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Industry demands abolishment of MAT & DDT to revive investors’ interest in SEZs
Apex industry body ASSOCHAM has urged the new commerce minister, Ms Nirmala Sitharaman to restore the policy for special economic zones (SEZs) to its original form and immediately withdraw minimum alternate tax (MAT) and dividend distribution tax to regain trust of domestic and global investors.
SEZs were conceived as tax free enclaves with world class infrastructure for exporting only goods and services from units set up in them without carrying the incidence of various direct and indirect taxes, duties and levies to provide Indian exports a strong competitive edge in global markets.

However, imposition of MAT and DDT by the government a few years after the announcement of SEZ policy took investors by surprise followed by a fall in their interest thereby raising questions about government’s commitment to a stable policy regime.

“Creation of additional infrastructure in approved SEZs without exemptions, concessions and drawback is also imperative as additional benefits would flow through decongestion of overcrowded cities and creation of alternated urban satellite centres would provide new streams of revenue for governments and local bodies,” highlighted a paper on ‘Suggestions to Revive Special Economic Zones’ prepared by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“Both of these significant changes in the SEZ policy are imperative to provide Indian exporters a level-playing field and these should be included and be implemented as part of the new government’s immediate economic agenda,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s paper.

“If immediate action is taken by implementing these corrective measures it would restore investor confidence and bring back SEZs to the forefront of economic and industrial development,” said Mr Rawat. “Restoring confidence of domestic manufacturing sector by providing a stable policy environment would promote competitiveness as SEZs can be the vehicle to boost manufacturing exports from India and catalyse revival of Indian economy.”

Besides, global markets are showing strong trends of revival after a prolonged spell of subdued and in some cases, negative growth, noted the ASSOCHAM paper. “India has the opportunity to reclaim its position as a world class, competitive global manufacturing power.”

Frequent policy changes have eroded the investors’ confidence in SEZs thereby severely affecting the overall potential of SEZs to provide significant boost to investments, exports and employment in India thereby virtually reducing it to a non-starter, noted the paper prepared by the ASSOCHAM Economic Research Bureau (AERB).

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