Latest DGFT Amendment on QCO Exemptions: Impact on SEZ Units, Developers & DTA Supplies 2026

June 13, 2026
by umspcs
Blog, News & Updates
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With changing times, it becomes imperative to be aware of the notifications that keep coming out now and then from the Government. One such amendment in any notification could have major repercussions on imports, compliance issues, and so forth.

To clarify the issue pertaining to QCOs and/or BIS certificates for SEZs, Notification No. 20/2026-27 dated 2 June 2026 came into effect.

According to the notification, Para 2.03(A)(iii) of Foreign Trade Policy (FTP) 2023 was amended, and QCO exemptions were brought in line with provisions of SEZ Act, 2005 and SEZ Rules, 2006. While the new notification provides a greater scope of operation to SEZ units and developers, there is also a certain compliance requirement that needs to be fulfilled for goods to enter the DTA.

This blog will provide details about the changes, their importance, and the actions required to be taken by the businesses.

Understanding DGFT and Its Regulatory Role

The Directorate General of Foreign Trade (DGFT) operates under the Ministry of Commerce & Industry of the Government of India. The DGFT is the main body that handles the implementation of the foreign trade policy of India.DGFT releases notifications and other policies related to international business, imports of products, exports, and other regulatory processes.For the companies involved in importing, manufacturing, and exporting, it becomes imperative to stay abreast of all DGFT notifications.

What Are BIS Quality Control Orders (QCOs)?

BIS Quality Control Order (QCO) are the mandatory rules made by different ministries as per the provisions of the BIS Act, 2016. These are aimed at ensuring that all the products marketed, imported, manufactured, or circulated in India conform to the relevant quality and safety standards.

In order to be eligible for marketing in India, a product needs to meet the relevant IS standard and receive the requisite BIS Certification.

The basic objectives of QCOs include:

Currently, a large number of products, such as electronics, steel, chemicals, machinery, construction products, household items, etc., are covered under QCOs.

What is an SEZ and its Benefits?

Special Economic Zone means any economic zone formed for the purpose of promoting exports, industries, foreign investments, and a good business environment.

There are various benefits provided to the units/developers of SEZs, which include:

But all such benefits can be availed subject to compliance with the provisions of the SEZ Act, 2005 and Rule 27 of the SEZ Rules, 2006 and other relevant provisions.

What Was the Earlier Position?

Prior to this amendment, the exemptions that were available to SEZ firms under the provision of QCO had various interpretations from both businesses and authorities.
The exemption was normally only applicable for inputs needed for export purposes, thus leading to uncertainties about:

There were no clear statements in the law as to whether there was any need for BIS certification on imported goods within the SEZs.

DGFT Notification No. 20/2026-27: What Has Changed?

In order to dispel any doubts in this regard, DGFT has made an amendment in para 2.03(A)(iii) of FTP 2023.The amendment provides that "Quality Control Orders shall not be applicable to all permissible goods imported by SEZ units and SEZ developers for performing authorised operations in SEZ."This can be considered a substantial improvement in terms of exemption provisions.Some examples of the exempted category include:

Raw materials
Components
Consumables
Capital goods
Equipment
Permissible other goods needed for authorised operations

DGFT has also harmonised the provisions of FTP with the SEZ Act, 2005 and SEZ Rules, 2006.

Spares

A Critical Condition Businesses Must Not Ignore

Though the amendments provide more exemptions, there is one important criterion that all importers and manufacturers should be aware of.The exemption can be applied only when imported materials are utilised for authorised purposes within the SEZ.When imported goods or goods manufactured using such imported materials are transported from the SEZ into the Domestic Tariff Area (DTA), applicability criteria kick in during the process of clearance.These include:

Quality Control Order Applicability Criteria (QCO)
Compulsory BIS Certification Requirements
Product-wise Approval Criteria
Any other laws/regulations that may be applicable

To summarise, the exemption provided within the SEZ doesn’t automatically apply in India.

The Core Principle Behind the Amendment

Goods used within the Special Economic Zone (SEZ)

Exemption under QCO available

No BIS certification needed at import

Subject to authorised SEZ activity

Goods entering the Domestic Tariff Area (DTA)

Applicability of all QCOs becomes mandatory

QCO certification from BIS is necessary

Compliance must be achieved prior to clearance

It is evident from above that the applicability of QCO depends on the ultimate usage of the good and not merely on where it was imported.

Impact on the SEZ Units

The amended law brings about immense relief to manufacturing units within SEZs.Some benefits include:

Streamlined Importing Procedures

It becomes easier for businesses to import more products without focusing on compliance with QCOs initially.

Lowered Complying Pressure

Imports that are required for conducting permitted activities may be done without the necessity for BIS certification at the import stage.

Better Production Planning

Firms can plan better regarding production without being worried about compliance with QCOs while importing.

Regulatory Clarification

Confusion related to certain types of imports is cleared by this amendment.

Impact on SEZ Developers

One of the crucial features of the amendment relates to the recognition of SEZ developers.The developers working towards developing facilities and infrastructure in SEZs may find greater clarity about the importation of goods related to the development work carried out by them.This can help in the following:

Development of infrastructure
Development of industrial parks
Development of utility projects
Construction work
Upgradation of facilities

The amendment provides developers with clearer guidance on compliance obligations and import planning.

Impact on DTA Supplies

Businesses offering goods to the Indian domestic market need to be careful.The amendment does not exempt compliance from products imported into the Domestic Tariff Area.For those who want to export to the DTA in the future, they should:

Assess the QCO applicability beforehand
Determine the necessity of BIS certification early on
Consider product standards prior to market entry
Plan the certification timeline ahead of time

Otherwise, they may face:

Shipping problems
Customs complications
Compliance expenses
Access problems

Industries Most Likely to Be Affected

The latest amendment by DGFT has special significance for industries functioning in SEZ, which includes:

Industries functioning in these sectors need to re-strategise themselves right away.

Compliance Challenges Businesses May Still Face

However, the clarification has not made things easier for companies that still face the following issues related to their compliance:

Identification of Relevant QCOs: Several items fall under certain Quality Control Orders issued by various ministries.
Evaluation of BIS Certification Criteria: Companies need to determine whether the goods require BIS certification or not.
Future Movement of DTAs: Items brought into the country through an exemption clause might find themselves sold on the Indian market in the future.
Documentation of Operations: Proper documentation is essential to show that the company conducts its activities through an approved SEZ.
Increasing Scope of QCOs: QCOs now cover more and more fields.

How UMSPCS Helps Businesses Navigate BIS and QCO Compliance

Given the shift towards quality regulation by the Indian regulatory system, business firms require professional support in meeting their regulatory requirements without disrupting their operations.UMSPCS offers complete regulatory advisory services to manufacturers, importers, exporters, SEZ Units, and SEZ developers.The regulatory advisory services offered by UMSPCS include:

Having extensive experience in BIS Certification, QCO regulations, and product compliance rules, UMSPCS enables companies to enter the markets effortlessly.

Conclusion

Having DGFT Notification No. 20/2026-27 is a very important new policy measure that gives clear guidelines for the QCOs exemption for SEZ Units and Developers.This new exemption not only enhances the scope of exemption of products for the purposes of authorised operations but also ensures proper compliance of products that are being transferred into the Domestic Tariff Area.One must not see this new exemption as an easing of the rules and regulations. This is rather a chance for companies to develop a robust strategy that considers the entire life cycle of products coming into the country.Regardless of whether it is about raw materials, capital goods, machinery, components, or consumable items, the focus on the DTA destination of these products cannot be ignored.Looking for Professional Guidance for BIS Certification, QCO Compliance, SEZ, and DTA Clearance? Contact UMSPCS now to get comprehensive compliance services and maintain compliance with DGFT and other regulations.

Frequently Asked Questions (FAQs)

Not necessarily, this exemption would apply only when such goods are used for authorised activities within the SEZ. The BIS certification might still become necessary when the goods are allowed to clear in the Domestic Tariff Area.

The following categories of goods are subject to this amendment: raw materials, consumables, spare parts, equipment, capital goods, and other permissible goods which may be used for authorised activities in SEZ.

As soon as goods are released into the Domestic Tariff Area, all relevant QCO and BIS certification requirements should be met by the importer.

Yes, the provision includes SEZ developers, apart from SEZ units.

UMSPCS offers end-to-end solutions including product evaluation, QCO applicability assessment, BIS Certification, documentation, filing and compliance strategy.

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