India allows SEZ units to sell domestically at reduced customs duty for one year
Change
India authorised Special Economic Zone manufacturing units to sell a capped share of output into the domestic tariff area at reduced basic customs duty and reduced Agriculture Infrastructure and Development Cess, limited to 30% of their highest three‑year export value and subject to minimum 20% value addition for the period April 1, 2026–March 31, 2027.
Why it matters
The concession excludes supplies from Free Trade Warehousing Zones and provides no relief on Integrated Goods and Services Tax (IGST) or on petrol and diesel, so reduced customs rates apply only to specified products. As a result, procurement and tax teams cannot treat SEZ‑to‑domestic sales as a permanent, unrestricted source of lower‑duty supply and must prepare for SEZ audits and product‑level qualification checks.
Implications
- • SEZ manufacturing unit management must limit domestic sales of eligible products to no more than 30% of their highest three‑year export value, ensure a minimum 20% value addition, and maintain records to support SEZ audits or forfeit concessional duty treatment.
- • Procurement teams at domestic buyers and traders must verify that purchases from SEZ suppliers meet the notification’s product and value‑addition conditions and must track cumulative purchases against the 30% cap or face full import duty liability.
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Source
Topics
Trade & Tariffs Regulatory Actions Supply Chain & Logistics Manufacturing