SEZ units to have up to 100 p.c. FDI - Maran

By Our Special Correspondent

NEW DELHI, MAY 30. The Union Government will shortly clear a proposal to allow setting up of units with 100 per cent foreign equity ownership in the new Special Economic Zones (SEZs) for export industries. These units will not have any sectoral caps on foreign equity.

This was disclosed here today by the Commerce and Industry Minister, Mr. Murasoli Maran, who said the Cabinet was likely to approve this issue in the next two weeks. The special dispensation would be confined to units in the new SEZs.

This will be the second phase of bringing the SEZ scheme into operation. The first phase has been initiated with the Finance Ministry issuing notifications declaring the zones as ``foreign trade territory'' for the purpose of duties and taxes. This means that goods supplied to the SEZs from the domestic tariff area (DTA) will be treated as deemed exports and goods brought from the SEZ into the domestic market will be treated as imported goods.

According to Mr. Maran, ``this is a significant break with the past''. The SEZ scheme announced in the Exim Policy on April 1 envisaged a simple and transparent policy with the minimum of paperwork. ``It will be the cornerstone of our re-oriented policy which is aimed at export-led growth'' , he said.

Addressing a press conference, he said, the export target for 2000-01 has been pegged at 18 per cent. It would have been higher but for lower growth expected in the gems and jewllery sector.

Regarding the SEZs, he said apart from the two initially proposed to be set up in Tamil Nadu and Gujarat, four other States have been given clearance in principle for setting up such export zones. Orissa has allocated 500 hectares near Paradeep, Maharashtra has offered 1,190 hectares in Dronagiri in Navi Mumbai, West Bengal has offered 8,000 hectares in Kulpi and Andhra Pradesh is providing a large area in Kakinada. Besides, four export processing zones have also been converted into SEZs, bringing the total to ten such zones.

Mr. Maran stressed that there would be no ``inspector-raj'', in the SEZs. ``We trust the exporters,'' he said. But any supplies to the DTA will attract the normal domestic taxes. Even so, all assessments would be in a ``hassle-free'' manner, he assured.

``These zones will be strong magnets in foreign investment, particularly in production for exports and will generate millions of jobs'', he said.

Asked about dereservation of selected small industries, he said the Small Scale Industries Minister, Ms. Vasundhara Raje, had assured him that a package would be finalised soon. This is meant to cover areas such as toys, textiles, garments and leather.

Regarding the response of foreign investors during his recent visit to France and the U.K., he said they were seeking an exit policy for their units. In the SEZs, however, units will be treated as public utilities which have to maintain continuous operation.

On export targets for the current year, the Commerce Secretary, Mr. P. P. Prabhu, said the textiles industry was expecting buoyant growth of 28 per cent. Similarly, the chemicals, pharmaceuticals and plastics industry was expecting 21 per cent increase while there would be a 100 per cent rise in exports of iron ore. Demand for this mineral has grown rapidly and the total value of exports is expected to rise from $265 million to $500 million.

In the gems and jewellery sector, however, exports are expected to grow by only 12 per cent. This is largely because demand had spurted in the last year of the millennium leading to a 30 per cent growth in 1999-2000. In this backdrop, he said the industry felt the increase might not exceed 12 to 13 per cent this year.

Regarding setting up of SEZs, Mr. Prabhu said tax incentives would be given for speedy implementation. According to the notifications, the SEZ units may import and export through ports, airports, land customs stations, inland container depots (ICD), container freight stations (CFS), courier mode and parcel post. In the case of imports, the goods will be assessed on the basis of documents furnished by the units and there will be no physical examination of goods.

For exports, there will be no routine examination of consignments by SEZ customs authorities and exports will be allowed on the basis of self-certification. While the cargo will not be subject to routine examination, the customs authorities may examine such cargo when there is a specific information or intelligence. Software development units may import and export through data communication and telecommunication links.

Exports growth target pegged at 18 p.c.

NEW DELHI, MAY 30. Buoyed by surging exports in recent months, the Union Government has fixed an 18 per cent growth target for 2000-01, the Commerce and Industry Minister, Mr. Murasoli Maran, said here today.

``Though I had said that we would aim at a 20 per cent growth while releasing the Exim policy, we have now fixed a lower growth target as the gems and jewellery sector after a high growth rate of 30 per cent last year is expected to grow by only 12 per cent," he told reporters.

- PTI

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