Panchakanya Group Exits Bhairahwa SEZ due to Export Hurdles

Panchakanya Group, which has been producing and exporting stainless steel (SS) tanks from the Bhairahwa Special Economic Zone (SEZ) since 2021, is set to withdraw its operations from the zone.

Devendra Sah, general manager of Panchakanya SS Export Pvt. Ltd., said the company formally notified the SEZ Authority about its exit around a month and a half ago. “To maintain operations in the SEZ, exports are mandatory. But difficulties in exporting products to India forced us to relocate the industry,” he explained.

Under the SEZ regulations, industries are allowed to sell products in the domestic market for the first three years. In the fourth year, industries must export 30 percent of their products. However, Panchakanya was unable to meet these export requirements. Since establishing the plant in 2021, the company has struggled to export SS tanks due to regulatory hurdles in India.

“India now requires Bureau of Indian Standards (BIS) certification even for raw materials and finished steel products. Since we lack BIS certification, we could not export,” Sah said.

He added that the SEZ legal framework does not allow industries to operate without exports. Therefore, the company sought and received approval from the SEZ Authority to relocate. While exiting the SEZ, Panchakanya does not plan to close the plant, but intends to reopen it at another location. The revised SEZ rules now require only 30 percent exports, down from the earlier 70 percent requirement.

A SEZ official confirmed that Panchakanya’s facility has been largely non-operational for some time. Earlier, the company had been exporting around 3–4 truckloads of steel tanks per month, totaling about Rs 20 million annually, but changes in Indian BIS standards prevented further exports.

Additionally, industries exporting steel must register with India’s Steel Import Monitoring System (SIMS), submitting invoices and certificates of origin. Since Nepal is not listed on SIMS’s online portal of steel importers, Panchakanya and other producers of steel products have faced significant operational hurdles.