Let Good Sense Prevail

With the government turning a deaf ear towards the cries of the exporters to do away with the Section 10B of the Income Tax Act, 1961 and give them income tax exemption at par with Special Economic Zones (SEZs), I believe that it’s time for exporters to look for other alternatives.

During my meeting with several members of the Confederation of Export Units they were also of the opinion that indeed the exporters have to carry on with their businesses even without help from the government. However they all agreed that the fight for recognition of the EOUs would continue. And rightly so!

I strongly feel that the government should really rethink its policy and bring Export Oriented Units (EOUs) under the ambit of the same tax slab.

SEZs get deduction to the extent of cent per cent of the profit and gains for five consecutive years and 50 percent for five years thereafter, while EOUs get relief from income tax burden for a period of 10 consecutive assessment year with a sunset clause of allowing deduction up to the assessment year 2009-10, which is really unfair. This means the EOU Scheme is not guaranteed and will be eliminated after March 2009.

If we look at the figures, EOUs exports for the fiscal 2004-05 stands at Rs 32075 crores, a growth rate of 17.21 percent. On the other hand exports of SEZs stand at Rs 18153 crores, a growth rate of 22.48 percent for the same fiscal.

However I am not against SEZs. Though SEZs are an excellent idea, there are location specific industries, which cannot be located in these zones. Thus EOUs with a good track record should be renamed as Virtual SEZs, as was mentioned while drafting the rules for SEZs.

Let good sense in the Commerce Ministry prevail!