A Study on Procurement of Goods by SEZ Units from the Domestic Tariff Area (DTA)

This paper examines how Special Economic Zone (SEZ) units procure goods from the Domestic Tariff Area (DTA) under India’s zero-rated supply framework, and what the process implies for compliance risk and working capital. The study draws on on-the-job training in the DTA Department of MOON SEZ & Management Consultants LLP, Pune, between 1 June and 3 August 2026, supplemented by secondary data on SEZ exports and the state-wise distribution of operational SEZs. A descriptive, single-organisation design is used. Findings are derived from direct task participation, review of SEZ Online Portal documentation, and arithmetic analysis of the secondary data. SEZ exports rose from Rs. 7,96,669 crore in 2019-20 to Rs. 16,36,192 crore in 2025-26, a cumulative increase of 105.38 per cent and a compound annual growth rate of 12.74 per cent, with a single contraction of 4.66 per cent in 2020-21. Five states account for 185 operational SEZs, with Tamil Nadu holding 27.6 per cent of that group. The DTA procurement workflow is a sequential, eight-step control chain in which early errors cascade into later delays. In an anonymised case transaction with a taxable value of Rs. 15,46,980, the zero-rated treatment removed an upfront IGST outlay of Rs. 2,78,456.40, equal to 18 per cent of taxable value. Letter of Undertaking (LUT) validity and GSTIN verification emerge as the highest-consequence controls. Five process recommendations are proposed. No primary survey data were available, and results are descriptive rather than inferential. Keywords: Special Economic Zones; Domestic Tariff Area; zero-rated supply; Letter of Undertaking; IGST; compliance risk; working capital; SEZ Online Portal