EOUs' tax benefits may continue after Mar '09

Export Oriented Units (EOUs) in the country are likely to continue to enjoy income tax benefits even after the ensuing deadline of March 2009.

Director General of Foreign Trade RS Gujral told a meeting of the Federation of Indian Export Organisations (FIEO) representatives today that the ministry of commerce is considering the demand to extend the tax benefits even after the deadline. "We have received a number of representations from EOUs seeking extension of the income tax benefits. The ministry will discuss the proposal soon and forward it to the government," Gujral said.

Investors are worried over the future of EOUs once the tax benefits are withdrawn, especially in the wake of the special economic zones (SEZs). The government, hence, may extend this deadline by another five years, Gujral indicated. More than 40 representatives of top EOUs in Maharashtra attended the meeting.

EOUs are mainly concentrated in textiles, food processing, electronics, chemicals, plastics, granites and minerals. Exports from EOUs during 2004-2005 amounted to Rs 36,806.17 crore when compared with Rs 28,827.58 crore during 2003-2004, registering a growth of 27.68%. According to current estimates, exports from EOUs have crossed Rs 35,000 crore.

Gujral assured EOU representatives of steps to protect their interests, adding the government is also paying focussed attention to the small and medium enterprises (SMEs) sector.

"Investments in EOUs have witnessed a drastic fall as the tax benefit deadline is approaching. SEZs are coming up in urban areas while EOUs have a strong presence in rural areas. EOUs have helped the rural economy to a large extent.

Hence, the government should continue these income tax benefits to EOUs even after March 2009," PC Nambiar, Export-Import Director, Poonawalla Group told Business Standard.

The director general also assured representatives of working as an interface between excise and customs departments and other establishments related to exports business.