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LATEST NEWS UPDATES | Developing SEZ in backward areas to fetch you incentives like wider tax concessions and lowering minimum area ceiling by Amiti Sen

Developing SEZ in backward areas to fetch you incentives like wider tax concessions and lowering minimum area ceiling by Amiti Sen

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published Published on Sep 27, 2011   modified Modified on Sep 27, 2011

The government is mulling a raft of incentives for special economic zone developers to encourage them to move away from urban centres and focus on economically backward regions. A senior official in the commerce ministry said SEZ developers might get wider tax concessions if they build economic hubs in underdeveloped areas.

The government may also lower the minimum area ceiling to ease land acquisition by them, the official said. These incentives are likely to be included in the proposed amendment to the Special Economic Zones (SEZ) Act, 2005. "We are considering incentives for building social infrastructure like hotels, hospitals and schools in the SEZs set up in backward areas ," the official said.

The current rules do offer tax benefits on investments made in social infrastructure in the non-processing area of an SEZ, but there is no relief on income generated from such infrastructure. The government may now extend the concession on income from social infrastructure , the official said.

The commerce ministry had last week invited industry secretaries from all states to take their views on the proposed changes in the SEZ Act. "Many (of the invitees) had a problem with the fact that SEZs are concentrated in just a few states and, that too, mainly in urban areas," the official said. While economically better-off states like Karnataka, Tamil Nadu , Andhra Pradesh, Maharashtra , Gujarat and Kerala are home to about four-fifths of all notified SEZs, poorer states like West Bengal , Chhattisgarh and Jharkhand have very few of these special conclaves to boast of.

The northeast region, which comprises seven states, has just one SEZ. Representatives of some states also raised the issue of land acquisition saying the minimum land requirement norm has become a major constraint for SEZ developers. The Centre had earlier amended SEZ rules to ensure that state governments do not acquire land forcibly for big industrial projects. This has left developers pretty much on their own, they said.

"We have received several representations to bring down the floor levels," the official said, adding, "it is being considered." The current norms require a minimum of 1,000 hectare for multi-product SEZs, while for sector-specific SEZs the floor is 100 hectare. IT, gems & jewellery and biotech SEZs require a minimum area of 10 hectare. "It is a good time to bring about changes in rules guiding SEZs as there is an overall negative sentiment about SEZs, which needs to be changed," said Hitender Mehta , a Gurgaon-based consultant and expert on SEZs.

The Economic Times, 28 September, 2011, http://economictimes.indiatimes.com/news/economy/finance/developing-sez-in-backward-areas-to-fetch-you-incentives-like-wider-tax-concessions-and-lowering-minimu


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