Panel on SEZ policy reforms to soon submit its report: Official
A government-constituted committee on Special Economic Zone (SEZ) policy reforms is set to submit its report shortly.
The panel's mandate covers short-term, medium-term and long-term policy, legal and procedural reforms, including possible amendments to the SEZ Act, 2005 and SEZ Rules, 2006.
The report is expected to suggest an implementation roadmap with clear timelines, intended to be synchronised with the Union Budget cycle and India's trade-policy commitments.
The committee draws representation across the Ministry of Commerce and Industry, the Central Board of Indirect Taxes and Customs (CBIC), the Department for Promotion of Industry and Internal Trade (DPIIT), and NITI Aayog, reflecting a multi-stakeholder push to modernise the SEZ framework often referred to as "SEZ 2.0."
The SEZ Act, 2005 and its objectives
The Special Economic Zones Act, 2005 (operationalised via the SEZ Rules, 2006) created a legal framework for delineated duty-free enclaves treated as "foreign territory" for trade and tariff purposes. Its stated objectives are generation of additional economic activity, promotion of exports of goods and services, promotion of investment from domestic and foreign sources, creation of employment, and development of infrastructure facilities.
Key Details
- SEZs function under a single-window clearance mechanism with approvals from a Board of Approval at the central level and a Unit Approval Committee at the zone level.
- Historically, SEZ units were required to be Net Foreign Exchange (NFE) positive over a five-year period and enjoyed tax incentives (including Section 10AA income-tax exemptions, since phased down).
- As of the current review, India has 276 operational SEZs housing 6,279 units.
The reform committee's brief — reviewing the SEZ Act/Rules and recommending amendments — is a direct response to structural bottlenecks in this two-decade-old framework, such as under-utilised land, regulatory overlaps, and constraints flagged under WTO subsidy disciplines.
The proposed DESH framework as a policy alternative
The Development of Enterprise and Service Hubs (DESH) Bill was an earlier draft proposal (first floated around 2022) intended to replace the SEZ Act with a broader "development hub" model. Unlike SEZs, which are export-focused, DESH hubs were designed to serve both domestic and international markets and to be evaluated on "positive growth" (including employment generation) rather than the strict Net Foreign Exchange positivity mandated under the SEZ regime — making them more compatible with WTO subsidy rules.
Key Details
- DESH proposed retaining infrastructure-development incentives while removing the NFE-positive and direct-tax-incentive conditions tied to the SEZ Act.
- The DESH Bill was never enacted; the current committee's roadmap is widely seen as the next attempt to modernise the SEZ regime after DESH did not proceed.
The panel's recommendations on "possible amendments to the SEZ Act/Rules" sit in the same policy lineage as DESH — both attempt to reconcile export-promotion incentives with WTO compliance and India's manufacturing competitiveness goals.
India's SEZ export performance
SEZ exports reached USD 172.27 billion in 2024–25, a year-on-year growth of about 7.37%, underlining the continued economic weight of the SEZ scheme even as the policy framework is being reviewed.
Key Details
- Exports from SEZs form a significant share of India's total merchandise and services exports.
- The scale of SEZ activity (276 zones, 6,279 units) is the backdrop against which the reform committee is weighing continuity versus structural change.
The magnitude of existing SEZ exports is a key reason the government is pursuing calibrated reform (via committee recommendations) rather than an abrupt legislative overhaul.
- SEZ Act enacted in 2005; SEZ Rules notified in 2006.
- SEZ exports: USD 172.27 billion in 2024–25 (about 7.37% growth over the previous year).
- 276 operational SEZs with 6,279 units currently functioning in India.
- Reform committee spans the Ministry of Commerce and Industry, CBIC, DPIIT, and NITI Aayog.
- DESH Bill (proposed SEZ Act replacement) was drafted around 2022 but was not enacted into law.