No policy decision on special economic zones: Kamal Nath

August 7th, 2008 - 10:10 pm ICT by IANS  

A file-photo of P. Chidambaram

New Delhi, Aug 7 (IANS) An empowered group of ministers (EGoM), headed by External Affairs Minister Pranab Mukherjee, met Thursday to discuss norms for special economic zones (SEZs), but took no policy decisions, a senior minister said. “The meeting looked into certain operational aspects of SEZs, but no policy decision was taken,” Commerce and Industry Minister Kamal Nath told IANS on the sidelines of a book release function at the Prime Minister’s Residence here.

The EGoM on SEZ comprises, among others, Commerce and Industry Minister Kamal Nath, Finance Minister P. Chidambaram, and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

When asked to comment if the government were to increase the ceiling of 5,000 hectares for SEZ, Kamal Nath said the matter was not discussed.

“We are still waiting for parliament to approve the rehabilitation policy. Till then, such decisions are not possible,” he said.

Private sector players have demanded upward revision of 5,000 hectares ceiling on SEZs, and exempting SEZ units from service tax.

The cap of 5,000 hectares has affected several SEZs to be developed by private players like Reliance Industries, Delhi Land Finance Ltd, DLF and the Omaxe Group.

The finance ministry has proposed to levy a minimum 12.5 percent alternate tax on SEZ units, which has been resented not only by the promoters but also by the ministry of commerce and industry.

The commerce and industry ministry has maintained that levying such taxes would go against the provisions in SEZ laws, which promises 100 percent tax exemption on profits in the first five years of operation of a unit in SEZ.

In India, there are 462 formally approved SEZs at present, of which 222 have already been notified, and over 40 of them are fully operational.

An official estimate says that 3,36,235 people were employed - directly or indirectly - in SEZs as of March 31, 2008, while direct employment created in notified SEZs stood at 97,993.

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