Export controls

General controls

What general controls are imposed on exports?

The Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) empowers the government of India to formulate the export policy and to issue orders prohibiting, restricting or otherwise regulating the export of goods. As per the Foreign Trade Policy of India 2015-2020 (FTP), exports and imports shall be ‘free’ except when regulated by way of ‘prohibition’, ‘restriction’ or ‘exclusive trading through State Trading Enterprises (STEs)’ as laid down in the Indian Trade Classification (Harmonized System) (ITC (HS)) of Exports and Imports. The import and export policies for all goods are indicated against each item in the ITC (HS). Schedule 2 of the ITC (HS) lays down the Export Policy regime.

Goods that are classified as prohibited are not permitted to be exported. On the other hand, restricted items can be permitted for export only in accordance with an authorisation, permission or licence granted by the DGFT or in accordance with the procedure prescribed in a Notification/Public Notice issued by the government. Further, there are some items that are ‘free’ for export, but subject to conditions stipulated in other Acts or in law for the time being in force (Paragraph 2.01(b) of the FTP). Export of items that do not require any authorisation, permission or licence from the DGFT has been denoted as ‘Free’ under the ITC (HS), subject to the policy conditions contained, if any, under the relevant chapter heading or sub-heading or conditions stipulated in other acts or in law for the time being in force. Further, restrictions and prohibitions are applicable on export of certain classes of goods to specified countries. In addition to the prohibitions and restrictions prescribed in the FTDR Act, the FTP and Export Policy (Schedule 2 of ITC (HS)), export of goods are also subject to conditions stipulated in other acts or in law for the time being in force.

While exporting, an exporter must file a shipping bill with the customs authorities at the port declaring the description, nature and quantity of the goods under export. The said shipping bill must be accompanied by a packing list and invoice. Once the said documents are verified by the customs authorities, the goods may be exported.

While most products are not subject to an export duty, there are a few exceptions, such as coffee, tea, black pepper, sugar, iron ore and its concentrates, raw cotton, raw wool, specific jute items, and certain goods of iron or steel (tubes and pipes, bars and rods).

Government authorities

Which authorities handle the controls?

Levy and collection of customs duties, Integrated Goods and Service Tax and surcharge is undertaken by the customs officers appointed under the provisions of the Customs Act 1962. Documentation requirements necessary for the import and export of goods are also regulated under the Customs Act 1962 and rules framed thereunder and are verified by the customs officers at the port of import or export.

It should be noted that requirements pertaining to import licences, conditions on import or export, notification of restricted goods or prohibited goods for import and export etc are all regulated by the DGFT under the provisions of the FTDR Act read together with the Foreign Trade Policy 2015-2020.

Thus, controls with respect to documentation pertaining to import or export are regulated by Customs, while controls in relation to licensing and corresponding related documents are regulated by the DGFT.

Special controls

Are separate controls imposed on specific products? Is a licence required to export such products? Give details.

Separate controls are applicable to specific products, and exporters in such cases must obtain a permit in the form of an export licence from the DGFT before exporting these specific products. As an example, items falling into the category of special chemicals, organisms, materials, equipment and technologies (SCOMET) can be exported pursuant to the fulfilment of certain conditions. The conditions imposed on items falling under SCOMET require, among other things, that any export of SCOMET items shall be in compliance with the Weapons of Mass Destruction and their Delivery System (Prohibition of Unlawful Activities) Act 2005; units engaged in the export of SCOMET items need to obtain prior central government approval before foreign government representatives or foreign private parties make any site visits; and the application should be accompanied by an end-use certificate. Certain chemicals can be exported to countries that are party to the Chemical Weapons Convention and the DGFT may require a copy of the bill of entry evidencing shipment to the destination country within 30 days of delivery.

The controls for SCOMET items and the procedure for application are provided under the Foreign Trade Policy and the Handbook of Procedure (available at www.dgft.gov.in/).

Supply chain security

Has your jurisdiction implemented the WCO’s SAFE Framework of Standards? Does it have an AEO programme or similar?

India has implemented WCO’s SAFE Framework of Standards. The government of India notified the authorised economic operator (AEO) programme in India on 23 August 2011 (available at www.cbec.gov.in).

The said programme was implemented through Circular No. 37/2011-Cus dated 23 August 2011, wherein the procedure for securing AEO status is prescribed. Under the said circular, any importer or exporter can apply for AEO status provided the applicant has been financially solvent for three years prior to the year of application. The application must be accompanied by a process map, security plan, site plan and self-assessment form. Pursuant to the application, an AEO programme team will examine the applicant’s record of compliance for the past four years to ensure adherence to customs, central excise and service tax laws, as well as allied laws. In addition, the applicant should also have a satisfactory system of managing commercial and transport records, a mechanism for ensuring the safety and security of the business and supply chain and a proper mechanism for cargo, conveyance, premises and personnel safety. Once the application is considered to be valid on the above grounds, the application is sent to the AEO team for conducting a pre-certification audit at the applicant’s premises. Satisfaction with the above requirements leads to the granting of AEO status.

Applicable countries

Where is information on countries subject to export controls listed?

Restriction on exports to certain countries is provided under the Foreign Trade Policy 2015-2020 (available at www.dgft.gov.in), which is notified under section 5 of the Foreign Trade (Development and Regulation) Act 1992.

The notified countries are Iraq (prohibition on export of arms and related material), the Islamic State in Iraq and the Levant, also known as Daesh (trade in oil and refined oil products, modular refineries and related materials, besides items of cultural (including antiquities), scientific and religious importance is prohibited with the Islamic State in Iraq and the Levant), the Democratic People’s Republic of Korea (direct or indirect export of all items, materials, equipment, goods and technology that could contribute to Korea’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes, and luxury goods, including but not limited to items specified in Annex IV of UN Security Council Resolution 2094 (2013)), Iran (direct or indirect export to Iran or import from Iran of any items, materials, equipment, goods or technology mentioned in INFCIRC/254/Rev.9/Part I and INFCIRC/254/ Rev.7/Part 2 (IAEA Documents) as updated by the IAEA from time to time and S/2015/546 (UN Security Council document) as updated by the Security Council from time to time) and Somalia (direct or indirect import of charcoal is prohibited from Somalia).

Named persons and institutions

Does your jurisdiction have a scheme restricting or banning exports to named persons and institutions abroad? Give details.

There is no scheme under which controls are imposed on named persons and institutions.

Penalties

What are the possible penalties for violation of export controls?

The possible penalties include seizure and confiscation of goods, penalties on the exporter, and suspension or cancellation of the export licence.