DGFT Expands QCO Exemption for SEZ Imports

The Directorate General of Foreign Trade (DGFT) has amended the Foreign Trade Policy (FTP), 2023 to broaden the scope of exemption from Quality Control Orders (QCOs) and Bureau of Indian Standards (BIS) requirements for imports made by SEZ Units and Developers.

The revised provisions seek to align the Foreign Trade Policy with the framework established under the SEZ Act, 2005 and the SEZ Rules, 2006, while also providing greater clarity regarding the applicability of QCOs on goods imported into SEZs.

What Has Changed?

Prior to the amendment, exemption from mandatory Quality Control Orders issued under the BIS Act, 2016 was available only for inputs imported by SEZ units for export production. The policy also restricted Domestic Tariff Area (DTA) clearances of such imported inputs or capital goods manufactured from those inputs. Furthermore, the exemption was limited to goods meant for physical exports.

Under the revised Para 2.03A(iii) of FTP, 2023, the scope of exemption has been substantially widened. The exemption will now apply to all permissible goods imported by SEZ Units or SEZ Developers for authorized operations within SEZs. This includes:

Raw materials
Components
Consumables
Spare parts
Capital goods
Other permissible goods required for authorized operations

The amendment effectively removes the earlier restriction that linked the exemption exclusively to export production and physical exports.

Alignment with SEZ Law

The revised provision explicitly states that imports by SEZ Units and Developers will enjoy exemption from QCO requirements when such imports are made for authorized operations in accordance with the SEZ Act, 2005 and Rule 27 of the SEZ Rules, 2006.

Industry stakeholders have long argued that the earlier FTP provision was narrower than the exemptions available under the SEZ legal framework. The amendment addresses this inconsistency and brings greater harmony between trade policy and SEZ regulations.

Important Safeguard: DTA Clearances Must Comply with QCOs

While the exemption has been expanded, the government has simultaneously clarified that goods imported under this relaxation cannot freely enter the Domestic Tariff Area without meeting applicable standards.

The notification specifies that any removal, transfer, or clearance of imported goods—or products manufactured or processed from such goods—from an SEZ to the Domestic Tariff Area will be subject to compliance with:

Applicable Quality Control Orders (QCOs)
Bureau of Indian Standards (BIS) requirements
Other relevant laws, rules, and regulations in force at the time of clearance

This means that although goods can be imported into SEZs without QCO compliance for authorized operations, the exemption does not automatically extend when those goods or their derivatives move into the domestic market.

Undertaking Requirement Continues

The notification also retains the requirement of submitting an undertaking to the concerned Development Commissioner.

SEZ Units and Developers availing the exemption must provide an undertaking at the time of importation confirming that the imported goods will be used for authorized operations within the SEZ and that any future DTA clearance will comply with applicable regulatory requirements.

Industry Impact

The amendment is expected to provide significant operational flexibility to SEZ businesses, particularly manufacturers, exporters, logistics operators, and infrastructure developers who rely on imported materials, machinery, components, and consumables.

By extending the exemption beyond export-production inputs and covering all permissible goods required for authorized operations, the government has reduced regulatory uncertainty and compliance burdens faced by SEZ entities.

The move is also expected to improve supply-chain efficiency and strengthen India’s SEZ ecosystem by ensuring that imported goods used within SEZs are not subjected to unnecessary quality certification requirements at the point of entry, while maintaining safeguards for products entering the domestic market.

Notification Details

Notification No. Notification No. 16 /2026-27

Date: 01/06/2026

Click Here To Read Notification