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Global Export Import Market Intelligence


Date: 20-08-2012
Subject: Govt plans SEZ booster dose to revive exports
Even as initial data for the first quarter of this fiscal shows a pick-up of sorts in exports from India’s SEZs (special economic zones), coming in the wake of lacklustre performances in the previous two financial years, the government is betting on a slew of booster doses slated to be announced over the next four weeks to revive shipments from these dedicated export enclaves.

With a view to offer a fillip to SEZ exports, the commerce ministry is reportedly close to wrapping up a series of meetings with the revenue department officials on the issue, and new measures could be announced in the next four weeks or so, government officials involved in the exercise said.

In fiscal 2011-12, exports from SEZs had increased by just 15 per cent to Rs 3,64,477.73 crore, the lowest growth in the last five years. In the first quarter of the current financial year, cumulative exports from SEZs have been recorded at Rs 1,18,321.56 crore, a 64 per cent surge over the exports of corresponding period of the previous financial year.

According to industry players, the imposition of Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11 has contributed to a perceptible slowdown in exports from these zones, which were earlier exempted from almost all levies.

“The imposition of Minimum Alternate Tax (MAT) on the book profits of SEZ developers and units has discouraged investments,” according to Export Promotion Council for EOUs and SEZs (EPCES) chairman Jatin R Mehta.

Under the SEZ Act, units get 100 per cent tax exemption on profits earned in the first five years of operation, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years. SEZ developers too get 100 per cent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation. IT, IT-hardware, petroleum, engineering, leather and garments are among the leading exports from the SEZs.

To boost investor sentiment, the government is planning incentives for developers who want to set up SEZs, especially in remote and undeveloped areas.

Sops on the anvil, include a possible relaxation of the minimum land area requirement for different special economic zone categories and a likely extension of the benefits of export schemes to SEZ units, that are already available to entities outside the special economic zone.

Source : indianexpress.com

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