Four banks have sought 10 licences to set up overseas banking units in special economic zones. Of these, the State Bank of India has applied for five. ICICI Bank and Bank of Baroda have proposed to set up two units each, and Oriental Bank of Commerce one.
The applications were being processed by the Reserve Bank of India, and the first set of offshore banks were expected to be operational by June, D K Mittal, joint secretary in the commerce ministry, said after an open house session with export-oriented and special economic zone units.
Mittal also said several tax incentives were likely to be part of the amendments to the Finance Bill. He said the commerce ministry might take up the issue of a service tax waiver for export-oriented units.
Several direct tax proposals have already been forwarded to the finance ministry, including treating transactions between special economic zones and the domestic tariff area as exports. A suggestion to carry forward unabsorbed losses and depreciation for eight years, like units in the domestic tariff area, is also under consideration.
It has also been proposed that 50 per cent of investments made from profits be given tax benefits.
A lower rate of taxation for offshore banking units has also been suggested by the commerce ministry.
Overseas banking units have recently been allowed to accept deposits from non-resident Indians and individuals in addition to companies in special economic zones.
Mittal added that the special economic zone in Indore, the first with private sector participation, was expected to start operations in May.
The government was also planning to expand the existing zones, he said. Around 300 acres each are proposed to be added to the Kandla and Falta special economic zones. A plan to expand the Vishakhapatnam zone by 200 acres is also under consideration.
Addressing the open house, A K Prasad, director of Customs, said the government had decided to extend special additional duty exemptions to export-oriented units.
Prasad said the accelerated clearance system for select exporters, which would introduce self-declaration, would be in place by the end of May. The system will be available to status holders and manufacturing exporters.
Mittal added that export-oriented units and special economic zones would be waived the value-added tax.
