Hitches: SEZ bill back in Cabinet court

The group of ministers (GoM) constituted to iron out problem areas in the proposed special economic zones’ (SEZs) legislation has put t...

The group of ministers (GoM) constituted to iron out problem areas in the proposed special economic zones’ (SEZs) legislation has put the ball back in the Cabinet’s court for a final decision.

Some issues still need to be resolved, commerce ministry officials said. The GoM heard the views of all the ministries concerned, but it has now been left for the Cabinet to take a final call, they said. The Cabinet would decide the changes that need to be made in the legislation based on the minutes of Friday’s meeting.

Objections to certain contents of the legislation have been raised by the finance, home, legal and labour ministries. One long-standing problem has been the change in allocation of business rules of the commerce ministry allowing the development commissioner in the SEZ to decide on the tax policy within the area.

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The finance ministry had opposed such a move despite several rounds of discussions with commerce ministry officials. Another problem raised relates to the applicability of Indian Penal Code to crimes committed in SEZs, which are proposed to be given a deemed foreign territory status. The SEZ legislation proposes to provide fiscal incentives to exporters including a 20-year income tax holiday and envisages procedural simplification for attracting foreign direct investment (FDI) by not subjecting investments to approval from the Foreign Investment Promotion Board (FIPB).

The GoM, headed by Defence Minister Pranab Mukherjee, include Finance Minister P. Chidambaram, Agriculture Minister Sharad Pawar, Commerce and Industry minister Kamal Nath, IT and Communications Minister Dayanidhi Maran and Deputy Chairman of the Planning Commission Montek Singh Ahluwalia.

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