SEZ Tax With­drawal Re­mains High on Scaled-down Wishlist

‘Short bud­getary pro­posal’ to push for nix­ing min­i­mum al­ter­nate tax Of­fi­cials Present Case to Nir­mala

The Economic Times - - Economy - DILASHA SETH

for sec­tors key ex­ports like gems and jew­el­ery

of 3% in­terst sub­ven­tion to all sec­tors

of tax on cer­tain ser­vices

The com­merce min­istry will push for with­drawal of taxes on Spe­cial Eco­nomic Zones and duty cut for sec­tors with high ex­port po­ten­tial as part of a crisp five-point bud­getary pro­posal it will make to the fi­nance min­istry.

Com­merce sec­re­tary Ra­jeev Kher met with var­i­ous ex­port pro­mo­tion coun­cils on Wed­nes­day where he made it clear that only a limited set of de­mands will be pre­sented to the fi­nance min­istry to boost ex­ports.

“It will be a short bud­getary pro­posal with the fo­cus on de­liv­er­ables in the up­com­ing budget,” said an of­fi­cial who did not wish to be named.

The five-point char­ter also in­cludes de­mand for mar­ket­ing and brand­ing as­sis­tance, the per­son said. The fi­nal budget for 2014-15 is likely to be pre­sented in the first half of July.

Com­merce min­istry is also work­ing on a com­pre­hen­sive for­eign trade pol­icy 2014-19, with thrust on non-fis­cal in­cen­tives and in­creas­ing ser­vices ex­ports. In 2013-14, ex­ports at $312.35 bil­lion, had fallen short of the tar­geted $325 bil­lion.

Wed­nes­day’s com­merce min­istry meet­ing was at­tended by rep­re­sen­ta­tives of ex­port pro­mo­tion coun­cils for gems and jew­ellery, ap­parel, en­gi­neer­ing sec­tors and Fed­er­a­tion of In­dian Ex­ports Or­ga­ni­za­tion (FIEO), among oth­ers. With- NEW DELHI In a pre­sen­ta­tion to the new com­merce and in­dus­try min­is­ter, of­fi­cials high­lighted min­i­mum al­ter­nate tax on SEZs, strug­gling man­u­fac­tur­ing sec­tor, gold im­port curbs and hic­cups due to land ac­qui­si­tion norms among key hur­dles for growth. The depart­ment of in­dus­trial pol­icy and pro­mo­tion raised is­sues re­lated to de­lays in giv­ing out in­dus­trial li­censes and in­formed the min­is­ter about the on­go­ing ex­er­cise to re­lax the for­eign di­rect in­vest­ment pol­icy in sec­tors in­clud­ing con­struc­tion, rail­ways and de­fence. Sithara­man will go through sub­ject-wise pre­sen­ta­tions on Thurs­day. drawal of min­i­mum al­ter­nate tax (MAT) was the key de­mand of the ex­port pro­mo­tion coun­cil for EOUs and SEZs, which could help re­vive the duty-free zones that lost sheen in 2011 af­ter im­po­si­tion of the taxes.

“The sec­re­tary agreed to take MAT and DDT with­drawal in the bud­getary pro­posal with the fi­nance min­istry,” said the of­fi­cial quoted ear­lier.

Nir­mala Sithara­man, MoS (in­de­pen­dent charge) for com­merce and in­dus­try, is also the MoS for fi­nance, which has raised op­ti­mism on the com­merce min­istry’s de­mands be­ing taken on board by the depart­ment of rev­enue.

Only 185 of the 389 no­ti­fied SEZs are op­er­a­tional. Hav­ing at least one func­tional ex­port unit makes the SEZ func­tional.

FIEO sug­gested the need for cre­ation of an ex­port de­velop- ment fund with a cor­pus of min­i­mum 0.5% of the pre­vi­ous year’s ex­ports. “This may be taken as a planned scheme for a pe­riod of five years with tar­get to take ex­ports from $300 bil­lion to $750 bil­lion in a five-year span. To re­plen­ish the fund, we sug­gested that an ex­port cess of 0.25% of ex­ports may be im­posed. Sim­i­lar con­tri­bu­tion by the govern­ment will also be made”, said Ajay Sa­hai, di­rec­tor gen­eral and CEO at FIEO. DGFT will likely pro­pose a 3% in­ter­est sub­ven­tion for all sec­tors to push ex­ports in the rec­om­men­da­tion list. Kher is also ex­pected to take up duty re­duc­tion in sec­tors which could lead to higher ex­ports. High im­port duty im­posed last year to con­tain CAD has im­pacted gems and jew­ellery ex­ports. Kher will also push for a ra­tio­nal sus­tain­able pol­icy on gold im­ports.

With­drawal

Brand­ing

DGFT

Duty re­duc­tion

Ex­ten­sion

Ex­emp­tion

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