State withdraws SEZs from Real Estate Category and puts them in Purview of Infrastructure

SEZs and IPs get major relief

Created on : 12/02/2008 2:18:48 PM (NORMAL )

New Delhi, Dec 2 (UNI) A day after it became officially known that India's exports declined by 12 per cent in October as compared to the month a year ago, the government has taken a major policy decision to spur export growth by withdrawing special economic zones and industrial parks from real estate category and putting them in purview of infrastructure.

Announcing this at a function here today, a senior government official said the government has issued a directive to Reserve Bank to withdraw its SEZs and IPs categorisation under real estate category and put it in purview of infrastructure to spur up exports which are badly hit due to global slowdown in the developed markets the United States and European Union nations.

The announcement made by Director General, Export Promotion Council for EOUs and SEZs, L B Singhal has come as a big relief to exporters who have been demanding a special package to check the slide in export growth.

Industry chambers, Ficci and Assocham- only yesterday had reiterated their demand for the relief package, saying if not given immediately it would lead to huge loss of jobs, particularly in labour-intensive sectors like textiles, leather, handicrafts and gems and jewellary- all hard hit by drop in exports.

Commerce Secretary Gopal Pillai, too, had recently warned of five lakh job loss in textile sector alone by March next on account of worldwide slowdown.

The Commerce Ministry, which overseas the SEZ policy, has been demanding for quite some time that Reserve Bank allow SEZ units in the infrastructure sub-group to raise loans at lower core sector interest rates.

Core sector interest rates are almost two percentage points lower than the rates applicable to real estate project. This categorisation, the Ministry contended, would complement its recent efforts to support private investment in infrastructure finance.

Source: http://www.uniindia.com/unilive%5Cunisite.nsf/All/EB73F06CB9C13C30652575130049086A

RBI To Categorise SEZs, IPs Under Infrastructure Head To Spur Up Exports : D.G., EPC, EoUs & SEZs
Tuesday, December 02, 2008

The government has issued a directive to Reserve Bank of India (RBI) to withdraw its SEZs and Industrial Park (IP) categorization under Real Estate category and put it in purview of infrastructure to spur up exports which are badly hit due to global meltdown.

Announcing this at ASSOCHAM organized National Summit on Special `Economic Zones : Resolving Policy and Tax Issues’, Director General, Export Promotion Council for EOUs and SEZs, Mr. L B Singhal said that the decision of RBI to categorise SEZs and IPs under purview of real estate dampened growth of SEZs and IPs due to which exports have suffered severely.

Mr. Singhal, therefore, suggested that the RBI should immediately implement decision of Group of Ministers (GoM) to bring SEZs and IPs under purview of infrastructure, especially when centre has already issued a directive to RBI.

The Director General, Export Promotion Council for EOUs and SEZs during Interactive Session with ASSOCHAM members here today pointed out that in the last 35 years, Rs.8000 crores of exports were effected through various SEZs. However, after the SEZ Act of 2005, exports activities through number of SEZs and IPs were held to an extent of Rs.66,000 crore and their exports by end of current fiscal would reach over Rs.1 lakh crore.

The SEZs and IPs that are currently operational have a total investment amounting Rs.94,000 crore and providing 3.62,000 direct employment to various people and therefore, their categorization under infrastructure head is the right call given by the central government to premier apex bank – the RBI as it is this institution which is empowered to categorise SEZs and IPs under purview of infrastructure, said Mr. Singhal.

In a bid to spur up exports through SEZs and IPs, the SEZ and IPs would be exempted from the service tax and a notification to this effect would shortly be issued, said Mr. Singhal, clarifying that the central government has already decided to provide service tax exemptions to SEZs for services they are providing outside the SEZs.

Mr. Singhal also said that the Department of Commerce and Industry is also finalizing a notification in consultation with the Ministry of Finance to provide Duty Entitlement Passbook Scheme (DEPB) as well as Duty Drawback benefits to SEZs and IPs. In addition, the Ministry of Finance is also coming out with directives to provide CENVAT credit benefits for manufacturing of various articles within SEZs, he added.

According to him, India would extend these benefits to its SEZs and IPs as their are total 138 countries that have such facilities for their SEZs and IPs which have created direct employment for 68 million people with investments of US$ 1600 billion and export worth of US$ 750 billion.

Mr. D S Rawat, ASSOCHAM Secretary General complimented Mr. Singhal for disclosing the government decision for directing RBI to bring in SEZs and IPs under purview of infrastructure as it has become necessary to push up exports at times when these are sinking.

Among others who attended the conference included Mr. B Vijayan, Development Commissioner, MEPZ, Special Economic Zone, Chennai, Mr. S Ramasundaram, CMD, Tamil Nadu Industrial Development Corpn., Mr. R Sannareddy, Chairman, Sri City Pvt. Ltd., Mr. Srinivasan K Swamy, President, Madras Chamber of Commerce & Industry and Mr. Murali Venkatraman, Chairman, ASSOCHAM Southern Region Development Council.

Source: http://www.assocham.org/prels/shownews.php?id=1795