Indore SEZ feeling the pinch of govt taxes

Indore SEZ is spread over an area of 1,113 hectares in Pithampur, about 25 km from Indore. The concept of SEZs was introduced by the union government in 2000 through a revision in the Export-Import Policy 1997-2002.

The Indore special economic zone -- the first greenfield multi-product SEZ in the country-- is losing sheen, data collected by HT shows.

Cipla-Unit-in-SEZ-Indore

Investments in the zone have come down to Rs 101 crore in 2014-15, compared to Rs 696 crore in the previous fiscal.

Industry bodies have blamed a minimum alternate tax (MAT) and other levies for the industry’s disillusionment with SEZs.

Indore SEZ is home to 47 industrial units across different sectors like pharmaceuticals, engineering, agro and textiles.

Even as operational units have gone up from 39 in 2012-13 to 46 in 2013-14, only one unit has started operations in the last one year.

A look at the past data shows that the investment of Rs 101 crore in a single financial year in Indore SEZ is the lowest in the past four years.

“Low demand in export markets and introduction of minimum alternate tax (MAT) and other levies have affected sentiments,” Indore SEZ development commissioner AK Rathore said.

Indore SEZ is not an isolated case.

In February this year, the union commerce ministry cancelled formal approvals given to six SEZ projects in Madhya Pradesh as the developers had made no significant progress even after many years.

“SEZs, which emerged as major export hubs in the last decade, started losing sheen after the government imposed minimum alternate tax (MAT) and dividend distribution tax. Most of the investments in Indore SEZ have come from the existing units who have no choice but to expand operations. This is also reflected in the exports growth year on year,” said Pithampur Audyogik Sangathan president Gautam Kothari.

Industry body CII had sought a reduction in MAT on SEZ in the last budget to boost investments. However, the finance minister did not announce any concessions leaving the industry disappointed.

Indore SEZ is spread over an area of 1,113 hectares in Pithampur, about 25 km from Indore. The concept of SEZs was introduced by the union government in 2000 through a revision in the Export-Import Policy 1997-2002.

These industrial enclaves were treated as foreign territories for the purposes of industrial, service and trade operations and were exempted for all the taxes. The aim was to boost the manufacturing sector and create jobs.

“The government has recently taken some corrective measures including extending the duty drawback benefits to units operating in SEZs,” Kothari said.