'Review SEZ policy to make it farmer friendly'

New Delhi, July 6: The Parliamentary Standing Committee of Commerce today called for sweeping changes in the SEZ policy being pursued by the UPA government to make it farmer friendly, including imposing a ban on further SEZs and review of tax sops provided under the SEZ Act.

The Committee is also of the view that a level playing field should be provided to the domestic industry.

The details of the Committee's Report were released at a Press Conference here by Chairman of the Standing Committee of Commerce Murli Manohar Joshi. who was Minister for Human Resource Development in the NDA government.

Mr Joshi said the Committee was of the view that SEZs should not come up at cost of farmers and that the food security of the country should not get jeopardised at any cost.

''There should preferably be a ban on the use of irrigated double-crop or multi-crop land for setting up SEZs. Only waste or barren lands should be used for setting up of SEZs,'' he said.

The SEZ policy has met with stiff resistance from the farming community, though it has the broad support of industry and business.

The farmers agitation has also resulted in violence and deaths in some parts of the country.

The Committee took up for an indepth study the subject of functioning of SEZs and its Report was unanimous.

''If the government is interested in ensuring that unrest among the farmers does not spread like wildfire, in maintaining the food security of the country and sustainable development then it should implement the recommendations of the Report. There is a consensus among all members on the Committee on the recommendations of the Report. Members of all political parties have been associated with the Report'', Mr Joshi said.

The Committee recomended that the fiscal exemptions, which are unrelated to exports, should not be granted. The provisions regarding direct and indirect taxes in this regard should be corrected and loopholes plugged. Tax benefits should be granted only for export activities and infrastructure development.

It has also recommended that the entire gamut of fiscal incentives given to SEZ Developers and Entrepreneurs need to be reviewed and so revised that the purpose for which these concessions were granted would be fully achieved.

Consequently, tax incentives and concessions provided in the SEZ Act would need to be reconsidered in the light of these facts, the Report says.

For instance, there was no justification for extending tax benfits given to the units in the processing to the business activity in the non-processing area. The Committee has strongly recommended that the revenue implications of the tax holiday under the SEZ policy should be looked at carefully.

Mr Joshi said the Committee was of the view that the Board of Approvals should not entertain any application directly from a developer and the system of giving 'in-principle' approval should be discontinued. It has made out a case for the Ministry of Agriculture being represented on the Board of Approvals.

The Report said the Land Acquisition Act 1894 needs to be replaced by a modern legislation relevant to the needs of the time. A National Relief and Rehabilitation Act should be enacted to provide a comprehensive compensation package to those deprived of their lands.

The Committee has also made recommendations regarding the need to strengthen the security of SEZs and the performance appraisal mechanism of SEZs.

It felt that if the existing tax benefits to the IT sector are extended for 10 more years, the mad rush for SEZs in the IT sector would automatically stop. The Committee, therefore, recommended that the government should soon take a decision on extending the tax holiday to the IT sector for a further period of ten years.

The Committee interacted with the representatives of the Department of Commerce, Industrial Policy and Promotion, Revenue, Ministries of Agriculture, Rural Development, Home Affairs, Urban Development, Labour and Employment and Defence.

It also heard the views of the representatives of the State governments of Gujarat, Andhra Pradesh, Haryana, Maharashtra, Tamil Nadu and West Bengal.

The representatives of various Trade Unions, NGOs, the SEZ Developers and Promoters, entrepreneurs like Infosys, Wipro, Reliance Industries, DLF, Mudra Port and Celebrity Fashions also put up their views before the Committee.

The Committee visited Kochi, Mumbai, Kolkata, Chennai, NOIDA, Ahmedabad, Kandla, Surat, Mumbai and Visakapatnam in connection with the study. A Sub- Committee of the Committee also visited Haryana, Andhra Pradesh, Karnataka, Gujarat and Maharashtra to directly interact with farmers.

UNI

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