SEZ rush may hit govt's tax revenues
The rush for SEZs is largely to do with the various tax sops announced by the government and an attempt to cash in on the growing demand for land in the country caused by higher and higher levels of investment
By TNN |
MUMBAI: India is seeing heightened activity in the setting up of special economic zones. Both local and foreign companies are focussing on setting up on SEZs with the aim of rivalling China���s Shenzhen Special Economic Zone and faster economic growth.
Steel baron LN Mittal���s upcoming 12m tonne steel project in Jharkhand and Posco���s similar project in Orissa, both estimated to cost over Rs 40,000 crore, are likely to be termed SEZs.
The rush for SEZs is largely to do with the various tax sops announced by the government and an attempt to cash in on the growing demand for land in the country caused by higher and higher levels of investment. Income-tax is exempt for 20 years, so are customs duty and excise duties.
Companies with expensive, capital intensive projects such as Reliance and ONGC are likely to benefit. Indeed, the rush for obtaining SEZ status for projects has led to fears that the Centre���s future tax revenues could be hit. The government has major spending commitments on health and education and the newly enacted rural employment guarantee bill.
Flexibility in labour laws, as demanded by the industry, hasn���t been incorporated. The government caved in to pressure from the Left parties and dropped a key clause allowing state governments to adopt flexible labour policies if necessary.
The SEZ Bill ���05 was passed in May this year. Other companies setting up SEZs include Mahindra & Mahindra, which plans to set up two projects in Chennai and Jaipur. The area covered by the Jaipur project is expected to be over 3,000 acres and is likely to cost over Rs 1,100 crore, as per information collated by the Mumbai-based tax and business consultancy firm RSM & Co.
Flextronics, the $16bn electronics manufacturing services provider, is believed to be building a large facility near Chennai, which the company officials said will be upgraded to an SEZ.
Other companies include Ranbaxy, Wipro, Zydus Cadila, Biocon, Orient Textiles, the Maharashtra Airport Development Co and the Tamil Nadu Industrial Development Corp.
Steel baron LN Mittal���s upcoming 12m tonne steel project in Jharkhand and Posco���s similar project in Orissa, both estimated to cost over Rs 40,000 crore, are likely to be termed SEZs.
The rush for SEZs is largely to do with the various tax sops announced by the government and an attempt to cash in on the growing demand for land in the country caused by higher and higher levels of investment. Income-tax is exempt for 20 years, so are customs duty and excise duties.
Companies with expensive, capital intensive projects such as Reliance and ONGC are likely to benefit. Indeed, the rush for obtaining SEZ status for projects has led to fears that the Centre���s future tax revenues could be hit. The government has major spending commitments on health and education and the newly enacted rural employment guarantee bill.
Flexibility in labour laws, as demanded by the industry, hasn���t been incorporated. The government caved in to pressure from the Left parties and dropped a key clause allowing state governments to adopt flexible labour policies if necessary.
The SEZ Bill ���05 was passed in May this year. Other companies setting up SEZs include Mahindra & Mahindra, which plans to set up two projects in Chennai and Jaipur. The area covered by the Jaipur project is expected to be over 3,000 acres and is likely to cost over Rs 1,100 crore, as per information collated by the Mumbai-based tax and business consultancy firm RSM & Co.
ADVERTISEMENT
Flextronics, the $16bn electronics manufacturing services provider, is believed to be building a large facility near Chennai, which the company officials said will be upgraded to an SEZ.
Other companies include Ranbaxy, Wipro, Zydus Cadila, Biocon, Orient Textiles, the Maharashtra Airport Development Co and the Tamil Nadu Industrial Development Corp.
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
