Govt likely to rework sops for SEZs, EOUs

NEW DELHI: The government may fine-tune the package of concessions available to special economic zones (SEZs) and export-oriented units (EOUs) in the full Budget for 2004-05. While both segments are seeking more concessions, the government is looking at the possibility of scrapping some of the duty exemptions available to SEZs as well as EOUs.
While the commerce & industry ministry is of the view that EOUs should get benefits on a par with SEZs, finance ministry officials are of the view that the concessions granted to SEZs have not brought in the expected results. In the Surat SEZ, for example, imports were higher than exports during 2003-04, sources in the finance ministry said. Tangible benefits are also not seen in terms of investments in SEZs, they added.
While the government has granted approval to a large number of greenfield SEZs, the only new project to come up so far is the Indore SEZ, which has been set up by the Madhya Pradesh government. Two units have come up so far at the Indore SEZ but even they have not become operational. The large SEZs proposed at Nanguneri and Hassan have failed to take shape, while the Positra SEZ project has been virtually abandoned since the promoters have shifted their interest to Maharashtra. Therefore, finance ministry officials are not inclined to provide more concessions to SEZs.
On the other hand, EOUs want parity with SEZs in terms of fiscal concessions. These units also want the sunset clause on income-tax exemption for EOUs, which is set to be scrapped in 2010, to be removed. Our demand is that tax holiday under Section 10 A and Section 10 B of the Income-Tax Act should continue without any time limit, Confederation of Export Units president S K Saraf said. The proposed legislation for SEZs should cover EOUs too, he added.