Finance Minister opposes amendment of SEZ Act

Commerce and industry minister Anand Sharma's move to give special economic zone (SEZ) a fresh lease of life faces stiff opposition from finance minister P Chidambaram. The finance minister, on September 12, wrote on the SEZ file, "I have serious reservations on the current policy on, and performance of, SEZs. They are not infrastructure-driven zones but tax exemption-driven zones. We should press our objections and views."

The matter has reached the finance minister for the first time since May this year, when the commerce ministry had approached the finance ministry for amending the SEZ Act, to make it more attractive for developers. Although officials of both the ministries have met on several occasions on the issue, they are yet to reach a conclusion.

"We are now looking at issuing new guidelines on SEZs and are conducting very serious negotiations with the revenue department. Very soon there will be revised guidelines where we will restore interest and their attractiveness. We will see how we can make SEZs viable for investors… guidelines will have greater degree of clarity," Sharma had said on Tuesday while addressing a business forum in Czech Republic.

The commerce ministry wants to announce a revised SEZ policy, which substantially liberalises land requirement and other norms. However, the revenue department under the finance ministry argues that such policy will only encourage industry to get an SEZ status to avail tax breaks among other benefits.

According to sources, "If the commerce department wants any amendments to the SEZ act, then they should take the matter to the Cabinet and get an approval. A point which commerce ministry has been opposing all through out."

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