The Central Government has constituted a 17-member committee to recommend comprehensive reforms in the policy framework governing Special Economic Zones (SEZs). The committee will prepare a concept paper/roadmap within six months with recommendations for broad-based reforms and formulation of a new SEZ 2.0 policy.
Objective of Committee
- It will undertake a background study to harmonise various export promotion schemes in India and improve the effectiveness of SEZs in the evolving global trade environment.
- The review aims to align SEZ policy with the current macroeconomic landscape, trade policies, and investment conditions.
Export Promotion Schemes to be Harmonised
The committee will examine integration and coordination among several export promotion schemes, including:
- Special Economic Zones Act 2005
- Export-Oriented Units (EOUs)
- MOOWR Scheme
- Advance Authorisation Scheme
- Export Promotion Capital Goods Scheme
- Duty Free Import Authorisation Scheme
The objective is to remove policy distortions and create a more integrated export promotion ecosystem.
Composition of Committee
The committee includes representatives from several government bodies and institutions, such as:
- NITI Aayog
- Department for Promotion of Industry and Internal Trade (DPIIT)
- Central Board of Indirect Taxes and Customs (CBIC)
- Department of Commerce
- Directorate General of Export Promotion
- Department of Economic Affairs
- Export Promotion Council for SEZs
- Two SEZ Development Commissioners
Key Terms of Reference
The committee will examine the existing SEZ framework and recommend reforms in several areas.
Review of SEZ Act, 2005: Assess the effectiveness of the SEZ Act in the current global trade and investment environment.
Evaluation of Policy Reforms: Assess the impact of existing and proposed reforms, including:
- Domestic Tariff Area (DTA) sales
- Fiscal and non-fiscal incentives
- Compliance requirements
- Operational flexibility.
These reforms will be evaluated based on their effect on exports, investment, employment and ease of doing business.
Assessment of SEZ Performance: The committee will examine how SEZs contribute to:
- Manufacturing growth
- Technology upgradation
- Value addition
- Services sector expansion
- Employment generation
- Participation of MSMEs.
Identification of Operational Challenges: The committee will identify key issues faced by SEZ developers and units, including:
- Customs procedures
- Taxation complexities
- Compliance burdens
- Infrastructure gaps
- Coordination among stakeholders.
Fiscal Impact Assessment: It will also review the revenue implications of SEZ incentives, including:
- Foregone duties and taxes
- Cost-benefit outcomes in terms of exports, investment and economic activity.
Study of Global Best Practices: The committee will analyse international SEZ and free trade zone models and evaluate their suitability for the Indian context.
Background: Budget Announcement Related to SEZ Reforms
In the Union Budget, the government announced a one-time measure allowing SEZ manufacturing units to sell goods in the Domestic Tariff Area (DTA) at concessional import duty rates, subject to quantitative restrictions.
This reform aims to address:
- Underutilisation of production capacity in SEZ units
- Global trade disruptions affecting exports.
Currently, goods sold from SEZ units into the domestic market attract high import duties.
Current Status of SEZs in India
- There are 276 operational SEZs, with 6,279 units, in the country**.**
- The total exports from these zones rose 7.37% to $172.27 billion in 2024-25.