Now Reading: Government Plans Rupee Payments for SEZ Services Sold Within India
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Government Plans Rupee Payments for SEZ Services Sold Within India
The commerce and industry ministry is preparing a Cabinet note to remove the foreign exchange requirement for services supplied by special economic zones to domestic tariff areas, ETCFO reports. Section 2(z) of…
The Story in Brief
The commerce and industry ministry is preparing a Cabinet note to remove the foreign exchange requirement for services supplied by special economic zones to domestic tariff areas, ETCFO reports. Section 2(z) of the SEZ Act, 2005 currently requires these payments to be realised in foreign exchange, unlike goods supplied to domestic entities. The proposed change would align the rule with the Goods and Services Tax law and require an amendment to the Act.
Industry is seeking rupee payments for aerospace, defence, maintenance, repair and overhaul, and advanced engineering services. It says the current process adds bank commissions and delays, while discouraging work by Indian units. SEZ exports fell to $133.45 billion in 2025-26 from $172.07 billion in 2024-25. India has 276 operational SEZs with 6,695 units.
The Indian Opinion
Claims that this change alone will revive SEZs would be overstated. The foreign exchange rule creates needless conversion costs for transactions between two Indian entities, but export performance also depends on demand, infrastructure and tax certainty. The government should publish the proposed amendment and track whether rupee billing increases domestic orders in defence and engineering services. The clearest test will be whether SEZ exports recover from $133.45 billion without weakening compliance checks.
Source: cfo.economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
