MUMBAI, 27 JNAUARY, 2016: The current global economic scenario is one where currencies of major trading countries like China have been devalued, this has been a challenge for growth in Indian exports. It is not just China, regional currencies like the Thai Baht or Indonesian Rupiah have been depreciating, and this has a major impact on the globally competitive aspect of India’s exports. In this scenario, the need to revitalize theSpecial Economic Zones (SEZs) so that India’s exports can compete in the global market takes on even more importance.
As the Union Budget for 2016-17 comes closer, media reports suggest that Ministry of Commerce and Industry, Government of India, has come up with a set of proposals which are expected to revitalize the SEZs. A section of the industry, which held interactions with Hon’ble Smt. NirmalaSitharaman, Minister of State for Commerce and Industry, Government of India, was informed by the Hon’ble Minister that an effort is under way to convince the relevant ministries about the need for removal of Minimum Alternate Tax (MAT) for SEZs as well as postponing the phase-out of tax exemptions for SEZs in the upcoming budget.
Niranjan Hiranandani, Managing Director, Hiranandani Communities, welcomed the proposed move to remove MAT for SEZs. “If this year’s budget can do the needful, it will be a positive development, and has the potential to create a positive impact for SEZs and the units that operate from the SEZs, effectively, enhancing India’s exports,” he said.
Smt. NirmalaSitharaman, Minister of State for Commerce and Industry, Government of India had detailed discussions on this with a delegation from SEZs which met her, said Niranjan Hiranandani. “The Hon’ble Minister said the intent was to make SEZs as vibrant as they can be, for all stake-holders in SEZ spaces, this is a positive move,” said Niranjan Hiranandani.
Quoting the Hon’ble Minister as having said: ‘SEZs should benefit from exports. They should also sometimes, if there is capacity for them, be able to do some work for domestic units, which want them to supplement their activities. A great degree of flexibility should be offered to units which are located in SEZs,’ Niranjan Hiranandani termed it a positive step, one which marks a major change.
By an amendment, the SEZ law was changed to levy MAT as well as dividend distribution tax on SEZs. This was done despite the SEZ Act promising a tax holiday for a specified period, said Niranjan Hiranandani. With the Commerce and Industry Ministry having pitched for removal of minimum alternate tax (MAT) as well as postponing the phase-out of tax exemptions in the budget, the efforts to ‘update and set right’ the rules for SEZs have the potential to be a positive move. “This can be the best way forward to meet the challenge of growing Indian exports,” he concluded.