The government expects to finalise modifications to the policy governing special economic zones (SEZs), which have apparently lost investor interest after imposition of certain taxes recently, commerce and industry minister Anand Sharma said on Thursday.
?Commerce and finance secretaries are discussing all the issues relating with these zones…we have to attract investments,??Sharma, who is leading an industry deligation, said here.
The government had imposed Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11 as part of its strategy to reduce tax exemptions.
Sharma told FE said that attracting investments was the need of the hour. ?I am sure soon a solution (to the proposed modifications) will be arrived at,?? he said. The proposed changes to the SEZ policy include incentives for developers to set up SEZs in remote and undeveloped areas. These tax free zones, which are supposedly export hubs and growth engines of the Indian economy, witnessed an export growth of just over 15% in 2011-12, compared with the country?s overall export growth of 21%.
The minister said that since the global economic scenario is not very rosy, such policy relaxations will ensure that India continues to be an attractive destination for investments. The minister said that due to MAT and DDT, there has been a substantial slip in growth of exports from SEZs.
Besides, while there has been a fall in India?s investment rate in recent years, cumulative SEZ investments reported a flat growth (-0.46%) in 2011-12, showing investors are no longer attracted to them. The employment generation from SEZ has fallen too.