Can SEZ, FTWZ and DTA units avail Buyers Credit ?

As discussed in earlier article, RBI issued a circular related to Trade Credit – New Regulatory Framework which has provided clarity on many aspects of Trade credit. One of the aspect is Trade Credit  (Buyers Credit / Suppliers Credit) availed by units based in SEZ/FTWZ/DTA.

In this article we have provided relevant extracts related to SEZ/FTWZ/DTA, definition, documentation and process to be followed by developers and units.


As per SEZ Act, 2005

“Special Economic Zone (SEZ)” means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone.

“Free Trade and Warehousing Zone (FTWZ)” means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on.

“Domestic Tariff Area (DTA)” means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the Special Economic Zones.

“import” means-

  • (i) bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developer from a place outside India by land, sea or air or by any other mode, whether physical or otherwise; or
  • (ii) receiving goods, or services by, Unit or Developer from  another Unit or Developer of the same Special Economic Zone or a different Special Economic Zone;

Who can Avail Trade Credit as per RBI ?

  1. Units or a Developer in a SEZ/FTWZ can avail trade credit for purchase of capital goods and raw material from
    • Outside India.
    • within SEZ including FTWZ or
    • a different SEZ including FTWZ.
  2. An entity in DTA can avail Trade Credit for purchase of capital / non-capital goods from a unit or a developer of a SEZ including FTWZ.

Documents and Process as per RBI

  1. Trade Transaction should be in compliance under SEZ Act, 2005
  2. For calculation of tenure, date of transfer of ownership of goods will be treated as  trade credit date.
  3. Supporting Documents: As there will be no Bill of Entry for sale transactions within SEZ, the inter unit receipt generated through NSDL can be treated as an import document.

Rest of the process remains same for all the importers. Details of which can be found in article Trade Credit – New Regulatory Framework 

Role of Bank

Banks should ensure that there is no double financing on account of these transactions between a unit or a developer in a SEZ including FTWZ for purchase of non-capital and capital goods within an SEZ including FTWZ or from a different SEZ including FTWZ

Frequently Asked Questions

1. Is there any RBI instructions where it says Trade Credits are permitted for import from SEZ.

Yes. With RBI Circular “Trade Credit – New Regulatory Framework” it has been clarified, that both developer and units in SEZ/FTWZ can avail trade credit for import of capital goods and raw material.

2. If the procurement of material is from SEZ unit then………Can Buyers Credit take place against the said LC?

Yes. DTA units purchasing from SEZ units can avail buyers credit. Tenure for the same will be calculated from the date of transfer of ownership of goods.

3. If the procurement of material is from Export Oriented Unit (EOU) to SEZ unit then………Can Buyers Credit take place against the said LC?

No specific clarification is provided for transaction between EOU and SEZ by RBI. But interpretation is any goods procured by SEZ is considered as import and thus units in SEZ can avail buyers credit against purchase from EOU.


  1. Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations: Updated on 26 Mar 2019
  2. RBI Circular : Trade Credit Policy – Revised framework: Dated 13 Mar 2019
  3. RBI Circular: New External Commercial Borrowings (ECB) framework : Dated 16 Jan 2019
  4. Old RBI Master Direction on ECB and Trade Credit: Updated till 22 Nov 2018
  5. RBI Master Direction: Import of Goods and Services: Updated 02 Feb 2018
  6. SEZ Act, 2005
  7. SEZ Rules
  8. Foreign Trade Policy 2015-2020 : Free Trade and Warehousing  Zone
  9. SEZ India: Ministry of Commerce & Industry, Department of Commerce
  10. Special Economic Zones (Customs Procedures) Regulations, 2003
  11. SEZ Online Manual Intra SEZ Transfer

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