UPSC Prelims Practice Questions — Union Budget 2026–27: Strengthening SEZs for Global Competitiveness & Growth

Q1. With reference to the statutory framework of Special Economic Zones in India, consider the following statements. Which of the statements given above is/are correct?

1. The Special Economic Zones Act, 2005 received Presidential assent on 23 June 2005.
2. The SEZ Act, 2005 along with the SEZ Rules came into force on 10 February 2006.
3. The Ministry of Commerce and Industry is the nodal ministry implementing the SEZ Act.
4. A Special Economic Zone is always treated as part of the customs territory of India for all of its operations.

• A. 1, 2 and 3
• B. 1 and 4
• C. 2, 3 and 4
• D. 1, 2, 3 and 4

Q2. Under the Special Economic Zones Act, 2005, a Special Economic Zone is legally regarded as which one of the following?

• A. Territory deemed to be outside the customs territory of India for its authorised operations
• B. Foreign territory exempt from the sovereignty and laws of India
• C. Part of the Domestic Tariff Area enjoying income-tax holidays only
• D. A free trade warehousing zone meant exclusively for re-exports

Q3. Which one of the following is correctly identified as Asia's first Export Processing Zone, set up in India in 1965?

• A. Kandla
• B. Santa Cruz (SEEPZ)
• C. Noida
• D. Falta

Q4. Consider the following locations associated with India's zone-based export policy. Which of the above is/are correctly identified as erstwhile Export Processing Zones that were converted into Special Economic Zones?

1. Kandla
2. Santa Cruz
3. Cochin
4. Sanand

• A. 1, 2 and 3
• B. 1 and 4
• C. 2, 3 and 4
• D. 1, 2, 3 and 4

Q5. With reference to the concessional-duty window for SEZ-to-DTA sales introduced in Union Budget 2026-27, consider the following statements. Which of the statements given above is/are correct?

1. Unlike the earlier pure export orientation, the window permits eligible SEZ manufacturing units to sell into the Domestic Tariff Area at concessional customs duty.
2. Such DTA clearances are capped at 30% of the highest annual FOB export value achieved in any of the three immediately preceding financial years.
3. The window is a permanent facility available to SEZ units with no fixed end date.

• A. 1 only
• B. 1 and 2 only
• C. 2 and 3 only
• D. 1, 2 and 3

Q6. Consider the following statements about the conditions governing the SEZ-to-DTA concessional-duty window of Budget 2026-27. Which of the above is/are correctly identified?

1. Only units that commenced production on or before 31 March 2025 are eligible.
2. Free Trade Warehousing Zones (FTWZ) are excluded from the window.
3. Duty drawback on inputs is additionally permitted for goods cleared under the window.
4. The relief is operationalised through a notification under Section 25 of the Customs Act, 1962.

• A. 1 and 3
• B. 2 and 4
• C. 1, 2 and 4
• D. 1, 2, 3 and 4

Q7. The June 2025 amendment to the SEZ Rules, 2006 permitting Special Economic Zones exclusively for semiconductor and electronic-component manufacturing was notified by which one of the following?

• A. Department of Commerce, Ministry of Commerce and Industry
• B. Ministry of Electronics and Information Technology
• C. Central Board of Indirect Taxes and Customs, Ministry of Finance
• D. NITI Aayog

Q8. With reference to the June 2025 amendments enabling semiconductor and electronic-component SEZs, consider the following statements. Which of the above is/are correctly identified?

1. The minimum contiguous land area for such SEZs was reduced to 10 hectares.
2. Micron's SEZ facility is located at Sanand, Gujarat.
3. Aequs's SEZ for electronics components is located at Dharwad, Karnataka.
4. The minimum contiguous land area for such SEZs was raised to 50 hectares.

• A. 1, 2 and 3
• B. 1 and 4
• C. 2, 3 and 4
• D. 1, 2, 3 and 4

Q9. The SEZ Board of Approval, the apex inter-ministerial body for approving SEZ proposals, is headed by which one of the following?

• A. Secretary, Department of Commerce
• B. Cabinet Secretary
• C. Union Finance Minister
• D. Development Commissioner of the concerned zone

Q10. Consider the following statements regarding the scale and performance of SEZs as cited in Budget 2026-27. Which of the above is/are NOT correct?

1. As of 28 February 2026, there were 368 notified SEZs in India.
2. SEZ exports in 2025-26 (up to December 2025) stood at about ₹11.70 lakh crore.
3. SEZ exports up to December 2025 recorded a 32.02% year-on-year increase.
4. The DTA concessional-duty window is expected to benefit about 12,000 SEZ manufacturing units.

• A. 1 and 2
• B. 2 and 3
• C. 3 only
• D. 4 only

Q11. With reference to the regulatory distinction between an SEZ and the Domestic Tariff Area (DTA), consider the following statements. Which of the statements given above is/are correct?

1. An SEZ is deemed to be territory outside the customs territory of India for its authorised operations.
2. The Domestic Tariff Area refers to the area of India that lies outside the SEZs.
3. When an SEZ unit sells goods into the DTA, such sales are normally treated as imports and attract applicable customs duties.
4. SEZs enjoy extraterritorial status and lie outside the sovereignty of India.

• A. 1, 2 and 3
• B. 1 and 4
• C. 2, 3 and 4
• D. 1, 2, 3 and 4

Q12. The exemption notification operationalising concessional SEZ-to-DTA sales under Section 25 of the Customs Act, 1962 was issued by which one of the following?

• A. Central Board of Indirect Taxes and Customs (CBIC)
• B. Central Board of Direct Taxes (CBDT)
• C. Directorate General of Foreign Trade (DGFT)
• D. Board of Approval for SEZs