The Cabinet has urged the Apex bank to grant infrastructure status to the Special Economic Zones (SEZ) for encouraging the exports, which are badly hit by recession in the US and several European economies.
India`s exports plunged by over 12% in October this fiscal under the impact of global slowdown.
At present, the Reserve Bank of India (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 (eGoM), said L B Singhal, director general of the Export Promotion Council for Export Oriented Units (EOUs) and SEZs.
Since the SEZ Act, 2005, came into force, exports from SEZs have been Rs 660 billion. The SEZ exports are likely to reach over 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 (DEPB) as well as Duty Drawback scheme.
In addition, the ministry of finance (FinMin) would be coming out with directives to provide central value added tax (CENVAT) credit benefits for manufacturing within SEZs.