SEZ Registrations

Registration with Special Economic Zones can be done through Special Economic Zones Act, 2005 and SEZ Rules, 2006. It can be undertaken by developers looking to establish a special economic zone or units looking to establish themselves in an approved zone. The approvals differ depending on whether it is being taken up by a developer or unit. Developer proposals are considered through the applicable Board of Approval process and the Central Government issues the SEZ notification. Units receive their Letter of Approval from the Development Commissioner. There are differing processes and continuous requirements. SEZ status may entitle businesses to exemption from paying customs duties on certain goods used in approved operations, zero rating of eligible exports and supplies to an SEZ unit/developer. There are single window processes for certain approvals. SEZ benefits are subject to authorised operations, applicable net foreign exchange requirements and other statutory conditions. SKMC Global can assist with both the application as a developer or unit, ensuring that it complies with operations within the SEZ and advise on taxation issues.

SEZ Registration in India: Key Facts at a Glance

Legal Framework and Responsible Authorities

The SEZ Act, 2005 and SEZ Rules, 2006 establish a two-tier system. These are The Board of Approval, under the Ministry of Commerce and Industry, considers proposals for establishing SEZs and approves authorised operations. The Central Government issues the SEZ notification. The Board also exercises powers provided under the Act and Rules. The Development Commissioners (each zone is headed by one Development Commissioner) also grant units’ approvals via an Approval Committee. They issue Letters of Approval (Form G) under Rule 18 and 19. They also monitor progress and deal with renewal. Customs control the bonded area within the zones. Under GST law, exports and qualifying supplies to an SEZ unit or developer are zero-rated. Refunds for supplies to an SEZ are subject to applicable authorised-operations and other GST conditions; supplies from an SEZ to the DTA are not automatically zero-rated The sunset date for eligibility as per section 10AA of the Income Tax Act 1961 has passed and from 1st April 2026, the Income Tax Act 2025 shall be applicable. Eligibility shall not be assumed by new units. Existing claims will be subject to transitional provisions and conditions.

Developer and Unit Routes

• Developer route: Establishing a new SEZ requires Central Government approval on a Form A proposal submitted to the concerned Development Commissioner for forwarding through the prescribed process, with land, feasibility and financial documentation; co-developer proposals are made separately in Form A1. Authorised operations — infrastructure and activities permitted in the zone — require approval under Rule 9 in Form C7.

• Unit route: Setting up a unit in an approved SEZ requires a Letter of Approval from the Development Commissioner, applied for in the consolidated Form F through the zone's Approval Committee.

• Sector structure: Zones may be multi-product or sector-specific, and a unit's activity must fall within the zone's approved operations.

• Export-oriented alternatives: The EOU scheme the STPI registration route for IT units and FTP incentives interact with the SEZ choice see our foreign trade policy advisory for the wider framework.

• The two routes must not be conflated: A developer's approval does not authorise trading or manufacturing by an affiliate, and a unit's LoA does not confer developer rights.

Eligibility and Requirements

• Eligible persons may apply to establish an SEZ or set up a unit in an approved SEZ, subject to the applicable requirements. Minimum land requirements apply to SEZ proposals; there is no general minimum land requirement for setting up a unit

• A unit's proposed activity must fall within the zone's authorised operations and the sector limitations of its approval.

• Applicants must provide the applicable export and net foreign exchange projections in their application. Units are subject to the NFE requirements and monitoring prescribed under the SEZ Rules.

• Trading and warehousing units follow separate approval parameters from manufacturing units.

• Complete the applicable Bond-cum-Legal Undertaking (BLUT), which may be done by submitting it electronically in the prescribed format and manner.

• While units are given SEZ status they are not exempt from other laws. They would have to comply with environmental/labor/sector specific laws and may need to get registered and approvals under them.

Documents for Developer and Unit Applications

Requirements differ materially between Form A developer applications and Form F unit applications; each should be built from the Rules' annexures.

SEZ Approval Process

1. Select the route: establish the zone as developer, or locate a unit in an approved SEZ, mapping activity against authorised operations.

2. Submit the application: Submit Form A for a developer proposal to the concerned Development Commissioner, who forwards it through the prescribed process with the required inspection report and State Government recommendation. Submit consolidated Form F for a unit proposal to the Development Commissioner for consideration by the Approval Committee.

3. Provide supporting information: To enable evaluation including feasibility, land and financial documents and answer any clarifying questions.

4. Obtain the Letter of Approval: The Development Commissioner issues the unit's LoA in Form G specifying permitted items of manufacture or service activity; developer approvals issue from the Board of Approval.

5. Execute compliance formalities: Complete the applicable bond-cum-legal undertaking and other required formalities, including tax registrations, before commencing operations under the Letter of Approval.

6. Completing the reporting cycle: by submitting an annual report using the Form I to represent unit performance. Developers will also be required to submit a quarterly or half yearly report using the Form E. Performances are measured in terms of Net Foreign Exchange Earnings.

 Benefits and Limitations

• Duty Free Imports: Capital goods and inputs used in authorised operations may be free of customs duty if they meet the conditions and criteria.

• Zero Rating of Supplies under GST: Exports and qualifying supplies to SEZ units or developers are zero-rated under GST, subject to applicable conditions. Refunds for supplies to an SEZ are subject to authorised-operations and other GST requirements; supplies from an SEZ to the DTA are not automatically zero-rated.

• Single Window Clearance: The SEZ Scheme provides a Single Window Clearance system through an Approval Committee for granting approvals and clearances to specified units. However, this does not mean that there is no need for registration/ licensing/ approvals under any of the other applicable laws. The Approval Committee is chaired by the Development Commissioner.

• Benefits are conditional: Duty free benefits are available for authorized operations only. If unauthorized operations are carried out, exemptions will not be available.

• New eligibility under section 10AA of the Income-tax Act, 1961 is no longer available as the date for sunset clause has been crossed. From 1st April 2026, section 144 of the Income-tax Act 2025 will apply in relation to qualifying continuing deductions for eligible units. New units should not assume eligibility.

• Positive net foreign exchange earnings must be achieved in the prescribed blocks; shortfall exposes the unit to corrective action.

• DTA clearances are subject to the applicable SEZ Rules, including conditions and duties that vary by the goods and transaction. They should not be described as subject to one general percentage cap.

Developer and Unit Approvals Compared

Continuing Compliance and Performance

SEZ compliance is continuous rather than one-time. Units file Annual Performance Reports in Form I with the Development Commissioner, who places them before the Approval Committee; developers file Form E reports covering zone activity. A unit’s net foreign exchange performance is assessed under the applicable SEZ Rules. The Development Commissioner places the unit’s Annual Performance Report before the Approval Committee for review, and any shortfall is dealt with under the applicable rules and procedures. Letters of Approval can be renewed through the prescribed application, and changes to items of manufacture or service activity require formal amendment rather than informal expansion. Where a unit or developer wishes to exit the regime, de-bonding follows its own approval and duty-accounting path — see our SEZ de-bonding service— and should be planned well in advance rather than at the last milestone.

Risks and Common Mistakes

• Failure to differentiate between developer and unit approval and exceeding the scope of activities outlined in the LoA.

• Failure to comply with Form I requirements reducing the strength of the case of the unit before the Approval Committee.

• Assumption that new units will still qualify for income tax exemptions post-section 10AA sunsetting.

• Operations outside the authorised activities may lead to the loss of applicable exemptions, recovery of duty or tax, and other action under the law.

• Failing to meet the applicable net foreign exchange requirement; the calculation is set out in Rule 53 and Rule 54 provides for monitoring and possible penal action.

• Planning exit late: de-bonding involves duty computation and approvals best prepared across a full cycle.

How SKMC Global Can Assist

• Advising on the developer versus unit route, land criteria and zone selection against the entity's business plan

• Preparing Form A and Form C7 developer applications, and Form F unit applications with the relevant feasibility and NFE projections

• Coordinating with the Development Commissioner and Approval Committee through LoA issuance, including amendments and renewals

• Supporting customs bond execution and tax registrations alongside SEZ compliance calendars

• Managing reporting cycles of Form I and Form E and net foreign exchange reviews;

• Providing expert counsel on tax and de-bonding implications of SEZ. Coordinating exit approvals and duty calculations.

Only approvals, letters of approval and de-bonding orders can be issued by Board of Approval, Development Commissioners and other Authorities. SKMC will provide advisory, documentation and co-ordination services only.