India’s Duty Exemption and Remission schemes are key components of the country’s Foreign Trade Policy. These schemes are designed to support exporters by reducing import costs, fostering a competitive export environment. This article will explain the core components of these schemes, and what businesses should keep in mind while applying for these schemes.
Purpose: Supporting Export-Oriented Production
The main purpose of Duty Exemption and Remission schemes is to make it easier for exporters to acquire duty-free imports of inputs necessary for production, allowing them to offer their products at competitive prices internationally. These schemes primarily focus on reducing import costs for exporters, creating a trade friendly environment.
Types of Duty Exemption and Remission Schemes:
The schemes are broadly categorized into two parts:
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Duty Exemption Schemes: These schemes allow duty-free imports of inputs directly used in the production of export goods. Major examples are:
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Advance Authorisation Scheme – Permits duty-free import of raw materials.
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Duty Free Import Authorisation Scheme (DFIA) – Allows duty free import without a specific export order.
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Duty Remission Schemes: These schemes enable exporters to claim a rebate or remission of duties on inputs used in exported products after completing the export. Key examples are:
* Duty Entitlement Passbook (DEPB) Scheme
* Duty Drawback (DBK) Scheme
Advance Authorisation: Key Guidelines
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Applications must be filed online, digitally signed by the IEC holder.
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The application can be filed by the registered office, head office or a branch of the company, and can be for export of any eligible product.
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Authorizations may be issued with specific export obligations (EO) that must be fulfilled.
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In certain cases, for products that are otherwise prohibited for exports, prior permission from relevant authorities and a pre-import condition may be imposed.
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Timelines for the fulfilment of export obligations are clearly specified (e.g. 90 days and 180 days).
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There are several conditions related to usage of the imports, or any deviation can attract penalties.
Self-Ratification and Standardization:
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Authorizations can also be based on self-declarations in specific cases, where the applicant submits an undertaking to abide by the rules and regulations.
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Norms Committees are empowered to revise SION or Adhoc Norms related to the schemes, and in general ensure that standardized norms are in place.
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The SION or Adhoc norms are based on the production data provided by exporters or industry bodies.
* Adhoc norms are valid for one authorisation.
Key aspects of Imports and Exports:
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Imports and exports are only permitted through EDI-enabled ports, except under special conditions.
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Clear guidelines are established for importing goods, handling restricted items, and claiming duty exemptions and drawback.
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Exporters must maintain proper records of imports and their utilization.
Financial Implications:
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In case of non-compliance with export obligations or the misuse of duty-free imports, applicants have to pay applicable duties and interest.
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The scheme also provides mechanisms for redressing grievances, should any disputes occur.
Conclusion:
The Duty Exemption and Remission schemes along with the Export Promotion Capital Goods scheme are essential instruments for promoting exports from India. By simplifying import procedures and reducing the cost of inputs for export production, these policies support the competitiveness of Indian exporters and aid in boosting the country’s international trade.