Export Promotion Schemes under Foreign Trade Policy: formula sheet

Key formulas

Section 5: policy notification

Central Government → formulates, announces and amends FTP → by notification in the Official Gazette

Special Economic Zones: the policy may apply with exceptions, modifications and adaptations as notified.

Section 3: Orders on trade

Order in Official Gazette → develop and regulate foreign trade; prohibit, restrict or regulate imports and exports

Goods covered by a section 3(2) Order are deemed prohibited under section 11 of the Customs Act, 1962. Services or technology are covered only if the provider avails FTP benefits or deals in specified services or technologies.

Section 3(4): no licence by default

No permit or licence needed for import or export, and no goods prohibited, except as required under the Act, rules or orders

Freedom to trade is the general rule; restrictions are the exception.

Section 6: DGFT

DGFT = appointed by Central Government; advises on FTP; carries out FTP

Delegated powers exclude sections 3, 5, 15, 16 and 19.

Section 11(2): penalty for contravention

Penalty = not less than ₹10,000 and not more than 5 × value of goods/services/technology, whichever is more

Applies to making, abetting or attempting an export or import in contravention.

Section 11(3): false documents

Penalty: not less than ₹10,000 or more than 5 × value, whichever is more

Applies to forged, tampered or materially false declarations submitted to the DGFT or an authorised officer.

Section 11(7)-(9): other consequences

IEC may be suspended until penalty is paid; goods and conveyances liable to confiscation; release on redemption charges equal to market value

The Adjudicating Authority acts in each case.

Permitted import quantity

Input allowed = Export quantity × Input norm per unit of export product

Norm comes from SION or the norm fixed by the authority. It already includes the permitted wastage.

Export obligation (value basis)

EO = Export value fixed in the authorisation (as per norms and the policy's value-addition requirement)

Take the exact value-addition percentage and EO period from the policy text given in the question. Do not assume them.

Duty forgone on a shortfall

Duty payable = Duty exempted on the unfulfilled share of inputs + interest

Proportionate shortfall approach: Duty × (Unfulfilled EO ÷ Total EO). Follow the notification conditions in the question.

Penalty under section 11(2), FT(D&R) Act, 1992

Not less than ₹10,000 and not more than 5 × value of goods, services or technology, whichever is more

Applies to contravention of the Act, rules, orders or foreign trade policy.

Appeal under section 15

Within 45 days of service of the order, plus a further 30 days for sufficient cause

Against the Director General's order: to the Central Government. Against a subordinate officer's order: to the Director General or an officer authorised by him. For penalty or redemption charges, deposit is needed unless dispensed with for undue hardship.

Export obligation (general rule)

Export obligation = 6 × Duty saved

Duty saved is the customs duty exempted on the capital goods. The multiple comes from the Foreign Trade Policy and Handbook of Procedures, not from the FT(D&R) Act. Use the multiple given in the question; 6 times is the commonly taught figure.

Duty saved

Duty saved = Duty that would have been payable at the normal rate − Duty actually paid (if any)

For a zero-duty import, duty saved equals the full duty that would have been payable.

Time to fulfil

Export obligation period = 6 years from the date of issue of the authorisation (commonly taught)

This period also comes from the policy and Handbook, not from the Act. Use the period stated in the question or the current policy.

Appeal period against an adverse order (section 15)

45 days from service of the order, plus up to 30 days more for sufficient cause

Appeal against a DGFT order goes to the Central Government. Against a subordinate officer's order it goes to the DGFT or a superior officer he authorises.

Penalty deposit for appeal

Penalty or redemption charges must be deposited before the appeal is entertained

The Appellate Authority may dispense with the deposit, unconditionally or on conditions, if it causes undue hardship.

Benefit under RoDTEP or RoSCTL

Benefit = FOB value of eligible exported goods × notified rate %

Apply any value cap per unit if the notification gives one. Rates are per tariff line.

No double benefit

RoDTEP and RoSCTL cannot both be claimed on the same product; drawback rates exclude components covered by them

Choose the scheme that applies to the product (garments and made-ups under RoSCTL, otherwise RoDTEP). Confirm in the current notification.

Appeal period under Section 15 FT(D&R) Act

45 days from service of the order, plus up to 30 days more for sufficient cause

For a penalty or redemption charges, the amount must be deposited first, unless the Appellate Authority dispenses with it for undue hardship.

Show-cause rule under Section 14

Notice in writing with grounds, reasonable time for written representation, and hearing if desired

Required before any penalty or confiscation order.

Net Foreign Exchange (NFE)

NFE = FOB value of exports (foreign exchange earned) − foreign exchange outgo (imports of inputs, capital goods and other specified outflows)

The unit must have positive NFE over the prescribed period. Use the exact definition and period from the current Foreign Trade Policy and Handbook of Procedures.

Meaning of export in the FT(D&R) Act

Goods: bringing into or taking out of India by land, sea or air. Services/technology: supply from India to another country, in India to a foreign consumer, through commercial presence abroad, or through Indian natural persons abroad.

Section 2(e). Services and technology exports are covered, so IT units fit the definition.

SEZ trade under the FT(D&R) Act

Import and export relating to an SEZ, or between two SEZs = governed by the SEZ Act, 2005.

This is all the proviso to section 2(e) says. It refers SEZ trade to the SEZ Act; it does not classify DTA-to-SEZ or SEZ-to-DTA movements.

DTA and SEZ movements

DTA to SEZ = treated as an export. SEZ to DTA = treated like an import for duty (customs duty on DTA clearance).

Source: the SEZ Act, 2005 and the customs and IGST provisions, not section 2(e). Check the SEZ Act and the customs procedure for the exact rules.

Policy power

Central Government formulates and amends the foreign trade policy by notification in the Official Gazette; for SEZs, exceptions and modifications can be notified.

Section 5 and its proviso.

Rules and Orders in Parliament

Rules and Orders are laid before each House for a total of 30 days

Section 19(3). Modification or annulment does not affect anything already done.

IEC requirement

No import or export without an IEC granted by the DGFT or authorised officer (section 7)

For services or technology, IEC is needed only if the provider takes FTP benefits or deals with specified services or technologies.

Penalty for contravention

Penalty ≥ ₹10,000 and up to 5 × value of goods, services or technology, whichever is more (section 11(2))

Applies where a person makes, abets or attempts an export or import in contravention of the Act, rules, orders or FTP.

Penalty for false documents

Penalty of not less than ₹10,000 or more than 5 × value, whichever is more (section 11(3))

Applies where a person uses a document knowing it is forged, tampered with or materially false.

Suspension or cancellation of IEC

Notice in writing + reasonable opportunity to represent + hearing if desired, then suspend or cancel (section 8(1))

After suspension or cancellation, import or export is possible only under a special licence (section 8(2)).

Suspension for unpaid penalty

IEC may be suspended by the Adjudicating Authority till penalty is paid or recovered (section 11(7))

This is in addition to the recovery modes in section 11(5).

Confiscation

Goods, package and conveyance liable to confiscation; release on redemption charges equal to market value (section 11(8) and (9))

Conditions and manner are prescribed by rules.

Quick revision

• Section 3 lets the Central Government make provision by Order for developing and regulating foreign trade.
• Section 5 lets the Central Government announce and amend the foreign trade policy by Gazette notification.
• Section 7: no import or export without an IEC, with a services and technology proviso.
• For services or technology, the IEC is needed only when the provider takes FTP benefits or deals with specified services or technologies.
• Section 8 allows suspension or cancellation of the IEC after a written notice and a reasonable opportunity to represent.
• Section 11(2): penalty of at least ₹10,000 and up to five times the value of the goods, services or technology, whichever is more.
• Section 11(3) covers forged, tampered or materially false documents, with the same penalty range.
• Section 11(8) makes goods and conveyances liable to confiscation, and section 11(9) allows release on redemption charges equal to market value.
• Advance Authorisation and EPCG both rest on an export obligation.
• RoDTEP and RoSCTL are remission schemes, not duty-free import schemes.
• MEIS and SEIS are discontinued and are historical.
• Always check current FTP conditions before writing figures.

Common mistakes

• Saying the DGFT formulates the policy. Fix: Section 5 gives the power to the Central Government. Section 6 makes the DGFT an adviser and implementer.
• Believing the Central Government can delegate every power to the DGFT. Fix: Remember that powers under sections 3, 5, 15, 16 and 19 cannot be delegated under section 6(3).
• Treating AA as a duty refund after export, like duty drawback. Fix: Remember the timing. AA exempts duty at import, before export. Drawback refunds duty after export. AA needs a bond and export obligation; drawback needs neither.
• Allowing import of inputs not physically incorporated in the export product. Fix: Check the physical incorporation condition and the norm. Only inputs covered by the norm, including permitted wastage, are allowed.
• Taking the export obligation as 6 times the value of capital goods Fix: Always multiply the duty saved, not the CIF value of the goods.
• Confusing EPCG with Advance Authorisation Fix: EPCG is for capital goods used in making export goods. Advance Authorisation is for inputs physically incorporated in the export product.
• Treating RoDTEP as a refund of GST. Fix: GST on exports is handled by zero rating and refund. RoDTEP covers embedded taxes that GST does not refund.
• Claiming RoDTEP and RoSCTL on the same product. Fix: Treat them as alternatives by product. Garments and made-ups go under RoSCTL; do not stack the two.
• Treating an EOU and an SEZ unit as the same thing Fix: Link an SEZ to a notified area under the SEZ Act, 2005. An EOU is a stand-alone bonded unit under the foreign trade policy.
• Treating a supply from the domestic market to an SEZ as a local sale Fix: Remember the SEZ is treated as foreign territory for trade, so a supply from the DTA to an SEZ is an export, and a sale from the SEZ to the DTA is an import.

Exam tips

• Learn the four sections 3, 5, 6 and 11 with one line each. MCQs usually test one fact from them.
• In penalty sums, show the 5 × value working and the ₹10,000 minimum.
• Write 'by notification in the Official Gazette' when answering on section 5.
• Do not quote salient features of a specific policy period unless your study material gives them. Stick to the legal framework you can state with certainty.
• Write the section 11 and 15 rules exactly as stated in the Act; examiners reward the precise wording on penalty range, 45 days and 30 days.
• In numerical questions, show the norm calculation first. Marks are given for each step even if the final figure is wrong.
• For AA vs drawback questions, build a short comparison on timing, bond, obligation and nature of benefit.
• Do not quote EO period or value-addition figures unless the question gives them; say 'as per the foreign trade policy in force'.