EPCES hopes for sops in forthcoming budget, FTP

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SME Times News Bureau | 19 Feb, 2015
The Government is likely to announce the Union Budget 2015-16. After presentation of Union Budget 2015-16 by Hon'ble Finance Minister on 28th February, 2015, Annual Supplement to Foreign Trade Policy (FTP) 2014-19 will be released by Hon'ble Minister for Commerce & Industry.

P.C. Nambiar, Chairman, Export Promotion Council for EOUs and SEZs (EPCES) requested the Finance Minister and Minister for Commerce & Industry to make SEZs effective instruments for industrial production, economic growth, export promotion and employment generation. The major incentives an investor looks for is the liquidity, mainly because of the ambiguity in the tax law and also their apprehension that the MAT paid by them cannot be adjusted in the prescribed time-limit.

EPCES has already submitted that MAT at 18.5 percent if paid, even the companies making minimum profits are not able to adjust the credit within the prescribed time-limit of 10 years. Shri P.C. Nambiar, Chairman, EPCES stated that this is the right time to restore faith in the minds of investors by providing a guaranteed stable SEZ policy with reference to taxation and the first step in this direction to be taken is that MAT/DDT should be totally withdrawn or reduced to its rate from 18.5 percent to 7.5 percent so as to get the credit utilized within the prescribed time limit of 10 years, which would definitely motivate the potential investors.

EPCES is hopeful that the forthcoming Union Budget would restore benefits of MAT and DDT, and extend benefits under Chapter 3 of Foreign Trade Policy and further rationalize the customs duties payable on DTA sales to be in line with concessional rates applicable under various Free Trade Agreements signed with our neighbouring nations.

EOUs and SEZs are the engines of economic growth of the country and are doing exceedingly well in terms of exports, manufacturing, investments and generating employment to over 15 lakhs people in the country. At the time of enactment of SEZ Act in 2005 and operationalization of SEZ Rules in 2006, the exports from SEZs were to the extent of Rs.22,840 crore, which has increased tremendously to Rs.4,94,077 crore during 2013-14 registering a remarkable growth of 21 percent.

Nambiar said that during 2013-14 the SEZs have recorded an export growth of 4 percent over the year 2012-13 in comparison to 31 percent export growth in 2012-13 over the previous year 2011-12.

In 2013-14 the export growth has been declined due to imposition of MAT & DDT on SEZs. He said that SEZ sector is not growing properly because implementation of MAT/DDT has adversely affected the growth, investments, employment and exports from SEZs in India, resulted in loss of valuable foreign exchange for the country and has also sent wrong signals to the international investment community which is looking at India for its resources of skills and manpower. As a matter of fact more and more investors have opted out of SEZ development due to uncertain economic policy of the Central Government.

Nambiar said that recently at the request of Ministry of Commerce & Industry, Indian Council for Research on International Economic Relations (ICRIER) has conducted a Study on SEZs and survey on SEZs in India.

He further informed that the above benefits, if provided, will definitely make remaining 156 SEZs (352 notified SEZs – 196 SEZs in operation) operational and will also help in increasing exports from the country.