Government has notified conditional customs duty concessions on clearance of goods manufactured in Special Economic Zones (SEZs) to the Domestic Tariff Area (DTA). The measure in line with Budget 2026 announcement will be effective from April 1, 2026 to March 31, 2027. It is expected to benefit approximately 1,200 SEZ manufacturing units impacted by global trade disruptions.
Why Was This Needed?
Under Section 30 of the Special Economic Zones Act, 2005, clearance of goods from SEZs to the DTA is treated as imports into India, attracting full customs duties. This had significantly affected competitiveness of SEZ manufacturers, particularly amid global trade disruptions. The present measure addresses this concern while maintaining a level playing field for DTA units.
What is Domestic Tariff Area (DTA)?
Refers to the entire territory of India excluding Special Economic Zones (SEZs), Export Oriented Units (EOUs), and similar customs-bonded areas, according to the SEZ Act. It represents the standard, non-exempted economic zone where regular customs and tax laws apply, with goods coming from SEZs treated as imports.
Key Features of Scheme
- SEZ manufacturing units can clear goods to the DTA at concessional duty rates, subject to a limit of 30% of the highest annual Free on Board (FOB) export value achieved in any of the three immediately preceding financial years.
- A minimum 20% value addition within the SEZ is mandatory, calculated using a defined formula based on assessable value and input costs.
- Export benefits such as duty drawback on inputs are not permitted for such clearances to prevent double benefits.
- In certain cases, partial exemption from Agriculture Infrastructure and Development Cess is also available.
- Applies only to units that commenced production on or before March 31, 2025.
- Free Trade Warehousing Zone (FTWZ) units are excluded, as are goods merely imported into SEZs and cleared to DTA without adequate manufacturing.
Eligibility & Compliance Requirements
To avail concessional duty benefits, SEZ units must:
- Furnish a Development Commissioner’s certificate confirming compliance with all conditions
- Submit a declaration to pay full duty in case of non-fulfilment of conditions
- Be subject to audit under SEZ Rules, 2006
Sectors Covered
The concessional framework covers a broad range including mineral products, chemicals, plastics and rubber, leather products, wood and paper, textiles, footwear, stone and ceramics, base metals, machinery and electrical equipment, vehicles and transport equipment, optical and medical instruments, arms and ammunition, and miscellaneous manufactured articles.
Excluded sectors include agriculture, marine and processed food products, tobacco, marble and granite, gems and jewellery, vehicles, toys and petroleum products.
Expected Benefits
- Enables economies of scale for SEZ manufacturers
- Reduces costs and enhances operational resilience
- Improves capacity utilisation of units affected by global trade disruptions
- Preserves the export-oriented nature of SEZs while providing domestic market access relief
- Benefits approximately 1,200 SEZ manufacturing units across India