Once major export and manufacturing hubs, SEZs started losing sheen after the imposition of Minimum Alternate Tax and Dividend Distribution Tax in 2011 on them. “A clear signal needs to be given for Indian SEZs as fresh investments are slowing down in recent years and the greenfield SEZs have not really taken of full swing,” said the pre-Budget document, tabled in Parliament.
It said while the new national investment and manufacturing zones (NIMZs) are being planned, a lot of investment has already been made in SEZs “waiting to be tapped to the full potential”. It added: “There are also areas where SEZs are worse off than domestic tariff area (DTA) units as in case of non- applicability of FTA concessions when SEZs sell in DTAs.”
The Commerce Ministry has already asked the Finance Ministry to roll-back the MAT on SEZs, saying that the levy has suppressed the potential of these zones as a tool to promote exports and generate employment.
The Finance Minister is expected to announce some steps to revamp these zones.