Even as the government is considering ways to revive investment in special economic zones (SEZ), 57 developers, including DLF, JSW Aluminium, Parsvnath and Delhi Metro Rail, have sought the government’s nod to surrender their approvals. The applications of these 57 developers for cancellation of the formal approvals granted to them will now be taken up by the inter-ministerial Board of Approval (BoA), chaired by commerce secretary Rajeev Kher, on February 20.
Of the 57 applications, 35 are from IT/ITeS sector, but others include engineering, multi-services, biotechnology, textile, medical devices/pharma, free trade warehousing zones, aluminium, and gems and jewellery. Twenty proposals are from Andhra Pradesh, eight are from Maharashtra, six each from Madhya Pradesh and Uttar Pradesh, and five from Gujarat.
“In (these) cases, formal approval has been granted by the department of commerce. However, since there is no significant progress made by the developer/co-developer, the concerned DC has proposed for cancellation of formal approval granted to the developer,” the agenda note of the BoA meeting said. More than 50 developers have surrendered SEZ projects earlier.
SEZs have been struggling since an 18.5% minimum alternate tax (MAT) on SEZ developers and units and dividend distribution tax (DDT) on developers were imposed in the FY12 Budget by then finance minister Pranab Mukherjee as the revenue department in the UPA government had begun to see SEZs as a drain on the exchequer. The finance ministry is currently considering proposals for removal/reduction of MAT and DDT on SEZs to revive investor interest.
Earlier, the finance ministry had in a study pegged the revenue loss at Rs 1.76 lakh crore from tax holidays granted to SEZs between 2004-10. The CAG had recently found that the revenue foregone on account of SEZs between 2006-07 and 2012-13 was worth Rs 83,105 crore.
The government has approved 524 SEZ proposals of which only 196 SEZs are functional. Exports from SEZs in 2013-14 was Rs 4.9 lakh crore, up 4.2% over 2012-13. Total employment in SEZs as on September 2014-end was 13.5 lakh, while total investment in SEZs as on June 2014-end is Rs 3.01 lakh cr
Regarding the application of Navi Mumbai SEZ Pvt (Kalamboli, Maharashtra) for an IT/ITES SEZ, the agenda note said, “the developer has informed they are not interested in implementation of SEZ. Accordingly, the development commissioner has recommended for cancellation of formal approval.”
On the plea of JSW Aluminum (Vizianagaram district, Andhra Pradesh) for an aluminum sector SEZ, the note said: “The project is held up due to pending signing of agreement for supply of bauxite and environmental clearance for mining of the ore. These hurdles are yet to be cleared. Accordingly, DC has recommended cancellation of formal approval.”