WHAT IS THIS NOTIFICATION?
The Directorate General of Foreign Trade (DGFT) has issued Notification No. 20/2026-27 dated June 2, 2026, amending Para 2.03A(iii) of the Foreign Trade Policy (FTP) 2023 with immediate effect.
This notification clarifies and expands the rules on Quality Control Orders (QCOs) and BIS (Bureau of Indian Standards) requirements for imports by SEZ Units and SEZ Developers. It is issued with the approval of the Minister of Commerce & Industry and signed by Lav Agarwal, Director General of Foreign Trade.
✅ Key Impact: SEZ Units and SEZ Developers now get a broader QCO exemption for all permissible imports — but face strict BIS/QCO compliance if goods are brought into the Domestic Tariff Area (DTA).
OLD vs NEW: WHAT EXACTLY CHANGED
Here is a side-by-side comparison of the existing Para 2.03A(iii) versus the revised Para 2.03A(iii):
| Existing Para 2.03A(iii) — OLD | Revised Para 2.03A(iii) — NEW |
|---|---|
| Exemption from QCOs issued under BIS Act, 2016 was available only for inputs required for export production | Exemption now covers all permissible goods — raw materials, components, consumables, spares, and capital goods — required for authorised operations within SEZs |
| No DTA clearance of such inputs or goods manufactured from such inputs was allowed | DTA clearance allowed BUT full QCO/BIS compliance mandatory at the time of removal/transfer from SEZ to DTA |
| An undertaking had to be submitted to the Development Commissioner by the SEZ Unit only | Undertaking must be submitted by SEZ Unit OR SEZ Developer to the Development Commissioner at time of importation |
| Exemption was limited — subject to para 2.03(c) of FTP | Aligned with SEZ Act, 2005 and Rule 27 of SEZ Rules, 2006 — broader legal framework |
WHAT THIS MEANS IN PLAIN LANGUAGE
✅ What SEZ Units & Developers Can Now Do
- Import any permissible goods — raw materials, components, consumables, spares, capital goods — without needing to comply with QCOs/BIS at the time of import
- Both SEZ Units and SEZ Developers (not just units) are now covered by this exemption
- Use imported goods freely for all authorised operations within the SEZ
⚠️ Where Full QCO/BIS Compliance Is Mandatory
- Any removal, transfer or clearance of imported goods from the SEZ into the Domestic Tariff Area (DTA)
- Any goods manufactured or processed from such imported inputs, if moved to DTA
- Compliance with all applicable QCOs, BIS requirements, and other laws in force at time of DTA clearance is mandatory
⚠️ Critical for SEZ Units selling to DTA: If you manufacture goods inside the SEZ using QCO-exempt imported inputs and then sell those goods into the Indian domestic market, full BIS/QCO compliance applies at the point of DTA clearance. No exemption carries over.
WHO IS AFFECTED?
| Category | Impact |
|---|---|
| SEZ Manufacturing Units | Broader import exemption — can now import capital goods and consumables without QCO compliance. But DTA sales require full compliance. |
| SEZ Developers | Now explicitly covered under the exemption — previously only SEZ Units were mentioned. Developers importing infrastructure goods benefit directly. |
| SEZ IT/ITeS Units | Import of equipment, components, and consumables for authorised operations now fully covered without BIS hassle. |
| SEZ Units with DTA Sales | High impact — must ensure BIS/QCO compliance for every DTA sale. Customs brokers handling SEZ-to-DTA transfers must update their compliance checklists. |
| Customs Brokers & Freight Forwarders | Update documentation procedures for SEZ imports. Ensure undertaking format for Development Commissioner is revised to cover both Unit and Developer. |
This notification is part of India's larger drive to make SEZs more competitive — a push that connects directly to the 9 FTAs being activated within 10 months, which are expected to drive more export manufacturing into SEZ corridors.
THE UNDERTAKING REQUIREMENT
Both under the old and new framework, an undertaking must be submitted to the Development Commissioner at the time of importation. Under the revised Para 2.03A(iii):
- To be submitted by the SEZ Unit OR SEZ Developer
- Submitted to the concerned Development Commissioner of the SEZ
- Must be submitted at the time of importation
- The undertaking covers the commitment that goods will be used only for authorised operations within the SEZ
- Any DTA removal will comply with all applicable QCOs, BIS standards, and regulations
📋 Action for Customs Brokers: Update your undertaking templates immediately to reflect the expanded scope — covering both SEZ Units and SEZ Developers, and all permissible goods (not just export production inputs).
WHY THIS AMENDMENT WAS NEEDED
The existing Para 2.03A(iii) was drafted narrowly — covering only inputs for export production and only SEZ Units. Over time, this created problems:
- SEZ Developers importing infrastructure goods (cables, equipment, construction materials) were in a grey zone — the old exemption did not clearly cover them
- The old provision only exempted inputs for export production — leaving capital goods, consumables, and spares in an ambiguous position
- The restriction on DTA clearance was absolute in the old text — the new version provides a compliance pathway rather than a blanket ban
- Alignment with SEZ Act, 2005 and SEZ Rules, 2006 was long overdue — the old FTP provision was inconsistent with the parent legislation
As India tightens quality standards through QCOs across hundreds of product categories — a trend that also affects exporters under the US Section 301 forced labour tariff scrutiny — clarifying SEZ exemptions ensures that quality standards are enforced where they matter (DTA sales) without blocking export manufacturing competitiveness inside SEZs.
LEGAL BASIS
| Reference | Details |
|---|---|
| Legal Authority | Section 3 read with Section 5, Foreign Trade (Development & Regulation) Act, 1992 |
| FTP Reference | Para 1.02, Foreign Trade Policy 2023 (as amended) |
| Amended Provision | Para 2.03A(iii) of FTP 2023 |
| Aligned With | SEZ Act, 2005 and Rule 27, SEZ Rules, 2006 |
| File Number | 01/89/180/13/AM-15/PC-2(A)/[E-5910] |
| Signed By | Lav Agarwal, DGFT & Ex-officio Additional Secretary, GoI |
| Effective | Immediate effect from June 2, 2026 |
ACTION CHECKLIST
- ✅ SEZ Units — Review your import register
All permissible goods — including capital goods, spares, consumables — are now covered under QCO exemption. Update your import documentation accordingly. - ✅ SEZ Developers — You are now explicitly covered
Update your undertaking format with the Development Commissioner to reflect your status as Developer (not just Unit). - ✅ Units with DTA Sales — Mandatory BIS/QCO Compliance Check
Before any removal of goods (or goods made from imported inputs) from SEZ to DTA, ensure full compliance with all applicable QCOs and BIS requirements in force at that date. - ✅ Customs Brokers — Update SEZ Import Procedures
Revise undertaking templates, compliance checklists, and client advisory notes to reflect the amended Para 2.03A(iii). - ✅ Legal/Compliance Teams — Align with SEZ Act & Rules
The amended provision is now aligned with SEZ Act 2005 and SEZ Rules 2006. Review your internal FEMA/FTP compliance manuals.
KEY FACTS SUMMARY
| Item | Details |
|---|---|
| Notification | DGFT Notification No. 20/2026-27 |
| Date | June 2, 2026 |
| Effective | Immediate |
| Amends | Para 2.03A(iii) of FTP 2023 |
| Subject | QCO/BIS exemption for SEZ Unit & Developer imports |
| QCO exemption scope | All permissible goods for authorised SEZ operations |
| DTA clearance | Full QCO/BIS compliance mandatory |
| Undertaking required | Yes — by SEZ Unit or Developer to Development Commissioner |
Source: DGFT Notification No. 20/2026-27 dated June 2, 2026 | F. No. 01/89/180/13/AM-15/PC-2(A)/[E-5910]
Signed by: Lav Agarwal, Director General of Foreign Trade & Ex-officio Additional Secretary to the Government of India
Published: June 2026 | Category: DGFT, SEZ, QCO, BIS, FTP 2023, Import Policy
Signed by: Lav Agarwal, Director General of Foreign Trade & Ex-officio Additional Secretary to the Government of India
Published: June 2026 | Category: DGFT, SEZ, QCO, BIS, FTP 2023, Import Policy