Commerce ministry may allow offshore banking facility at SEZs

VK Chakravarti

Ahmedabad, May 17: THE ministry of commerce may allow offshore banking facility at the newly-created special economic zones (SEZs) during its next policy announcement. This was hinted by Surat SEZ senior vice-president R Chandran while holding its first roadshow at the Gujarat Chamber of Commerce and Industry (GCCI) premises here.

He pointed out that these SEZs being set up in different parts of India as deemed foreign territory, already allow 100 per cent foreign equity participation through automatic route and 100 per cent repatriation of profits without any dividend balancing requirement.

As per the government’s last announcement on March 31, 2000, for setting up SEZs in the public, private or joint sector, he said, several sops have been offered and many more may be offered to make a success of these SEZs. The country has travelled a long way since 1950 with the introduction of the Free Trade Zone (FTZ) and Export Promotion Zone (EPZ).

“It is a great incentive even for domestic companies to start manufacturing or trading units in SEZs. In the new set-up, supplies from the Domestic Tariff Area (DTA) to SEZ are treated as deemed export. Job work or sub-contracting from DTA to SEZ and vice-versa are also permitted,” he said.

“Out of several SEZs being set up in India, Gujarat has got the lion’s share of three at Surat, Kandla and Positra and the Surat SEZ is the first to take off,” he claimed.

Over 30 companies, including a few MNCs, have already established their units at the Surat SEZ since the government had decided to convert the Surat EPZ, also known as Diamond Industrial Park, into a SEZ on November 1, 2000.

These and other companies are expected to generate a turnover of Rs 500 crores by the end of the current financial year. Another interesting feature of the Surat SEZ, being promoted by the Mumbai-based Diamond & Gem Development Corporation, is that it has been converted from a single commodity to a multi-commodity zone with the inclusion of gold, jewellery, yarns, textiles and garments.

Nearly a half of the units are trading companies. Others lined-up include agro-processing.

Meanwhile, the Confederation of Indian Industry (CII) has also decided to take up with the ministry of comerce the cause of setting up another SEZ in Gujarat with a view to rehabilitating particularly small and medium-scale industry devastated by the earthquake.