SEZ Amendment Bill: Proposed Changes to the 2005 SEZ Act
Why in the news
A long-awaited Bill reworking the Special Economic Zones law was expected in the coming Monsoon Session, once the Union Cabinet clears it.
Background
- The SEZ Act, 2005 has not brought the expected manufacturing investment.
- SEZs are enclaves treated as foreign territory for trade and tax, with incentives for exports and foreign investment.
- Aims: match global trade realities, ease business, boost local manufacturing and jobs.
Proposed changes
| Area | Now | Proposal | Effect |
|---|---|---|---|
| Domestic sales | Full customs duty on the finished product in the DTA | Duty on raw materials only | Cheaper sales, better linkages and capacity use |
| Reverse job work | Production only for export | Partial manufacturing for domestic firms | Smooths export seasonality, cuts idle capacity |
| Services payment | Foreign exchange only | Rupee payments allowed | Parity with manufacturing; more domestic demand |
Exam angle
- Terms: DTA (Domestic Tariff Area), reverse job work.
- Existing law: SEZ Act, 2005.