The government is working on changes in the Special Economic Zone (SEZ) domain to ensure that commodities travel seamlessly between the domestic tariff area (DTA) and the SEZ space without compromising their competitiveness in export markets, Commerce Secretary Sunil Barthwal stated on Saturday.

During the pandemic two years ago, several office spaces in SEZ regions were deserted due to the inhabitants’ ‘work from home’ policy. According to Barthwal, this has resulted in the separation of SEZs into SEZ and DTA spaces.

Scale economies are quite significant anymore. Reforms in the SEZ are in the works so that the transfer of products from SEZ to DTA and vice versa is not hampered, making commodities produced less competitive,” Barthwal said at a conference hosted by the Bharat Chamber of Commerce. The official stated that the government’s foreign trade strategy (FTP) was developed with the global value chain in mind.

‘Our FTP is meant to help exporters take advantage of the global value chain. The industry, which had previously sought protection, will now have to integrate with the global value chain and determine where the competitive edge lies,” he added.

Barthwal stated that the goal of generating USD two trillion in exports by 2030 is achievable, with USD one trillion coming from product exports and another USD one trillion from services.

‘Services appear to be intangible, yet there is a big opportunity for growth. We should look at the barriers to the expansion of the services industry,” he added. According to Barthwal, “as external trade becomes an essential element of the development engine, industrial and international trade policies are more linked.”

He stated that there is a growing appetite among countries to sign free trade agreements (FTA) with India. The most critical part of bilateral and multilateral agreements is understanding the ‘give and take’ approach. If one needs to receive something, he must also offer something, he stated.

According to Barthwal, both the UK and the US are boosting standards by addressing sanitary and phytosanitary risks in imported commodities. “We will have to adhere to these standards, which are becoming increasingly difficult,” he stated.

Special economic zones are often established to promote rapid economic growth by offering tax breaks to attract foreign investment and spur technical innovation. While several governments have established special economic zones. China has had the most success using SEZs to attract international investors.