The Government has allowed Essar Steel to surrender its sector-specific SEZ in Gujarat as the developer is facing an exodus of units from the zone.
The company-promoted Essar SEZ Hazira Ltd requested de- notification of the zone because its two existing units had reportedly decided to opt out of the SEZ due to the adverse effects of the global economic recession on steel markets.
The de-notification decision was taken by the inter- ministerial Board of Approval headed by Commerce Secretary Rahul Khullar Ministry.
"The Board decided to approve the request of Essar for de-notification, subject to DC’s certificate that the developer and existing units have refunded all the tax/duty benefits, which might have been availed...," the BoA minutes document said.
The de-notification approval comes in the backdrop of developers losing interest in tax free zones as the proposed Direct Tax Code has denied benefits to new SEZs.
Income Tax exemptions were the biggest attraction among SEZ developers and unit holders.
The two units, which want to leave the SEZ, have already been granted in-principle exit approval by the Development Commissioner (DC) concerned.
Essar had set up four units at the SEZ in Hazira to consolidate steel exports, in view of buoyancy in the steel industry in 2006.
Though industrial houses were rushing for SEZ projects a few years ago, taking their export potential and tax breaks into account, a large number are now keen on exiting these projects owing to the demand slump in developed countries.
Earlier, the government had allowed about 12 developers, including DLF and Maytas Ventures, to surrender their SEZs.
