Government sources have told CNBC-TV18 that a push is likely for the Special Economic Zones (Amendment) Bill in Parliament to support exporters and export units facing strain and slack demand due to global trade uncertainties.
Pointing out that labour-intensive exporters are compelled to produce at lower capacities run the risk of layoffs till they get new clients, government sources indicated that such export units need immediate orders to keep their operations running, for which the proposed SEZ Bill aims to allow sale by SEZs in the domestic market (Domestic Tariff Area) on a duty foregone basis.
The proposal aims to utilise unused capacity in SEZs to boost jobs, incentivise capacity addition, and investment, while retaining the condition for SEZs to be NFE-positive for five years along with a nod for reverse job-work.
Sources assured that the bill will not hurt domestic manufacturers as it will allow SEZs to replace imports from FTA partner countries.
Sources explained that many manufacturers of labour-intensive goods and brands currently find it economical to import from their facilities in other countries than from Indian SEZs, indicating that sale into domestic market by export units in SEZs will replace imports of labour-intensive products by brands from their facilities in other countries.
Sources added that many countries with successful SEZ models already allow sale of goods into local markets on a duty foregone basis.
In July 2025, CNBC-TV18 had reported citing sources that the bill aims to make SEZs more viable and ensure larger capacity utilisation, especially for SEZs operating at a lower capacity.
Assuring that the proposed amendments will allow only part of production to be diverted to Domestic Tariff Area (DTA), which again will be subject to rules on proportion of the total turnover, government sources had projected a huge potential investment at the brink in SEZs which may get triggered by the proposed amendment.
The government is hopeful of mitigating the current headwinds in exports with an increase in production by SEZs.
Last December, government sources had told CNBC TV18 that the government had shelved the DESH (Development of Enterprise and Services Hub) Bill by integrating most of its proposed amendments into the SEZ Amendment Bill.
Sources had highlighted that the government plans to introduce changes to Rules and Subordinate Legislation under the SEZ Act to address immediate concerns, as passing the Bill may take time.
Noting that investor interest in SEZs had declined following the removal of direct tax breaks, sources had said that the government aims to include sops for companies investing in SEZs to make the prospect alluring for them.
Discussions on the DESH Bill, held in 2022, involved the Ministry of Commerce & Industry and the Department of Revenue attempting to resolve taxation-related differences.
The discussions also included demands to drop corporate tax concession in the proposed bill.
Earlier, the Union Ministry for Finance had expressed its objections to the proposed extension of the 15% corporate tax rate till 2032.
While both the ministries had considered changes to the DESH bill to give a greater push to exports, the Commerce Ministry was keen on exempting SEZs from the NFE-evaluation criteria despite objections raised by the Union Finance Ministry and the NITI Aayog.
