India’s plan to step up investments in Bangladesh by setting up three mega Special Economic Zones (SEZ) exclusively for Indian companies in the latter’s territory has hit a major hurdle.
Citing “constraints, including inadequate infrastructure and lack of uninterrupted power supply” at Mongla, Bheramara and Mirsarai – the sites in Bangladesh for the proposed Indian SEZs, representatives of India Inc. told the Centre at a meeting on Monday that it will not be commercially viable to set up SEZs in the locations.
For better connectivity and business prospects, they sought alternative sites close to the Chittagong Port and the capital city of Dhaka — similar to those been allocated by Bangladesh for Chinese SEZs, official sources told The Hindu.
Clarity sought
Expressing reluctance in taking forward the proposal, India Inc. also referred to “ambiguity and uncertainty regarding incentives offered by the Bangladesh Government to develop the SEZs,” the sources said.
To lure investments into its SEZs, Bangladesh had offered incentives, including exemption from income tax, VAT, customs duty and stamp duty, removal of ceiling on FDI, full repatriation of capital and dividend, no curbs on issuance of work permits as well as resident visas and citizenship for investments over a certain limit.
India Inc. wanted greater clarity on some of the incentives as well as an assurance that they will be continued even if there was a regime change in Bangladesh.
The meeting – aimed at finalising the list of Indian companies interested in developing SEZs in Bangladesh – was attended by officials, including from the Ministries of External Affairs and Commerce as well as representatives from industry bodies including the FICCI, the CII, Federation of Indian Export Organisations and the Export Promotion Council for Export oriented units and SEZs.
India and Bangladesh had inked a Memorandum of Understanding (MoU) in June 2015 — during Prime Minister Narendra Modi’s visit to Bangladesh — for cooperation on establishing Indian SEZs in Bangladesh.
The plan was to develop Indian SEZs at Mirsarai (1,005 acres), Bheramara (about 480 acres) and Mongla (200 acres). The construction of these SEZs and Indian investment in the zones were to be facilitated through concessional Line of Credit extended by India to Bangladesh.
The Centre had promised to address the concerns of India Inc. by taking them up with the Bangladesh Government in June-end or early July and asked Indian companies not to reject Bangladesh’s offer of land and other incentives to build Indian SEZs there.
India’s plea
The government officials said the proposed sites are close to a port (Mongla) and not far from the Petrapole-Benapole Integrated Check Post. Besides, they said, India was considering a supply of about 5,000 MW (including 1,320 MW Rampal power plant that was not far from these sites) of power to Bangladesh.
In the meantime, the Centre had asked consultancy firm PwC – that had carried out a preliminary study on the topic — to incorporate the suggestions of India Inc. in its report and give a clearer assessment of the potential gains for Indian companies from the incentives, including tax benefits, offered by Bangladesh for setting up SEZs.
