Government Weighs Easing SEZ Norms To Cushion Exporters From US Tariffs

The commerce ministry is working on a plan to ease rules for special economic zone (SEZ) units to help exporters cope with the steep 50% tariff recently imposed by the US, a government official said.

The ministry is drawing up measures, with SEZ relaxations forming a key part of the relief package under the Export Promotion Mission.

Officials said one of the proposals under consideration is to permit SEZ units to sell into the domestic tariff area (DTA) on a duty-foregone basis. Currently, such sales are allowed only after payment of applicable duties. Units have argued that duty-free domestic sales would provide an immediate outlet for inventory stuck due to cancelled export orders.

Exports from SEZs touched $176.6 billion in 2024-25, making them a critical component of India’s trade basket. With the sudden tariff hike expected to dent shipments of sectors ranging from engineering goods to textiles, policymakers are keen to ensure that production capacities are not idled.

"The idea is to safeguard exporters and also absorb displaced production through domestic demand," the official said, adding that the broader action plan also covers e-commerce exports and compliance easing.