The Commerce Ministry will convene a stakeholder workshop on Special Economic Zones (SEZ) on September 5.
The meeting, to be attended among others by Finance Ministry officials and international SEZ experts, is being held amid concerns expressed by the SEZ sector about the lack of clarity in the proposed Goods and Services Tax (GST) regime regarding upfront exemptions of taxes and duties for SEZ developers and units.
Diminished interestThe workshop comes in the backdrop of diminished investor interest in SEZs due to concerns including those on the tax burden due to the FY’12 Union Budget imposing a 20.5 per cent Minimum Alternate Tax (including cess) on SEZ developers and units as well as Dividend Distribution Tax (DDT) on developers.
The Commerce Ministry and the SEZ sector had sought exemption or at least reduction of MAT and DDT on SEZs.
Significantly, the meeting will have as participants, representatives from the Dubai-based World Free Zones Organization (World FZO) who will give their views on the future of SEZs in India under the GST regime as well as on global best practices relating to SEZs, official sources said.
The World FZO was set up to “bring together free zones from around the world to enable them to achieve shared objectives and address common issues.”
The workshop will also be attended by officials from the Australian Trade & Investment Commission (or Austrade) as well as South Africa’s experts on SEZ & Value Added Tax, they said. Efforts to get suggestions from global experts on the SEZ policy follow a similar attempt made by India in May this year along with several countries bordering the Indian Ocean to develop a regional framework to cooperate on SEZ-related issues.
Participants at the meeting in May at the Iranian Port of Chabahar had also considered forming a “joint FTZ” among the Indian Ocean Rim Association-member countries since most of these FTZs are situated or are being built in coastal regions.
P.C. Nambiar, Chairman of the Export Promotion Council for EOUs and SEZs (EPCES) and the Secretary of the World FZO, told The Hindu , “The government needs to amend the SEZ Rules to ensure that idle capacity in SEZs is converted to productive capacity. Such a move will strengthen the ‘Make in India’ initiative.”
Mr. Nambiar, who is also on the Board of Directors of the World FZO, said the government must identify the land lying idle in the Central/state-government SEZs, de-notify them as SEZ land and instead use it for creating infrastructure or for manufacturing units that would cater to the domestic market.
Tax exemptionDuring the meet, to be held in New Delhi, the Commerce Ministry will also seek suggestions for greater ease of doing business in SEZs. The workshop, where Finance Minister Arun Jaitley will be the chief guest, is also an attempt to convince Finance Ministry officials about the need to ensure upfront exemptions of taxes and duties to SEZ developers and units in the new GST regime.
There are about 329 notified SEZs of which 204 are operational. As on March 31, 2016, SEZs had attracted almost Rs.3.8 lakh crore worth of investments.
