The government on Friday said it is expecting 94 Special Economic Zones to become operational in the next 18 months.
"In 18 months 94 SEZs are expected to come up of which 22, which have already been notified, would be running in next six months," commerce ministry officials said.
At present, 150 SEZs have got approval from the government while applications for 225 are pending before the board of approval. The proposals that are pending before the board include those by Posco and one in Haldia. These are likely to be taken up at the next meeting.
According to officials, the country needs up to 300 SEZs. They said that the SEZs are expected to attract investment of up to Rs 100,000 crore (Rs 1,000 billion), a quarter of which would be foreign direct investment.
The commerce ministry is also of the view that the number of jobs created by the SEZs would be to the tune of 500,000 by December 2007.
The officials also contested the argument that the SEZs would lead to a tax loss of Rs 70,000 crore (Rs 700 billion) in direct taxes and said in fact the government stands to gain Rs 45,000 crore (Rs 450 billion) annually from them.
"The study undertaken on the tax loss through SEZs assumes that the entire incremental growth in country's exports will come from these SEZs," they said.
According to officials, if the loss in direct tax loss is Rs 70,000 crore than the profits of units in SEZs should be more than Rs 350,000 crore (Rs 3.500 billion) and turnover should be five times the profits.
The commerce ministry officials said the incremental economic activity generated by these zones would ensure that the government earns Rs 45,000 crore every year as taxes.
Besides, the officials said even the Reserve Bank of India has observed that the SEZs would act as catalysts for growth and facilitate large flow of foreign and domestic investments. Moreover, RBI has also noted that simplification of procedures for development, operation and maintenance of the SEZs and the fiscal incentives was expected to spur investment and industrial activity, they said.
The officials also dismissed claims that SEZs were degenerating into a land scam and that farmers' land was being acquired, saying the 225 new proposals pending before the board of approval required only about 75,000 hectares. This constituted a minuscule 0.000625 per cent of the 120 million hectares of total cultivable area in the country, they said.
To ensure that the SEZs do not become a real estate business opportunity, the rules does not allow any sale of land and all land allotted to the developers were on lease.
The officials said the 150 SEZs that have been approved so far are spread over an area of 26,800 hectares, of which the zones promoted by state government industrial development corporations accounted for 9,140 hectares.
On RBI's concern that the SEZs could aggravate the uneven pattern of development by pulling resources from less developed areas, the officials said special consideration has been given to states like Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Himachal Pradesh, Uttaranchal and Uttar Pradesh while approving the zones.
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