Stakeholder consultations next week to discuss proposals such as allowing SEZ sales in domestic market at concessional duties, rupee-denominated service payments and job work for DTA firms
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The government panel reviewing India’s Special Economic Zone (SEZ) framework will meet next week to hold stakeholder consultations on a series of reforms that could form the basis of a new SEZ 2.0 policy. “The key proposals on the agenda include discussions on allowing sales from SEZ units to the domestic tariff area (DTA) on a duty-foregone basis, permitting rupee-denominated payments for services supplied by SEZ units to domestic entities, and enabling SEZ units to undertake job work for DTA firms without linking such activity to exports,” sources familiar with the discussions told businessline.The 17-member committee, headed by the Additional Secretary (SEZ) in the Department of Commerce and including members from the Finance Ministry and NITI Aayog, constituted earlier this year, will also assess the impact of concessions and reforms already extended to SEZs.One-time reliefFor instance, Budget 2026-27 provided a special one-time relief measure allowing eligible SEZ manufacturing units to sell a prescribed proportion of their output in the Domestic Tariff Area (DTA or domestic market) at concessional duty rates instead of standard customs duties.Relaxations on minimum land requirement mandate for key sectors, such as ‘semi-conductor and electronics’ and Net Foreign Exchange (NFE) calculations (SEZs have to be NFE positive) and some other operational flexibilities, too, have been extended to units.“The review will examine whether these changes have succeeded in boosting exports, attracting investment, generating employment and improving ease of doing business, and whether further policy interventions are required to enhance the competitiveness of SEZs,” the source said.The main proposals that would be discussed in the meeting have been deliberated for a long time are aimed at giving SEZ units greater operational flexibility and improving their integration with the domestic economy. “Allowing DTA sales on a duty-foregone basis would reduce the tax burden on goods sold in the domestic market by requiring units to pay only the duties exempted on imported inputs rather than full customs duties. The other important proposal is permitting rupee-denominated payments for services supplied to domestic entities as it would ease such transactions by removing the requirement of foreign exchange realisation for such transactions,” the source said.Job workAnother proposal long pursued by the industry is allowing SEZ units to undertake job work for DTA firms without linking it to exports as it would enable them to utilise idle capacity and participate more freely in domestic manufacturing value chains.The consultations assume significance as the government is weighing options to make the SEZ policy more attractive following the lapse of key direct tax incentives that had originally underpinned the success of the scheme. Industry has long argued that, in the absence of tax benefits, SEZs need greater operational flexibility and a more liberal regulatory regime to remain globally competitive.The review also comes against the backdrop of the proposed Development of Enterprise and Service Hubs (DESH) Bill, which was intended to replace the SEZ Act, 2005, but was put in the back-burner amid differences over certain provisions and changing policy priorities. The government subsequently opted to pursue reforms through amendments to SEZ rules and administrative measures, while undertaking a broader review of the existing framework before deciding on the next phase of reforms.Published on June 24, 2026
