[Home](/)/[Resources](/resources)/India SEZ and Bonded Warehousing IndiaSEZ / Bonded # Special Economic Zones and Bonded Warehousing for Technology Imports in India SEZs and bonded warehouses are India's primary mechanisms for duty deferment and export-oriented manufacturing. For tech importers distributing across India, a bonded warehouse eliminates the need to pay full customs duty on an entire shipment upfront. For foreign OEMs setting up India manufacturing, SEZs offer duty-free component imports for export-oriented production. Copy Link[Share on WhatsApp](https://wa.me/?text=https%3A%2F%2Fkrono-labs.com%2Fguides%2Findia-sez-import) At a glance SEZ benefits 5 Bonded warehouse types 3 Usage scenarios 4 ## SEZ benefits for technology companies ### Duty-free import of capital goods and raw materials SEZ units can import capital goods (machinery, equipment) and raw materials without payment of customs duty. Duties are only payable if goods are removed to the Domestic Tariff Area (DTA). **Applies to:** Manufacturing SEZ units ### 100% FDI in most sectors SEZs offer 100% Foreign Direct Investment through automatic route in most manufacturing and service sectors — no FIPB approval needed. **Applies to:** Foreign companies setting up SEZ units ### Income tax benefits (residual) SEZ units were historically exempt from income tax for initial years. Tax holidays have been phased down under IGCR amendments but MAT (Minimum Alternate Tax) exemptions may still apply for older units. **Applies to:** SEZ units registered before MAT amendment ### Simplified customs procedures within SEZ SEZ units have dedicated customs officers on-site. Customs clearance for SEZ imports is handled within the zone — faster than standard port clearance. **Applies to:** All SEZ units ### No state levies on goods procured from DTA Domestic suppliers to SEZ units are treated as 'exports' — the DTA supplier gets export benefits (duty drawback, GST refund) and the SEZ unit does not pay state levies on DTA-sourced materials. **Applies to:** Manufacturing SEZ units procuring materials from Indian suppliers ## Bonded warehouse types ### Customs Bonded Warehouse (Public) Managed by a licensed warehouse operator. Any importer can store goods here after customs registration. Duty is paid when goods are removed from the warehouse for home consumption. **Best for:** Importers who want to defer duty payment and distribute goods in batches, without setting up their own dedicated warehouse. ### Private Bonded Warehouse Licensed to a single importer for exclusive use. The importer stores their own import cargo here. Applicable for large-volume importers with regular import flows. **Best for:** Large electronics distributors or manufacturers with consistent high-volume imports who want full control of their bonded storage. ### Special Warehouse (for sensitive goods) For goods requiring special handling: explosives, chemicals, precious metals. Licensed under Section 58A of Customs Act. **Best for:** Importers of hazardous or high-value regulated goods. ## When to use SEZ vs bonded warehouse ScenarioRecommended Approach Distributing imported products across India over timeBonded warehouse — import once, store, and clear for consumption region by region as demand requires. Avoids paying full duty on the entire shipment upfront. Manufacturing electronics for exportSEZ unit — duty-free import of components for export-oriented manufacturing. SEZ is India's primary framework for export-oriented electronics manufacturing. Market validation with limited initial inventoryStandard import with AEO status (if eligible) for faster clearance — bonded warehouse may not be cost-effective for small validation volumes due to warehousing fees. Large capital equipment import for India factoryEPCG (Export Promotion Capital Goods) scheme — zero or concessional duty on capital goods against export obligation. Different from bonded warehouse but highly relevant for tech manufacturers. ## Frequently asked questions ### Do BIS CRS and other product compliance requirements apply to goods stored in a bonded warehouse? Yes — BIS CRS and other regulatory compliance requirements must be in place before goods are cleared for home consumption from a bonded warehouse. Goods can be imported and stored in bond without full domestic regulatory compliance (customs registration at import is still required), but before they are removed from the bonded warehouse for sale in India, all applicable certifications (BIS CRS, WPC ETA, etc.) must be valid. Bonded warehousing defers duty payment — it does not waive regulatory compliance. ### Can a foreign technology company set up in an Indian SEZ without an Indian partner? Yes — 100% FDI through the automatic route is permitted in most SEZ manufacturing and service sectors. A foreign technology company can set up a wholly-owned subsidiary (WOS) within an Indian SEZ without an Indian joint venture partner. The subsidiary is an Indian legal entity incorporated under Companies Act 2013. This is a common structure for foreign electronics OEMs setting up India export-oriented manufacturing. ### Are goods manufactured in an Indian SEZ and sold in India subject to customs duty? Yes. When SEZ-manufactured goods are sold into the Indian Domestic Tariff Area (DTA — i.e., India outside SEZ), they are treated as imports into the DTA from the SEZ. The buyer in the DTA pays customs duty on the goods as if they were imported from abroad. The rate depends on the product. Some electronics may attract lower duty from SEZ to DTA if the product is manufactured domestically with sufficient value addition, but the general principle is: SEZ to DTA = deemed import. **Disclaimer:** SEZ policies and bonded warehouse regulations are governed by the SEZ Act 2005, Customs Act 1962, and associated rules. Tax benefits have been modified through Finance Acts. Always verify current benefits and compliance requirements with a qualified customs consultant or SEBI-registered professional. 🇮🇳 India roadmap for your product Every standard, document, and test that applies — free, no account required. See your free roadmap[ Want an expert to take your product through 🇮🇳 India compliance for you? One consultant from Krono's compliance team takes your product from requirements to legal sale, with a fixed quote before any work starts. See compliance services](/services) Learn this properly In-depth course that teaches the full process, not just this one answer. [Start the course — $149](/courses/04-bis-certification-for-electronics)[Prefer to read? Get the book — $24.99](/books/04-bis-certification-for-electronics) Related guides * [Authorized Economic Operator (AEO) ProgramComplete guide to India's Authorized Economic Operator (AEO) program: AEO-T1, T2, T3 tiers, eligibility criteria for importers …](/guides/aeo-india) * [India Customs Duty for ElectronicsPractical guide to India customs duty on electronics and technology products: how Basic Customs Duty (BCD) is calculated, key H…](/guides/india-customs-duty-electronics) * [India FTA Benefits for Technology ProductsPractical guide to India's Free Trade Agreements (FTAs) and their benefits for technology product imports: preferential duty ra…](/guides/india-fta-benefits-tech) * [India Market Entry for Hardware CompaniesPractical regulatory roadmap for hardware companies entering India: BIS CRS, WPC ETA, TEC MTCTE, EPR, and customs requirements …](/guides/india-market-entry-hardware)