Tax sops in petro zones to be limited to infrastructure

With tax sops to special economic zones raising a big controversy, the government has decided to limit fiscal concessions to infrastructure developers in Petroleum, Chemical and Petrochemical Investment Regions.

"The tax concessions in PCPIRs will be limited to developers of infrastructure and would be same as other infrastructure projects get. The units in the regions will not qualify for any tax concessions automatically," official sources said.

The units could, however, apply for special economic zone (SEZ) status.

The Ministry of Chemicals has moved a Cabinet note for finalising a policy for these regions, which would be spread over an area of more than 200 kilometres.

The proposal to limit the fiscal concessions was mooted by the finance ministry and the Department of Industrial Policy and Promotion has decided to go with it. Finance ministry's opposition to tax sops to PCPIRs follows estimates of huge revenue losses in SEZs.

So far seven proposals have been mooted for setting up these regions. These are Haldia in West Bengal, Vizag in Andhra Pradesh, Dahej in Gujarat, Mangalore in Karnataka, Paradip in Orissa, Panipat in Haryana) and near Ratnagiri in Maharashtra.

All these areas already have a substantial presence of chemical or petroleum units such as Indian Oil Corp's refinery in Panipat.

The proposal for PCPIR has generated huge interest among the investors like ONGC, IOC, BASF, Exxon Mobil, Royal Dutch Shell, BP and Dow Chemicals. The total investment in these regions could touch Rs 70,000 crore to start with.