A 17-member panel chaired by a senior commerce department official will meet on June 30 to deliberate reforms in India’s Special Economic Zones (SEZs), including the impact of free trade agreements (FTAs), import substitution measures, and rupee-denominated payments for services supplied by SEZ units to domestic entities, according to an official cited by the Economic Times.
The committee, set up in February following the Budget 2026-27 announcement of a special one-time relief measure, will also consider allowing sales from SEZ units to the Domestic Tariff Area (DTA) on a duty-foregone basis and enabling SEZ units to undertake job work for firms in the DTA without linking it to exports, the official said.
Panel Deliberates FTA Impact and Import Substitution
The stakeholder consultation is expected to take up international best practices missing in Indian SEZs and changes in the SEZ Act, the official added. The discussion on FTA impact and import substitution reflects the government’s effort to align SEZ policies with broader trade policy objectives, including reducing customs duty leakage and promoting domestic manufacturing.
The one-time relief measure announced in the Budget allows eligible SEZ manufacturing units to sell a prescribed proportion of their output in the Domestic Tariff Area at concessional duty rates instead of standard customs duties. This measure is a key reform driver for the panel’s agenda.
Rupee Payments and Domestic Sales Reforms
A central item on the June 30 agenda is allowing rupee-denominated payments for services supplied by SEZ units to domestic entities. The commerce and industry ministry has sought industry inputs on whether the industry would be willing to pay SEZs in foreign exchange for reverse job work, or if they would demand payment in Indian rupees, the official said.
The panel will also deliberate on enabling SEZ units to undertake job work for firms in the DTA without linking that activity to export obligations. This could significantly ease compliance for manufacturing units that supply intermediate goods to domestic buyers.
“Discussions on reforms in the SEZs and free trade warehousing zones and ease of doing business issues would be held,” the official said.
Industry Inputs Sought on Reverse Job Work and Duty Foregone Sales
The official stated that the commerce and industry ministry has specifically requested industry feedback on two payment models for reverse job work: foreign exchange payment to SEZ units versus rupee-denominated payment. This input will help shape whether the panel recommends continuing the existing foreign exchange requirement or moving to a rupee-based system, which could reduce transaction costs for domestic firms.
The duty-foregone basis for DTA sales — where SEZ units supply goods to the domestic market without paying full customs duties — is another key reform under consideration. The one-time relief measure in Budget 2026-27 already allows a prescribed proportion of SEZ output to enter the DTA at concessional rates, and the panel may expand or formalise this mechanism.
Implications for Importers, Exporters, and Trade Policy Professionals
The reforms under discussion directly affect customs duty structures for SEZ-DTA trade, payment settlement methods in cross-border transactions, and job work compliance rules. For importers and exporters operating in SEZs, the June 30 meeting could lead to changes in how they invoice domestic customers, what documentation they must maintain for job work, and which duty rates apply to DTA sales.
The panel’s consideration of FTAs’ impact signals that SEZ units may need to align their sourcing and production patterns with India’s evolving preferential trade agreements. Import substitution measures, if implemented, could require SEZ units to source more inputs domestically to qualify for concessional duty benefits.
Trade policy analysts and customs brokers should monitor the panel’s recommendations closely, as they may lead to amendments in the SEZ Act, new Customs Notifications governing DTA clearances, and revised Foreign Trade Policy provisions for SEZ units. The official confirmed that changes to the SEZ Act itself are among the issues likely to be taken up at the June 30 consultation.
