However, before the law came into effect, the zone manufacturers filed bills of entry with the zone customs to fulfil commitments made before the budget.
Since these manufacturers had exhausted their orders, apparently they had no sales, leading to winding up of business, sources said, adding that they would be closed if they did not search overseas markets for their items manufactured with inputs imported duty-free under the KEPZ rules.
The owners of these units made strong representation to the Central Board of Revenue (CBR) to withdraw the rule but to no avail.
The Customs Department was adamant on the new rule, saying that the zone was established with a view to boosting the exports and the manufacturers could not be allowed to do business with the local market.
The rule was, however, relaxed for the manufacturers, who were making packing material used for export. These included units, producing polypropylene bags used for the export of rice.
They were allowed to continue to make exports to the tariff under SRO 410.
The KEPZ has received fresh investment in food processing units and second-hand clothing. The food units have a target market of overseas Pakistanis mainly in the UK, who are interested to consume processed Pakistani food with a variety of dishes.
The second-hand clothing units, set up at the zone, have a target market in Africa. They would import second-hand clothes and then export to Africa after necessary repair and additions to give them a new look.
The zone has several units, manufacturing readymade garments, which are geared up to face the challenges of the quota-free regime, began in January.
The units faced stiff competition in the European Union (EU) market after the expiry of general system of preferences (GSP) due to 12 percent duty on all exports to Europe. They are waiting for the efforts launched by the Commerce Ministry to get a place for Pakistan in the new GSP Plus scheme, ensuring duty-free access to the European markets.