Fifteen developers including Essar, DLF, Mahindra Satyam and K Raheja are threatening to seek denotification of their respective Special Economic Zones citing uncertainty over the continuation of earlier promised fiscal benefits and imposition of new taxes.

Disclosing this in a statement on Wednesday, the Export Promotion Council for EOUs and SEZs (EPCES) asked the Finance Minister, Mr Pranab Mukherjee, not to alter the SEZ Act and take away the benefits through any legislation including the Direct Taxes Code.

“Unexpected imposition of Minimum Alternate Tax at 18.5 per cent and Dividend Distribution Tax at 15 per cent on SEZs has forced the approved SEZs to review their business plan,” EPCES said.

“Fifteen SEZs – Satyam Computer Service, MIDC, S2Tech.com, Mansarovar Industrial Development Corporation, Bengal Shapoorji Infrastructure Development, K. Raheja Universal, Lahari Infrastructure, Shivajimarg Properties, DLF Ltd (3 SEZs), TCG Urban Infrastructure Holdings, Essar SEZ Hazira, Omnibus Industrial Development Corporation and SIDCUL – are considering for de-notification,” it added.

The EPCES statement said uncertainty in tax laws and going back from the commitment of tax exemption would result in a lack of credibility in the minds of investors. It also adversely affects the progress of project implementation, the statement added.

“Many more SEZs, who are yet to commence commercial activities may withdraw from the (SEZ) scheme as they are now put on par with any DTA (Domestic Tariff Area or the area outside SEZs) sector which enjoys more operational freedom. With the imposition of MAT and DDT, fresh proposals to set up SEZs are not coming up,” the EPCES said.

“SEZs have been a growth engine of the Indian economy and they need to be supported not with fresh sops but at least by providing exemptions as promised when approval was given to set up SEZs,” EPCES said.

The existing SEZ scheme with all its fiscal benefits must be provided for all SEZs notified till December 31, 2014, it said, adding that this would ensure the completion of the SEZ projects of these developers who have already invested huge amount of money.

SEZs have registered a 43.11 per cent growth in exports in 2010-11 (of Rs 3,15,868 crore). Total employment generated by SEZs is 6,76,608, while investments into these zones are worth Rs 2,02,810 crore. The manufacturing sector SEZs exported goods worth Rs 1,94,941 crore.

“While the manufacturing sector as a whole shows considerable decline, the manufacturing sector SEZs shows commendable growth. This can be attributed to the tax concessions and administrative support given in the SEZ policy,” EPCES said.

Of 584 formally approved SEZs, 378 have been notified and 133 have started exports.

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