Duty Concessions Revitalize SEZs Amidst Global Demand Challenges

The Indian government's temporary duty concession policy aims to provide limited domestic market access to manufacturing units in SEZs. While preserving their export-oriented character, it assists sectors such as electronics and textiles. However, the concessions are modest, leading to limited benefits for certain industries and not fully addressing import substitution.

The recent introduction of duty concessions by the Indian government aims to bolster the manufacturing units in Special Economic Zones (SEZs) amidst fluctuating global demand. By enabling restricted domestic market access, these concessions aim to ease operational strains while retaining the SEZs' export-oriented focus.

According to Gulzar Didwania, Partner at Deloitte India, the measure reflects a gradual shift in India's export strategy. The concessions offer much-needed relief for sectors facing under-utilized capacity and demand volatility, but the limited nature of the duty relief raises questions about its broader efficacy in achieving import substitution.

A Sakthivel, Chairman of the Apparel Export Promotion Council, highlighted its significance for textile exporters grappling with high input costs and pricing pressures. As it takes effect, SEZ units are set to benefit from improved liquidity and production continuity, enhancing inventory management and capacity utilization.

(With inputs from agencies.)