Marine Economic Zones: a framework for abhyudayam of marine peoples’ lives

Rows of trawlers at Thoppumpadi Fishing Harbour, Ernakulam.

Marine Economic Zone (MEZ) is different from Special Economic Zone (SEZ).

  • MEZ is swadeshi, while SEZ is intended to promote foreign investment
  • MEZ is meant for using marine resources, while SEZ replaces cultivable land to promote industry. MEZ does NOT involve any displacement of any existing industry.
  • MEZ is a cooperative of small fishermen and small-scale marine product processing sector on the long coastline of Bharat, while SEZ is a concentrated large-scale activity creating an industrial megapolis.

MEZ needs an attractive fiscal package both at the Centre and the State levels. This package should be comparable to the fiscal package offered for SEZ.

Objective of MEZ is to generate marine economic activity and employment.

The key components of MEZ are:

  1. Generation of additional economic activity using the five-fold increase in fish landings along the coastline of Bharat.
  2. promotion of exports of marine products and services
  3. promotion of investment from domestic sources
  4. creation of employment opportunities
  5. development of infrastructure facilities by increased numbers of fishing harbours and fishing vessels, equipment, cold-storage facilities and marine product processing industries

MEZ will trigger a flow of domestic investment in infrastructure and productive capacity.

A single window MEZ approval mechanism should be established with a MEZ Board of Approval (BOA) composed of leaders from the coastal communities.

MEZ will be a central scheme with funding directly provided to the MEZs which should function as autonomous institutions led by a Board composed of members drawn from the coastal communities. States’ contributions will be in the nature of complementary governance activities and state services related to law and order, maintenance of road networks and civic amenities.

MEZ will involve the build up of infrastructure of housing, medical services and schools for the direct benefit of the coastal marine communities.

Central Government should provide direct insurance cover to the fisherfolk engaged in the risky activity of fishing on high-seas of the Indian Ocean (including Arabian Sea and Bay of Bengal).

On the same lines of rules/incentives provided for SEZ, the MEZ Rules should provide for :

· Simplified procedures for development, operation, and maintenance of the Marine Economic Zones and for setting up units and conducting business in MEZs;

· Single window clearance for setting up of an MEZ;

· Single window clearance for setting up a unit in a Marine Economic Zone;

· Single Window clearance on matters relating to Central as well as State Governments;

· Simplified compliance procedures and documentation with an emphasis on self certification   

· Foreign investments should be encouraged only where the domestic investors require specific areas of technical collaboration not available within the country.

Incentives and facilities for MEZ

The incentives and facilities offered to the units in MEZs for attracting investments into the MEZs:-

· Duty free import/domestic procurement of goods for development, operation and maintenance of MEZ units

· 100% Income Tax exemption on export income for MEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

· Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

· External commercial borrowing by MEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.

· Exemption from Central Sales Tax.

· Exemption from Service Tax.

· Single window clearance for Central and State level approvals.

· Exemption from State sales tax and other levies as extended by the respective State Governments.  

The major incentives and facilities available to MEZ developers include:-

· Exemption from customs/excise duties for development of MEZs for authorized operations approved by the BOA.

· Income Tax exemption on export income for a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.

· Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.

· Exemption from dividend distribution tax under Section 115O of the Income Tax Act.

· Exemption from Central Sales Tax (CST).

· Exemption from Service Tax (Section 7, 26 and Second Schedule of the MEZ Act).


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