The whole idea of SEZ was to give Tax Free regime for the units put up/operating there in spite of numerous hurdles such as isolated and remote location, lack of social and physical infrastructure coupled with difficulty in procuring inputs from DTA (Domestic Tariff Area) and receiving drawbacks. Government’s move to impose Minimum Alternate Tax (MAT) and the Dividend Distribution Tax (DDT) would not be conducive for practical viability of units operating in SEZ, said Sanjay Budhia, Co-Chairman of CII National Committee on International Trade Policy and Exports and Managing Director of Patton International Limited. 

Mr. Budhia has strongly suggested and asked the Government to allow one time 100 percent income tax holiday for five years for all manufacturing units in SEZ. This will go a long way in motivating exporters to enhance and promote exports through their units in SEZ.  Otherwise in the backdrop of slowing demand in the international market and continuously declining India’s exports, regaining investor’s confidence in SEZ is very difficult, he further added. Over Rs. 3 lakh crores have been invested by Government and private enterprises and almost 33% of India’s total exports are done through SEZs. Tax exemptions and provisions proposed in the Act have actually been the impetus for this huge investment. 

The SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.But the original intention of setting up special economic zones (SEZs) is not producing desired result now. The Act was implemented with the main objectives of generating additional economic activity through promotion of exports and creation of new employment opportunities. 

February 10, 2016
New Delhi