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The government is likely to approve some new proposals for special economic zones (SEZs) and extend the approvals for old ones, when the Board of Approvals (BoA) on SEZs meets on February 20. This is expected to boost investments and production in these tax-free enclaves.
The 64th BoA was supposed to meet in November last year. The BoA is an empowered body under the ministry of commerce and industry to approve SEZ proposals, extend their validity and even cancel these projects.
The BoA, chaired by Commerce Secretary Rajeev Kher, earlier met on September 18, 2014. Since then, no new proposals have been approved. On the contrary, the government cancelled 67 SEZs that had been formally approved.
In the previous meeting, as many as 14 SEZ developers, including GP Realtors and Navi Mumbai, had asked the government for more time to start their projects.
Reliance Chairman Mukesh Ambani-led Navi Mumbai SEZ has asked for extension of the validity period of formal approval beyond October 24 for its information technology SEZ. It has already been granted four extensions.
SEZ activity in the country has slowed substantially, with the introduction of minimum alternate tax (MAT) and dividend distribution tax. It is expected that in the coming Budget, to be unveiled by finance minister Arun Jaitley on February 28, the rate of MAT might be reduced to 7.5 per cent from the 18.5 per cent at present.
This was also indicated by Kher recently where he indicated that the issue of MAT would be addressed in the budget.
Last month, the government had relaxed a set of norms for the zones that allowed developers to carry out infrastructure-related work within the tax-free enclaves such as building of banks, hospitals, hotels, schools and colleges that can be even used by people residing outside, as well as by the workers and families staying within.
The total number of SEZs with formal approval came down to 491 in December from 558 in October due to cancellation of projects. Out of the 491 projects, 352 have been notified. A total of 196 SEZs are presently operational and are exporting.
