In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 28 of 2005 the Central Government

## Report on Special Economic Zones Amendment Rules, 2021 **1. Executive Summary:** This report analyzes the Special Economic Zones Amendment Rules, 2021, as notified by the Ministry of Commerce and Industry, Department of Commerce, on June 16, 2021. This amendment to the Special Economic Zones Rules, 2006, introduces provisions for Multilateral, Unilateral, or International agencies to establish units within International Financial Services Centres (IFSCs). The core purpose is to facilitate the presence and operation of such agencies within these specialized zones. This report details the key changes, affected stakeholders, and potential impacts based solely on the provided notification text. **2. Introduction:** The purpose of this report is to provide an informative overview of the Special Economic Zones Amendment Rules, 2021, based on the official notification. This analysis focuses solely on the content of the provided text and aims to elucidate the key provisions, implications, and intended outcomes of this amendment. **3. Policy Overview:** * This document amends the Special Economic Zones Rules, 2006. * The core objective, as inferred from the text, is to facilitate and regulate the establishment and operation of Multilateral, Unilateral, or International agencies within International Financial Services Centres (IFSCs) in Special Economic Zones (SEZs). **4. Background and Rationale:** This amendment likely aims to enhance the attractiveness of IFSCs within SEZs to Multilateral, Unilateral, and International agencies. By providing a framework for their establishment and operation, the amendment seeks to integrate these agencies more formally into the IFSC ecosystem. This framework likely addresses the need for specific guidelines and regulations tailored to the unique nature of these organizations, which might not have been adequately covered under the existing SEZ Rules. **5. Key Provisions / Changes:** The amendment introduces a new Rule 21A to the Special Economic Zones Rules, 2006, specifically addressing the "Setting up of Unit by Multilateral or Unilateral or International agencies in International Financial Services Centre." The key changes are: * **Addition of Rule 21A:** This is an entirely new rule. * **Eligibility:** Multilateral, Unilateral, or International agencies notified under the United Nations Privileges and Immunities Act, 1947, are allowed to set up local or regional offices as units within IFSCs. * **Application Process:** Applications for setting up and operating such units must be submitted to the Board of Approval through the concerned Development Commissioner. * **Terms and Conditions:** The terms and conditions for setting up and operating these units will be determined by the Board of Approval, based on the recommendations of the Development Commissioner. * **Exemptions:** The Board of Approval, based on the recommendation of the Development Commissioner, can exempt these units from certain provisions of the SEZ Rules, including those related to positive Net Foreign Exchange earnings, filing of Annual Performance Reports, or other exemptions. * **Extension of Approval:** The Board of Approval will consider proposals for extending the Letter of Approval for these units. **6. Target Audience and Stakeholders:** The primary target audience and stakeholders directly affected by this amendment are: * Multilateral agencies notified under the United Nations Privileges and Immunities Act, 1947 * Unilateral agencies notified under the United Nations Privileges and Immunities Act, 1947 * International agencies notified under the United Nations Privileges and Immunities Act, 1947 * Development Commissioners of relevant SEZs. * The Board of Approval. * Entities operating or planning to operate within International Financial Services Centres (IFSCs). **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Board of Approval and the Development Commissioner play key roles in approving applications, setting terms and conditions, and recommending exemptions. * **Procedures:** Agencies must apply to the Board of Approval through the Development Commissioner. The Board then decides on the terms and conditions. * **Timelines:** The amendment comes into force on the date of its publication in the Official Gazette (June 21, 2021). No specific timelines for the application process are mentioned in the provided text. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of these specific changes are: * **Increased participation of Multilateral/Unilateral/International agencies in IFSCs:** By providing a clear regulatory pathway, the amendment should encourage these agencies to establish a presence in IFSCs. * **Enhanced operational flexibility for these agencies:** The potential for exemptions from certain SEZ rules allows for a more tailored regulatory environment. * **Boost to the attractiveness of IFSCs:** A more diverse range of participants can contribute to the growth and development of IFSCs. **9. Conclusion:** The Special Economic Zones Amendment Rules, 2021, represents a targeted effort to integrate Multilateral, Unilateral, and International agencies into the International Financial Services Centre framework within Special Economic Zones. By clarifying the process for establishing units and offering potential exemptions, the amendment aims to attract these agencies and enhance the overall competitiveness and attractiveness of IFSCs. The long-term success of this amendment will depend on its effective implementation and its ability to create a favorable environment for these agencies to operate and contribute to the growth of the Indian economy.

Key Entities Referenced