Applicable Laws upon Foreign Nationals & Foreign Corporations on Exports from India- India Business Entry

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Introduction to India’s Export Policy: Setting-Up Business in India through Foreign Direct Investments in India or FDI in India
The development and regulation of foreign trade by increasing the exports of goods and services is a priority and has seen an exponential growth with the increase inflow of Foreign Direct Investments in India or FDI in India. International trade has been important since began of the civilization period. In recent years international trade became increasingly important with a larger share of GDP (Gross Domestic Product) devoted to imports and exports from India. The foreign trade policy was launched to promote exports from India. The policy is based on four pillars Incentive to remission, ease of doing business, export promotion through collaboration, and emerging areas. These days a lot of Foreign Nationals and Foreign Corporations are looking forward to setting up their businesses in India or business set up their businesses in India and are incorporating their Corporations in India respectively. The policy was launched to support emerging areas such as e-commerce in developing states or districts as export hubs and streamlining the Special Chemicals, Organism, Material, Equipment, and Technologies (“SCOMET”) Policy. There are many schemes that are launched under foreign trade and for Foreign Direct Investments in Inda such as the PM MITRA scheme to claim benefits under the common service provider scheme of Export promotion Capital goods. And the Diary sector is exempt from maintaining the average export obligation under Export promotion capital goods. And export obligation is less to battery electric vehicles of all types. The One-time Amnesty scheme helps exporters who are unable to fulfil their export obligations under the Export promotion capital goods (EPCG) the scheme provides a 100% exemption of interest and No interest is payable on the portion of special Additional Customs duty and Additional Customs duty. However, the Amnesty scheme will only be applicable for a limited period of time up to September 30, 2023. And the Status holder scheme which helps in the recognition of exports. The foreign trade policy and Foreign Direct Investments promote mechanization to make it easier for exporters to set up business.1992 It makes the implementation mechanisms easier and online in a paperless manner reducing the fee structure and helping to boost exports in India. And the government has launched various schemes making it easier for MSMEs and others to access export benefits. There is to promote export in the Indian economy to earn foreign exchange and increase FDI global competition for the domestic market. And to promote the interests of Indian exporters and keep the commitment of the world trade organization. And the Special economic zones will be the engines of growth in international trade for India. In the end, it is mandatory to comply with export compliances if you want to export from India.

Laws Applicable for Exports from India:
1. Foreign Trade (Development and Regulation) Act, 1992: The Foreign Trade (Development and Regulation) Act of 1992 governs and regulates India’s foreign policy. This statute was established on August 7th, 1992. The Import and Exports (Control) Act of 1947 was replaced by the same law, which did not begin as a separate law to govern foreign affairs. India’s whole export and import situation is currently governed and regulated by the Foreign Trade (Development and Regulation) Act 1992. Appointment of a director general is done by the central government.
• No person shall make any export except under the exporter code number granted by the officer authorized by the director general or Director general as per section 7 of the Act.
• The act will operate under existing trade policies.
• The Director General or authorized officer by the director general can issue, suspend and cancel the license after the due inquiry of the goods.
• The main objective is to promote the imports in the country and increase the exports from India and improve the law of overseas exchange through facilitating imports into the country, taking measures to grow exports from India.
• The general agreement on tariffs and trade permits the product-specific quantitative restrictions as well as the imposition of duties on their exports as per section 9A in the FTDR Act,1992.
• In accordance with the Act, the government has the authority to control and regulate the import and export of products and services. For a number of reasons, such as ensuring national security, protecting the general public’s health, protecting the environment, and for economic reasons, it gives the government the power to formulate policies, send out alerts, and impose trade restrictions.

2. FEMA (Foreign Exchange Management Act, 1999): It regulates foreign exchange transactions, international trade, and payments made in foreign currencies. It gives the Reserve Bank of India (RBI) the authority to create guidelines for the purchase, holding, transfer, and sale of foreign currency. FEMA makes a distinction between capital account and current account transactions. It permits the majority of current account transactions, including remittances, travel costs, and trade in goods and services, to be carried out without limitations and restrictions. Capital account transactions, which involve the transfer of investments or capital assets, are governed by FEMA.
• Realization of Exports Proceeds: FEMA mandates that export proceeds must be received within a specified period. Exporters from India are required to repatriate the proceeds to India within the prescribed time frame, generally within nine months from the date of export. Failure to repatriate export earnings within the stipulated time may attract penalties or restrictions.
• Repatriation of Export Earnings: Exporters are required to repatriate their export earnings to India through authorized banking channels. These funds must be converted into Indian currency and deposited in an authorized bank account such as the Reserve Bank of India
• Export Declaration Form (EDF): Under FEMA, exporters are required to submit an Export Declaration Form (EDF) to the authorized dealer (bank) within 21 days from the date of export. The EDF captures details of the export transaction, including the invoice value, the name of the buyer, and the destination country.
• Export Promotion Schemes: FEMA provides provisions for various export promotion schemes aimed at incentivizing exports and boosting foreign trade. These schemes include the Duty Drawback Scheme, Export Promotion Capital Goods (EPCG) Scheme, Export Oriented Units (EOUs), and Special Economic Zones (SEZs).
• Export Compliance: FEMA outlines regulations to ensure compliance with export-related laws, including restrictions on certain goods or services, compliance with trade agreements and international obligations, and adherence to customs regulations.
• Reporting Requirements: Exporters are required to comply with reporting requirements under FEMA. They must submit periodic returns and reports to authorized entities such as the Reserve Bank of India (RBI) or the Directorate General of Foreign Trade (DGFT).

3. The Customs Act,1962: The Act governs the imports and exports of goods, regulates customs duties, Outlines regulations, rules, and procedures, and also penalties associated with clearance of customs, valuation of goods, and classification of the goods. The Customs Act provides the enforcement of custom-related provisions it covers the key aspects of exports from India:
• Export Procedures: The Act defines the procedures to be followed for the export of goods from India. It includes requirements such as filing shipping bills, submission of export declarations, obtaining necessary clearances, and compliance with customs regulations.
• Classification and Valuation of Export Goods: The Customs Act provides guidelines for the proper classification and valuation of export goods. It specifies the rules and methodologies for determining the customs value of exported goods, which is essential for calculating applicable customs duties and taxes.
• Enforcement and Penalties: The Act grants powers to customs authorities for enforcing customs-related provisions, conducting inspections, seizing prohibited goods, and imposing penalties for non-compliance. It specifies penalties for offenses such as smuggling, fraudulent practices, false declarations, and violation of customs regulations.
• Export Warehousing and Bonded Warehouses: The Customs Act allows for the establishment of export warehouses and bonded warehouses, which provide facilities for the storage of goods intended for export. These warehouses are subject to customs supervision and enable exporters to store goods before export and claim certain benefits or exemptions.
• Export Manifest and Shipping Documents: The Act mandates the submission of an export manifest and other shipping documents for export consignments. These documents provide details about the goods being exported, their value, the exporter’s information, and other necessary information for customs clearance.
• Export Duties and Prohibitions: The Act empowers the government to impose export duties or prohibit the export of certain goods for various reasons, such as protecting national interests, controlling the availability of essential commodities, or complying with international trade agreements.

4. Export Import Policy: The Export-Import (EXIM) Policy, also known as the Foreign Trade Policy (FTP), governs the export and import activities of India. It is a set of guidelines and regulations formulated by the Government of India to promote and regulate foreign trade. The Policy is regulated by the foreign trade development and Regulation Act 1992. The governing body in matters concerning Export and Import policy is DGFT (Director General of foreign trade)
• Export Promotion Schemes: The EXIM Policy introduces several export promotion schemes to incentivize and support exporters from India. These schemes include the Merchandise Exports from India Scheme (MEIS), Service Exports from India Scheme (SEIS), Export Promotion Capital Goods (EPCG) Scheme, Duty Drawback, Advance Authorization Scheme, and more. These schemes provide benefits such as duty exemptions, tax refunds, and access to subsidized inputs.
• Focus and Thrust Products: The EXIM Policy identifies certain sectors or products as “Focus” and “Thrust” sectors, which receive special attention and support for export promotion. These sectors are eligible for additional incentives, infrastructure development, and market access facilitation.
• Export Obligation: The EXIM Policy specifies the export obligation for certain schemes. Exporters availing benefits under schemes like Advance Authorization or EPCG Scheme are required to fulfill a specific export obligation, which mandates exporting a certain value or quantity of goods within a prescribed time frame.
• Export Documentation and Procedures: The EXIM Policy provides guidelines for export documentation and procedures. It specifies the forms, declarations, and certificates required for export transactions. It also streamlines export-related processes to facilitate smoother customs clearance and export documentation.
• Export Incentives and Financial Assistance: The EXIM Policy offers various incentives and financial assistance schemes to exporters, such as interest rate subsidies, export credit insurance, export finance facilitation, and export incentives under the Goods and Services Tax (GST) regime.

Export from India Regulations
1. Opening Bank accounts: Exporters need to establish a bank account with a scheduled bank that is permitted to handle transactions involving foreign exchange.
2. Obtaining Permanent Account Number: Exporters must apply for the PAN on the National Securities Depository Limited portal owned by the Government of India.
3. Obtaining Importer- Exporter Code Number:
• Visit the Directorate General of Foreign Trade (DGDT) website (https://dgft.gov.in/).
• Access the application form
• Download the application form (Aayaat Niryaat Form ANF 2A) in the prescribed format.
• Fill out the application form: Fill in all the required details in the IEC application form. You will need to provide information such as your business name, address, contact details, PAN (Permanent Account Number), bank account details, and other relevant information as per the form.
• Gather necessary documents: Prepare the necessary documents that need to be submitted along with the application form. The typical documents required for an IEC application include:
• Self-attested copy of the PAN card
• Self-attested copy of the identity proof (such as an Aadhaar card, voter ID, or passport)
• Self-attested copy of the address proof (such as electricity bill, telephone bill, or rent agreement)
• Bank certificate or canceled cheque leaf with the name of the applicant and bank account details
• Passport-sized photograph of the applicant
• Any additional documents as specified in the application form or as required by the DGFT.
• upload the application and documents online, as per the instructions provided on the DGFT website.
• Pay the application fee: Pay the prescribed application fee for obtaining the IEC number. The fee can be paid through online payment modes or via a demand draft, as specified by the DGFT.
• Track the application: After submission, you can track the status of your IEC application on the DGFT website using the provided application reference number or other tracking details.
• Receive the IEC number: Once your application is processed and approved, you will receive your Import Export number. The IEC certificate can be downloaded from the DGFT website, and a physical copy may also be sent to your registered address.

4. Obtain the Registration and Membership Certificate for Exporting Goods from India: The benefits of Registration and membership certificate are:
• Benefits and accommodations provided by the FTP include for exports after obtaining Registration and membership certificate include a) an advanced license. b) The Duty Drawback Program. b) Considered an Export Benefit. DFIA (Duty-Free Import Authorization) Scheme. RODTEP Scheme is e. f) The Export Promotion Capital Goods (EPCG) Zero Duty Program. f) Any additional import or export permits. h) No requirement for a bank guarantee at the time of export. i) Access to catalog shows and trade shows both domestically and internationally. j) Access to buyer-seller matching through overseas businesses.
• Import and Export of any item.
• The Form ANF-2C needs to be filled and submitted as a certificate that certifies an exporter working with goods that have been registered with a body authorized by the Indian Government.
5. Incorporate Company in India: In order to start an export business, one must first legally establish a single proprietorship, partnership firm, or company with a suitable name and logo.

What is Export Duty?
The Export Duty is the sum that the exporting company must pay as tax to the Indian government. India adopts a zero-levy approach for import and export in accordance with the Customs Act, which implies that CGST is not applied to exported items in addition to the export duty rate. Prior to this, there was the duty drawback system, which involved taxation for the export of items that were exempt from it.

Bank Certificate Receipt for Exporting from India
Authorized dealers will issue bank certificates to the exporter once payment has been received, and only after the issuance of the bank certificate will the export transaction be finished. Exporters must only engage with authorized Reserve Bank dealers to negotiate shipping documentation. The RBI can only receive export income for goods that are shipped outside of the nation using this procedure.

Export Authorization for SCOMET Items
the Special Chemicals, Organism, Material, Equipment, and Technologies (SCOMET list covers items that have dual-uses). The exporters who want to deal with these items should obtain a Unique Exporter-Importer code. The authorization is done by the Director General of Foreign Trade prescribed in the Handbook of Procedures. Certain documents should be uploaded such as entry of items exported during last year, Purchase orders.
The Examination of the application is done by the director general of the foreign Trade inter- Ministerial working group who accepts the requests after analysing all required rules and then issues the Export authorization it may be with or without conditions to the exporter. The Export authorization is valid for 24 hours from its issue.
Exporting SCOMET Items without Authorization can lead to an imprisonment of 6 months to 5 years in prison and/or a fine of at least 3 lakh rupees, with a maximum fine of 20 lakh rupees or five times the value of the exported goods.

Commercial Documents required for the Export Regulations
• GSTR Refund Form
• Bill of entry GST return forms (GSTR 1 and GSTR 2).
• Exchange Control Declaration.
• Bill of export.
• Airwaybill.
• Commercial invoice.
• Registration of your Membership Certificate (RCMC).
• Bank Realization Certificate.
Is any other Export Procedure Regulation involved?
You must register with the Indian Chamber of Commerce (ICC) in order to clear your goods for export. A Non-Preferential Certificate of Origin will be issued by the ICC. This will attest to the fact that your exports are made in India.

The products which are banned from Imports and Exports from India
• Illegal drugs
• Firearms and ammunition – unless permission has been obtained
• Knives and deadly weapons
• Pets and other live animals – unless permission has been obtained
• Birds and bird products –eggs and feathers
• Pigs and pig meat products
• Endangered plants
• Plants and plant products – unless permission has been obtained
• Radio transmitters
• Culturally important or valuable antiques
• Counterfeit money and goods
• Pornographic material

Conclusion
India is becoming more integrated with countries that have export controls, and its policy framework is being strengthened to better implement international agreements. A country with a strong export sector tends to attract foreign direct investment. Export-oriented industries provide attractive investment opportunities, as investors are drawn to markets with a robust export base and the potential for a profitable trade. India has been one of them. Exports from India contribute to economic growth by generating Foreign Direct Investment and foreign exchange earnings for the country. Export revenues help boost a nation’s GDP (Gross Domestic Product) and contribute to overall economic development its crucial to comply with Export laws and regulations.
Authored By: Adv. Anant Sharma & Chandana Surthi

 

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