Online Platform Soon for SEZs to Raise Issues & Concerns: Commerce Ministry Official

NEW DELHI, 5 AUGUST 2016: The union government will soon roll out a web-based platform for special economic zones (SEZs) to raise their concerns and action taken may be provided by the concerned authority, a top Union Commerce Ministry official said at an event organized by ASSOCHAM.

“This will provide a platform for constant dialogue and transparency in resolution of issues. I intend to roll it out as soon as possible,” said Mr Alok V. Chaturvedi, additional secretary, Department of Commerce while inaugurating 10th SEZ Convention organized by ASSOCHAM.

“The software is already in place, we need to adopt it for our requirement, efforts have already been made in this direction,” said Mr Chaturvedi.

He added that the online platform would be on the lines of a Project Monitoring Group system in the Cabinet Secretariat.

Highlighting the issue of lifting of Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) concerning the SEZ sector, Mr Chaturvedi said, “MAT appears to be unfair for SEZ units and it is not in tune with the Government philosophy of stable tax regime, we have taken up the issue with Finance Ministry.”

“According to Finance Ministry, MAT has been imposed to partly recoup the loss of revenue due to profit-linked exemptions. They are bringing down average rate of corporate tax. However, we have taken it up again in view of adverse export conditions and the stellar role played by SEZ in the export growth and the employment generation,” he said.

“Alternative suggestions regarding reduction of MAT from 20.5 per cent to 7.5 per cent or extension of period of ten years till the entire MAT credit is adjusted against the tax liability of SEZ will also be taken up with Finance Department,” he added.

Talking about the issue of permitting SEZ units, to perform job work for units in Domestic Tariff Area, which at present is not permissible, Mr Chaturvedi said, “In order to facilitate integration of SEZs with domestic economy, the procedure for job work and domestic clearances from SEZs need to be streamlined by amending SEZ Rules. There is an issue there as SEZs are primarily for exports and they have taken the benefit of concessions.”

He however, said that it is nobody’s case, that there should be an idle capacity within or outside SEZs. “We need to resolve these issues. This is all the more important since it is becoming increasing difficult to have land for setting up industries elsewhere. The issue is being examined in consultation with Finance Ministry.”

On the issue of permitting exports from SEZs to the domestic tariff area, at the most favourable tariff rates as given to India’s Free Trade Agreement (FTA) partners, he said, “This would give a boost to the ‘Make in India,’ campaign and our import requirement can be met through manufacturing in SEZs rather than through import of the same goods from FTA partners such as Japan, South Korea, ASEAN, etc. We have taken up this issue also with the Finance Ministry.”

He also said that there is a need to have a relook at the Free Trade Warehousing Zone Policy.

“Proposals regarding permission for keeping goods on behalf of foreign buyer, DTA buyer and DTA supplier in addition to foreign supplier, allowing drawback on export of goods from DTA supplier to FTWZ unit, on account of the foreign buyer, and Net Foreign Exchange calculation criteria, all these proposals have been sent to the Department of Revenue and are under active consideration of the Government,” said Mr Chaturvedi.

On the issue of phasing out of exemptions, he said that CBDT has proposed to provide a sunset date of March 31, 2017 for tax exemption in respect of SEZ projects having non-operational by then. “This matter has also been taken up with CBDT and we are following up with them.”

Talking about the contribution of SEZs in growth of India’s economy, he said that over 200 SEZs are operational while over 400 SEZs have been formally approved. Total investment in SEZs is over $50 billion and they are providing direct employment to over 1.5 million persons. Exports from SEZs have increased from about $3.5 billion in 2005-06 to over $65 billion in 2014-15 that is about 20 times in the last ten years and nearly 16% of country’s exports are from SEZs.

He also sought industry's views and suggestions on how to further improve the business environment for the units in SEZ.