The Ministry of Finance has issued Notification granting conditional customs duty concessions on goods manufactured in Special Economic Zones (SEZs) and supplied to the Domestic Tariff Area (DTA).
The concessional regime is temporary in nature effective from April 1, 2026 and valid till March 31, 2027.Â
The notification, effective from April 1, 2026, introduces a structured concessional duty regime for a wide range of goods, subject to stringent eligibility conditions and compliance requirements.
The Central Government has exercised its powers under Section 25(1) of the Customs Act, 1962 to exempt specified goods from customs duty exceeding prescribed concessional rates when such goods are manufactured in SEZ units, and cleared into the Domestic Tariff Area (DTA).
The notification provides two separate frameworks:
Table I: Prescribes concessional Basic Customs Duty (BCD) rates for a vast range of goods across sectors including chemicals, plastics, textiles, machinery, electronics, and more.
Table II: Extends concessional treatment not only for BCD but also for Agriculture Infrastructure and Development Cess (AIDC) on select goods such as fertilizers, PVC flex films, footwear, solar equipment, and furniture.
The notification covers an extensive list of tariff items spanning: Chemicals and petrochemicals, Plastics and polymers, Textiles and garments, Machinery and electrical equipment, Metals and fabricated goods, and Consumer goods and furniture.
The concessional BCD rates broadly range between 5% and 12.5%, depending on the product category, significantly reducing the tax burden compared to standard import duties.
To prevent misuse and ensure genuine manufacturing activity, the government has imposed conditions.
Firstly, only SEZ units that commenced production on or before March 31, 2025 are eligible.
Secondly, a mandatory 20% value addition must be achieved in the SEZ.
Thirdly, DTA Clearance Limit: Supplies to DTA under this benefit cannot exceed 30% of the highest export value (FOB)in any of the preceding three financial years.
Fourthly, no Export Benefit Duplication: No drawback or export incentives should have been availed on inputs used.
The notification also mandates filing of Bill of Entry on the common portal for DTA clearances. Certification from the Development Commissioner regarding production date, export performance, and value addition. Submission of an undertaking to pay full duty in case of non-compliance. Mandatory audit under Rule 79 of SEZ Rules, 2006
The exemption will not apply to units operating in Free Trade and Warehousing Zones (FTWZs) and goods that are merely imported into SEZs and then cleared to DTA without substantial manufacturing
However, the strict conditions—especially the value addition threshold and export-linked cap—indicate that the benefit is targeted at genuine manufacturers rather than trading entities.
Notification Details
Notification No. 11/2026-Customs
Date: 31/03/2026
