The government on Thursday announced a host of measures to boost India’s exports including sops to special economic zones (SEZs). These included easier land requirement norms, simpler exit options, cheaper credit and tax breaks for import of machinery.
The new rules for SEZs will allow IT firms to claim tax breaks by moving offshore work to such duty-free enclaves. The earlier requirement of minimum 10-hectares for such campuses has been done away with and IT SEZs can now be set up if the these are spread across at least 100,000 square metres in seven major cities including Mumbai, Delhi and NCR, Chennai, Hyderabad, Bangalore, Pune and Kolkata.
For category B cities, IT companies can set up SEZs even in a smaller built-up area of 50,000 square metres and for remaining cities in only 25,000 square metres.
“The SEZ scheme has not been able to realise its full potential so far. We have undertaken a comprehensive review of the SEZ Policy ... I am happy to announce a package of reforms for reviving investor interest in SEZs,” commerce and industry minister Anand Sharma said while unveiling the annual supplement to the Foreign Trade Policy.
“We are delighted that the government recognizes IT exports as a key growth driver for India’s exports, IT-industry body Nasscom said in a statement.
Removing the minimum land requirement and reducing the built-up area will enable the SEZ scheme to realise its true potential,” said Nasscom.
In view of the acute difficulties in aggregating large tracts of uncultivable land for setting up SEZs, the government also halved the minimum land area requirement to 500 hectares for multi-purpose SEZs and to 50 hectares for sector-specific SEZs.
It has also been decided to permit transfer of ownership of SEZ units, including sale of units.
The government has also decided to extend the Export Promotion Capital Goods, which allows exporters to import machinery and capital goods at zero duty, would be extended beyond March 2013 and would be applicable to all sectors, said Sharma.
He also extended an existing subsidised bank loan scheme, for embattled exporters struggling to stay afloat amid shrinking world demand.
Under the subsidised interest rate scheme, specified exporters can now avail bank loans at a cheaper rate. The government pays banks directly by two percentage points to ensure that lending institutions do not have bear the additional burden of providing cheaper credit.
This scheme, which was to end on March 2013, has been extended for one more year.
Besides, more sectors have been covered under it with engineering exporters being the major beneficiaries.