Amid doubts over continuation of tax sops to new Special Economic Zones (SEZs), the Government today approved three fresh proposals including that of Videocon Industries.
The interest in the SEZs, the favourite investment destination since 2006, has started declining since December 2009. First, it was the economic slowdown of 2008-09, which took a toll on investments.
Even as the economy took to recovery, the renewal of interest in SEZs was missing as the draft Direct Tax Code (DTC) of the Finance Ministry proposed elimination of the income tax exemptions on export incomes on new SEZs and units there in.
The Board of Approval (BoA) in the Commerce Ministry met in this backdrop and cleared the only three applications before it.
It also gave extensions to 24 developers which included GMR Hyderabad International Airport, Unitech Kochi SEZ and K Raheja Corporation.
The BoA, however, deferred decision on guidelines for giving a waiver on a clause in the Rules which require that SEZ should be built on a single piece of land. The decision on a proposal to tighten environment norms for plastic units in SEZs was also deferred.
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"These (contiguity and plastic recycling matters) will be taken up in the next meeting," Commerce Secretary Rahul Khullar told PTI after the BoA meeting.
Videocon Industries was given permission to set up SEZ for electronics hardware and software in Navi Mumbai over 100 hectare. Coastal Ferrotech got approval for SEZ in Haldia East Mednipur and Infoparks Kerala in Ernakulam district.
The Government also approved the Essar SEZ Hazira's request for de-notification of its sector specific zone in Gujarat.
The proposed DTC has not only dampened the spirit of new developers, but also caused anxiety among those who have obtained approvals but are yet to implement the projects. Of the 580 approved SEZs, 111 are functional.
The BoA had taken up six proposals each, at its April and June meetings, while 10 developers had approached the Commerce Ministry in February and 11 in December 2009.
The industry said the income tax benefits were the only major attraction for investment in SEZs, which accounted for about 25 per cent of the country's exports in 2009-10. As per the latest data, SEZs have attracted investments worth Rs 1.5 lakh crore.