Synopsis: Gujarat has sanctioned two new SEZs with an export potential of ₹27,600 crore. The projects will generate almost 10,000 jobs and boost the State’s export-oriented industrial ecosystem. This further strengthens Gujarat’s position as the leading SEZ and export hub in India.
In an era of countries competing for global supply chains and increased exports, Special Economic Zones (SEZs) are once again being identified as strong drivers of industrial growth. Gujarat has then further consolidated its lead in this race by approval of two new SEZ projects by Essar Power and the Arham SEZ (I) Pvt Ltd. The two projects will produce exports valued at ₹27,600 crore and create almost 10,000 jobs, marking the state’s increasing contribution to India’s manufacturing and export goals.
What are Special Economic Zones (SEZs)
A Special Economic Zone refers to a geographical region that is given the status of foreign territory in respect of commercial and custom purposes. The goods exported from the domestic market to a special economic zone are treated as exports and goods imported into the domestic market from special economic zones are treated as imports. These rules enable companies operating in the SEZs to avail themselves of tax benefits, import benefits, and other facilities for export promotion. India presently has 368 Special Economic Zones with total investments exceeding ₹7.86 lakh crore and total employment created exceeding 31.73 lakh.
Gujarat Approves two New SEZ Projects
The Board of Approval has approved two additional SEZs in Gujarat, one from Essar and another from Arham, that have an export potential of ₹27,600 crore.
Essar Power Ltd: Devbhumi Dwarka
Essar Power has been granted in-principle clearance for a multi-sector SEZ located at Kajurda village in the Devbhumi Dwarka district spanning an area of 56.65 hectares. Essar Power has made plans to invest ₹50 crore into the project, with estimated exports worth ₹17,629 crore. In addition, there will be about 894 direct and indirect employment opportunities within the next five years.The emphasis of the project is on developing a bio fuel complex for ATF production.
Arham SEZ (I) Pvt Ltd: Kutch
Arham has obtained in-principle approval for a special economic zone covering several sectors in Vadala, located in close proximity to Mundra Port in the Kutch district, over an area of 94.19 hectares. The investment in the project will be ₹230 crore and it is estimated that ₹10,000 crore of exports will be generated, with a creation of 9,000 jobs within five years. The proposal includes a Free Trade Warehousing Zone.
Tax Benefits, Duty Exemptions, and Other Incentives in SEZs
SEZs enjoy progressive taxation exemption on income from exports: 100% for the first 5 years, tapering to 50% for the next 10 years. Customs include exemptions from import duties on capital equipment and raw materials. GST charged on domestic supply to SEZs is zero-rated. In addition, some states provide exemption from electricity duty in SEZ.
- 100% FDI allowed in all manufacturing sectors – no cap; no prior approval required.
- External borrowings up to $500 million per year, with no maturity restrictions
- Single window clearance system – one interface instead of running between multiple departments
- No routine customs examination of export/import cargo
- Freedom to repatriate export proceeds without time limits
New in 2026
The Union Budget 2026-27 provided a one-time opportunity where SEZ manufacturing units could sell up to 30% of their maximum export volume to the domestic market under reduced customs duty rates. This was not an option available for SEZ manufacturing units earlier.
Also read: Andhra Pradesh vs Tamil Nadu: Which State Will Be South India’s Leading Investment Hub by 2035?
How SEZs help boost exports and foreign investment
- SEZs succeed due to their ability to reduce friction in all aspects like cost, time, and compliance. Clearance of imports will be done quickly through dedicated officers of the SEZ. The infrastructure within the zones is likely better than the one provided without them. Moreover, the exemption of duties will increase the competitiveness of Indian-made goods abroad.
- The figures prove the point. In FY2025-26 (up to Dec. 2025), SEZ exports reached over ₹11.70 lakh crore, marking a rise of 32% from the previous fiscal year. Investments made in the 368 notified SEZs stand at ₹7.86 lakh crore while providing employment to over 31.73 lakh people.
- To be more specific about the opportunities for foreign investors, 100% FDI, 0% duties, and single-window clearance make SEZs a trustworthy manufacturing location especially for multinational corporations that wish to reduce dependence on China.
The two newly approved Gujarat SEZs alone bring:
- Essar Power (Devbhumi Dwarka): ₹17,629 crore in exports, 894 jobs over 5 years
- Arham SEZ (Kutch/Mundra): ₹10,000 crore in exports, 9,000 jobs over 5 years
- Combined: ₹27,600+ crore export potential, nearly 10,000 jobs
Gujarat’s Growing Role in India’s Export-Led Growth Strategy
- Gujarat is not merely involved in India’s export journey; it is leading the charge. The state makes up 30.7% of total exports in the country and is responsible for 21% of total SEZ exports in India. It has 24 functioning SEZs that operate in sectors ranging from chemicals and petrochemicals to engineering and pharma, gems and jewelry, as well as semiconductors and clean fuels.
- The move toward semiconductors especially stands out. Companies such as Micron CG Semi , Kaynes Semicon and Tata Electronics are among those that have been notified as captive SEZs of Gujarat.
- Meanwhile, availability of land at APSEZ, Aqualine SEZ, GIDC Gandhinagar Electronics Park, and Aspen SEZ indicates scope for more growth.
- Total exports of India reached a high of $863 billion in FY2025–26. Gujarat, accounting for approx $110 billion of that figure, emerged as the top performing state in that period.
Challenges and Criticisms of the SEZ Model
- Some SEZs faced difficulties in generating adequate industrial activity. The Surat Apparel Park SEZ and Ahmedabad Apparel Park SEZ of Gujarat are being de-notified because of difficulties faced in the textile industry.
- According to an audit conducted by the CAG, there were instances when vast tracts of land in several notifiable SEZs remained undeveloped for a long time.
- There are allegations that the economic gains accruing from SEZs tend to be localized and do not benefit the adjoining areas or industries.
- Establishing SEZs necessitates availability of vast tracts of land, which generally come at the cost of agricultural areas, leading to compensatory issues.
- Several measures are being undertaken by the government to overcome some of the difficulties through legislation like the DESH Bill and changes in SEZ regulations.
Key Takeaway for Investors and Businesses
Essar and Arham SEZ projects make Gujarat one of the main engines behind India’s export-oriented economic growth model. The two projects have a total export potential of ₹27,600 crore and will help improve logistics and energy sectors and create around 10,000 employment opportunities. But, the past performance of some other SEZs indicates that incentives may not be sufficient to ensure success in all cases. Business and investor success depends on several other variables including global demand and competitiveness.
Written By Ameet S
