1 month ago
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Against the backdrop of weakening outer request and constrained proviso routes, the authorities has allowed India’s export oriented units successful Special Economic Zones (SEZs) to merchantability their products wrong India astatine concessional taxation rates.
The determination follows an announcement to this effect successful Budget 2026 presented by Finance Minister Nirmala Sitharaman connected February 1. Experts accidental this would person the dual vantage of allowing export units to stay operational portion allowing home units to trim their reliance connected imports.
“In pursuance of the Union Budget 2026-27 announcement to code the concerns faced by the manufacturing units successful the Special Economic Zones (SEZ) owed to ongoing planetary commercialized disruptions, the Central Board of Indirect Taxes and Customs (CBIC) contiguous introduced a peculiar one-time alleviation measurement to facilitate income by eligible manufacturing units successful SEZs to the Domestic Tariff Area (DTA) astatine concessional rates of duty,” the Ministry of Finance said successful a release.
Concessions and caveats
The authorities added that the work concessions person been provided aft taking “due care” to support a level playing-field for the units operating wrong India but extracurricular the SEZs.
The concessional duties besides travel with immoderate caveats. They volition use for 1 year, from April 1, 2026, to March 31, 2027. Further, the SEZ units claiming payment nether this model would person to person begun accumulation connected oregon earlier March 31, 2025.
“The goods manufactured by specified units, for which payment is claimed nether this alleviation window, should person undergone worth summation of minimum 20% implicit the inputs,” the merchandise added.
The authorities besides said that the accent connected exports by SEZ units shall remain. That is, these SEZ units volition not beryllium overly-incentivised to divert their export accumulation towards India’s home market.
“DTA income astatine concessional rates by the eligible SEZ units shall not beryllium much than 30% of the highest yearly Free On Board (FOB) worth of exports successful immoderate of 3 instantly preceding fiscal years,” the merchandise said.
According to sources successful the Ministry of Finance, this benignant of concession is simply a one-time happening alternatively than a longer-term displacement successful strategy.
“The alleviation is chiefly driven by contiguous outer challenges alternatively than a semipermanent argumentation shift,” the authoritative said, declining to beryllium named. “The backdrop is intelligibly 1 of planetary commercialized uncertainty, geopolitical disruptions, and weakening export demand, each of which person placed unit connected the capacities of the existing SEZ units that are babelike connected planetary markets. It is simply a one-time, time-bound relief, and that framing is important.”
Dual benefit
According to Krishan Arora, Partner and Leader of Indirect Tax and India Investment Advisory astatine Grant Thornton Bharat, this relaxation would person a dual payment for India’s businesses.
“This argumentation alteration guarantees that our cutting borderline SEZ infrastructure does not prevarication idle arsenic Indian exporters navigate the dual challenges of rising planetary tariff barriers, geopolitical uncertainties and proviso concatenation disruptions successful the look of US-Israel-Iran war, blocking overmuch of the commercialized routes,” Mr. Arora said.
Apart from helping SEZ units code these under-capacity issues, the relaxation besides helps those companies that trust connected imports, helium explained.
“At the aforesaid time, home manufacture besides benefits by exploiting disposable capableness of SEZ and shall person reduced reliance connected imports which are getting some delayed and expensive, owing to the warfare epoch planetary system is presently grappling with,” Mr. Arora said.
