Check proliferation of SEZs: Survey

Amid the brouhaha over special economic zones and their viability, the Economic Survey has made more room for dissent by suggesting the need to check the proliferation of these tax-free zones in the country.

The annual economic progress card, however, also pointed out that exports from SEZs have been steadily increasing.

"Another major policy issue in the trade sector which created a lot of heat was that of SEZs... Some fundamental policy changes are needed for the merchandise trade sector and these include checking the proliferation of SEZs," the pre- Budget Economic Survey, tabled in Parliament on Thursday, said.

The Survey pointed out that exports from the tax-free zones have been steadily increasing. Exports from the zones in 2006-07 stood at Rs 34,615 crore (Rs 346.15 billion), registering a growth of 52 per cent from Rs 22,840 crore (Rs 228.4 billion) in the year-ago period.

"Projected exports for 2007-08 from SEZs is Rs 67,088 crore (Rs 670.88 billion)," it said.

The Survey further said while apprehension has been expressed on misuse of the scheme and relocation of existing industries into SEZs, "experience has shown that these apprehensions are ill-founded

and fresh investments and employment have been flowing into the SEZs".

The benefits derived from the multiplier effect of the investments and additional economic activity in the SEZs along with employment generated is estimated to far outweigh the revenue losses on account of tax exemptions given to the zones, which are freshly developed industrial clusters and not "relocated from elsewhere", it said.

So far, formal approval has been granted to 439 SEZs in 22 states across 23 sectors, of which 195 have been notified.

The newly notified SEZs, which have come up after February 2006 when the SEZ Act and Rules came into effect, have provided direct employment to 61,015 people, while investments in these zones has been to the tune of Rs 67,347 crore (Rs 673.47 billion).

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