‘SEZs Fail To Have Any Major Impact On Growth’ – Times of India – 20-Nov-2014

December 3, 2014 - Uncategorized

Special Economic Zones (SEZs) have had no noticeable impact on any aspect of economic growth while they have claimed over Rs 1000 crore of ineligible taxes, a CAGaudit has found.

The report tabled in Parliament on Friday says the objective of SEZs was employment generation, investment, exports and economic growth. “However, the trends of the national databases on economic growth of the country, trade, infrastructure, investment, employment etc do not indicate any significant impact of the functioning of the SEZs on the economic growth,” the report has said.

The report pointed out that the SEZs in India have availed tax concessions to the tune of Rs 83,104.76 crore, of which Rs 55,158 crore of income tax and indirect taxes of Rs 27,946.76 crore, between 2006-07 and 2012-13. “Our review of the tax assessments indicated several instances of extending ineligible exemptions/deductions to the tune of Rs 1,150.06 crore,” the report has said.

The audit has pointed that just 38.78% of the SEZs had become operational after their notification, while 52% of the land allotted remained idle even though the approval dated back to 2006. “There was a decline in the activity in the manufacturing sector in the SEZs. Land acquired for public purposes were subsequently diverted (up to 100% in some cases) after de-notification,” the audit has said.

The report also pointed out that 17 states were not on board in implementing the SEZ act with matching state level legislations, which rendered the single window system not very effective. “Developers and unit holders were almost left unmonitored, in the absence of an internal audit setup. This posed a huge risk for the revenue administration,” it said.

“The achievements of SEZs are contributed by a few SEZs located in some developed States, which were mostly established prior to enactment of the SEZ act,” the report says.

Over a period of time, the growth curve of SEZs had indicated preference for urban agglomeration by industry, undermining the objective of promoting balanced regional development, it says. Another significant trend in the SEZ growth has been the preponderance of IT/ITES industry–56.64% of the country’s SEZs cater to IT/ITES sector and only 9.6% were catering to the multi-product manufacturing sector.

“Land appeared to be the most crucial and attractive component of the scheme. Out of 45,635.63 hectares (ha) of land notified in the country for SEZ purposes, operations commenced in only 28,488.49 ha (62.42 %) of land.


Times of India

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