Daijiworld Media Network – New Delhi
New Delhi, Dec 11: As many as 466 units have closed in seven Special Economic Zones (SEZs) across India over the last five years till FY25, according to data shared by the Commerce and Industry Ministry in response to a Lok Sabha query.
The data highlights that 100 units shut down in FY25 alone, following 113 closures after FY22, a period marked by Covid-19 disruptions. Employment in SEZs also fell slightly, from 31.94 lakh in FY24 to 31.77 lakh in FY25. SEZs, which benefit from tax incentives including duty-free imports and domestic procurement, employ over 31 lakh people in labour-intensive sectors.
While SEZs in China have historically powered manufacturing growth, the Indian model has not replicated similar success. Despite the closures, exports from SEZs have seen a positive trend, doubling over five years to Rs 14.63 lakh crore in FY25 from Rs 7.59 lakh crore in FY21. Investments have also risen modestly, reaching Rs 7.82 lakh crore in FY25 from Rs 6.17 lakh crore in FY21, although low research and development (R&D) investment and global competition continue to challenge SEZs.
Responding to questions on measures to support SEZs, Minister of State for Commerce and Industry Jitin Prasada said the government periodically introduces policy initiatives and regulatory changes, including permitting reverse job work, in consultation with stakeholders to ease operational challenges.
A survey by the Indian Council for Research on International Economic Relations (ICRIER) highlighted factors behind low foreign direct investment (FDI) in Indian SEZs, citing a lack of investment protection agreements, negative perceptions, and limited marketing and branding efforts. Productivity-related challenges have also affected specific sectors. For instance, the number of gems and jewellery units in SEZs dropped from around 500 before 2019 to roughly 360 in FY22.
The Ministry of Commerce and Industry has been working on SEZ reforms for the past three years, with new measures expected to be announced soon to strengthen the ecosystem and attract investment.