Amendments in Deemed Export Policy under Foreign Trade Policy – What is the intention of Ministry of Commerce and Industry.

[Surender Gupta]

Recent amendments in the Chapter 8 of the Foreign Trade Policy 2009 – 2014  (RE-2010) [As amended] creates some doubts and confusions which need clarifications to avoid difficulties that may be faced by the persons availing deemed export benefits under the policy.

An amendment was carried vide notification no. 92 dated 28-12-2011 to allow benefit of deemed export to supplied made to non-mega power projects only under Para 8.3(a) of FTP, viz., Advance Authorisation / Advance Authorisation for annual requirement / DFIA. Before this amendment, the benefit of Deemed Export Drawback was also allowed.

Therefore, notification 92 issued to amend the policy of deemed export to restrict the deemed export benefit.

Now, deemed export policy has further been amended to deny the deemed export benefit to all supplied made to non-mega projects. – Notification no. 107 dated 21-3-2012

Though the intention may be limited to deny the deemed export benefits to the non-mega power project supplied falling within the paragraph no. 8.4.4 of the policy, but the insertion of new paragraph into the policy gives a different outlook.

New paragraph no. 8.7 is read as under:

“Notwithstanding anything contained either in FTP or in HBP vol. 1;  supplies to non mega power projects shall not be entitled to any deemed export benefit.”

If the whole text of Chapter 8 related to Deemed export is read it appears that it is necessary that a clarification may be issued without loss of time to clear the intention of the legislature in this regard.