Here's a scenario a lot of export-oriented businesses run into: a piece of equipment or a component needed for operations is technically covered by a mandatory BIS Quality Control Order (QCO), but the goods are being brought in purely to support export-oriented manufacturing inside a Special Economic Zone (SEZ). Does the full BIS/QCO compliance burden still apply at the point of import?

A recent DGFT amendment gives a much clearer answer to that question — and it's worth understanding properly if your business operates inside an SEZ or is planning to import capital goods, spares, or components for authorised SEZ operations.

Where This Exemption Started

The exemption itself isn't new. Back in March 2024, DGFT Notification No. 71/2023, dated 11 March 2024, inserted Para 2.03A into the Foreign Trade Policy (FTP) 2023, giving Advance Authorisation holders, Export Oriented Units (EOUs), and SEZ units relief from mandatory QCO compliance — but only for inputs specifically required for export production.

Anything imported under that original exemption had to go straight into manufacturing goods for physical export, with no route into the Domestic Tariff Area (DTA) for either the input itself or anything made from it. That framing worked fine for raw materials feeding directly into an export product. It worked less well for everything else an SEZ actually needs to function — capital equipment, spare parts, testing instruments, consumables — none of which get "exported" in the literal sense, but all of which are essential to keeping authorised operations running.

What Changed in June 2026

DGFT Notification No. 20/2026-27, dated 2 June 2026, amends Para 2.03A(iii) of FTP 2023. Here's the exact shift, based on the official notification text:

The key legal shift is easy to miss: the exemption is no longer tied to whether goods eventually get physically exported. It now applies to any permissible good used for authorised SEZ operations — a broader, SEZ-Act-based standard rather than an export-linked one. That's what makes capital goods and equipment fall cleanly within scope now, where they didn't clearly qualify before.

Two details worth flagging specifically:

• SEZ Developers are now explicitly covered, not just SEZ Units. The earlier provision only referenced units, leaving developers in a grey area — the amendment closes that.

• Capital goods and equipment are now unambiguously in scope. Under the old rule, importing testing equipment or production machinery that happened to fall under a QCO was a genuinely uncertain area, since it didn't fit neatly into "inputs for export production." That ambiguity is gone.

Also Read: View & Download the Official DGFT Notifications (71/2023 & 20/2026-27)

What Hasn't Changed — This Isn't a Blanket Exemption

This is not a blanket exit from BIS or QCO compliance. A few things stay exactly as strict as before:

• The exemption applies only within the SEZ, for goods used in authorised operations as defined under the SEZ Act, 2005 and SEZ Rules, 2006.

• It covers only the QCOs issued by the specific Ministries/Departments listed in Appendix 2Y of FTP 2023: the Ministry of Steel, the Department for Promotion of Industry and Internal Trade (DPIIT), the Ministry of Textiles, the Ministry of Mines, the Department of Chemicals and Petrochemicals, and the Ministry of Heavy Industries. A QCO issued outside this list isn't covered by this exemption mechanism.

• The moment any of these goods — or anything manufactured or processed from them — moves into the Domestic Tariff Area, full compliance with the applicable QCOs, BIS requirements, and any other applicable law becomes mandatory at that point of clearance. There's no exemption that follows the goods once they leave the SEZ boundary.

• A formal undertaking must be submitted to the Development Commissioner of the SEZ by the SEZ Unit or SEZ Developer, at the time of importation.

Why This Matters for SEZ Businesses

For a business running SEZ operations, this removes a genuine operational bottleneck. Previously, sourcing a piece of QCO-covered capital equipment or a batch of spares for machinery maintenance meant either finding a workaround, absorbing the compliance cost anyway, or navigating uncertainty about whether the equipment even qualified for the existing exemption. Now, as long as the import is for authorised SEZ operations and stays within the zone, that friction is largely gone.

The trade-off is that this puts more weight on getting the DTA transition right. Any business planning to eventually move SEZ-processed goods, or the capital equipment itself, into the domestic market needs to plan for full BIS/QCO compliance at that stage — this isn't a rule that quietly disappears once goods cross into the DTA.

What SEZ Businesses Should Do Next

• Map your import list against what now qualifies as "permissible goods for authorised operations" — this is a wider net than the old "export production inputs only" test.

• Check your SEZ classification — confirm whether your entity is registered as a Unit or a Developer, since both are now explicitly covered but your paperwork should reflect the correct classification.

• Don't treat DTA clearance as an afterthought. If there's any chance imported capital goods or SEZ-manufactured products will eventually enter the domestic market, plan the BIS/QCO compliance pathway for that transition now, not when the shipment is already at the border.

• File the required undertaking with your SEZ Development Commissioner as part of using this exemption — this isn't optional paperwork, it's how the exemption is formally claimed.

• Watch for QCO-specific carve-outs. The exemption applies to QCOs covered under this DGFT framework specifically — if a particular product falls under a QCO that isn't part of this mechanism, this amendment doesn't help.

About Absolute Veritas

Absolute Veritas is a leading Testing, Inspection, and Certification (TIC) consultancy with over 15 years of expertise, headquartered in New Delhi, India. We help manufacturers, importers, SEZ units, and export-oriented businesses navigate the intersection of BIS/QCO compliance and India's trade policy framework — including determining exactly when an exemption applies, when it doesn't, and what's required to stay compliant once goods move into the domestic market.

Contact us today at cs@absoluteveritas.com for expert guidance on BIS/QCO compliance for SEZ, EOU, and export-oriented operations.

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