Date:22/01/2007 URL: http://www.thehindubusinessline.com/2007/01/22/stories/2007012201800300.htm

Back SEZ rules to be amended to benefit turnkey sub-contractors

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New Delhi, Jan. 21 Turnkey sub-contractors executing their engineering procurement and construction (EPC) contracts with the Special Economic Zone units have cause for cheer.

They would soon be entitled to avail themselves of drawback and other concessions on the goods and services sourced by them from the domestic tariff area (DTA) for executing their EPC contracts.

The SEZ rules would be amended for this purpose, the Commerce Secretary, Mr G.K. Pillai, told reporters here on Saturday.

Hitherto, only developers and co-developers of an SEZ and their sub-contractors were eligible to avail themselves of drawback and other concessions on the goods and services sourced from DTA.

SEZs promoted by the private sector had submitted to the Government that this facility, which is already provided to developers, should be extended to SEZ units also.

Meanwhile, Mr G.K. Pillai said that the Commerce Ministry has written to the Reserve Bank of India to allow developers to open foreign currency denominated account and also release foreign exchange to them against their rupee payments.

Currently, the SEZ rules stipulate that developers would get drawback, duty entitlement passbook and other benefits only if they purchase goods and services out of their foreign currency account (with export earnings).

As most developers do not have export earnings in foreign currency to start with, it has been represented that foreign exchange should be released to them against Indian rupees.