Inter-ministerial tug of war on forex payment to SEZ suppliers
Much to the Commerce Ministry's discomfort, the Finance Ministry appears resolved on treating SEZs as foreign territories, a classification that will require developers to pay foreign exchange for sourcing raw materials.
By PTI |
NEW DELHI: Much to the Commerce Ministry's discomfort, the Finance Ministry appears resolved on treating SEZs as foreign territories - a classification that will require developers to pay foreign exchange for sourcing raw materials.
"The issue has been hanging in balance for the last 18 months and proving to be a major irritant for the developers," a senior Commerce Ministry official said.
He said it is a piquant situation where a domestic developer is being asked to raise forex for sourcing construction raw material from suppliers within the country.
"Where is the developer going to get the foreign exchange from," the official asked.
Besides, the RBI has informed the Commerce Department that a domestic developer cannot be given foreign exchange for domestic payments unless the Foreign Exchange Management Act is amended.
The developers are quite disappointed with a flaw in the SEZ policy which is being "interpreted in a rigid way by the Revenue Department," the official said.
After consulting the RBI, the commerce department has sent a fresh communication to the Revenue Department, which is "still sitting on the matter and has yet to take a call".
The developers through the Export Promotion Council for SEZs and EoUs have approached both the RBI as well as the government for changing the rules.
"We have asked the government to either change the rules or make available foreign exchange," Director General of EPC on SEZs and EoUs L B Singhal said.
He said the developers who are entitled for duty-free inputs have been facing the problem for the last 18 months.
"The issue has been hanging in balance for the last 18 months and proving to be a major irritant for the developers," a senior Commerce Ministry official said.
He said it is a piquant situation where a domestic developer is being asked to raise forex for sourcing construction raw material from suppliers within the country.
"Where is the developer going to get the foreign exchange from," the official asked.
Besides, the RBI has informed the Commerce Department that a domestic developer cannot be given foreign exchange for domestic payments unless the Foreign Exchange Management Act is amended.
The developers are quite disappointed with a flaw in the SEZ policy which is being "interpreted in a rigid way by the Revenue Department," the official said.
ADVERTISEMENT
After consulting the RBI, the commerce department has sent a fresh communication to the Revenue Department, which is "still sitting on the matter and has yet to take a call".
The developers through the Export Promotion Council for SEZs and EoUs have approached both the RBI as well as the government for changing the rules.
"We have asked the government to either change the rules or make available foreign exchange," Director General of EPC on SEZs and EoUs L B Singhal said.
He said the developers who are entitled for duty-free inputs have been facing the problem for the last 18 months.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
