Date: 2015-06-09Category: Extra OrdinaryState: Union GovernmentCountry: India
Corrigendum to Public Notice No.16 dated 4th June, 2015 in respect of amendments in Paragraphs 4.38 (viii) (b)&(c) and paragraph 4.42(c) of Hand Book of Procedure
Executive Summary:
This public notice, issued by the Directorate General of Foreign Trade on June 9, 2015, announces a corrigendum to Public Notice No. 16 dated June 4, 2015, regarding amendments to paragraphs 4.38 viii b & c and 4.42 c of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-2020. The corrections are effective from April 1, 2015. It addresses composition fees and export obligations.
Key Points / Main Content:
Amendments to Paragraph 4.38 viii b & c (Clubbing of Authorizations):
* For authorizations with an initial obligation period of 18 months and a shipment date within 30 months, exports up to 30 months from the earliest authorization date will be considered for clubbing.
* Accounting of exports is subject to a composition fee of 0.5% of FOB value for exports made after 18 months but up to 24 months from the earliest authorization date.
* For exports after the 24th month until the 30th month, the composition fee is 0.5% per month of the FOB value of exports.
* The same conditions apply when authorizations with an initial obligation period of 36 months are clubbed with those of 18 months.
Amendment to Paragraph 4.42 c (Export Obligation Period and Extension):
* A further extension of six months after the initial extension can be considered by the Regional Authority if the authorization holder has fulfilled a minimum of 50% of the export obligation in quantity and value on a pro-rata basis.
* This extension is subject to a composition fee of 0.5% per month on the unfulfilled FOB value of the export obligation.
* No further extension beyond 12 months from the expiry date of the Export Obligation period will be granted.
* For the second extension, a certificate from an independent Chartered Accountant/Engineer is required, confirming the availability of unutilized imported/domestically procured inputs with the applicant.
* The composition fee for the second extension of authorization is 0.5% per month of the FOB value of exports made.
* Corrections have been made in Paragraph 4.38 viiibc to align with paragraph 4.38viiia.
* A typographical error in paragraph 4.42c has been corrected.
Impact Analysis:
Authorisation Holders:
Impact: Changes in composition fees, export obligation periods, and extension conditions affect financial planning and compliance requirements for exports. The additional requirement of a certificate from a Chartered Accountant/Engineer for the second extension adds to the compliance burden.
Action Required: Review and adjust export strategies to comply with the revised composition fee structure and extension conditions. Ensure proper documentation and certification for seeking extensions.
Regional Authorities:
Impact: Must adhere to the new rules for granting extensions on export obligations and verify compliance with the required conditions, including the 50% fulfillment of export obligations and submission of necessary certifications.
Action Required: Implement the revised guidelines for processing extension requests, including verifying the fulfillment of export obligations and the submission of the required certificate from a Chartered Accountant/Engineer.
Key Entities Referenced
Foreign Trade Policy, 2015-2020: A policy governing import and export in India; this public notice makes amendments to the Handbook of Procedures of this policy.
Directorate General of Foreign Trade: The organization responsible for implementing the Foreign Trade Policy in India and issuing public notices related to it.
Handbook of Procedures: A document that provides detailed procedures and guidelines for implementing the Foreign Trade Policy.
New Delhi: The location of the Directorate General of Foreign Trade, and place of publication, Delhi, India.
Advance Authorisations: An authorization issued to allow duty-free import of inputs which are physically incorporated in export product.
Regional Authority: A regional authority which can consider request for extension of six months after first extension as in b above can be considered by Regional Authority
Pravir Kumar: Director General of Foreign Trade.
Chartered Accountant: An independent Chartered Accountant/Chartered Engineer who certifies that unutilized imported/domestically procured inputs are available with the applicant.