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The government has given more time to 33 special economic zone developers, including Uttam Galva Steels Ltd, Unitech Infracon and GMR Hyderabad International Airport Ltd, to execute their projects.
At a meeting on July 6, the Board of Approval (BoA), headed by Commerce Secretary, Mr S R Rao, also allowed three SEZ developers to surrender their projects. The BoA is a 19-member inter-ministerial body that deals with Special Economic Zones (SEZs) and the issues related to them.
The minutes of the meeting said the developers surrendering their projects have to obtain a certificate from the respective Development Commissioners that “the developer has not availed of any tax/duty benefits under the SEZ Act/ Rules or the same have been refunded”.
SEZ developers, including Ansal SEZ Projects and Shyam Steel Industries had approached the BoA for surrendering their projects.
According to industry experts, seeking more time for developing projects and surrendering them reflected lack of enthusiasm in the tax-free enclaves.
“Imposition of minimum alternate tax and uncertainty over tax incentives after implementation of the Direct Taxes Code (DTC) has dampened interest in the tax-free enclaves,” a Commerce Ministry official said.
The DTC regime being considered by Parliament proposes to do away with the income tax exemption given to SEZs and instead link tax sops to investments made in them. Profit- linked benefits were the main attraction of the SEZ scheme.
The initial phase of SEZ scheme, launched in 2006, saw developers lining up in big numbers for projects. It was also seen as a real estate opportunity.
Other developers that got more time to execute their projects include Navi Mumbai SEZ and Mahindra & Mahindra Ltd.
The BoA also approved four new proposals, including Jubilant Infrastructure Ltd, which has proposed to set a biotech SEZ in Karnataka.
However, to boost investor confidence in these zones, the government is planning incentives for developers who want to set up SEZs in remote and undeveloped areas.
Overseas shipments from the 153 operational tax-free havens have come down to 12 per cent in the country’s total exports, from about 30 per cent in previous years.
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