In the works

New Delhi, July 13: The government today approved a metals SEZ in Haldia, which was one of the three proposals before the commerce ministry’s board of approval (BoA).

The removal of tax exemptions in the recently released draft of the direct taxes code has created uncertainty over SEZs.

From 11 proposals in December, the BoA had vetted six in April and June. This time it has approved three.

Besides Coastal Ferrotech Ltd’s proposal for Haldia, the BoA, headed by commerce secretary Rahul Khullar, cleared Videocon Industries’ electronics hardware and software enclave in Navi Mumbai and Infoparks’ infotech zone at Ernakulam in Kerala.

The interest in SEZs had started waning from December as a fallout of the economic slowdown. But even a recovery could not rekindle any interest, with the tax code proposing an end to exemptions on export income in new SEZs.

The proposed code has not only dampened the mood of new developers but also caused anxiety among those who have obtained approvals but are yet to implement the projects. Of the 580 approved SEZs, 111 are functional.

The inter-ministerial panel also gave extensions to 24 developers, which included GMR Hyderabad International Airport Ltd, Unitech Kochi SEZ Ltd and K Raheja Corporation. It deferred a decision on waiving the clause that necessitates the setting up of an SEZ on a single piece of land.

The decision to tighten environment norms for units recycling plastic wastes was also deferred.

Essar’s request to denotify its sector-specific zone at Hazira was cleared.

Commerce ministry officials, who have taken up the concerns of industry on the scrapping of the tax benefits with the finance ministry, said, “We have stressed the need to see to the best extent possible that the interests of the investors are protected.”

The revised discussion paper on direct tax code has said profit-linked deductions will be available only to existing SEZs, which means new units that come up from next fiscal will not get exemptions.

Commerce ministry sources said investments of Rs 10 lakh crore and 10 million new jobs in 500 SEZs in the next 10 years were at stake.