Exports from SEZs grow 17%

Exports from special economic zones increased by 17 per cent year-on-year to Rs 2.60 lakh crore (Rs 2.6 trillion) during April-December 2011, the Export Promotion Council for EOUs and SEZs said on Wednesday.

IT, IT-hardware, petroleum, engineering, leather and garments are the leading exports from the SEZs.

Exports from 148 operational SEZs totalled Rs 2.23 lakh crore (Rs 2.23 trillion) in the April-December 2010.

Shipments from EOU/SEZ has contributed 34 per cent to the country's total exports in 2010-11.

The total exports from the tax-free enclaves during 2010-11 stood at Rs 3.15 lakh crore (Rs 3.15 trillion), a growth of 43.11 per cent over the same period previous year.

The SEZs, which were touted as major vehicles for investment and export promotion, were allowed a host of tax exemptions under a special SEZ Act of 2005.

Under the law, incentives for SEZ units include 100 per cent income tax exemption on export profits earned for the first five years, a 50 per cent for the next five years and another 50 per cent exemption on re-invested

profits in the following five years.

The initial phase saw developers lining up in big numbers for the projects. It was also seen as a real estate opportunity.

However, following concerns about loss of tax revenue by the Finance Ministry, the government has proposed phasing out the tax sops for the units commencing operations after 2014.

Moreover, farmers protests has made land acquisition a problem area.

The industry has also expressed concern over imposition of Minimum Alternate Tax of 18.5 per cent on the book profits of SEZ developers and units therein.