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INDIA
BUSINESS WORLD -
FEBRUARY 2006
THE MONTH THAT WAS SEZ RULES TO CUT RED TAPE, ATTRACT RS 1,00,000 CRORE
In a bid to attract large investments, the government has come out with a comprehensive package for special economic zones (SEZs), sweetened with liberalised set of rules. Procedures have been drastically simplified and a single-window for clearances has been provided in the new rules which would be notified tomorrow. The simplified procedures and the tax breaks provided by the government would enable SEZs to attract investments of Rs 1,00,000 crore in three years, commerce & industry minister Kamal Nath said. --This would create five lakh new jobs in the next three years, he said at a media conference here today. It is estimated that exports from SEZs would increase to $5 billion during the current financial year. According to initial estimates, exports during April-December 2005 was $3.5 billion.
Investors from several countries including Japan and Singapore are looking at this new window which is expected to take off now, the commerce & industry minister said. Seven new SEZs are already in operation and many are expected to follow now, he added. So far, the government has provided formal clearance to 51 SEZ projects and in-principle clearance to 66 projects
Mr Kamal Nath was of the view that foreign investment could flow into specialised SEZs covering services sector areas like hospitals and entertainment. International finance centres are also expected to come up in a big way to boost SEZ exports, he said.
The new norms make it unnecessary for SEZ developers and SEZ units to approach the revenue department for duty exemption. These facilities become available automatically once clearance for the project is made available.
Transaction costs would be cut down in a big way and this will help exporters to become internationally more competitive. Large investments are expected in IT, pharma, biotech, textiles, petrochemicals and auto components, Mr Kamal Nath said. The SEZ Act was cleared by Parliament last year and inter-ministerial consultations were on to finalise the rules. Nearly 600 suggestions were received and 400 of them have been incorporated, Mr Kamal Nath said.
The procedural simplification carried out through the rules would lead to a major boost to exports, said L B Singhal, director general of the Export Promotion Council for EOUs and SEZs. It will also lead to a sharp reduction in transaction costs and facilitate construction of world-class infrastructure, he said while reacting to the SEZ rules
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