Government Notifies Two New SEZs in Puducherry, Key Details

Why in the News?: The Government of India has notified two new Special Economic Zones (SEZs) in the Union Territory of Puducherry. The proposals were approved by the Board of Approval (BoA) for SEZs under the Department of Commerce during its 137th meeting held on 27 February 2026.

One of the SEZs will be developed by the Oulgaret Municipality, making it the first SEZ in India to be developed by an Urban Local Body (ULB).

What are Special Economic Zones (SEZs)?

• Special Economic Zones (SEZs) are geographically demarcated areas within a country that operate under a separate economic and regulatory framework designed to promote investment, manufacturing and exports. 
  • These zones offer businesses a more liberal policy environment through simplified procedures, better infrastructure and fiscal incentives.
• In India, SEZs are governed by the Special Economic Zones Act, 2005 and the SEZ Rules, 2006. 
• The Board of Approval (BoA) under the Department of Commerce is the apex body responsible for granting approvals for the establishment of SEZs.
• The primary objective of SEZs is to create globally competitive industrial and service hubs that can attract investment, boost exports, generate employment and accelerate economic growth.

Types of SEZs in India

• Multi-Product SEZs: Large zones hosting multiple manufacturing and service sectors.
• Sector-Specific SEZs: Dedicated to a particular sector such as textiles, pharmaceuticals or engineering.
• IT/ITES SEZs: Focused on software development, IT-enabled services and digital industries.
• Free Trade and Warehousing Zones (FTWZs): Facilitate trading, warehousing, logistics and re-export activities.
• Specialised SEZs: Established for specific activities such as biotechnology, gems and jewellery, or electronics.

‹ ›

Details of the Newly Approved SEZs

Together, the two projects are expected to attract investments of nearly ₹1,975 crore and create around 8,500 jobs, providing a major boost to Puducherry’s industrial and export ecosystem.

Significance of the New SEZs

• First Municipality-Led SEZ in India: Oulgaret Municipality becomes the first Urban Local Body in India to develop an SEZ.
• Strengthening Export-Led Growth: Enhances Puducherry’s export capacity and supports India’s global trade expansion goals.
• Boosting Investment and Employment: Expected investment of about ₹1,975 crore and creation of nearly 8,500 jobs.
• Supporting the Services and Technology Sector: IT/ITES SEZ will attract software, digital services and technology-based enterprises.
• Promoting Industrial Diversification: Multi-Sector SEZ will support diverse manufacturing and service industries, reducing sectoral dependence.
• Advancing the Vision of Aatmanirbhar Bharat: Strengthens domestic production, innovation and export competitiveness.
• Strengthening Regional Development: Boosts industrial growth in the Tamil Nadu-Andaman and Puducherry (TAP) Region and promotes balanced development.

Evolution of SEZ Policy in India

India’s SEZ policy has undergone a significant transformation — from narrow export-promotion enclaves to comprehensive industrial and trade zones aimed at global competitiveness.

• India’s SEZ policy evolved from the Export Processing Zone (EPZ) model. 
  • The country’s first EPZ was established at Kandla in 1965, making it the first such zone in Asia.
  • These zones were primarily focused on promoting export-oriented manufacturing with limited policy flexibility.
• The enactment of the SEZ Act, 2005 provided a comprehensive legal framework to promote globally competitive industrial enclaves. Over time, SEZs emerged as important drivers of exports, employment and investment.
• In 2018, the Baba Kalyani Committee reviewed the performance of SEZs and recommended their transformation into Employment and Economic Enclaves (3Es). 
  • The focus was shifted towards job creation, integration with the domestic economy and improving overall industrial productivity rather than purely export-led incentives.
• The SEZ (Amendment) Act, 2023 further modernised the framework by allowing greater flexibility for domestic sales within the Domestic Tariff Area (DTA) and introducing a trust-based compliance system — reducing the regulatory burden on SEZ units and making the model more attractive for diverse investors.
• The policy evolution has reached a new milestone with the approval of the Oulgaret Municipality SEZ in Puducherry, the first SEZ in India to be developed by an Urban Local Body, marking a shift from the traditional model led by private developers or state industrial corporations towards a more decentralised, ULB-driven approach to industrial development.