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December 02, 2008 16:03 IST
The government has asked the Reserve Bank of India [Get Quote] to grant infrastructure status to the special economic zones to spur exports, badly hit by recession in the US and several European economies. At present, RBI considers SEZs as real estate as a result of which promoters have to pay higher interest on bank loans. Banks charge higher interest from the real estate promoters because they need to provide increased provisioning. However, the central bank is yet to implement the government directive, which was issued after a decision of the empowered Group of Ministers, director general of the export promotion council for EOUs and SEZs L B Singhal said at an Assocham function in Chennai. Since the SEZ Act, 2005, came into force exports from SEZs have been Rs 66,000 crore (Rs 660 billion). The SEZ exports are likely to reach over Rs 100,000 crore (Rs 1,000 billion) by the end of this fiscal, Singhal said. He said the central government has already decided to provide service tax exemptions to SEZs for services provided outside the tax-free zones. The department of commerce is working on extending the tax refund benefits to SEZs under the duty entitlement passbook scheme as well as Duty Drawback scheme. In addition, the ministry of finance would be coming out with directives to provide CENVAT credit benefits for manufacturing within SEZs. India's exports plunged by over 12 per cent in October this fiscal under the impact of global slowdown.
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