While welcoming the move, the Confederation of Export units (CEU) feels that it has fallen below its expectations for two reasons. First, tax holiday up to nine years will be available for EOU/EPZ/SEZ units set up after April, 1, 2000 and eight years for those established from April 1, 2001.

Second, the tax holiday will be subject to a fixed time-frame implying that it will not be a permanent relief for those setting up EOU/EPZ/SEZ units after the expiry of the nine year and eight year period respectively.Earlier, the EOU and EPZ units were enjoying a ten-year tax holiday, but it was sought to be withdrawn in a period of five years by the finance minister from April 1 this year.

There is no plausible explanation for introducing the grade scale of tax holiday for the units unless the finance ministry has been driven by revenue consideratiions. "How much will the finance ministry gain by limiting the holiday period" asks CEU president R. Veeramani.

For the commerce minister the tax relief has come as a shot in the arm for pushing through his proposal to set up SEZs on the Chinese model. The going had been by no means easy. He had several round of consultations with Sinha on the subject, the last one being on April 29. This was on the eve of the clause-by-clause consideration of the Finance Bill 2000.

Maran had realised that without the tax holiday benefit his proposal to set up special econoomic zones in the country would not take off the ground. He had also set much store in the scheme as it was primarily designed to attract foreign direct investment to boost exports.

Veeramani felt strongly that the tax holiday benefit for EOUs/EPZs should be on a permanent basis as they had a big stake in exports. Moreover the tax relief was the only worthwhile incentive available to them after the initiation of economic reforms in 1991-92.

Meanwhile, Federation of Indian Export Organisations (FIEO) president Navratan Samdria led a delegation to Prime Minister Atal Bihari Vajpayee to take up the issue of phase-out of Section 80-HHC tax benefit over five years from April 1 this year. Vajpayee, according to a FIEO release, had assured the delegation that the matter would be taken up with the finance minister.