Industry seeks payment in rupee for domestic supplies at maiden SEZ reforms stakeholder consultation

New Delhi: Developers and units of Special Economic Zones (SEZ) Tuesday raised the issue of operating below their potential due to subdued global demand and suggested that supplies from SEZs to the domestic market be made against payment in Indian Rupees instead of mandating foreign exchange realisation.

At a meeting of the SEZ reforms committee, issues related to allowing SEZ units to undertake job work for entities in the domestic area without export linkage, reforms in Free Trade Warehousing Zones and further measures to enhance ease of doing business, were also taken up. The committee is expected to recommend a roadmap for a comprehensive SEZ 2.0 policy aligned with the current global trade realities.

On the issue of permitting SEZ units to receive payment in Indian rupees for services supplied to domestic customers, industry said that the extant requirement of payment in foreign exchange is a hurdle for sectors such as aerospace, defence, maintenance, repair and overhaul, and advanced engineering services due to which Indian companies to source such services from overseas.


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The inter-ministerial committee on larger SEZ reforms and harmonisation of export promotion schemes was setup in February and began stakeholder consultations Tuesday.

“Industry has sought access the Domestic Tariff Area by paying duties only on the imported inputs contained in the products rather than on the finished goods, thereby creating a level playing field with domestic manufacturers,” said an industry representative who participated in the meeting.

Industry also backed allowing supplies from SEZs to the domestic tariff area on a duty foregone basis, similar to the EOU and MOOWR schemes wherein the SEZ units would reverse only the customs duty benefits availed on imported inputs instead of paying duties on the finished product, a practice stakeholders said is followed in several leading global free-zone models.

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This is aimed to improve capacity utilisation, strengthen domestic manufacturing, encourage investment in SEZs, and enhance their contribution to employment, exports, and India’s overall industrial competitiveness.