Currently, SEZ units can sell their products in the domestic customs area (DTA or domestic market) by paying duty based on output (finished goods). Image used for representational purposes only. | Photo credit: Bijoy Ghosh
Finance Minister Nirmala Sitharaman on Sunday (February 1, 2026) proposed a special one-time measure that would facilitate sales by eligible manufacturing units in special economy (SEZ) to the domestic customs area at concessional duty rates.
Ms Sitharaman presented her ninth consecutive Union Budget for April 2026 to March 2027 in Parliament on Sunday (February 1).
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This was a demand from the industry as it faced capacity utilization issues in SEZ units due to high tariffs in the US
“To address concerns arising from capacity utilization by manufacturing units in SEZs due to disruption of global trade, I propose as a special one-time measure to facilitate sales by eligible manufacturing units in SEZs to DTA at concessional duty rates,” she said in her budget speech.
The quantity of these sales will be limited to a prescribed proportion of their exports.
Ms. Sitharaman said necessary regulatory changes would be made to operationalize these measures while ensuring a level playing field for units working in DTA.
The industry had earlier requested the Center to allow them to sell products made in SEZs domestically after paying foregone duty on inputs as it would help promote value addition.
Currently, SEZ units can sell their products in the domestic customs area (DTA or domestic market) by paying duty based on output (finished goods).
These zones are treated as foreign territories for trade and customs, with restrictions on duty-free domestic sales.
Companies operating within the SEZ are allowed to import materials and components duty-free, provided that the finished goods produced are for export from India and sale in the Indian domestic market after payment of the relevant output duties.
SEZs have emerged as an important contributor to India’s exports. Total exports from these zones stood at $176.6 billion in 2024-25.
Published – 1 Feb 2026 13:39 IST
