eligible for income-tax benefits for 20 years instead of 10 years. As part of simplification of procedures for attracting FDI in SEZs, he said the Bill provided that the approval for foreign direct investment (FDI) requiring issue of industrial licences or approval of the Foreign Investment Promotion Board (FIPB) can be cleared by the Board of Approval (BOA).

For developers, he said complete freedom would be granted to developers to allocate space and charge for the space as well as other infrastructure and services on commercial terms. Further, the zones would continue in perpetuity. In case of mismanagement of services/insolvency of developer, an administrator might be appointed for up to one year for stabilisation of the zone.

The Commerce Secretary also made it clear that the Central Government did not intend to set up any SEZ on its own. "We believe that the Centre should only be a facilitator", Mr Menon said. On the issue of flexibility of labour, Mr Menon pointed out that labour is essentially a State subject. At the same time, he held that the Centre would encourage the State Governments to liberalise the State laws (eg. labour) and delegate powers to the Labour Commissioner.

As regards the State legislations, Mr Menon highlighted that Uttar Pradesh, Madhya Pradesh, Rajasthan and Gujarat have already enacted the SEZ Acts.

Maharashtra and Karnataka legislations are pending final clearance by the Central Government. Andhra Pradesh, Maharashtra, Rajasthan, Jharkhand, Orissa, Kerala, West Bengal and Tamil Nadu have framed their SEZ policies.

Commenting on regulatory restrictions, Mr Lew Syn Pau, Chairman, Ascendas, Singapore, highlighted that the stamp duty for real estate transactions are high. The implication of this, he said, is that the investments get illiquid and exit options also get limited.

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