India Business Journal - Govt notifies lower levies to help units in SEZs to sell goods in domestic markets

ECONOMY

Govt notifies lower levies to help units in SEZs to sell goods in domestic markets

IBJ Bureau
Apr 02, 2026

Factories in special economic ‌zones (SEZs) have been allowed to sell goods domestically at lower Import Duties, according to a government order.

This measure was initially announced in the Union Budget 2026-27 to shield exporters from higher US tariffs.

The duty relief will provide much-needed respite for exporters who have been battered by disruption in trade amid the West Asia war that has pushed up freight and oil costs and thrown trade supply chains into disarray.

The relief ⁠applies to factories in SEZs, which are primarily set up for exports and allow companies to import raw materials duty-free.

Under the order, SEZ businesses can sell a limited share of products, including chemicals, engineering goods, heavy machinery, textiles, footwear, pharmaceuticals, electronics and consumer items in the domestic market, while paying reduced Customs Duties instead of the full Import Duties applied to foreign goods.

The reduced duties vary by product, with rates of about 5 to 12.5 per cent, rather than the higher levies applied to comparable imports, the order has said.

The relief ‌will ⁠apply from April 1, 2026, to March 31, 2027, and will be available to businesses that began production on or before March 31, 2025.

The policy will help Indian exporters navigate rising tariff barriers, geopolitical uncertainty and supply chain disruptions as the West Asia conflict disrupts key trade routes, notes Krishan Arora, ⁠a partner at consultancy Grant Thornton.