SEZ units seek QCO relief, local sale flexibility

New Delhi: Developers and units of special economic zones ( SEZ) have sought exemption from quality control orders, minimum import price and port restrictions so that imports of those goods are allowed into these zones.

In a meeting with commerce and industry ministry officials on Tuesday, they also sought amendment in the import policy to allow Free Trade Warehousing Zones to import new vehicles and get them included in the list of 18 ports and inland container depots which are allowed such imports. FTWZs are designated areas in SEZs that allow businesses to import, store and re-export goods without paying customs duties and taxes. These zones facilitate various warehousing services such as packaging and inspection.

SEZs are also pushing for flexibilities to enable units to sell and purchase more easily in the domestic market and do reverse job work for domestic manufacturers as that would help them use their unutilised capacities. "We have heard the concerns of the industry and are examining all the issues," said an official. There are 276 operational SEZs in India with $172 billion of exports in FY25, up 7.3% on-year.

Among other concerns, they flagged issues pertaining to banks not having clear instructions to allow advance remittance for purchase of gold from abroad as it blocks working capital of the units. "We also requested that limit of advance remittance of $2,00,000 be increased at least in case of import of gold as price of gold has risen," the representative added. These enclaves have also pushed for flexibilities to sell in the domestic market on a duty foregone basis (where duty payable is based on duties on raw materials) instead of paying customs duties as it would make their goods more competitive locally and they can sell more.

"There is lack of clarity in the field formations about the zero rating of export of contract manufacturing services. This has become all the more important in view of the high additional tariff levied by the US," said an industry representative who participated in the meeting, adding that Washington's 50% tariffs are impacting the SEZ units.

During the meeting, the SEZ industry raised issues about the Import Monitoring Systems for steel and paper, and pushed for easier norms to comply with them.

Since many SEZ units supply goods to bonded warehouses including units operating under the Manufacture and Other Operations in Warehouse Regulations scheme, the representative said that this should be counted towards Net Foreign Exchange (NFE) as SEZs have to be NFE positive.