**Executive Summary:**
This notification amends the Foreign Trade Policy (FTP) 2023 to enable exemptions from mandatory Quality Control Orders (QCOs) for inputs imported by Advance Authorisation holders and Export Oriented Units (EOUs) for export production. It specifies conditions for these exemptions, including pre-import conditions, export obligations, and restrictions on domestic transfer. The notification lists the Ministries/Departments whose QCOs are exempted in Appendix 2Y of FTP 2023, including the Ministry of Steel and DPIIT.
**Key Points / Main Content:**
* **Advance Authorisation (AA) Holders:**
* Import of inputs under AA without QCO compliance requires a pre-import condition.
* Inputs must be used to manufacture export products with normal wastage allowance and exported under the same authorisation.
* Exemption from QCOs must be specifically endorsed on the AA.
* Unutilised imports or products manufactured with inputs imported without QCO compliance cannot be transferred to DTA, even after regularisation of default.
* Unutilised imports can be regularised by destruction certified by GST/Customs authorities or re-export, along with payment of exempted duties/taxes/cesses with interest and a composition fee of 10% of the CIF value to DGFT.
* QCO exemption is only for physical exports, not deemed exports.
* Clubbing facility under para 4.36 of HBP 2023 is not available.
* EO period for such authorisations shall be as per para 4.40 of Handbook of Procedures.
* Exemption is subjected to para 2.03 c of FTP.
* **DFIA Scheme:**
* Import of inputs without compliance to mandatory QCOs under Duty Free Import Authorisation (DFIA) scheme is not allowed.
* **Export Oriented Units (EOUs):**
* EOUs are exempt from QCOs on import of inputs required for export production.
* EOUs must submit an undertaking to Customs authorities at the time of import and a copy to the Development Commissioner.
* No DTA clearance of such inputs or goods manufactured from them is allowed.
* QCO exemption is only for physical exports, not deemed exports.
* Exemption is subjected to para 2.03 c of FTP.
* **Appendix 2Y of FTP 2023:**
* Lists Ministries/Departments whose QCO notifications are exempted by DGFT for goods used in export product manufacturing.
* Includes Ministry of Steel and Department for Promotion of Industry and Internal Trade (DPIIT).
**Impact Analysis**
**Advance Authorisation Holders:**
* *Impact:* Benefit from exemption of QCO on imports used for export production, subject to conditions.
* *Action Required:* Request specific endorsement of QCO exemption on Advance Authorisations, ensure compliance with pre-import conditions, and adhere to export obligations and restrictions on DTA transfers. Regularise unutilised imports as per the procedure outlined.
**Export Oriented Units (EOUs):**
* *Impact:* Benefit from exemption of QCO on imports used for export production.
* *Action Required:* Submit an undertaking to Customs authorities and a copy to the Development Commissioner at the time of import, and ensure no DTA clearance of such inputs or manufactured goods.
**Customs Authorities:**
* *Impact:* Responsible for monitoring and enforcing compliance with the new regulations related to QCO exemptions.
* *Action Required:* Implement procedures for endorsing QCO exemptions on Advance Authorisations, overseeing the destruction of unutilised imports, and collecting applicable duties/taxes/cesses and composition fees.
**Development Commissioners:**
* *Impact:* Oversight of EOUs availing the QCO exemption.
* *Action Required:* Receive and review copies of undertakings submitted by EOUs regarding QCO exemption compliance.
**DGFT (Directorate General of Foreign Trade):**
* *Impact:* Implementing and monitoring the amended Foreign Trade Policy.
* *Action Required:* Oversee the implementation of the new provisions, including the collection of composition fees for unutilised imports, and update relevant manuals and procedures.
Key Entities Referenced
Foreign Trade Development Regulation Act, 1992: An act of the Indian Parliament regulating foreign trade.
Foreign Trade Policy FTP, 2023: The prevailing Foreign Trade Policy of India, governing import and export regulations.
Advance Authorisation: A scheme under the Foreign Trade Policy allowing duty-free import of inputs for export production.
Quality Control Orders QCOs: Mandatory quality standards imposed on certain products imported into India.
Export Oriented Unit EOU: An entity set up to undertake export production.
Directorate General of Foreign Trade DGFT: The government agency responsible for implementing and regulating India's foreign trade policy.
Bureau of Indian Standards BIS Act, 2016: The act under which the Bureau of Indian Standards (BIS) operates, setting standards for products.
Department for Promotion of Industry and Internal Trade DPIIT: A department under the Ministry of Commerce and Industry, Government of India, responsible for the promotion of industry and internal trade.
[To be Published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii)]
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Vanijya Bhawan
Notification No. 69 /2023
New Delhi, Dated the 7 March 2024
Subject:- Enabling provisions for import of inputs that are subjected to mandatory
Quality Control Orders (QCOs) by Advance Authorisation holders and
EOU- reg
S.O. (E) In exercise of powers conferred by Section 3 read with Section 5 of the Foreign
Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para
1.02, 2.01 and 2.03 of the Foreign Trade Policy (FTP), 2023, the Central Government hereby
makes the following amendments to FTP, 2023.
2. Below para 4.18 of FTP 2023, a new para 4.18 (A) is inserted as follows:
“4.18A Importability of items under Advance Authorisation without mandatory
Quality Control Orders (QCOs)
Import of Inputs under Advance Authorisation, without compliance to the mandatory
QCOs, shall be subjected to the following conditions:
(i) Import of inputs under the Advance authorisation without compliance to the
mandatory QCOs shall be with pre-import condition. Such inputs shall be utilised in
the manufacturing of the export product (making normal allowance for wastage) and
shall be exported under the same authorisation.
(ii) Exemption from mandatory QCOs shall be specifically endorsed in the
Advance authorisation, upon the request of the authorisation holder. Imports under
Authorisation without specific endorsement of exemption shall be made in accordance
with mandatory QCOs.
(iil) Any unutilised imports or the products manufactured with inputs imported
without compliance to the mandatory QCOs, shall not be transferred to DTA, even
after regularisation of default in fulfilment of export obligation. For the purpose of
this para, unutilised imports means imported inputs (without compliance of
mandatory QCOs) which have not been accounted for, as per SION/Ad-hoc Norms, in
the product exported under the same authorisation.
(iv) The unutilised imports shall be regularised as follows:
(a) The unutilised material shall be destroyed in the presence of jurisdictional
GST/Customs authorities who shall certify the destruction of the goods or
same may be re-exported; and in addition
se(b) The AA holder shall pay duties/taxes/cesses exempted along with interest on the
unutilsed exempted material to Customs Authorities plus composition fee of an
amount equivalent to 10% of the CIF value of unutilized imported inputs to DGFT.
Proof thereof shall be submitted to the RA concerned before grant of EODC.
(v) The exemption from QCO will be available for physical exports only and such
exemption will not be allowed for deemed exports for Advance Authorisation Holders.
(vi) The facility of clubbing under para 4.36 of Handbook of Procedures (HBP),
2023 shall not be available.
(vii) | The EO period for such authorizations shall be as per para 4.40 of Handbook
of Procedures.
(viii) This exemption is further subjected to para 2.03 (c) of FTP.
3. The following sub-para is appended to the existing para 4.24 of FTP 2023:
“(d) Import of Inputs without compliance to the mandatory QCOs under DFIA
scheme is not allowed.”
4. The following sub-para is appended to the existing para 6.07 of FTP 2023:
“(k) Exemption from applicability of mandatory Quality Control Orders (QCOs)
issued under the BIS Act, 2016, shall be provided to EOU on import of inputs which
are required for export production. An undertaking to that effect will be submitted to
the Customs authorities by the EOU at the time of importation and a copy of the same
shall also be submitted to the Development Commissioner concerned. No DTA
clearance of such inputs or goods manufactured made out of such inputs, are allowed.
The exemption from QCO will be available for physical exports only and such exemption will
not be allowed for deemed exports. This exemption is further subjected to para 2.03 (c)
of FIP.”
5. The following sub-para is appended to the existing para 2.03 of FTP 2023:
(c) The list of Ministries/Departments whose notifications on mandatory QCOs, that are
exempted by the DGFT for goods to be utilised/consumed in manufacture of export products,
are given in Appendix-2Y of FTP 2023.
Effect of this Notification: Enabling provisions are made for exempting inputs imported by
Advance Authorisation holders and EOUs, from mandatory Quality Control Orders (QCOs)
Accordingly, list of Ministries / Departments ( i.e. Ministry of Steel and Department for
Promotion of Industry and Internal Trade (DPIIT) are notified in Appendix 2Y of FTP, 2023.
This issue with the approval of Minister of Commerce & Industry.
(Santosh Kumar Sarangi)
Director General of Foreign Trade &
Ex-Officio Additional Secretary to the Government of India
E-mail: dgft@nic.in
[Issued from File No.01/89/180/13/AM-15/PC-2[A]/E-5910]