SEZs: Govt considering `export obligation'

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The details
The already notified 63 SEZs would not be affected by any new rules
being framed or under way for the SEZs as the rules would be prospective.
Till now, the Board of Approvals had given final approvals to 237 SEZs
and in-principle nod to 165 SEZs.
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New Delhi Jan. 22 Though the meeting of the Empowered Group of Ministers
for Special Economic Zones (SEZs) today ended `inconclusively,' the
Government is toying with a proposal to introduce "export obligation"
for SEZs so that serious players remain in the field and exports begin
from an early date and revenue loss due to tax concessions be stemmed.
However, officials were not keen to elaborate on the proposal.

The meeting was chaired by the External Affairs Minister, Mr Pranab
Mukherjee, and sources indicated that the meeting discussed various
issues pertaining to SEZs, including the contentious issue of land
acquisition. The Finance Minister, Mr P. Chidambaram, and the Commerce
and Industry Minister, Mr Kamal Nath, were among the Ministers who
attended the meeting.

Mr Nath, later briefing the media, said that the Empowered Group could
not decide on the future of new SEZs or the ones already granted
in-principle nod at the meeting today due to paucity of time. Old SEZs
not affected

The Commerce Secretary, Mr G.K. Pillai, later clarified that the already
notified 63 SEZs would not be affected by any new rules being framed or
under way for the SEZs as the rules would be prospective.

On the issue of imposing time-bound export obligations on SEZs, official
sources told Business Line here that this would only "complicate" the
concept and add to transaction cost as most of the SEZ developers and
units believe that there is "finality" to the SEZ Rules notified by the
Revenue Department towards the end of 2006.

They said that in IT SEZs, 100 per cent export was taking place and that
the idea of ensuring hassle-free functioning of the SEZs would be lost
if the rules were tampered with in the wake of controversies.

Mr Nath said the Centre had asked State Governments to forward details
of land acquisitions for all purposes including SEZs. He said the group
deliberated on "land issues, rehabilitation policy and possible misuse
of tax concessions by SEZs."

He said the Centre could not acquire the land for SEZ purposes, as it
was the States that were pro-active.

Till now, the Board of Approvals for SEZs has given final approvals to
237 SEZs and in-principle nod to 165 SEZs. Besides, another 300
applications remain pending.

Both the Central and State Governments have been facing the heat from
farmers, non-governmental organisations and opposition parties for
allowing big industries to acquire farmland to develop SEZs. Already
corporates such as Reliance Industries Ltd, Mahindra & Mahindra Ltd and
Gitanjali Gems Ltd have announced plans to set up SEZs, while the
national oil company Oil and Natural Gas Corporation has also joined the
SEZ bandwagon.

http://www.thehindubusinessline.com/2007/01/23/stories/2007012305090100.htm