Modi 3.0 government: Proposed SEZ Amendment Bill may figure in 100-day Agenda

The Modi 3.0 government is expected to bring in proposed amendments in the Special Economic Zones (SEZ) law in the 100-day agenda of the Commerce Ministry and may table in the Monsoon Session of Parliament, sources said. The monsoon session will be the first session of the newly elected government which will also see the presentation of the full budget for 2024-25.

SEZs are enclosures that are treated as foreign territories for trade and customs duties, with restrictions on duty-free sales outside these zones in the domestic market.

The government is already considering several measures such as a flexible framework for the sale of products manufactured in SEZs in the domestic market, and streamlining approval processes for units, sources told news agency PTI.

The aim is to help revive SEZs and facilitate business transactions between SEZs and the domestic tariff area (DTA) or the domestic market.

The commerce ministry had earlier held an inter-ministerial meeting on the proposals.

Last year, Commerce and Industry Minister Piyush Goyal said the government is looking at easing certain restrictions for units in the special economic zones (SEZ) to promote the sector's growth.

"We are looking at ways and means to liberalise some of these restrictions on SEZ units. It's under consideration...We are discussing it with all the stakeholders and hopefully that itself will give a significant boost to the SEZ units," Goyal said.

Companies in SEZs are urging the government to permit them to sell their products in domestic tariff areas or domestic markets without paying the import duties that currently apply, similar to duty-free FTA imports.

SEZs have emerged as an important contributor to India's exports.

Total exports from SEZs stood at $155.8 billion in 2022-23. These included USD 61.6 billion in merchandise and $94.2 billion in services exports.

Think tank Global Trade Research Initiative (GTRI) in a report has suggested the government allow sale of products manufactured in SEZs in the domestic market on payment of duty foregone on inputs as that would help promote value addition.

At present, units in SEZs are allowed to sell their products in DTA on payment of duties on an output basis (finished goods).