Govt allows SEZ factores to sell goods at lower taxes:GTRI calls for stronger measures, including embargo on petrol diesel export

To help factories in Special Economic Zones (SEZs) deal with slow global sales, the Central Government has allowed them to sell a quota of their goods in India’s domestic market at a slightly lower tax rate. This new rule is in place from April 1, 2026, to March 31, 2027. Factories in SEZs can now sell a certain quantity of their produce in India by paying a bit less in Basic Customs Duty (BCD) and Agriculture Infrastructure and Development Cess (AIDC). This covers sectors like chemicals, apparel, footwear, etc. Exclusions: Petrol and diesel are not part of this tax break, except for a few refinery products like petroleum coke. Conditions: To get this tax break, factories must get 20% value addition to their produce. According to global think tank, GTRI, founder, Ajay Srivastava, the tax cut is small – only about 1% for many products. Also, there’s no tax break on IGST (Integrated Goods and Services Tax), which limits the benefit. The rules about adding value and limiting sales inside India also make it harder for SEZ factories to use this new rule. The government is trying to be flexible and help exporters who are struggling because of weak global demand. GTRI thinks stronger steps might be needed to really boost local supply, like limiting exports of petrol and diesel, as other countries have done to combat supply disruptions caused by the West Asia conflict.