India Eases Import Duties for Export-Focused Zones Amid Middle East Conflict
India will allow factories in Special Economic Zones to sell goods domestically with lower import duties as Middle East conflicts disrupt trade, aiming to protect exporters and utilize unused capacity. The policy starts in April 2026 and intends to navigate rising tariff barriers and supply disruptions.
India has announced a new policy that permits factories in export-focused Special Economic Zones (SEZs) to sell goods domestically at reduced import duties to counter the impact of Middle East conflicts on trade. This measure, unveiled in February, seeks to protect exporters from increasing U.S. tariffs as geopolitical tensions elevate freight and oil costs.
Under the directive, SEZ businesses can sell a limited portion of their products, such as chemicals, machinery, textiles, and electronics, within the domestic market, incurring customs rates between 5% to 12.5% rather than the standard full import taxes applied to foreign imports. The policy is effective from April 2026 to March 2027 for businesses operational by March 2025.
Analysts like Krishan Arora from Grant Thornton LLP and Rajiv Chugh from EY India believe this initiative will support Indian exporters against rising tariffs and supply chain challenges, while also making surplus SEZ capacity more economically viable, as it steers away from high import duties for domestic sales.
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