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Move to impose 51 pc EO on SEZ units dropped |
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02/09/2008 |
| The Union government has shelved a proposal to impose a 51 per cent export obligation (EO) on Special Economic Zone (SEZ) units.
This was decided at a recent meeting of the Empowered Group of Ministers (eGoM) on SEZs.
This comes as a huge relief to investors in SEZ units, both foreign and domestic, as they are no longer forced to start exporting from the very first year of operations.
The current rules specify that SEZ units need to be only net foreign exchange (forex) earners.
"There are a number of cases, like the Nokia unit in Sriperumbudur, where investors did not export much in the first year. However, they started exporting a huge chunk of their total production subsequently. A minimum EO obligation would take away this flexibility which units enjoy at the moment", an official of the Commerce Department explained.
At present, more than 80 per cent of goods produced in SEZ units are exported, the official pointed out.
The EO issue was discussed at several eGoM meetings, but no decision was arrived at.
However, with the Chairman of the Prime Minister’s Economic Advisory Council, Mr C Rangarajan, stating that the EO on SEZ units was not necessary, the Commerce Department’s case was strengthened.
Exports from SEZs were estimated at Rs 66,638 crore in 2007-08. This was 92 per cent higher than exports of Rs 34,615 crore from the zones in 2006-07. |
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