Commerce and Industry Minister Anand Sharma today met Environment Minister Jayanthi Natrajan to resolve

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the inter-ministerial differences over a proposal to ease environment laws in the manufacturing policy.

"I think we are in a position now to move forward for taking final view in the matter," Sharma said after the meeting.

According to an official statement, the two ministers have reached an understanding to fast-track the resolution of the issues so that the new proposed policy can be put up before the Cabinet as soon as possible.

However, earlier in the day Secretary in the Department of Industrial Policy and Promotion (DIPP) R P Singh said that there were issues with both the environment and labour ministries.

The draft policy, as reflected in the DIPP's discussion paper, has suggested setting up of National Manufacturing Investment Zones (NMIZs) -- big enclaves which could even subsume special economic zones -- should be given the flexibility to downsize labour.

Likewise, it recommended changes in environment norms that come in the way of investment.

"... Labour Department is citing ILO (International Labour Organisation) obligations... One serious difference of opinion I got is that everybody is talking about (their) sovereign functions, including Environment (Ministry)," Singh said here at a Ficci function.

Singh regretted that there was "lukewarm" response from the Labour Department on the policy.

He asked the industry to talk directly with the Labour Department and labour unions on the issue.

Meanwhile, Singh also said the Revenue Department is veering round to the proposal for extending capital gains tax exemptions on equity investment in NMIZs.

The DIPP is of the view that the units in the NMIZs should get exemption from Capital Gains Tax.

"Finally, Revenue Department has seen merit in this and hopefully they are agreeing to this. Now, we are working modalities with them as to how to check the misuse of this...," he said.

Prime Minister Manmohan Singh had called a meeting of the key ministers last month in the backdrop of differences between the ministries of environment, labour and finance and the DIPP. At the meeting, the draft Policy was given in-principle approval and a Committee of Secretaries, chaired by Prime Minister's Principal Secretary T K A Nair, was asked to work out a consensus.

According to the paper, the NMIZs would enjoy all the tax benefits that SEZs and EOUs have.