In a bid to help special economic zone (SEZ) units amid prevailing global economic slowdown, the Commerce Ministry has planned to seek tax concessional structure for SEZ units under which the duty forgone towards sale of products in domestic tariff area (DTA) could be recovered once the economic situation improves.
The tax concession would be given to SEZ units to sell their products in the domestic market as several of these units in sectors like auto components, textiles and pharmaceuticals are not able to export due to global demand slowdown. Presently, SEZ units have to pay full duty if they sell goods in the DTA. The move will also help SEZs in boosting their manufacturing process, which in turn will create jobs and revive India's economic growth. Indian industrial output has slowed down sharply to 0.6 percent in August mainly due to contraction in manufacturing and mining.
The government has approved 576 such zones out of which 173 have commenced exports. Presently, SEZs units are struggling with global economic slowdown and so far this fiscal, around 58 SEZ developers have surrendered their projects. Further, imposition of Minimum Alternate Tax, Dividend Distribution Tax in 2011 and certain provisions in the proposed Direct Tax Code has also been denting the attractiveness of these units. During April-June period, exports from these zones stood at Rs 1.13 lakh crore as compared to Rs 4.05 lakh crore of country's overall exports in the reported period. Meanwhile, the government has announced various incentives like easing of land requirement norms to revive investor confidence in SEZs.
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