Commerce Ministry to Extend Hybrid Model for IT Units in SEZs by Two Years.

The Commerce & Industry Ministry plans to recommend extending the hybrid working model for IT-ITeS units operating in Special Economic Zones (SEZs) by at least two years, according to sources. The current hybrid model is set to lapse at the end of this year, following a one-year extension granted in 2023.

The hybrid model allows IT-ITeS units to permit employees to work remotely from locations outside SEZs while maintaining a physical presence within the zone.

“The Ministry is prepared to extend the hybrid model for more than a year, possibly up to five years. A decision has been taken, and the Directorate General of Exports Promotion (DGEP) will be approached for concurrence. Once approved, the Commerce Department will issue the required notification,” a source told businessline.

Balancing Flexibility and SEZ Operations

The hybrid model aligns with industry recommendations, including those from Nasscom, which advocated for the shift from full-time work-from-home arrangements to a hybrid structure. Nasscom argued that the model ensures SEZ units remain operational within the zones, supporting real estate developers while providing flexibility to employees, thereby improving overall efficiency.

However, the government is hesitant to grant indefinite flexibility. “While the hybrid model was necessary during Covid-19, the situation has changed. Companies like Amazon and TCS are emphasizing the importance of returning to office. The government acknowledges the need for a gradual transition but sees no reason for perpetual flexibility,” the source said.

Moving Forward

The IT-ITeS industry has pushed for making the hybrid model permanent, citing its benefits for employee productivity and operational efficiency. The government, however, remains committed to setting a timeline for phasing out such arrangements to ensure SEZs continue to fulfill their intended purpose as hubs of economic activity.

The proposed extension is expected to provide IT-ITeS units additional time to adapt while preserving the role of SEZs in promoting investment and employment. A formal notification will follow once approvals are secured.

HBL