SEZ IN INDIA - The Inside Story SEZ India Invest - Blog
The SEZ's are important in today's context for the third world countries which have been in the race for rapid economic growth. Ask any person about SEZ, and the three words that you will definitely hear will be 'exemptions', 'exports' and most importantly 'foreign territory'. It is true that the SEZs are exclusively set up for the purpose of promoting exports through grant of various tax exemptions. In pursuance to this, the Special Economic Zones Act, 2005 inter-alia provides exemption from certain taxes on supplies to a unit or a Developer in an SEZ for carrying out authorized operations. The exemptions granted under the Act are indeed very wide covering various indirect and direct taxes.
The above desired objective of SEZ have had not fulfilled due to the government decision, lack of infrastructure, non availability of talent pool.
It was earlier promised, that Income Tax will be exempted for first 5 years of Operations but that was killed by Finance Act. 2011, by way of inclusion of SEZ profits in Minimum Alternative Tax (MAT) under section 115JB of IT Act 1961.
Because of this inclusion, many of the Foreign Institutional Investor (FII) has been pulled out their investment from Indian SEZ. The Developer also started surrender their approval because of the wrong Tax Policy, which halts the countries progress in terms of Investment & Employment generation.
Our Country is the second largest in the world in terms of population, the Govt. started distribute the nation's wealth amongst its citizens to remove the barrier of Rich & Poor so bringing of SEZ in the Semi Urban Area was a Welcome Step. The idea has lost its direction from its inceptions to till now.
One of the major clause of this SEZ Act. Was for single Window clearance of Import & Export, this clause is only looks attractive on the paper. The developers & units have been facing lots of problem in their day to day activities because of multi layer hierarchy in SEZ systems. They are knocking many windows to process the Import & Export.
There is an acute shortage of skilled man power for the operation of SEZ due to rise in migration and the lack of Govt. plan to upgrade the technical skill by way of training and education. Obsolesce in knowledge also another barrier for the development of SEZ.
Bottlenecks of SEZ growth is also due to higher price/ Short supply of electricity power, Water & Utilities in spite the government has kept the provision for the said basic needs in the SEZ acts and rules.
The Govt. land acquisitions policy is also not so transparent and widely accepted by land owners.
Apart of the said dark side there are materialistic contribution in terms of employment and rise in exports. This fact is evident as the subject has provided the employment to around 6, 76,608 people in the country with the exports to the tune of Rs.3, 15,867 crore representing a growth of 43% over the previous year" which is 28% of the nations exports during 2010-11 that too with investment of Rs.2,02,810 crore as on 31.3.2011. From these positive figures we can say that future of SEZ is not under dark.
In the nutshell, if the Govt. will take the necessary actions along with strategic and decisive planning we can remove the current bottlenecks with implication of new policies that will help to drive the true spirit of SEZ & help in the country's economic growth by way of +ive foreign currency reserve, recognition of Indian product in world market, lucrative employment opportunities with rise in per capita income in the country.
As we all knows every coin has two sides, similarly SEZ too has wherein the darker side of it is predominant, but simultaneously we do not have to overlook the glitter of its other side same can also increase its shine If adequate modification in the rules are done then picture may be change. For example, if we see we can use a sword for either saving someone in trouble or killing someone for robbery. At last it depends upon you, how you want to use it.