By Dr. Ajay Kummar Pandey
Advocate, Supreme Court of India | National Spokesperson, Lok Janshakti Party (Ram Vilas)
Director, 4C Supreme Law International

At a time when the Commerce Ministry is going all out to revive Special Economic Zones (SEZs) with liberal sops and legislative changes, Export Oriented Units (EOUs)—India’s original workhorses of the export economy—are being sidelined without a second thought.

A recent news item in The Times of India dated July 1, 2025, reports major structural concessions being planned for SEZs, including:

Relaxation in DTA sales by allowing lower customs duties

Permission to take up job work from domestic tariff area (DTA) units using idle SEZ capacity

INR payment permissions for MROs, space-tech, and similar service providers

Plug-and-play pre-cleared industrial zones

A fresh bill to replace the existing SEZ Act, 2005

All of this sounds promising—for SEZs. But not a word about EOUs. Not a rupee in relief. Not a clause in reform.

EOUs: Treated Like an Afterthought
It is shocking that while EOUs continue to be bound by stringent foreign exchange realization norms, zero DTA flexibility, and a jungle of customs and GST compliance, SEZs are being pampered with INR trade permissions and domestic job work liberties.

This is not just a matter of policy discrimination. It’s a constitutional issue.

Legal Question: Can EOUs Be Treated Like Stepchildren?
EOUs and SEZs share the same objective: to boost exports and generate employment. If SEZs are allowed to sell domestically at lower duties and accept INR payments, why are EOUs still punished for DTA sales and tied to strict forex rules?

Article 14 of the Indian Constitution guarantees equality before the law. Unequal treatment of similarly situated entities without reasonable classification is clearly arbitrary—and therefore, challengeable.

Landmark Judgments Supporting EOUs
NCC Blue Water Products Ltd. v. CCE – The Supreme Court held that fiscal benefits under different export schemes must be applied uniformly where the objectives align.

Sun Industries v. UOI – Gujarat High Court warned against discriminatory tax treatment within export promotion frameworks.

Sarla Performance Fibers Ltd. v. CCE – Procedural classifications that harm one category of exporters without justification were struck down.

These rulings make it clear: If the law treats EOUs and SEZs differently for the same purpose without a rational basis, it’s legally indefensible.

What Happens If This Bias Continues?
EOUs, especially small and mid-size players, will shut shop.

SEZs will monopolize export-related incentives.

Litigation will explode—both under GST and Customs law.

Foreign buyers dependent on EOU units will shift to SEZ vendors, raising costs and delays.

India’s export competitiveness will erode at the grassroots.

My Recommendations
Extend the same DTA duty relaxation to EOUs immediately.

Permit EOUs to engage in INR trade where applicable, especially in services.

Introduce a level-playing field in the new SEZ Bill by recognizing EOUs as parallel enablers of exports.

If ignored, EOUs should approach the judiciary to enforce their right to equal treatment under Article 14 and 19(1)(g).

Conclusion: Don’t Let Policy Kill a Performing Sector
For decades, EOUs have been the quiet backbone of India’s export success. If this government truly believes in Make in India and Sabka Saath, then it must stop this silent killing of EOUs and bring them at par with SEZs.

Because when law starts favouring the influential and ignoring the foundational, justice is no longer justice—it’s politics.

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