NEW DELHI: India is eyeing a revamp of its framework for special economic zones (SEZs) to boost manufacturing, including the exemption of factories located in them from minimum alternate tax (MAT), seen as a key factor that has stunted the zones.
Other ideas include slashing the category of deemed exports besides reducing minimum area requirement for smaller and special category states. The proposals are likely to be considered during budget talks, but a final call will be taken keeping in view revenue considerations and Government's intent to cut corporate exemptions.
The revamp has been necessitated by the switchover to the goods and services tax (GST), but the Government is keen to go beyond this to spur private investments, particularly in manufacturing. GST was implemented across the Country on July 1.
"Imposition of MAT had a huge negative impact on exports from SEZ," said a person aware of the recommendations of a panel set up to draft a plan for the revamp of the zones, conceived as areas of enterprise that would drive jobs and growth as in China.
Experts welcomed the proposals. "Focus seems to be on making the entry, exit as well as operations within SEZ easier and incentivising exports by simplifying the procedures and removing operational restrictions such as manufacturing for domestic units," said Pratik Jain, Indirect Tax Leader, PwC.
The Ministry of Commerce and Industry had set up a panel comprising Noida SEZ Development Commissioner LB Singhal and his counterparts at Kandla SEZ, Santacruz Electronics Export Processing Zone (Seepz) and Madras Export Processing Zone (MEPZ) to suggest changes in the framework to align it with the GST regime.