Govt allows temporary customs duty relief for SEZ units sold domestically

The government has announced a one-time relief measure for units operating in special economic zones (SEZ), allowing them to sell goods at a lower customs duty for a one-year period, according to a finance ministry notification.

The concessional tariff is expected to help exporters deal with ongoing geopolitical uncertainties and enable units in SEZs to utilise idle capacity, amid an unpredictable export market.

The measure will be effective from 1 April 2026 to 31 March 2027 and will cover several product categories, including plastics, textiles and chemicals. According to the notification, the duties will range from 5 per cent to 12. 5 per cent.

The lower duty is restricted to units that started production on or before 31 March 2025.

“This exemption shall be available only if the unit in the SEZ had commenced production of goods on or before the 31st day of March 2025, and proves to the satisfaction of the proper officer that the goods in respect of which benefits of this exemption notification have been claimed fulfil all the conditions specified in the Annexure to this notification,” the notification dated 31 March said.

However, the benefits will not apply to units operating in Free Trade Warehousing Zones.

The announcement came after Finance Minister Nirmala Sitharaman, during the Budget speech, said that the government would soon come up with a one-time measure to allow eligible manufacturing units in SEZs to sell their goods in the domestic market at a ‘concessional duty’.

However, the quantity of such sales will be limited to a certain proportion of their exports. This will ensure that adequate safeguards are in place and units operating in the domestic tariff area (DTA) are not at a disadvantage.