Exporters in India can choose among several schemes, and the best choice depends on what you make, where you sell and how much compliance you can carry.
The three schemes at a glance
| Point | SEZ | EOU | STPI |
|---|---|---|---|
| Legal basis | SEZ Act, 2005 and SEZ Rules, 2006 | Foreign Trade Policy, EOU chapter | Foreign Trade Policy, STP scheme for software |
| Location | Inside a notified zone only | Anywhere in India | Any office in India |
| Customs and GST | Treated as outside customs territory for authorised operations; supplies to SEZ are zero-rated under the IGST Act | Duty-free imports for export production within bond conditions | Duty-free import of specified capital goods |
| Domestic sales | Allowed on payment of applicable duties | Limited, on payment of duties | Limited |
| Income tax | Section 10AA deduction not available to units starting after 31 March 2020 | No exemption now | No exemption now |
| Compliance | High: separate books, Development Commissioner oversight, net foreign exchange | Positive net foreign exchange and bonding | Lighter, filing-based, Softex |
How to choose
- Pure IT or ITES exporter, small team: STPI is often simplest because you can register an existing office.
- Large manufacturer or heavy importer of capital goods: SEZ provides the deepest duty and GST relief, in return for a fixed location and stricter oversight.
- Exporter with meaningful domestic sales: compare duty cost on domestic clearances under SEZ and EOU, and consider the Manufacture and Other Operations in Warehouse (MOOWR) scheme.
Watch the exit
Leaving any scheme can trigger duty, interest or approvals. Consider the exit cost, and see our article on SEZ exit and debonding, before choosing.
Government has discussed replacing the SEZ Act with a new framework (the proposed DESH Bill). Check the status when planning a long-term investment.
Need Guidance? Contact KC LEGAL
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This article is for general information only and is not legal advice. Law and procedure change; please verify the current position for your specific case. Last reviewed: November 2026.