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Informist, Friday, Jan. 2, 2026

 

By Krity Ambey

 

NEW DELHI – The government is likely to introduce a bill to amend the Special Economic Zones Act in the upcoming Budget Session of Parliament, a commerce ministry official said. The bill has been in the works for four years now. Finance Minister Nirmala Sitharaman, in her Budget speech for 2022-23 (Apr-Mar), had announced that the government would amend the SEZ Act to optimally utilise infrastructure and enhance India's export competitiveness.

 

The commerce and industry ministry is likely to seek the Union Cabinet's approval for the bill very soon, the official said. The government had planned to table the legislation during the Winter Session, but differences between the Department of Commerce and the Department of Revenue over some provisions delayed the bill, the official said. 

 

The bill aims to promote investment and local manufacturing and align India's Special Economic Zones framework with the evolving global trade order. An operational measure under consideration is allowing units in the Domestic Tariff Area--including all regions in India other than SEZs--to pay in rupees for services procured from SEZ units. Currently, such transactions can only be settled in foreign currency, which is cumbersome and expensive.

 

The government is also looking at allowing manufacturing units in Special Economic Zones to sell goods in the domestic market by paying customs duty only on the raw materials, rather than on the finished products, the official said. Currently, sales to the Domestic Tariff Area attract customs duty on finished goods.

 

Another proposed change is allowing Special Economic Zone units to undertake jobwork for domestic units. While domestic units are currently permitted to perform jobwork for Special Economic Zones, the reverse is not allowed. "We want to allow reverse jobwork as well," the official said.

 

The broader objective of amending the SEZ Act is to facilitate smoother integration of SEZ units with the domestic market. We want to ensure maximum utilisation of the capacity installed in the SEZ units, the official said. Export orders are often unpredictable, and in many cases, units operate at just 30–40?pacity, the official added. Allowing SEZ units to also serve the domestic market would help address underutilisation.

 

The plan for amendment of the SEZ Act has undergone considerable twists and turns over the last three years, primarily due to disagreements between the commerce and revenue departments. In 2023, the commerce and industry ministry prepared the Development of Enterprise and Service Hubs Bill to replace the SEZ Act. However, the bill had to be scrapped because the finance ministry was not on the same page as the commerce and industry ministry over the proposals. 

 

India enacted the SEZ Act in 2005 to create export-oriented industrial hubs and position the country as a globally competitive destination for manufacturing and services. Units operating in these zones primarily serve export markets and enjoy several tax incentives, including duty-free imports.

 

India currently has 276 operational SEZs with a cumulative investment of INR 7.07 trillion, according to data from the commerce and industry ministry. Exports from these units were $172.27 billion in FY25, accounting for one-fifth of India's total exports of goods and services.   End

 

US$1 = INR 90.20

 

Edited by Tanima Banerjee

 

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