June 16: The Delhi-based board that approves SEZ status has listed for next week software export giant Wipro's application for a project in Rajarhat that has been hanging fire for close to four years.

"The Development Commissioner of Falta Special Economic Zone has recommended in-principle approval (for the proposal). The state government's recommendation is awaited. The proposal of the developer is submitted for consideration of BoA (Board of Approval)," the agenda for the June 22 meeting says.

The Bengal government's response will indicate whether chief minister Mamata Banerjee has revised her opposition to the SEZ status in her second innings at the helm of the state. The very fact that the Wipro project figures on the agenda has fuelled suggestions about the possibility of a rethink.

It is not clear when the development commissioner of the Falta zone forwarded the recommendation for the in-principle approval. The commissioner is a central official and his designation mentions only Falta in South 24-Parganas though the person oversees all special economic zones in the state.

If the in-principle approval was recommended recently, it may mean that some signal had been conveyed about a possible change of stand by the Bengal government.

Commerce secretary Rita Teaotia heads the Board of Approval - an inter-ministerial body - which will consider the Wipro proposal. This is the first BoA meeting since Mamata regained power last month.

Wipro has proposed to set up an SEZ for information technology or information technology-enabled services over 19.76 hectares in Calcutta, the agenda said.

Wipro has been pressing for an approval since 2012 when it made its application but the state government has dilly-dallied on the issue.

A proposed SEZ first gets an in-principle approval when the developer has yet to get land. After the developer acquires land, the SEZ applies for a formal approval.

Bratya Basu, IT minister of Bengal, declined to comment on the Wipro proposal.

Last week, a CII delegation, which included a Wipro official, met Basu and impressed upon him the need to allow special economic zones in the infotech sector.

Sources said the minister had asked for a "solid plan" of employment and expansion for renewing or granting SEZ status to various IT companies, including Wipro and Infosys.

"We have put forward the question of special economic zones (SEZ) and he has assured us that he will look into it. But it needs time. We hope to work out a solution soon," Kaushlendra Sinha, regional director (east and northeast) of the CII, had said after the conference.

Formal BoA approvals have been granted for 12 SEZ projects in Bengal - all of them during Left Front rule. Bengal is a laggard with Karnataka topping the list with 61 formal approvals for SEZs, followed by Maharashtra with 59. In all, the BoA has granted formal approvals to 417 SEZ projects in the country.

SEZs qualify for massive tax breaks and a host of incentives, which is why investors once scrambled to win approvals.

Investors get a 100 per cent income tax exemption during the first five years of operation, 50 per cent for the next five years, and another 50 per cent of the ploughed-back export profits for the next five years. Effectively, promoters of SEZs do not have to pay tax for 10 years. They are also exempt from central sales tax, service tax, state sales tax and other levies.

Mamata's resistance to SEZs stemmed from her opposition to land acquisition from farmers to house industrial projects. But with very little big-ticket investments to show in her first term, the response to the Wipro application will show whether her stand is wilting.

The Trinamul manifesto for the recent Assembly elections was conspicuously silent on IT SEZs. "We will consider plans for knowledge-based industries like IT and industries that depend on intellectual resources. Coming up with special policies and schemes to facilitate the development of such industries will be our priority," the manifesto read.

In contrast, the manifesto for the 2011 polls had clearly said the government would not allow special economic zones (SEZs) in Bengal and cited the need to protect multi-crop land.

Under the SEZ rules, the state government has to exempt the project from state sales tax, octroi, mandi tax, turnover tax and any other duty/cess or levies on the supply of goods from the domestic tariff area to SEZ units.

In the case of units within the zone, the powers under the Industrial Disputes Act and other related labour Acts must be delegated to the Development Commissioner and the units must be declared as a public utility service under the Industrial Disputes Act which ensures that there are no labour strikes.

Many investors have lost interest in SEZs, which is why only 330 of the 417 proposals that received formal approvals have been notified.

But there were howls of protest after the Central Board of Direct Taxes (CBDT) announced last December that it would invoke a sunset clause and phase out the tax breaks for SEZs from March 2017. The move was in line with finance minister Arun Jaitley's proposal to phase out exemptions and reduce corporate tax rate to 25 per cent in four years.

But in his budget speech in February, Jaitley said the 10-year tax exemption for SEZs would be available if they became operational by April 1, 2020 - a three-year extension of the deadline for the phaseout.