Special Economic Zone Units Eligible for Concessional Duty on Domestic Sales for Initial Year

Government Relaxes Customs Duty Rules for SEZ Units

The Indian government has announced a new measure to support special economic zone (SEZ) manufacturing units, allowing them to sell goods in the domestic market at concessional customs duty rates for a period of one year. This move is in line with the Budget 2026-27, which outlined this provision.

The measure will be effective from April 1, 2026 to March 31, 2027. According to the finance ministry, a maximum of 30 percent of the highest annual Free on Board (FOB) value of exports in any of the three immediately preceding financial years can be sold in the domestic market at concessional rates by eligible SEZ units.

For context, the FOB value refers to the value of goods at the point of export, excluding freight and insurance. To be eligible for this benefit, SEZ units must have commenced production of goods on or before March 31, 2025. Additionally, the goods manufactured by these units must undergo a minimum value addition of 20 percent over the inputs.

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The concessional duty rates for domestic clearances by SEZ units have been specified as follows:

Goods in the 30-40 percent duty slab will attract a concessional duty rate of 20 percent. The SEZ units claiming benefit under this relief window must adhere to these conditions to be eligible for the reduced duty rates.

The government has implemented this measure through an automated and faceless customs assessment system, making it more efficient and transparent. The notification aims to provide relief to SEZ units while ensuring that the focus remains on exports and sensitive sectors are safeguarded to protect domestic industry.

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