Chamber says Kutch to lose out if tax sops not extended

Projects worth up to Rs 10,000 crore may go from the region, warns industry

The Gandhidham Chamber of Commerce and Industry has warned that half of the Rs 8,000 crore to Rs 10,000 crore worth of projects that are in the pipeline in the earthquake-ravaged Kutch district of Gujarat might withdraw if the government does not extend tax holiday in Kutch.

The tax holiday is scheduled to expire on December 1, 2004.

Several industries' associations and the state government had made representations to the central government to extend tax holiday in Kutch for at least two years.

However, while the Union finance minister P Chidambaram announced tax holiday extension to several places until March 2007, there has been no extension of tax holiday in Kutch.

"Commercial production has begun in projects where investments worth Rs 1000 crore has already been made and projects worth additional Rs 8,000 crore to Rs 10,000 crore are in the pipeline and in different stages of implementation. We fear that at least half of these proposed projects will back out if tax holiday in terms of excise and sales tax are not extended for three more years as done in the case of other backward areas," said Ashok Sharma, president of the Gandhidham Chamber of Commerce and Industry.

He said although the incentives were ordered within months of the January 26, 2001, earthquake, not much activity was witnessed for about 18 months after the earthquake as aftershocks kept occurring in the region.

"Actual investments began to pour into Kutch district only 18 months after the earthquake and withdrawing tax holiday on December 31, 2004, would mean bringing to halt the development and growth process that has just taken off," said Sharma.

After the devastating earthquake destroyed a majority of structures of the district and claimed many lives, a special package was announced for speedy growth of the region. The special incentives were effective from July 31, 2001, to July 31, 2003, but were extended to December 2004.

Meanwhile, a newly constructed building of the Gandhidham Chamber of Commerce and Industry will be inaugurated on Thursday by the chief minister Narendra Modi in Gandhidham.

Constructed over 30,000 square feet of land at a cost of Rs 2 crore, the building will house offices of all the member trade organisations of the chamber, Sharma said.

Established in 1953, the chamber has 1,600 direct members and 36 institutional members.