New Delhi: Government will come up with a legislation, which will have a fiscal package, including a 20-year income tax holiday for Special Economic Zones (SEZs), by end December, a top Government official said today (Dec 7, 2004).

"Government is working on a legislative framework and a fiscal package for SEZs to be put in place by December end," Commerce Secretary S N Menon said adding the draft bill had gone to the Law Ministry for vetting.

Speaking at the India Economic Summit, Menon said Government proposed to further simplify the procedures for attracting foreign direct investment which will not require approval of Foreign Investment Promotion Board.

These, he said, would only need the nod of Board of Approval, which will be headed by Additional Secretary in Commerce Ministry. Approval for manufacturing and services units will be granted at the zonal level by approval committee headed by Development Commissioner.

The legislation provides for tax benefits like exemption from customs duty, excise duty besides income tax benefits for 20 years, he said.

Menon said the new legislation would also give complete freedom to developers to allocate space as well as infrastructure and services on commercial terms.

Highlighting the other features of the draft central legislation, he said the zones would continue in perpetuity and only in the case of mismanagement of services or insolvency of developer, an administrator might be appointed for upto one year for stability.