Director General of Foreign Trade RS Gujral told a meeting of the Federation of Indian Export Organisations (FIEO) representatives on Monday that the Ministry of Commerce is considering the demand to extend the tax benefits even after the deadline.
"We have received a number of representations from EOUs seeking extension of the income-tax benefits. The ministry will discuss the proposal soon and forward it to the government," Gujral said.
Investors are worried over the future of EOUs once the tax benefits are withdrawn, especially in the wake of the special economic zones (SEZs).
The government, hence, may extend this deadline by another five years, Gujral indicated. EOUs are mainly concentrated in textiles, food processing, electronics, chemicals, plastics, granites and minerals.
Exports from EOUs during 2004-2005 amounted to Rs 36,806.17 crore (Rs 368.06 billion) as compared with the export of Rs 28,827.58 crore (Rs 288.27 billion) achieved during 2003-2004, registering 27.68 per cent growth. According to current estimates, exports from EOUs have crossed Rs 35,000 crore (Rs 350 billlion).
Gujral assured the EOU representatives of taking steps to protect their interests, adding that the government is also paying focussed attention to the Small and Medium Enterprises sector.
PC Nambiar, export-import director, Poonawalla Group, told Business Standard that the investments in EOUs have witnessed a drastic fall as the tax benefit deadline is approaching. "SEZs are coming up in urban areas while EOUs have a strong presence in rural areas.
Hence, the government should continue these income-tax benefits to EOUs even after March 2009," Nambiar demanded.
Gujral also assured representatives of working as an interface between excise and customs department and other establishments related to exports business.