- Limited number & area limits mooted
- Farmers-run SEZs
- No zones on farm land
- Extremely liberal tax holidays opposed
The Administrative Reforms Commission (ARC) has recommended the setting up of a limited number of special economic zones (SEZs) in order to create infrastructure in backward regions.
It has also suggested the setting up of SEZs promoted only by farmers.
The ARC, in its seventh report, titled, ‘Capacity Building for Conflict Resolution’ that has been submitted to the Prime Minister, Dr Manmohan Singh, was not in favour of using agricultural land for the establishment of SEZs.
Chaired by Mr M. Veerappa Moily, the ARC was also against the extremely liberal tax holidays provided to export units and developers and has demanded reconsideration of these measures.
The ARC has noted that while China permitted a limited number of large-sized SEZs, in India, hundreds of SEZs have been approved, some of which extended beyond 10 hectares.
The ARC also cautioned against the 25 per cent ceiling on processing activity in multi-product SEZs as it felt that this could lead to revenue loss, as well as diversion, or displacement of units, particularly of IT companies, which would move to SEZs because their existing tax holidays would end in 2009.
"All the elements of the Chinese SEZ policy that led to negative consequences are also present in the Indian SEZ policy. It is necessary to be vigilant about the social costs and consequences of the SEZ policy since it may lead to conflict", the Commission report cautions.
"Establishing SEZs to allocate land to private companies cannot be termed as furtherance of a public purpose", the report warned.
The ARC report advised that to avoid conflict it would be desirable that industrial activities are taken up in areas where they would cause the least displacement.
Source: Exim News Service-New Delhi, April 1 |
