India's SEZ exports slide 22% as government plans policy overhaul

India's special economic zones shipped $133.45 billion in goods during 2025-26, down from $172.07 billion the prior year. That 22% drop comes as the commerce ministry convenes a stakeholder meeting June 30 to discuss a broader reform of the SEZ framework.

The meeting will cover harmonization of export promotion schemes and SEZ policy changes, an official said. Specific items on the agenda include allowing rupee payments for SEZ services sold to the domestic tariff area, permitting job work by SEZ units for DTA customers without export linkage, and import substitution rules. Reforms to free trade warehousing zones and further ease-of-doing-business measures are also expected.

The government has formed a 17-member committee to propose a SEZ 2.0 policy. The panel is conducting a background study on harmonizing the various export promotion schemes that currently operate in parallel: SEZs, export-oriented units, the Manufacturing and Other Operations in Warehouse scheme, Advance Authorisation, the Export Promotion Capital Goods scheme, and Duty Free Import Authorisation. The committee will submit a concept paper with a roadmap for broad-based reforms.

The push reflects how much has changed since the SEZ Act was passed in 2005. India's trade policy looked different then, and global trade dynamics have shifted significantly. The zones are treated as foreign territory for customs purposes, meaning duty-free domestic sales are restricted.

There are 276 operational SEZs in the country housing 6,695 units. The export decline from $172 billion to $133 billion in a single year gives the reform effort some urgency.