𝗔 𝘁𝗶𝗺𝗲𝗹𝘆 𝗮𝗻𝗱 𝗱𝗲𝗰𝗶𝘀𝗶𝘃𝗲 𝗽𝗼𝗹𝗶𝗰𝘆 𝗶𝗻𝘁𝗲𝗿𝘃𝗲𝗻𝘁𝗶𝗼𝗻 𝗯𝘆 𝘁𝗵𝗲 𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝗼𝗳 𝗜𝗻𝗱𝗶𝗮 — 𝗼𝗻𝗲 𝘁𝗵𝗮𝘁 𝗘𝗦𝗖 𝘄𝗲𝗹𝗰𝗼𝗺𝗲𝘀 𝘄𝗵𝗼𝗹𝗲𝗵𝗲𝗮𝗿𝘁𝗲𝗱𝗹𝘆.
At a time when global trade is navigating a war-like disruption, the Government under the leadership of 𝗛𝗼𝗻’𝗯𝗹𝗲 𝗣𝗿𝗶𝗺𝗲 𝗠𝗶𝗻𝗶𝘀𝘁𝗲𝗿 𝗡𝗮𝗿𝗲𝗻𝗱𝗿𝗮 𝗠𝗼𝗱𝗶 has once again demonstrated its commitment to protecting Indian businesses.
𝗧𝗵𝗲 𝗗𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗼𝗳 𝗘𝘅𝗽𝗲𝗻𝗱𝗶𝘁𝘂𝗿𝗲, 𝗠𝗶𝗻𝗶𝘀𝘁𝗿𝘆 𝗼𝗳 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 has issued an important Office Memorandum providing critical clarity on the 𝗙𝗼𝗿𝗰𝗲 𝗠𝗮𝗷𝗲𝘂𝗿𝗲 𝗖𝗹𝗮𝘂𝘀𝗲 (𝗙𝗠𝗖) — explicitly recognising the ongoing West Asia situation as a 𝘄𝗮𝗿-𝗹𝗲𝘃𝗲𝗹 𝗲𝘃𝗲𝗻𝘁 for the purposes of government contracts.
𝗪𝗵𝗮𝘁 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻𝘀, 𝗶𝗻 𝘀𝗶𝗺𝗽𝗹𝗲 𝘁𝗲𝗿𝗺𝘀:
If your company holds a government contract — for goods, services, IT, or works — and your ability to deliver has been disrupted due to extraordinary events 𝗯𝗲𝘆𝗼𝗻𝗱 𝘆𝗼𝘂𝗿 𝗰𝗼𝗻𝘁𝗿𝗼𝗹, you are 𝗻𝗼𝘁 𝗮𝘂𝘁𝗼𝗺𝗮𝘁𝗶𝗰𝗮𝗹𝗹𝘆 𝗶𝗻 𝗯𝗿𝗲𝗮𝗰𝗵.
These events may include:
The government has formally acknowledged that such delays are beyond your control and has provided a structured mechanism to protect you from financial penalties.
Specifically:
The extension period will be determined on a case-to-case basis — but the message is clear: 𝗻𝗼 𝗽𝗲𝗻𝗮𝗹𝘁𝘆, 𝗻𝗼 𝘀𝗮𝗻𝗰𝘁𝗶𝗼𝗻, 𝗻𝗼 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 — 𝗶𝗳 𝘁𝗵𝗲 𝗿𝗶𝗴𝗵𝘁 𝗽𝗿𝗼𝗰𝗲𝘀𝘀 𝗶𝘀 𝗳𝗼𝗹𝗹𝗼𝘄𝗲𝗱.
𝗘𝗦𝗖 𝗔𝗱𝘃𝗶𝘀𝗼𝗿𝘆 — 𝗪𝗵𝗮𝘁 𝗼𝘂𝗿 𝗺𝗲𝗺𝗯𝗲𝗿𝘀 𝗺𝘂𝘀𝘁 𝗮𝗰𝘁 𝗼𝗻 𝗻𝗼𝘄:
As the nodal export promotion council for electronics and IT, ESC, with the support of the Ministry of Commerce, is actively guiding its members to respond strategically:
🔹 Act Early, Don’t Delay
If your contract has been impacted, issue a Force Majeure notice promptly — ideally within 14 days of the disruption. Delays can weaken your claim.
🔹Document Everything
Maintain clear evidence — freight disruptions, supplier delays, port issues, insurance alerts — to establish a direct link to the West Asia situation.
🔹Engage Proactively with Buyers
Reach out to the procuring agency early. This OM empowers them to extend timelines — proactive communication will ensure smoother approvals.
🔹Leverage the Policy Strategically
Use this window not just for relief, but to preserve long-term business relationships and credibility.
ESC will continue to closely monitor developments impacting its members across electronics hardware, IT, and software exports, and remains committed to bridging policy with on-ground business realities.
If you need guidance on applying this OM to your specific contract situation, we encourage you to reach out.
𝗧𝗵𝗶𝘀 𝗶𝘀 𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝗮 𝗿𝗲𝗹𝗶𝗲𝗳 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 — 𝗶𝘁 𝗶𝘀 𝗮 𝗰𝗹𝗲𝗮𝗿 𝗮𝗻𝗱 𝗰𝗼𝗻𝗳𝗶𝗱𝗲𝗻𝘁 𝘀𝗶𝗴𝗻𝗮𝗹 𝘁𝗵𝗮𝘁 𝗜𝗻𝗱𝗶𝗮 𝘀𝘁𝗮𝗻𝗱𝘀 𝗳𝗶𝗿𝗺𝗹𝘆 𝗯𝗲𝗵𝗶𝗻𝗱 𝗶𝘁𝘀 𝗲𝘅𝗽𝗼𝗿𝘁𝗲𝗿𝘀, 𝗲𝘃𝗲𝗻 𝗶𝗻 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝘂𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻 𝗴𝗹𝗼𝗯𝗮𝗹 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀.
DGFT Notification Update: Certificate of Origin & Approved Exporter Scheme
In accordance with the Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, Notification No. 05/2026-27 dated 07 April 2026 has been issued, amending Para 2.62 of the Foreign Trade Policy (FTP) 2023. The notification comes into effect immediately and introduces significant changes to the framework governing Certificates of Origin (CoO) and the Approved Exporter Scheme.
1. Certificate of Origin (CoO) — Tighter Issuance Rules
2. Approved Exporter Scheme — Self-Certification Framework
ESC India will continue to monitor DGFT notifications and provide timely updates to members on regulatory developments impacting the electronics and software export sector.
Disclaimer: This advisory is issued for informational purposes. Members are advised to refer to the official DGFT notification for complete details.
Union Budget 2026: An Overview
Union Budget 2026, announced by Finance Minister Nirmala Sitharaman, emerges not merely as a fiscal statement but as a strategic blueprint for India’s technology-led growth. This overview shares the key announcements through the lens of their impact on exports, imports, and the evolving dynamics of the technology sector.
1. Semiconductor Sovereignity – ISM 2.0
2. Electronics Manufacturing Boost – ECMS & PLI
3. Green Tech & Critical Minerals
4. Logistics Reform – Warehousing & Hubs
5. IT & Services Expansion
6. Innovation & Skilling
7. AVGC Sector Support
8. Skilling & Workforce Development
Overall Trade Impact
Conclusion:
At ESC, we see this Budget not just as fiscal policy but as a strategic blueprint—empowering MSMEs, strengthening electronics, and opening new horizons for IT and startups. Together, let’s embrace the spirit of Vasudhaiva Kutumbakam and build Brand India as trusted, resilient, and future-ready.
Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026
The Electronics and Computer Software Export Promotion Council (ESC) welcomes the Reserve Bank of India’s notification of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, issued on 13 January 2026. These Regulations, issued under the Foreign Exchange Management Act, 1999 (FEMA), will come into force from 1 October 2026 and supersede the existing export regulations of 2015. The updated framework introduces a unified regulatory regime for both exports and imports of goods and services, strengthening clarity, consistency and compliance under India’s foreign exchange law.
Key Highlights
1. Unified Regulatory Framework
The 2026 Regulations replace the earlier export-only regime with a single set of rules governing both export and import of goods and services. This consolidates requirements and simplifies understanding across trade functions.
2. Export Declaration Form (EDF) Requirements
Under the new Regulations:
Exporters of goods must file the Export Declaration Form (EDF) at the time of shipment, declaring full export value.
Service exporters must file the EDF within 30 days from the end of the month in which the relevant service invoice is raised.
Special provisions enable consolidated EDF filing for multiple recipients and earlier submission norms for non-software service exports.
3. Export Realisation Timelines
The Regulations specify that:
Export proceeds must be realised and repatriated to India within 15 months from the date of shipment (for goods) or invoice (for services).
Where receipts are invoiced or settled in Indian Rupees, the realisation window extends to 18 months.
Authorised Dealer (AD) banks may grant extensions on valid grounds.
4. Powers of Authorised Dealers
Authorised Dealer banks are empowered to:
Monitor and enforce timelines for export realisation and import payments
Permit reductions in export realisation value on a case-by-case basis, including for exports up to ₹10 lakh based on declaration
Close entries in EDPMS and IDPMS with appropriate documentation
5. Imports and Payments
The Regulations require importers to:
Complete payment obligations within contractual timelines
Repatriate any advance payment if contractual timelines are not met
Ensure accurate monitoring and closure of import transactions via electronic systems
6. Merchanting Trade Transactions
Defined rules, timelines and documentation standards apply to merchanting trade transactions, with provisions for extensions on justified grounds.
7. Reporting and Internal Controls
Authorised Dealers must maintain comprehensive Standard Operating Procedures (SOPs) covering export, import and merchanting trade, including documentation norms, timelines, internal delegation, grievance handling, and fee structures.
This FEMA update marks a significant shift towards a harmonised trade compliance environment for both exports and imports, with clear timelines, reporting requirements and monitoring mechanisms. Service exporters — including IT, software and digital services providers — and importers should update their internal processes, EDF filing practices and banking coordination well ahead of the 1 October 2026 effective date to ensure seamless compliance under the Unified FEMA framework.
ESC will continue to analyse the Regulations in detail and share further clarifications or guidance as issued by RBI or other authorities.
ANALYSIS OF THE UNION BUDGET 2025-26
The Electronics and Computer Software Export Promotion Council (ESC) welcomes the various progressive measures announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025. The budget lays a strong foundation for boosting domestic manufacturing, enhancing skill development, supporting startups, and strengthening India’s export ecosystem, all of which will greatly benefit the electronics and IT sectors
ESC appreciates the government’s continued commitment to strengthening India’s position as a global electronics and IT hub. The budget’s focus on fostering domestic manufacturing, skill development, startup support, and export promotion aligns well with India’s vision of becoming a global leader in electronics and digital technologies. We look forward to working closely with industry stakeholders and the government to implement these initiatives successfully.
Remission of Duties and Taxes on Exported Products (RoDTEP) scheme
RoDTEP – Introduced on 1 January 2021 to refund embedded Central, State & local levies that exporters couldn’t otherwise reclaim (e.g. VAT on fuel, electricity duty, mandi taxes, stamp duty, certain GST components).
It is Administered jointly by the Department of Commerce, DGFT, and Dept. of Revenue, implemented digitally via ICEGATE.
A dedicated RoDTEP Policy Committee oversees its execution. Exporters must declare RoDTEP intent in the shipping online, post-shipment, customs verifies and credits transferable e-scrips to the ICEGATE ledger
Registration-Cum Membership Certificate (RCMC) is a certificate that validates an exporter dealing with products registered with an agency / organization that are authorised by the Indian Government. The certificate is issued for five financial years by the Export Promotion Councils (EPCs) / Commodity board / Development authority or other competent authority in India. These bodies function as the Registering Authority to issue the RCMC to its user. An exporter desiring to obtain an RCMC has to declare his mainstream business in the application. This application would be submitted to the related Registering Authority.
A total number of 26 Export Promotion Councils and 9 commodities board are present in India. Commodities board and the EPCs in India are the concerned authorities for issuing RCMC. These institutions have been authorised by the Central Government to issue RCMC to the exporters.
Every EPC and the commodities board in India categories itself depending on the type of products. The RCMC shall be deemed to be valid from 1st April of the licensing year in which it was issued and shall be valid for 5 financial years ending 31st March of the licensing year, unless
otherwise is specified.
You need an active IEC to apply for RCMC. You need an updated IEC Profile and linked Digital Signature token or Aadhaar e-Signature for submitting the application. Login here to apply eRCMC :
https://www.dgft.gov.in/CP/
The Importer -Exporter Code (IEC) is a key business identification number which is mandatory for Exports or Imports. No person shall make any import or export except under an IEC Number granted by the DGFT. In case of import or export of services or technology, the IEC shall be required only when the service or technology provider is taking benefits under the Foreign Trade Policy or is dealing with specified services or technologies
The nature of the firm obtaining an IEC may be any of the follows- “Proprietorship, Partnership, LLP, Limited Company, Trust, HUF and Society. Consequent upon introduction of GST, IEC number is the same as the PAN of the firm. The IEC would be separately issued by DGFT. To apply the IEC, please visit : https://www.dgft.gov.in/CP/
Duty Drawback scheme was introduced by the Ministry of Finance as a rebate for duty chargeable on any imported materials or excisable materials used in the manufacture or processing of goods manufactured in India and exported. The exported products are revenue neutral.
The Central Government is empowered to grant Duty Drawback under sections 74 and 75 of the Customs Act, 1962. Under section 74 of the Customs Act, 1962 duty drawback to the extent of 98 percent of the duty paid on imported goods can be claimed for re-export, provided the goods are re-exported within two years of payment of import duty. Section 75 of the Act, empowers duty drawback on the export of manufactured articles.
The tariff items and descriptions of goods in the said Schedule are aligned with the tariff items and descriptions of goods in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) at the four-digit level only. The descriptions of goods given at the six digit or eight digit in the said Schedule are in several cases not aligned with the descriptions of goods given in the First Schedule to the Customs Tariff Act, 1975.
The general rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 shall, mutatis mutandis, apply for classifying the export goods listed in the said Schedule.
Notwithstanding anything contained in the said Schedule, –
Any identifiable ready to use machined part or component predominantly made of iron, steel or aluminium, made through casting or forging process, and not specifically mentioned at six digit level or more in Chapter 84 or 85 or 87, except those classifiable under heading 8432 or 8433 or 8436, may be classified under the relevant tariff item (depending upon material composition and making process) under heading 8487 or 8548 or 8708, as the case may be, irrespective of classification of such part or component at four digit level in Chapter 84 or 85 or 87 of the said Schedule;
The figures shown in column (4) in the said Schedule refer to the rate of drawback expressed as a percentage of the free on board value or the rate per unit quantity of the export goods, as the case may be.
The figures shown in column (5) in the said Schedule refer to the maximum amount of drawback that can be availed of per unit specified in column (3).
An export product accompanied with a tax invoice and forming part of project export (including turnkey export or supplies) for which no figure is shown in column (5) in the said Schedule, shall be so declared by the exporter and the maximum amount of drawback that can be availed under the said Schedule shall not exceed the amount calculated by applying ad-valoremrate of drawback shown in column (4) to one and half times the tax invoice value.
The rates of drawback specified against the various tariff items in the said Schedule in specific terms or on ad valorem basis, unless otherwise specifically provided, are inclusive of drawback for packing materials used, if any.
Drawback at the rates specified in the said Schedule shall be applicable only if the procedural requirements for claiming drawback as specified in rule 12, 13 and 14of the said rules, unless otherwise relaxed by the competent authority, are satisfied.
The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is, –
manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962);
manufactured or exported in discharge of export obligation against an Advance Authorisation or Duty Free Import Authorisation issued under the Duty Exemption Scheme of the relevant Foreign Trade Policy :
Provided that where exports are made against Special Advance Authorisation issued under paragraph 4.04A of the Foreign Trade Policy 2015-20 in discharge of export obligations in terms of Notification No. 45/2016-Customs, dated the 13th August, 2016, the rates of drawback specified in the said Schedule shall apply as if in the said Schedule, the entries in columns (4)and (5) against the Tariff items in the said Schedule below all Chapters, except Chapter 61 and 62, are NIL, and those in Chapters 61 and 62 are as specified in the Table given below;
manufactured or exported by a unit licensed as hundred per cent Export Oriented Unit in terms of the provisions of the relevant Foreign Trade Policy;
manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zones;
manufactured or exported availing the benefit of the notification No. 32/1997-Customs, dated the 1st April, 1997.
Whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials on the basis of a self-declaration to be furnished by the exporter to this effect and in case of doubt or where there is any information contrary to the declarations, the proper officer of customs shall cause a verification of such declarations
All claims for duty drawback at the rates of drawback notified herein shall be filed with reference to the tariff items and descriptions of goods shown in columns (1) and (2) of the said Schedule respectively. Where, in respect of the export product, the rate of drawback specified in the said Schedule is Nil or is not applicable, the rate of drawback may be fixed, on an application by an individual manufacturer or exporter in accordance with the said rules. Where the claim for duty drawback is filed with reference to tariff item of the said Schedule and it is for the rate of drawback specified herein, an application, as referred under sub-rule (1) of rule 7 of the said rules shall not be admissible.
The amount referred in sub-rule (3) of rule 7 of the said rules, relating to provisional drawback amount as may be specified by the Central Government, shall be equivalent to the drawback rate and drawback cap shown in column (4) and (5) in the said Schedule for the tariff item corresponding to the export goods, if applicable, and determined as if it were a claim for duty drawback filed with reference to such rate and cap.
Review of All Industry Rates (AIR) of Duty Drawback for the year 2025 and Constitution of Drawback Committee 2025
Certificate of Origin (CoO) is a common digital platform. It is a single point of access for certificates of origin for all FTAs/PTAs for all agencies and all products. This is designed to facilitate exporters through a secure, electronic, paperless CoO issuance process. All designated COO-issuing agencies are required to work through this portal.
Visit the web portal : https://coo.dgft.gov.in/users/login
The President of India approved the Constitution Amendment Bill for Goods and Services Tax (GST) on 8 September 2016, following the bill’s passage in the Indian parliament and its ratification by more than 50% of state legislatures. This law will replace all indirect taxes levied on goods and services by the central government and state government and implement GST by April 2017. The implementation of GST will have a far-reaching impact on almost all the aspects of the business operations in India. With more than 140 countries now adopting some form of GST, India has long been a standout exception.
GST is a value-added tax levied at all points in the supply chain, with credit allowed for any tax paid on input acquired for use in making the supply. It would apply to both goods and services in a comprehensive manner, with exemptions restricted to a minimum. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. The tax would accrue to the taxing authority that has jurisdiction over the place of consumption, which is also termed as place of supply.
In keeping with the federal structure of India, it is proposed that the GST will be levied concurrently by the central government (CGST) and the state government (SGST). It is expected that the base and other essential design features would be common between CGST and SGSTs for individual states. The inter-state supplies within India would attract an integrated GST (IGST), which is the aggregate of CGST and the SGST of the destination state.
GST would be levied on the basis of the destination principle. Exports would be zero-rated, and imports would attract tax in the same manner as domestic goods and services. In addition to the IGST in respect of supply of goods, an additional tax of up to 1% has been proposed to be levied by the central government. The revenue from this tax is to be assigned to the origin states. This tax is proposed to be levied for the first two years or a longer period, as recommended by the GST Council.
With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable, with minimum exemptions. GST would bring in a modern tax system to ensure efficient and effective tax administration. It will bring in greater transparency and strengthen monitoring, thus making tax evasion difficult. While the process of implementation of GST unfolds in the next few months, it is important for industry to understand the impact and opportunities offered by this reform. GST will affect all industries, irrespective of the sector. It will impact the entire value chain of operations, namely procurement, manufacturing, distribution, warehousing, sales and pricing.
The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST.
The current Indian government has an aim of increasing the output and the quality of exports from India as portrayed by the “Make in India” policy, and the many tax benefits provided to the exporters. GST rolled out on July 1 and yet there is still some ambiguity among the exporters on the possible impact of the new regime on this industry. Traders want to know how GST will affect the products exported, and the amount of tax paid on the raw material/input used. To erase this confusion, the Indian government has shared a set of notifications and guidance note for the public on 28th June 2017 regarding the applicability of CGST, SGST, UTGST and cess and GST rates.
A duty drawback was provided under the previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty drawback was a cumbersome process. Under GST, the duty drawback would only be available for the customs duty paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation.There was some confusion surrounding the refund of the tax paid by exporters on the inputs. A guidance note relating to the above issue was released by the Indian government which has helped in clearing doubts regarding the claim of input tax credit on zero-rated exports. An exporter dealing in zero-rated goods under GST can claim a refund for zero-rated supplies as per the following options :
Option 1: Supply goods or services, or both, under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax, and then claim a refund of unutilised input tax credit.
Option 2: Any exporter or United Nations or Embassy or other agencies/bodies as specified in section 55 who supplies goods or services, or both, after fulfilling certain conditions, safeguards and procedures as may be prescribed; and paying the IGST, can claim refund of such tax paid on the supplied goods or services, or both. The applicant has to apply for the refund as per the conditions specified under section 54 of the CGST Act.
The supply of goods or services to the following would be treated as exports under GST
The Government has proposed a 4-tier tax structure for all goods and services under the slabs : 5%, 12%, 18% and 28%. After the recent revision of GST rates, these are the commodities that fall under the four tax slabs along with those that do not attract any tax.
Guide on Exports / Imports Tax Rates :https://www.icegate.gov.in/Webappl
For more information, please visit https://cbic-gst.gov.in/
The Harmonized System is an international nomenclature for the classification of products. It allows participating countries to classify traded goods on a common basis for customs purposes. At the international level, the Harmonized System (HS) for classifying goods is a six-digit code system.
The HS comprises approximately 5,300 article/product descriptions that appear as headings and subheadings, arranged in 99 chapters, grouped in 21 sections. The six digits can be broken down into three parts. The first two digits (HS-2) identify the chapter the goods are classified in, e.g. 09 = Coffee, Tea, Maté and Spices. The next two digits (HS-4) identify groupings within that chapter, e.g. 09.02 = Tea, whether or not flavoured. The next two digits (HS-6) are even more specific, e.g. 09.02.10 Green tea (not fermented)… Up to the HS-6 digit level, all countries classify products in the same way (a few exceptions exist where some countries apply old versions of the HS).
The Harmonized System was introduced in 1988 and has been adopted by most of the countries worldwide. It has undergone several changes in the classification of products. These changes are called revisions and entered into force in 1996, 2002, 2007, 2012 and 2017. Detailed amendments to each HS nomenclature are available at attachment links below.
By entering key words or HS code, you can search list of products and commodities with their 6 digit, 4 digit, or 2 digit – HS codes at the online database below:
http://www.foreign-trade.com/reference/hscode.htm
Harmonized System 2017
Amendments to Harmonized Commodity Description and Coding System, which have been accepted as result of the Customs Co-operation Council Recommendation of 27 June 2014 and 11 June 2015, will enter into force on 1 January 2017 and 1 January 2018, respectively. The complementary amendments (of 11 June 2015) is to take into account of the necessary corrections and some further amendments in respect to heading 44.01 and certain subheadings of Chapter 44, inadvertently omitted from the Council Recommendation of 27 June 2014. The HS Contracting Parties are, however, encouraged to apply these amendments from 1 January 2017.
http://dgftcom.nic.in/licasp/itchs2012/itchs2012.asp
India’s Foreign Trade i.e. Exports and Imports are regulated by Foreign Trade Policy notified by Central Government. Presently Foreign Trade Policy 2015-20 is effective from 1st April, 2015. As per FTD&R act, export is defined as an act of taking out of India any goods by land, sea or air and with proper transaction of money.
India’s Foreign Trade i.e. Exports and Imports are regulated by Foreign Trade Policy notified by Central Government. Presently Foreign Trade Policy 2015-20 is effective from 1st April, 2015. As per FTD&R act, export is defined as an act of taking out of India any goods by land, sea or air and with proper transaction of money.
To start export business, the following steps may be followed:
To start the export business, first a sole Proprietary concern/ Partnership firm/Company has to be set up as per procedure with an attractive name and logo.
A current account with a Bank authorized to deal in Foreign Exchange should be opened.
It is necessary for every exporter and importer to obtain a PAN from the Income Tax Department. (To apply PAN Card Click Here)
An IEC is a 10 digit number which is mandatory for undertaking export/ import. Application for obtaining IEC Number can be submitted to Regional authority of DGFT in form ANF 2A along with the documents listed therein. Applicants can also apply for e-IEC on the DGFT website (http://dgft.gov.in/). Only one IEC can be obtained against a single PAN.
For availing authorization to import/ export or any other benefit or concession under FTP 2015-20, as also to avail the services/ guidance, exporters are required to obtain RCMC granted by the concerned Export Promotion Councils/ FIEO/Commodity Boards/ Authorities.
All items are freely exportable except few items appearing in prohibited/ restricted list. After studying the trends of export of different products from India proper selection of the product(s) to be exported may be made.
An overseas market should be selected after research covering market size, competition, quality requirements, payment terms etc. Exporters can also evaluate the markets based on the export benefits available for few countries under the FTP. Export promotion agencies, Indian Missions abroad, colleagues, friends, and relatives might be helpful in gathering information.
Participation in trade fairs, buyer seller meets, exhibitions, B2B portals, web browsing are an effective tool to find buyers. EPC’s, Indian Missions abroad, overseas chambers of commerce can also be helpful. Creating multilingual Website with product catalogue, price, payment terms and other related information would also help.
Providing customized samples as per the demands of Foreign buyers help in getting export orders. As per FTP 2015-2020, exports of bonafide trade and technical samples of freely exportable items shall be allowed without any limit.
Product pricing is crucial in getting buyers’ attention and promoting sales in view of international competition. The price should be worked out taking into consideration all expenses from sampling to realization of export proceeds on the basis of terms of sale i.e. Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost & Freight(C&F), etc. Goal of establishing export costing should be to sell maximum quantity at competitive price with maximum profit margin. Preparing an export costing sheet for every export product is advisable.
After determining the buyer’s interest in the product, future prospects and continuity in business, demand for giving reasonable allowance/discount in price may be considered.
International trade involves payment risks due to buyer/ Country insolvency. These risks can be covered by an appropriate Policy from Export Credit Guarantee Corporation Ltd (ECGC). Where the buyer is placing order without making advance payment or opening letter of Credit, it is advisable to procure credit limit on the foreign buyer from ECGC to protect against risk of non-payment.(To know more about ECGC Click Here)
On receiving an export order, it should be examined carefully in respect of items, specification, payment conditions, packaging, delivery schedule, etc. and then the order should be confirmed. Accordingly, the exporter may enter into a formal contract with the overseas buyer.
After confirmation of the export order, immediate steps may be taken for procurement/manufacture of the goods meant for export. It should be remembered that the order has been obtained with much efforts and competition so the procurement should also be strictly as per buyer’s requirement.
In today’s competitive era, it is important to be strict quality conscious about the export goods. Some products like food and agriculture, fishery, certain chemicals, etc. are subject to compulsory pre-shipment inspection. Foreign buyers may also lay down their own standards/specifications and insist upon inspection by their own nominated agencies. Maintaining high quality is necessary to sustain in export business.
Exporters are eligible to obtain pre-shipment and post-shipment finance from Commercial Banks at concessional interest rates to complete the export transaction. Packing Credit advance in pre-shipment stage is granted to new exporters against lodgment of L/C or confirmed order for 180 days to meet working capital requirements for purchase of raw material/finished goods, labour expenses, packing, transporting, etc. Normally Banks give 75% to 90% advances of the value of the order keeping the balance as margin. Banks adjust the packing credit advance from the proceeds of export bills negotiated, purchased or discounted.
Post Shipment finance is given to exporters normally upto 90% of the Invoice value for normal transit period and in cases of usance export bills upto notional due date. The maximum period for post-shipment advances is 180 days from the date of shipment. Advances granted by Banks are adjusted by realization of the sale proceeds of the export bills. In case export bill becomes overdue Banks will charge commercial lending rate of interest.
The export goods should be labeled, packaged and packed strictly as per the buyer’s specific instructions. Good packaging delivers and presents the goods in top condition and in attractive way. Similarly, good packing helps easy handling, maximum loading, reducing shipping costs and to ensuring safety and standard of the cargo. Marking such as address, package number, port and place of destination, weight, handling instructions, etc. provides identification and information of cargo packed.
Marine insurance policy covers risks of loss or damage to the goods during the while the goods are in transit. Generally in CIF contract the exporters arrange the insurance whereas for C&F and FOB contract the buyers obtain insurance policy.
It is important feature of export and the exporter must adhere the delivery schedule. Planning should be there to let nothing stand in the way of fast and efficient delivery.
It is necessary to obtain PAN based Business Identification Number (BIN) from the Customs prior to filing of shipping bill for clearance of export good and open a current account in the designated bank for crediting of any drawback amount and the same has to be registered on the system.
In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to apply different forms of shipping bill/ bill of export for export of duty free goods, export of dutiable goods and export under drawback etc.
Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made by the exporters without any human intervention. Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency in the ICES/E system.
Any correction/amendments in the check list generated after filing of declaration can be made at the service center, if the documents have not yet been submitted in the system and the shipping bill number has not been generated. In situations, where corrections are required to be made after the generation of the shipping bill number or after the goods have been brought into the Export Dock, amendments is carried out in the following manners.
1. The goods have not yet been allowed “let export” amendments may be permitted by the Assistant Commissioner (Exports).
2. Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner, Custom House, in charge of export section.
In both the cases, after the permission for amendments has been granted, the Assistant Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the shipping bill to the Dock Appraiser for cancellation before amendment is approved on the system.
Exporters may avail services of Customs House Agents licensed by the Commissioner of Customs. They are professionals and facilitate work connected with clearance of cargo from Customs.
FTP 2015-2020 describe the following mandatory documents for import and export.
Bill of Lading/ Airway bill
Commercial invoice cum packing list
shipping bill/ bill of export/ bill of entry (for imports)
(Other documents like certificate of origin, inspection certificate etc may be required as per the case.)
After shipment, it is obligatory to present the documents to the Bank within 21 days for onward dispatch to the foreign Bank for arranging payment. Documents should be drawn under Collection/Purchase/Negotiation under L/C as the case may be, along with the following documents
Bill of Exchange
Letter of Credit (if shipment is under L/C)
Invoice
Packing List
Airway Bill/Bill of Lading
Declaration under Foreign Exchange
Certificate of Origin/GSP
Inspection Certificate, wherever necessary
Any other document as required in the L/C or by the buyer or statutorily.
As per FTP 2015-2020, all export contracts and invoices shall be denominated either in freely convertible currency of Indian rupees, but export proceeds should be realized in freely convertible currency except for export to Iran.
Export proceeds should be realized in 9 months.
Prior to importing from India, every business must first obtain an Import Export Code (IEC) number from the regional joint DGFT. The IEC is a pan-based registration of traders with lifetime validity and is required for clearing customs, sending shipments, as well as for sending or receiving money in foreign currency.
The process to obtain the IEC registration takes about 10-15 days.
Once an IEC is allotted, businesses may import goods that are compliant with Section 11 of the Customs Act (1962), Foreign Trade (Development & Regulation) Act (1992), and the Foreign Trade Policy, 2015-20.
However, certain items – restricted, canalized, or prohibited, as declared and notified by the government – require additional permission and licenses from the DGFT and the federal government.
To determine whether a license is needed to import a particular commercial product or service, an importer must first classify the item by identifying its Indian Trading Clarification based on a Harmonized System of Coding or ITC (HS) classification.
ITC (HS) is India’s chief method of classifying items for trade and import-export operations. The ITC-HS code, issued by the DGFT, is an 8-digit alphanumeric code representing a certain class or category of goods, which allows the importer to follow regulations concerned with those goods.
An import license may be either a general license or specific license. Under a general license, goods can be imported from any country, whereas a specific or individual license authorizes import only from specific countries.
Import licenses are used in import clearance, renewable, and typically valid for 24 months for capital goods or 18 months for raw materials components, consumables, and spare parts.
After obtaining import licenses, importers are required to furnish import declaration in the prescribed Bill of Entry along with permanent account number (PAN) based Business Identification Number (BIN), as per Section 46 of the Customs Act (1962).
A Bill of Entry gives information on the exact nature, precise quantity, and value of goods that have landed or entered inwards in the country.
If the goods are cleared through the Electronic Data Interchange (EDI) system, no formal Bill of Entry is filed as it is generated in the computer system. However, the importer must file a cargo declaration after prescribing particulars required for processing of the entry for customs clearance.
If the Bill of Entry is filed without using the EDI system, the importer is required to submit supporting documents that include certificate of origin, certificate of inspection, bill of exchange, commercial invoice cum packing list, among others.
Once the goods are shipped, the customs officials examine and assess the information furnished in the bill of entry and match it with the imported items. If there are no irregularities, the officials issue a ‘pass out order’ that allows the imported goods to be replaced from the customs.
India levies basic customs duty on imported goods, as specified in the first schedule of the Customs tariff Act, 1975, along with goods-specific duties such as anti-dumping duty, safeguard duty, and social welfare surcharge.
In addition to these, the government levies an integrated goods and services tax (IGST) under the new GST system. The IGST rates depend on the classification of imported goods as specified in Schedules notified under Section 5 of the IGST Act (2017).
1. Mr. Shomit Gupta
(Sr. Manager)
Tel: 9650713514
Email: Shomit@escindia.com
2. Mr. C S Rawat
(Assistant Director)
Tel: 9868104370
Email: csr@escindia.com
Electronics and Computer Software Export Promotion Council of India (ESC), one of India’s most dynamic premier trade promotion organisations sponsored by the Government of India.
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