Ministers' meet on SEZs postponed

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New Delhi, Feb 4 (UNI) A ministerial group meeting, which was to scheduled to be held today to discuss various proposals on special economic zones (SEZs), including relaxing the 5,000 hectare area cap, has been postponed.

Official sources, while confirming it, said new date has not been decided yet.

Removal of area cap, particularly in respect of multi-product zones on case-by-case basis, has been suggested by the Commerce Ministry.

Commerce Minister Kamal Nath is a member of the empowered group of ministers (EGoM) on SEZs headed by External Affairs minister Pranab Mukherjee.

Finance Ministry, which is also represented in EGoM by Mr P Chidambaram, on the other hand, has been pressing for doing away with tax benefits enjoyed by SEZs.

Besides taking up proposals to relaxing the 5,000 hectare cap on area of SEZs, the EGoM was also to take up withdrawal of tax benefits which has been leading to loss of revenue.

Commerce Ministry's board of approval on SEZs have so far formally approved 404 zones out of which 193 have been notified.

The board, in its last meeting held in January, had given in-principle approval to Reliance Industries' multi-product SEZ in Jahjjar district of Haryana. This SEZ is slated to come up in area above the capped 5,000 hectares.

The 5,000-hectare cap was imposed by the EGoM in April, 2006 in the aftermath of violent protests against land acquisition in Nandigram, West Bengal.

Finance Ministry wants to impose an export obligation of more than 50 per cent on zone developers and units to become eligible for duty and tax benefits.

Currently, the SEZs have to be a positive net foreign exchange earner in order to enjoy duty-free benefits.

The SEZ Act of 2005, which came into force in February 2006, provides for total tax exemption to the SEZs for first five years, 50 per cent for the next five years and exemptions on profits that are reinvested for another five years. Developers and promotors hold the view that withdrawal of all these benefits would amount to negating the SEZ policy.

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