News Brief
India Eyes New SEZ Framework To Revive Manufacturing, Ease Export Strain Amid Steep US Tariffs: Report
(Representative Image)
A high-level government panel—including representatives from the Commerce and Industry Ministry, NITI Aayog, and leading exporter groups—is working on framing new SEZ norms to revive manufacturing and help Indian exporters tap the domestic market, Indian Express reported citing a person aware of the development.
The initiative comes as steep US tariffs have disrupted production and strained export competitiveness.
This comes as several SEZ-based exporters catering largely to the US have requested de-notification as high tariffs rendered their exports unprofitable.
Many, however, have continued trading to retain their foothold in the US market despite losses.
Indian SEZs, which benefit from duty-free imports and tax incentives, exported goods worth $172 billion in FY25 from 276 units.
Domestic sales, however, formed a mere 2 percent of total output, highlighting their export-centric nature.
To offset export losses, exporters are pressing for a ‘reverse job work’ policy—permitting SEZ units to take up domestic orders and optimise unused labour and equipment during low export seasons.
A senior government official cited in the IE report said the reverse job work proposal was under active discussion but stressed that duties on inputs must remain equitable for both SEZ and domestic industries.
A “reverse job work” policy would allow SEZ units to execute work for the domestic tariff area (DTA), a demand aimed at improving efficiency as seasonal export dips often leave capacity under-used.
Among the sectors pushing hardest for the reforms is gems and jewellery, which contributes 65 percent of India’s studded jewellery exports and faces the brunt of US tariff hikes, its biggest market.
Following a September meeting with Finance Minister Nirmala Sitharaman, the Gem and Jewellery Export Promotion Council (GJEPC) said that it has requested allowing SEZ units to undertake reverse job work and domestic tariff area (DTA) sales to keep factories and artisans engaged, extending export obligation periods for US shipments, and providing an interest moratorium on packing credit and working capital loans to ease financial stress.
Experts warn of a possible negative trade balance in SEZs, citing rising raw-material imports and sluggish jewellery exports.
An ICRIER report found SEZs suffer from low Research and Development (R&D) investment and skill gaps, with only 4 of 14 surveyed jewellery units having invested in R&D.
Low foreign direct investment (FDI) further weakens SEZ competitiveness due to limited brand building, negative perceptions, and absence of investment-protection pacts.
