Comments
The Finance Ministry has objected to the Commerce Ministry's proposal of lowering the minimum land area criterion for Special Economic Zones (SEZs).
The Ministry feels allowing a lesser area will lead to a proliferation of such zones and result in massive revenue losses, official sources told Business Line . It views SEZs as tax-free enclaves due to the duty benefits under the SEZ Act and has expressed apprehensions over revenue losses due to the duty foregone and fiscal benefits.
It also opines that more SEZs would mean the need to appoint additional field officers to oversee the operations. The Ministry, therefore, does not want the norms to be changed and is pitching for a few big SEZs instead of many small ones.
However, due to the constraints faced by developers in procuring large, contiguous, vacant and non-agricultural land for SEZs, the Commerce Ministry suggests reducing the minimum area for multi-product SEZs from 1,000 hectares to 250 hectares; and multi-services / sector-specific SEZs from 100 hectares to 40 hectares.
The proposal to cut the minimum area requirement is also to counter the general perception that developers procure land in the name of setting up SEZs only to use it later for realty projects and garner huge profits after land prices escalate.
Commerce Ministry's view
The Commerce Ministry argues that SEZs have led to increased exports, employment and investment. Relaxation of norms, including for land, would only help in investors viewing SEZs positively, especially after a fall in investments in SEZs due to the recent imposition of Minimum Alternate Tax, Dividend Distribution Tax and the forthcoming Direct Taxes Code regime proposing to shift from profit-linked incentives to investment-linked sops. On the difficulties in appointing more field officials, the Commerce Ministry feels that since SEZs operate on a ‘Cost Recovery Basis' model — where developers deposit a certain amount in a Government account to be utilised towards the payment of salaries of officials, their housing, conveyance and other perks — the Government would not incur any additional cost on this count.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.