The Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, Government of India, has issued Notification No. 20/2026-27 dated 2nd June, 2026, amending Para 2.03A(iii) of the Foreign Trade Policy (FTP) 2023 with immediate effect. The amendment pertains to the applicability of Quality Control Orders (QCOs) and Bureau of Indian Standards (BIS) requirements on imports by Special Economic Zone (SEZ) Units and Developers. The notification has been issued under the powers conferred by Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (22 of 1992), read with Paragraph 1.02 of the FTP 2023, with the approval of the Minister of Commerce & Industry.
Nature of Amendment — Para 2.03A(iii) of FTP 2023:
The existing Para 2.03A(iii) of FTP 2023 provided a limited exemption from mandatory Quality Control Orders (QCOs) issued under the BIS Act, 2016, only for SEZ units importing inputs required for export production. Additionally, the earlier provision restricted DTA clearance of such inputs or goods manufactured from such inputs. The revised Para 2.03A(iii) substantially broadens the scope of this exemption as set out below.
Key Changes in the Revised Para 2.03A(iii):
| Aspect | Earlier Provision | Revised Provision |
| Who is covered? | SEZ Units only | SEZ Units AND SEZ Developers |
| What imports covered? | Inputs required for export production only | All permissible goods — raw materials, components, consumables, spares, and capital goods — for authorised SEZ operations |
| Legal framework cited? | Not specifically cited | SEZ Act, 2005 and SEZ Rules, 2006 (Rule 27) |
| DTA clearance restriction? | No DTA clearance of inputs or goods manufactured therefrom allowed | DTA clearance permitted subject to compliance with applicable QCOs, BIS requirements and other laws at the time of clearance |
| Undertaking required? | Undertaking to Development Commissioner at time of importation | Undertaking to Development Commissioner at time of importation (retained) |
Effect of the Notification:
Para 2.03A(iii) of FTP 2023 is amended to align the provisions relating to exemption from applicability of Quality Control Orders (QCOs) for imports by SEZ Units and Developers with the provisions of the SEZ Act, 2005 and SEZ Rules, 2006, and to bring clarity regarding the applicability of QCOs. The revised provision ensures that:
[i] SEZ Units and SEZ Developers are fully exempted from QCO/BIS requirements for all categories of permissible goods imported for authorised SEZ operations — not merely export-production inputs — as long as such goods remain within the SEZ.
[ii] Any removal, transfer, or clearance of imported goods — or goods manufactured/processed therefrom — from the SEZ into the Domestic Tariff Area (DTA) shall attract full compliance with QCOs, BIS requirements, and other applicable laws and regulations in force at the time of such clearance.
[iii] SEZ Units and Developers are still required to submit an undertaking to the concerned Development Commissioner at the time of importation.
Background:
Quality Control Orders (QCOs) are mandatory standards notifications issued by the Bureau of Indian Standards (BIS) under the BIS Act, 2016 that require specified goods to conform to Indian Standards before they can be imported, manufactured, or sold in India. Special Economic Zones (SEZs) are designated geographic enclaves operating under the SEZ Act, 2005, and are treated as deemed foreign territory for the purposes of trade operations, duties, and tariffs. The earlier provisions of Para 2.03A(iii) of FTP 2023 had created ambiguity about the scope of QCO exemptions available to SEZ Developers and the range of goods covered. The present amendment removes this ambiguity by aligning the FTP provisions with the SEZ Act, 2005 and SEZ Rules, 2006, thereby providing a clear and comprehensive regulatory framework for SEZ operations.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/06/Notification-No.-20.pdf
