SEZ Denotification: Commerce Ministry Mandates Adherence to Land-Use Guidelines
The Commerce Ministry has issued a directive concerning developers seeking to relinquish Special Economic Zones (SEZs). These developers must now provide an undertaking guaranteeing that the land will be utilized in accordance with the guidelines formulated by the Government of India.
Collaboration with State Governments
According to the SEZ guidelines, all submitted proposals must include a clearance letter from the respective state government. Following denotification, the ministry will hand over these lands to the state governments. The state governments will bear the responsibility of ensuring that any acquired SEZ land is employed in the development of infrastructure projects which serve the original objectives of the SEZ, as outlined in the drafted rules.
SEZ Appeal Diminishes
SEZs were once a significant draw for investors. However, they have lost their luster after the Cabinet's implementation of the Minimum Alternate Tax and Dividend Tax in 2011. Certain provisions within the Direct Taxes Code (DTC) also share some blame for investors withdrawing their interest. The global economic slowdown has further exacerbated the situation, adding insult to injury.
"SEZ was an attraction for investors; it has lost its sheen after the Cabinet implement Minimum Alternate Tax and Dividend Tax in 2011. There are certain provisions in the DTC tax also held responsible. The global slowdown is like rubbing salt in the injury."
Developers Surrender SEZs
More than 58 developers have surrendered their SEZs, citing the global slowdown as the primary reason. The Centre had initially approved 576 SEZ zones, out of which 173 have commenced exporting operations.
SEZ Export Contribution
During the first quarter of the year, these zones generated Rs 1.13 lakh crore in exports, while the country's total export revenue reached Rs 1.05 lakh crore.