India’s Commerce Department is preparing a Cabinet note to change the Special Economic Zones, or SEZ, framework for services. The proposal would amend the SEZ Act so that units operating in these zones can receive payment in Indian rupees instead of foreign exchange when they provide services to clients within the country.
The planned change targets a long-standing rule that ties SEZ service transactions to foreign currency earnings. If the amendment moves ahead, SEZ-based service providers would be able to bill domestic customers in rupees, a shift that could make it easier for more businesses inside SEZs to serve the Indian market.
The sectors expected to benefit include MRO, defence, engineering and IT services. Allowing rupee payments could remove a practical hurdle for companies in these segments, especially where demand comes from domestic buyers rather than overseas customers.
The proposal signals a broader effort to make the SEZ regime more aligned with the needs of service industries. By reducing the dependence on foreign exchange payments for local business, the government may open the door for greater use of SEZ infrastructure by Indian service providers and their domestic clients.
