SEZ Act could give a boost to 38 projects

The Special Economic Zone (SEZ) legislation is expected to be in place in the next two to three weeks, giving a boost to the 38 SEZ projects approved in principle.

This, coupled with the proposed downward path of customs duties to ASEAN levels over a two to three year time frame will up the competitiveness of exporters.

At the Coffee Board's Coffee Exporters Awards ceremony here on Tuesday, S N Menon, commerce secretary said that the SEZ's will have limited Union government interference. It will be a private sector and state government dominated and promoted affair.

"We believe states have a large role to play and we will restrict ourselves to a facilitating role." Menon said that internal processes are already in place and discussions with states is in an advanced stage now.

The Union commerce ministry studied several overseas SEZ model's including China's before zeroing in on the proposed format. The ministry had concluded that the Chinese model cannot be replicated. The proposed format will have multi-product zones that will include infrastructure, housing facilities and entire range of services ranging from financial functions to health.

Menon said some of the majors approved SEZ plans include a jewelry zone and a software zone in Kolkata, auto component cluster in Tamil Nadu, and a tea processing SEZ in Darjeeling.

Karnataka will have two SEZs in Mangalore (ONGC's 25,000 crore multi phase SEZ) and a multi-product one in Hassan.

He added that the ministry is now trying to introduce a single window clearance to attract foreign SME's into the country.

For coffee, he said that the ministry will ask the finance ministry to remove the export cess, which will ensure that Rs 500 per tonne burden goes. He called on the industry to rally for the cause. Simultaneously, the industry should reduce its reliance on exports and develop a strong domestic coffee market.

Lakshmi Venkatachalam, chairperson, Coffee Board said that the spurt in home consumption is visible particularly in the metros. Domestic consumption which stagnated at 55,000 tonnes is now set to cross 70,000 tonnes, according to a Coffee Board audit. Also value addition in roasted and ground coffee can grow the domestic market further.

This potential can be built if enough R&G roasters are willing to experiment and put in place products that can be distributed in the regional/national market, she said.

Given all this, the road for the future lies in sustaining the present levels of exports in quantity, but reordering the product mix to add value. To do that, exporters should spot opportunities for export of R&G coffee in packaged/branded coffee to neighbouring countries and West Asia.

Earlier, Ramesh Rajah, president, Coffee Exporters Association requested the Centre to continue with the transport subsidy scheme for coffee exporters.

For the period January-March 2004, 52 exporters got Rs 3.23 crore transport subsidy. And for the full fiscal 2002-03, 82 exporters bagged Rs 8.06 crore.

He also asked the empowerment committee on value added tax to exempt green beans and bring coffee powder under the 4 per cent slab from 12 per cent.