The finance ministry stated the one-time relief that allows special-economic-zone units to sell up to 30% of their export turnover in the domestic market is an effort to offset global demand slowdown and supply disruptions, as per sources from the ministry cited by NDTV Profit on Wednesday.
These supply disruptions are primarily due to the partial closure of the Strait of Hormuz by Iran so as to apply global pressure amid fighting a war with forces of US and Israel. The ministry also stipulated a 20% value addition over inputs to emphasise genuine manufacturing activity.
The sources stated that the 30% cap on SEZ units sold in DTAs Domestic Tariff Area provide a "meaningful buffer" to demand shocks and that the domestic sales enablement would perform the function of a stabilizing mechanism for manufacturing operations.
The centre also reduced the customs duty rates on goods made in special economic zones and sold in the DTAs.
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The concessional customs duty rates will range between 5% and 12.5%, notably lower than the standard applicable rates, as per a gazette notification issued late Tuesday. The relief will be in place for one year, effective from April 1, 2026, through March 31, 2027.
The benefit will be available only to SEZ units that began commercial production on or before March 31, 2025. Units that started operations after this cut-off date will not have eligibility with regards to the reduced duty structure.
Sources stated that the Centre undertook sectoral exclusions from the relief measures with regards to select sensitive sectors, especially in those cases where domestic industry requires protection or where tariffs are already low.
They also affirmed that this would be a one-time measure and is not indicative of a long-term policy direction. This was also done to ensure factories can run closer to optimal capacity during export downturns. This in turn reduces risk for manufacturers while maintaining employee continuity.
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