Government withdraws duty benefits for power plants within SEZs

NEW DELHI: The government today withdrew duty benefits extended to operation and maintenance of power plants set up by developers within special economic zones (SEZs).

The Commerce Ministry in a notification on guidelines for power generation in SEZs said the directive issued in March 2012 was being withdrawn and the position of February 2009 was being restored.

In February 2009, the ministry had allowed SEZ developers to avail duty benefits only at the initial stage of setting up of a power plant in a non-processing areas and not for operational and maintenance of the plants.

But in 2012, it had extended duty benefits for operation and maintenance of power plants in SEZs also.

The notification came into effect from April 1. An official said the notification will impact developers of SEZs and not the units which are engaged in generation and trading of power in these zones.

An industry expert said that the move will hit the developers of the special economic zones.

"The developer, who has set up a power plant in processing ares of SEZ and is availing duty benefit, will now have to demarcate that area as non-processing area," an industry official said.

In a bid to promote exports from special economic zones, government in the foreign trade policy has extended all the incentives to such units that are available to exporters outside such enclaves.

Exports from SEZs have gone up from Rs 22,000 crore in 2005-2006 to Rs 4,94,077 crore in 2013-14; investment in SEZs have gone up from Rs 4,035 crore in February 2006 to Rs 3,80,284 crore in September 2014; and direct employment in the SEZs has gone up from 1,34,704 persons in February 2006 to 13,50,071 in September 2014.