SEZs to get only new investments

ECONOMY BUREAU
DATELINE

NEW DELHI, DEC 19: The government on Monday clarified that it was not
possible to shift to special economic zones (SEZs) industrial activities
that existed outside.
"Any investment in SEZs has to be new investment with new machinery and
other new facilities," commerce and industry minister Kamal Nath said on
Monday at the meeting of the Parliamentary consultative committee
attached to his ministry.

On controversies concerning the land for SEZs, Nath said the Centre had
not acquired any land for SEZs. The minister said he had written to
chief ministers that while acquiring land for SEZs priority should be
given to waste and barren lands.

He deplored the tendency to link all land issues with SEZs. The Singur
controversy had nothing to do with SEZ, since it is a standalone
industrial project of the state government, the minister said, claiming
that criticism of special economic zones was entirely misplaced and that
the propaganda against such zones was not based on facts.

On the issue of revenue loss, Nath explained that for infrastructure
developers tax benefits already existed even outside the SEZs.

Moreover, "unless suitable tax concessions are given, no developer will
come forward to invest over Rs 2,500 crore in multi-product SEZs without
any assured time-frame for returns."

Allaying Fears
• Shifting of existing industrial activities outside the SEZs to
such zones ruled out
• For sale in domestic tariff area, 100% duty and taxes as per import
tariff have to be paid by SEZ units
• 100% FDI in SEZs was allowed for manufacturing provided the
manufacture is for exports
• The projected jobs in the 51 notified SEZs is likely to be over 5 lakh

In case of SEZ units, the corporate tax concessions are available only
on export income. For sale in domestic tariff area (DTA), 100% duty and
taxes as per import tariff have to be paid by SEZ units. There are no
exemptions for such DTA sales under the SEZ regime," he said.

MPs who participated, including Suresh Prabhu, Shantharam Naik, P
Karunakaran, Sambasiva R Rao, Sudhangshu Seal, JM Aaron Rashid, KC
Palanisamy and Ramsingh Kaswan, were unanimously of the view that India
does need SEZs, while suggesting that in the process of implementation
concerns relating to land, labour laws etc. be suitably addressed and
generation of employment and FDI in SEZs be ensured.

Of the 650 proposals received so far, 237 approvals have been granted
spread over 17 states and 2 Union Territories and 51 SEZs have been
notified.

The employment projected in these 51 notified SEZs would be over 5 lakh,
the commerce minister said.

In response to a member's query whether foreign direct investment (FDI)
was allowed in SEZs for the manufacture of cigarettes, Nath stated that
100% FDI was allowed for manufacturing provided the manufacture is for
exports. This would also benefit the tobacco farmers in the country, he
added.

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