Reflecting lack of enthusiasm about the SEZs, 20 more promoters have sought additional time from the government for implementing their projects, taking the number of developers seeking extension to over 200. Another four promoters have approached the Commerce Ministry for surrendering their formal approvals, citing global economic uncertainty as the reason.
The Commerce Ministry, on January 14, will consider these proposals, including that of Tata Consultancy Services and Parsvnath SEZ for extension of time. Special Economic Zone (SEZ) developers, including Medicaps IT Park Pvt Ltd have approached the Board of Approval (BoA), headed by Commerce Secretary Rahul Khullar to surrender their projects, a ministry official said.
"It will not be financially feasible to develop the SEZ due to ongoing uncertainties in global economy," a developer which has requested for withdrawal of approval for its IT/ITeS SEZ in Maharashtra said in its application. "...due to the present market scenario, it does not seem possible to implement the project," Medicaps IT Park Pvt Ltd said in its request.
According to an industry expert, uncertainty over tax exemptions to new SEZs has also led to declining interest in the tax free enclaves. Investors are very apprehensive about the new draft Direct Taxes Code (DTC).
According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to the existing units.
The developers who have sought more time to implement their projects, include Mahindra World City (Jaipur) Ltd for its sector specific zone, Genpact Infrastructure (Jaipur) and Tata Consultancy Services Ltd for their IT/ITeS zone in Rajasthan and Andhra Pradesh, respectively.
Parsvnath SEZ Ltd has asked the 19-member inter-ministerial board for more time to develop its sector specific SEZ for Biotech in Andhra Pradesh. As much as 184 SEZ developers have been given additional time to execute their projects.
The BoA would also consider two new proposals of Mahindra World City (Jaipur) Ltd to set up a Gems and Jewellery SEZ and IT/ITeS tax free zone in Rajasthan.
SEZs have emerged as major sources of attracting investments and increasing exports. So far 580 SEZs have been formally approved of which 114 are in operation.
The SEZs contributed 35 per cent to the country's exports in 2009-10. Exports from these zones stood at Rs 1,39,841 crore (Rs 1398.41 billion) during April- September 2010-11 against Rs 89,750 crore (Rs 897.50 billion) in the same period last fiscal.
Shipments from SEZs increased from Rs 22,840 crore (Rs 228.40 billion) in 2005-06 to Rs 2,20,711 crore (Rs 2207.11 billion) in 2009-10.
