SEZ Tax Withdrawal Remains High on Scaled-down Wishlist
‘Short budgetary proposal’ to push for nixing minimum alternate tax Officials Present Case to Nirmala
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.