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The Centre has relaxed lease rent payment for special economic zone (SEZ) units given the financial crunch faced by most of them because of disruptions in production and sale caused by the lockdown.
The Commerce Ministry, in consultation with the Department of Expenditure, has decided that there will be no increase in lease rent for the SEZ units for 2020-21 and the lease rent of the first quarter is to be deferred up to July 31, 2020, as per a letter issued by the SEZ division of the Commerce Ministry on Monday to the Development Commissioners of all SEZs. The deferment of lease payment will also not attract any interest.
“Accordingly, DCs are requested to take necessary action on the matter. DCs are also requested to advise developers of State govt/private SEZs to consider similar relief measures in their zones,” the letter said. It added that the relaxation was being given on account of the Covid-19 outbreak and the resulting lockdown.
Orders cancelled
SEZ units are facing large-scale cancellation of global orders due to the spread of the pandemic and manufactured products worth crores of rupees are lying idle in units as they are not able to sell them in the domestic market due to Customs duty barrier.
“Most SEZ units are in a major financial problem because of stalled sales and production and the relief in payment of lease rent would give them some breathing space,” a government official told BusinessLine .
The Export Promotion Council for EOUs and SEZs, a representative body for SEZ developers and units, has also asked the Centre to do away with Customs duties on sales made by SEZ units in the domestic market and also lower the corporate tax rate and minimum alternate tax to be paid by SEZs.
“The requests on tax relief made by SEZs are being discussed by Commerce Ministry officials with their counterparts in the Finance Ministry. While the Commerce Ministry largely supports the SEZs’ demands, a final decision on tax cuts can be taken only after the Prime Minister’s Office gives a green signal,” the official said.
As per industry estimates, EOUs and SEZs provide direct employment to more than 25 lakh person and have attracted investments of more than ₹5.50-lakh crore. In 2018-19, SEZ units exported goods worth ₹7.01-lakh crore, accounting for about a third of the country’s total exports, according to EPCES.
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