India has allowed export-oriented units operating in Special Economic Zones (SEZs) to sell goods in the domestic market at concessional duty rates, marking a significant policy shift aimed at boosting manufacturing and improving capacity utilization.
The move, notified by the government through the Directorate General of Foreign Trade (DGFT), is expected to provide relief to SEZ-based exporters facing weak global demand and supply chain disruptions. By enabling easier access to the domestic market, authorities aim to help firms maintain production levels and reduce inventory build-up.
Under the revised framework, SEZ units can now supply a portion of their output to the domestic tariff area (DTA) while benefiting from lower import duty structures. This is likely to enhance the competitiveness of their products within India, especially in sectors such as electronics, textiles, engineering goods, and pharmaceuticals.
Industry stakeholders have welcomed the decision, noting that it provides greater operational flexibility and reduces dependence on volatile export markets. For many SEZ units, which were primarily geared toward exports, the ability to tap domestic demand offers a crucial buffer during periods of global uncertainty.
The policy is also expected to support job retention and investment within SEZs, which have faced challenges in recent years due to changing global trade dynamics and evolving tax regimes. By improving the viability of SEZ operations, the government hopes to revive interest in these zones as key manufacturing and export hubs.
Experts point out that the success of the initiative will depend on clear implementation guidelines and seamless coordination between customs authorities and SEZ administrations. If executed effectively, the reform could strengthen India’s industrial base while aligning export-oriented units more closely with domestic market opportunities.
The development reflects a broader policy direction focused on flexibility, competitiveness, and resilience in India’s trade and manufacturing ecosystem.
