No FinMin nod needed for export obligation waiver

The commerce ministry has deleted a provision dealing with export obligation waiver that required a final say by its finance counterpart. Instead, it will use another provision in the current trade policy that allows it to grant waiver on its own.

The paragraph that was deleted through a Directorate General of Foreign Trade (DGFT) notification on Monday, allowed exporters to request waiver of export obligation, in case they were impacted by force majeure, like natural calamities, fire or other extraordinary events beyond anyone’s control.

Exporters have to commit certain value of exports within a specified period of time while subscribing to various export promotion measures like the Export Promotion Capital Goods (EPCG).

The waiver applications in cases of force majeure conditions can now be taken up by the DGFT as the foreign trade policy allows the directorate to provide relief in cases where the exporter faces “genuine hardship” and “adverse impact of trade”.

“The new arrangement will lead to transparency,” said a Delhi-based exporter, who did not wish to be identified.

According to the provisions of the deleted provision, a committee comprising officials of the Department of Commerce and its revenue counterpart would consider waiver applications. But it was the revenue department that finally notified the decision of the committee.

According government sources in the know, only one meeting of the committee took place, about a year back, where eight cases were discussed. While six cases were rejected by the committee due to lack of proper credentials of the applications, two were found to be genuine. However, sources added that one of these two cases were rejected at the “highest levels” of the finance ministry.

In the remaining cases, the finance ministry told the commerce department that it could issue notifications only in prospective cases. Since the notification on the approved waiver application would have meant a retrospective notification, approval of Parliament would have to be taken.

“As a result, even the approved application got stuck,” the official added. The issue was even discussed in the committee on trade facilitation measures, which was set up in the backdrop of the global slowdown.

Now, the DGFT will have the option to take in waiver applications through two of its internal committees, which include the EPCG committee and the policy relaxation committee. “The foreign trade policy gives the DGFT power to relax policy provisions if exporters face genuine hardship,” the official said.

Meanwhile, the DGFT has made it mandatory for importers of metallic scraps to furnish certificates from internationally-recognised inspection agencies that the import consignments do not contain radioactive contaminated material.