Rightly, the Commerce Ministry has started its parleys to reverse certain proposals made in the recent Union Budget that might hurt the exim community.

Commerce Minister Mr. Kamal Nath has sought Prime Minister Manmohan Singh's intervention to reverse the proposal to end tax holiday for Special Economic Zone units from 2009.

Indeed, if the government does so it would only act as a hurdle in promoting the fledgling SEZs aimed at boosting exports and employment.

I feel if tax holiday for SEZs are done away with, it will discourage investment in the zones which have till date succeeded in acting as vehicles of export-led growth of the economy and employment generation. The contributing of the SEZs to the exchequer cannot be ignored by any means.

If the new proposal comes into effect, every unit, irrespective of their period of operation, will be taxed after year 2009. This is in contrast to the existing norm which allows cent per cent income tax exemption for a period of 10 years, total tax holiday for the first five years, 50 per cent for the next two years and 50 per cent of the profit ploughed back in the capital investment for the next ten years.

What surprises me is that, despite the draft Special Economic Zones Bill where this exemption was proposed to be extended by 20 years, beginning from the date the unit starts production; the Finance Ministry has brought out this proposal.

But I still like to believe that good sense will prevail amongst the decision-making circles and the zones will not be deprived of this incentive. Let's hope for the best.