This post was originally published on The Economic Times
The one-time duty concession to manufacturing units in SEZs will provide them with limited domestic market access while preserving their export-oriented character, experts said on Friday.
However, the relatively modest duty relief somewhat diminishes the extent of the potential benefits to these special economic zones (SEZs), as it is not structured around the principle of duty forgone, they added.
“Consequently, the measure falls short of fully addressing the import substitution objective or significantly incentivising domestic procurement by SEZ units for manufacturing for DTA (domestic tariff area) requirements,” Gulzar Didwania, Partner, Deloitte India, said.
He added that the measure reflects a nuanced shift in India’s export strategy that is allowing limited domestic market access to SEZ units while preserving their export-oriented character.
“The relief provides much-needed cushion for SEZ units facing under-utilised capacity and demand volatility in export markets. By enabling calibrated access to the domestic market at concessional duty rates, it supports better capacity utilisation and revenue realisation,” he said.
Didwania said that sectors with high export dependence, such as electronics, engineering goods, and textiles, are likely to benefit the most from this measure
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