More SEZs in South compared to North: Report
According to a joint report by PWC and Assocham, southern states have taken a considerable lead in terms of number of SEZs as compared to the northern states in the country. The growth of SEZs in South is primarily driven by investment friendly policies in the region.
While releasing the findings, Assocham President, Sajjan Jindal said that the situation in Northern part is comparatively adverse and it’s state governments are partly responsible for it as land acquisition in Northern part has been consistently subject to intense controversies because of loopholes in their policies.
The Assocham-PWC have jointly recommended that wherever work for commissioning SEZs is being delayed, the government should ensure their de-notification as current SEZs rules do not provide for a specific de-notification process. The two organizations also pointed out that the SEZs benefits and exemptions do not encourage the ancillary industries/vendors/support manufacturers of the main industry to house themselves in the SEZs and accordingly modification need to be made.
The report informs that 69 SEZs in Tamil Nadu have so far been approved by government, of which 54 are notified and in majority of them, construction work is commenced. Likewise, in Andhra, number of SEZs formally approved stands at 103, out of which 70 such facilities are notified as on date. In Karnataka and Kerala, number of SEZs approved are respectively 53 and 25 of which 30 and 10 have been notified.
These are very positive numbers compared to the numbers from the north where in Punjab the centre so far approved 10 SEZs and only two SEZs have so far been notified. Likewise, State of Uttar Pradesh in which 34 SEZs have been approved, notification for SEZs numbering 16 have so far been issued. In State of Madhya Pradesh, 14 SEZs are formally approved against which only 5 are notified. However, the progress in Rajasthan is extremely satisfactory in which 8 SEZs are approved and 7 of them are notified.
An SEZ unit (vendor) supplying to another SEZs (the main manufacturer) does not get any income-tax benefit on account of existing definition of exports under the income-tax Act. This anomaly needs to be corrected.
Assocham has also pointed out that the new Direct Tax Code as it stands today proposes not to provide any fiscal benefits/tax exemptions to SEZ units. SEZ developers benefits are proposed to be transitioned from the profit based incentive under Section 10IAB to investment based reduction without any fixed period. It is therefore, suggested that tax incentives need to be carried on for SEZs in the tax code proposed by the UPA government, said Jindal.