New Delhi, Mar 29 (TNT) : The Union Budget 2026–27 has proposed targeted reforms to strengthen Special Economic Zones (SEZs), aiming to enhance export competitiveness, attract investment and improve capacity utilisation.
As part of the proposals, eligible SEZ manufacturing units will be allowed, as a one-time measure, to sell a limited portion of their output in the Domestic Tariff Area (DTA) at concessional duty rates.
The quantity of such sales will be capped relative to exports, with regulatory changes to be introduced for implementation.
The move is intended to help SEZ units achieve economies of scale while maintaining their export-oriented character and ensuring a level playing field for domestic manufacturers.
India currently has 368 notified SEZs as of February 2026, with exports from operational zones exceeding ₹11.70 lakh crore in 2025–26 (till December), marking a growth of over 32 per cent year-on-year.
SEZs, governed by the Special Economic Zones Act, 2005, function as duty-free enclaves designed to promote exports, attract domestic and foreign investment, generate employment and build world-class infrastructure.
India was among the first Asian countries to adopt export-focused zones, beginning with the Kandla Export Processing Zone in 1965, with the SEZ policy introduced in 2000 to address structural bottlenecks and enhance investor confidence.
The SEZ framework was further strengthened through the SEZ Act, 2005 and SEZ Rules, 2006, which introduced a simplified regulatory regime, including single-window clearances and fiscal incentives.
Recent policy measures have also focused on emerging sectors, with amendments in 2025 enabling the establishment of SEZs dedicated to semiconductor and electronic component manufacturing to boost high-tech production and reduce import dependence.
Officials said the Budget proposals, along with continued incentives such as tax benefits and ease of doing business, are aimed at strengthening SEZs as key drivers of exports, employment and industrial growth, while positioning India as a competitive global investment destination.
TNT KS
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