By: Ravi Sinha
Track2Realty Exclusive
There was no holistic planning for SEZs to position them strategically for being complementary to each other and serving their own market niches respectively. The Ministry of Commerce that provides in-principle approvals to new SEZs on the basis of pre-feasibility reports being submitted by the respective state governments, soon seem to have lost its monitoring mechanism. Secondly, the SEZ was not synchronized with other schemes for development of specialized industrial parks.
The two draft direct tax codes (DTC), released in August 2009 and September 2010, further hindered the development of SEZs. The imposition of the Minimum Alternate Tax and Dividend Distribution Tax on SEZs as well as the economic slowdown hit the development.
As a result, the industry started crying foul and the chambers like ASSOCHAM asking the Government to revisit the policy on SEZs, particularly matters related with taxation in order to make them attractive for domestic and global investors. Huge investments have been made in SEZs across the country and frequent changes, especially relating to tax matters and land acquisition, are eroding confidence among investors, ASSOCHAM said.
In the absence of a sound vision and policy framework, added to the developers’ lax attitude, SEZs started making its presence felt only in the news, for all the wrong reasons. Only a handful of SEZs could get operational due to functional anomalies and rigid timelines.
Facts speak for themselves. After about five years since the SEZs Act and Rules were notified in February 2006, of the 585 SEZs approved and 381 notified, only 143 SEZs are functional.
“A large number of SEZs have been formally approved of which only few are in operation,” Export Promotion Council for EoUs and SEZs (EPCES) quoted Anup Wadhawan, Joint Secretary in the Commerce Ministry as having said.
However, in a face saving exercise the government seems to have given the SEZ developers more than what was actually needed. Right from coercive land acquisition and now allowing them to sell stake in their projects, setting aside Revenue Department’s argument that it would amount to transfer of land that is not permitted.
……to be continued
