**Executive Summary**
The Ministry of Commerce & Industry has notified conditional customs duty concessions for goods manufactured in Special Economic Zones (SEZs) and sold to the Domestic Tariff Area (DTA), effective from April 1, 2026, to March 31, 2027. Aimed at boosting manufacturing capacity for approximately 1,200 units, the measure introduces reduced duty rates and cess exemptions subject to specific value-addition and export-performance criteria. Eligible units must obtain compliance certification from the Development Commissioner to avail of these benefits during the 2026-27 financial year.
**Key Points / Main Content**
**Eligibility and Scope**
* **Target Units:** Applies to SEZ manufacturing units that commenced production on or before March 31, 2025.
* **Exclusions:** Free Trade Warehousing Zone units and goods cleared to the DTA without "adequate manufacturing" are ineligible.
* **Sectoral Coverage:** Includes mineral and chemical products, plastics, textiles, machinery, and medical instruments.
* **Sectoral Exclusions:** Specifically excludes agriculture (marine and processed foods), tobacco, gems and jewellery, toys, and petroleum.
**Operational Conditions and Limits**
* **Sales Cap:** DTA clearances at concessional rates are limited to 30% of the highest annual Free on Board (FOB) export value achieved in any of the three preceding financial years.
* **Value Addition:** A minimum of 20% value addition within the SEZ is mandatory, calculated via a defined formula involving assessable value and input costs.
* **Benefit Restrictions:** To prevent double benefits, units cannot claim export benefits like duty drawback on inputs for these DTA clearances.
**Legal and Regulatory Framework**
* **Notification:** Implemented via Notification No. 11/2026-Customs under Section 25(1) of the Customs Act, 1962.
* **Duty Adjustments:** Provides reduced customs duty rates and, in specific instances, partial exemption from the Agriculture Infrastructure and Development Cess.
* **Compliance:** Units must furnish a Development Commissioner’s certificate and a declaration to pay full duty if conditions are not met.
* **Oversight:** All participating units are subject to audits under the SEZ Rules, 2006.
**Impact Analysis**
**SEZ Manufacturing Units**
**Impact**
Eligible units (approx. 1,200) will benefit from reduced costs and improved capacity utilization, addressing competitiveness issues previously caused by high customs duties on DTA sales. This allows for better economies of scale and resilience against global trade disruptions.
**Action Required**
Units must ensure they meet the 20% value-addition threshold, track their three-year export history to calculate the 30% sales limit, and secure the necessary certification from the Development Commissioner.
**Development Commissioners**
**Impact**
These officials serve as the primary regulatory authority for verifying compliance with the new concession framework.
**Action Required**
Responsible for reviewing unit compliance and issuing the mandatory certificates required for SEZ units to avail of the concessional duty rates.
**DTA-based Manufacturers**
**Impact**
The measure is designed to ensure a level-playing field between SEZ manufacturers and those already operating within the Domestic Tariff Area.
**Action Required**
No specific action is mentioned, though they are identified as stakeholders protected by the "level-playing field" provision of the measure.
Key Entities Referenced
Customs Act, 1962: The legal framework under which Section 25(1) was exercised to notify conditional customs duty concessions for SEZ-to-DTA sales.
Special Economic Zones Act, 2005: The primary legislation governing SEZs; Section 30 defines clearances to the Domestic Tariff Area as imports into India.
Ministry of Commerce & Industry: The primary government body responsible for implementing the measure to boost manufacturing capacity and resilience for SEZ units.
Development Commissioner: The official authority responsible for certifying that SEZ units comply with the conditions required to avail concessional duty benefits.
SEZ Rules, 2006: The regulatory framework under which SEZ manufacturing units are subject to audit for compliance with the new concessional framework.
Ministry of Commerce & Industry
Government notifies Conditional Concessional
Customs Duty for SEZ to Domestic Tariff Area
sales to boost manufacturing capacity
Measure to benefit around 1,200 SEZ units; Boost scale, cut
costs, enhance resilience
Posted On: 01 APR 2026 8:20PM by PIB Delhi
In line with the Budget announcement 2026, conditional customs duty concessions have been notified on
clearance of goods manufactured in Special Economic Zones (SEZs) to the Domestic Tariff Area (DTA) to
improve capacity utilisation of manufacturing units impacted by global trade disruptions. The measure is
expected to benefit approximately 1,200 SEZ manufacturing units by enabling economies of scale,
reducing costs and enhancing resilience, while preserving the export-oriented nature of SEZs.
The measure allows eligible SEZ manufacturing units to clear goods to the DTA at concessional duty
rates, subject to a limit of 30 per cent of the highest annual Free on Board export value achieved in any of
the three immediately preceding financial years. Export benefits such as duty drawback on inputs are not
permitted for such clearances to prevent double benefits.
The notification prescribes key eligibility conditions, including a minimum 20 per cent value addition
within the SEZ, calculated using a defined formula based on assessable value and input costs.
The concessional framework covers a broad range of sectors including mineral products; chemical
products; plastics and rubber; hides and skins, leather products and articles of furskins; wood, cork and
paper; textiles and textile articles; footwear and headgear; stone, ceramic and glass; base metals and
articles thereof; machinery and electrical equipment; vehicles, aircraft and transport equipment; optical,
medical and scientific instruments; arms and ammunition; and miscellaneous manufactured articles.
However, sectors such as agriculture (including marine and processed food products, tobacco, etc.),
marble and granite, gems and jewellery, vehicles, toys and petroleum are excluded.
For availing concessional duty benefits, SEZ units are required to furnish a Development Commissioner’s
certificate confirming compliance with conditions, along with a declaration to pay full duty in case of non-
fulfilment. The units will also be subject to audit under SEZ Rules, 2006. The notification is effective
from April 1, 2026 to March 31, 2027.
The above has been implemented vide Notification No. 11/2026-Customs dated March 31, 2026 issued
under Section 25(1) of the Customs Act, 1962. The notification grants conditional customs duty
concessions on goods manufactured in SEZs and cleared to the DTA, including reduced duty rates and, in
certain cases, partial exemption from Agriculture Infrastructure and Development Cess. It applies to units
that commenced production on or before March 31, 2025 and meet specified conditions, while excluding
Free Trade Warehousing Zone units and goods imported into SEZs and cleared to DTA without adequate
manufacturing.As per Section 30 of the Special Economic Zones Act, 2005, clearance of goods from SEZs to the DTA is
treated as imports into India and attracts applicable customs duties, which had affected the
competitiveness of SEZ manufacturers. The present measure addresses this concern while ensuring a
level-playing field for units operating in the DTA.
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Abhishek Dayal/Abhijit Narayana/Garima Singh
(Release ID: 2247993) Visitor Counter : 176
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