Commerce and Industry Minister Anand Sharma sought to comfort investors in special economic zones (SEZs), saying the government would protect the benefits available to investors, including developers and units.
“We have discussed this with the finance minister (Pranab Mukherjee) and also the prime minister (Manmohan Singh),” Sharma told the gathering of industrialists and exporters while releasing the Foreign Trade Policy review here.
The revised discussion paper on the Direct Taxes Code (DTC), which would overhaul the Income Tax Act, proposes limit tax exemptions only to units set up before March 2011. The commerce ministry has argued this may not be possible in case of the manufacturing sector.
Sharma said there should be stability in the policy for the promoters and the developers of the zone. “The finance minister is fully sensitive to our concerns and also the apprehensions of the investors and industry. I am sure that these issues will get addressed when the final version of DTC goes to Parliament,” he said.
The proposal has unnerved SEZ developers and commerce ministry officials have said the proposal itself has resulted in lower flow of investments into the duty-free enclaves. An SEZ unit gets 100 per cent income tax exemption in the first five years, 50 per cent in the next five and 50 per cent of the ploughed back export profit for five years thereafter.
The minister said SEZs have lived up to the promise of attracting investments and generating employment. During 2009-10, exports from these zones more than doubled to over Rs 2.20 lakh crore and they provided direct employment to 550,000 people. During the first quarter of 2010-11, exports are estimated to have increased by 67 per cent to Rs 59,000 crore. So far, nearly Rs 1.66 lakh crore has been invested in these zones.