RESTRICTED
WORLD TRADE G/LIC/N/3/IND/1
23January 1996
ORGANIZATION(96-0236)
Original: English Committee onImport Licensing
REPLIES TOQUESTIONNAIRE ONIMPORT LICENSING PROCEDURES
NOTIFICATION UNDER ARTICLE 7.3OFTHE
AGREEMENT ONIMPORT LICENSING PROCEDURES
INDIA
Thefollowing notification, dated 29November 1995, hasbeenreceived fromthePermanent
Mission ofIndia.
_______________
OUTLINE OFSYSTEMS
1. Oneofthemain objectives ofthepresent trade policy oftheGovernment ofIndia istophase
outquantitative, licensing andother discretionary controls regulating India'sforeign trade. Keeping
thisobjective inview, thecurrent Export andImport Policy wasannounced bytheGovernment on
31March 1992, valid foraperiod offiveyears from April 1992 toMarch 1997.
IntermsofExportandImportPolicyfor1992-97,allcapitalgoods,rawmaterials,intermediates,
components, consumables, spares, parts, accessories, instruments andother goods maybeimported
without anyrestriction except totheextent suchimports areregulated bytheNegative ListofImports
oranyother provisions ofthispolicy oranyother lawinforce. TheNegative ListofImports consists
ofprohibited items, restricted items andcanalized items. Import ofprohibited items contained inthe
Negative ListofImports isnotallowed under anycircumstances, whereas thecanalized items canbe
imported through thedesignated canalizing agencies. Imports ofcanalized items mayalsobepermitted
against alicence granted bytheDirector-General ofForeign Trade. Asregards restricted items, imports
mayonlybeallowed against specific import licences orinaccordance withaPublic Notice issued for
thispurpose.
Second-hand capital goods mayalsobeimported without alicence byactual users witheffect
from 30March 1994.
Theerstwhile Imports andExports (Control) Act,1947, hasbeenreplaced byanewactcalled
theForeign Trade (Development andRegulation) Act,1992. Under thisAct,import licences and
customs clearance permits, wherever necessary, willbeissued bytheOffice oftheDirector-General
ofForeign Trade, NewDelhi anditsregional offices inIndia.
PURPOSES AND COVERAGE OFLICENSING
2. Thepolicy andprocedures governing import ofvarious items isgiven intheImport Policy
Book which isvalidforaspecified period. TheHandbook ofImport-Export Procedures isalsopublished
asasupplement totheImport Policy. Thecurrent Export andImport Policy andHandbook ofG/LIC/N/3/IND/1
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Procedures arevalid foraperiod offiveyears, i.e.,upto31March 1997. Interms ofExport and
Import Policy, 1992-97, import ofallitems other thanthose covered bytheNegative ListofImports
isallowed without anyrestriction. TheNegative ListofImports comprises prohibited items, restricted
items andcanalized items. Import ofprohibited items isbanned whereas canalized items canbeimported
through designated agencies oragainst alicence granted bytheDirector-General ofForeign Trade.
Therestricted items areallowed tobeimported against specific import licences orinaccordance with
Public Notices issued forthispurpose.
3. Almost allofIndia'strading partners receive MFN treatment intheissue ofimport licences.
TheexceptionstothisareIraq,FijiandYugoslavia(SerbiaandMontenegro)(onaccountofUNsanctions
inthecaseofIraqandYugoslavia) incaseofwhich import licences cannot beusedorlicences can
onlybeissued against tiedaidandforeign credits andunder rupee payment areawhich areavailable
onlyforimports from specified countries.
4. Therestrictions onimport ofNegative Listitems areforbalance-of-payment purposes aswell
asongrounds ofsafety, security andenvironmental protection policies andagreements. Inrespect
ofcertain items, theconditions forimport havebeenspecified inageneral wayinPublic Notices issued
forthispurpose andtheneedforlicensing inindividual cases hasbeeneliminated.
5. Thestatutory authority fordevelopment andregulation offoreign trade byfacilitating import
intoandaugmenting exports fromIndiaistheForeign Trade (Development andRegulation) Act,1992.
PROCEDURES
6. I. Imports intoIndia arenotrestricted through maintenance ofquotas. Allitems may
beimported without anyrestriction except totheextent suchimport areregulated bytheNegative List
ofImports oftheExport andImport Policy, 1992-97, oranyother provisions ofthispolicy orany
lawinforce.
TheNegative ListofImports comprises threeprohibited items, consumer goods, 62restricted
items andseven canalized items. Thethreeprohibited items aretallow, fatand/or oilsofanimal origin,
animal rennet, andwildanimals including theirparts andproducts ofivory.
Import ofconsumer goods andconsumer durables covered bythelistofrestricted items is
under restraint. Thelistofrestricted items under theNegative Listincludes specified precious, semi-
precious andother stones; insecticides andpesticides; electronic items; drugs, pharmaceuticals,
chemicals andallied items; hazardous wastes andhazardous chemicals; items relating tothesmall-scale
sector; certain miscellaneous items; andspecial items required forhotels, thetourism industry and
sports bodies.
Import ofrestricted items covered bytheNegative Listmaybemade against alicence orin
accordance withPublic Notices issued forthispurpose. Inthecaseofimport ofships, trawlers and
boats, aircraft andhelicopters, automobiles andnewsprint, nolicence isrequired butimports areallowed
subject topublished conditions. Import ofsecond-hand goods andmachinery isalsopermitted freely
byactual users. Thenumber ofcanalized items hasbeendrastically reduced andcanalization isconfined
tocertain petroleum products, fertilizers, edible oilsandafewother items.
Importof75specifiedrestricteditems(includingcertainconsumergoods)is,however,permitted
freely against freely transferable Special Import Licences granted toExport Houses, Trading Houses,
StarTrading Houses orSuper-Star Trading Houses, exporters ofelectronic goods anddeemed exporters
andmanufacturers whohaveacquired prescribed quality certification onthebasis oftheirforeignG/LIC/N/3/IND/1
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exchange earnings. One-time facility forimport ofcarsisavailable toExport Houses, Trading Houses,
StarTrading Houses orSuper-Star Trading Houses against theirownSpecial Import Licence.
Restrictions ontheitems included intheNegative ListofImports areconsidered necessary
forbalance-of-payments reasons aswellasongrounds ofsafety, security andenvironment.
Forimportofitemsrequiredforexportproduction,exportersareissuedduty-freeimportlicences
under theDuty Exemption Scheme. Inaddition, under theExport Promotion Capital Goods (EPCG)
Scheme, capital goods maybeimported ataconcessional rateofcustoms duty/zero customs dutysubject
toanexport obligation tobefulfilled overaperiod oftime.
1. DUTY EXEMPTION SCHEME
TheDuty Exemption Scheme isanimportant instrument forboosting exports. Asa
matter ofprocedural simplification, exporters canimport duty-free imported imports which
gointoexport products without resorting tothemechanism ofclaiming dutydrawback ata
laterstage. Thescheme ascontained inChapter VIIoftheExport-Import Policy, 1992-97,
hasbeenmodified andenlarged. Themodified Duty Exemption Scheme nowcovers the
following categories oflicences:
(i) Advance Licence;
(a) Value-Based Advance Licence;
(b) Quantity-Based Advance Licence;
(ii) Passbook Scheme;
(iii) Advance Intermediate Licence, value-based Advance Intermediate Licence; and
(iv) Special Imprest Licence.
Thebasisandconditions forissueofthesetypes oflicence vary. Hence licences issued
under onecategory cannot becombined withthose issued under another category. Duty-free
licences bearasuitable export obligation forthepurpose ofachieving theobjective ofthe
scheme. Thepurpose andscope ofthecategories oflicence mentioned above areasfollows:
(i) Advance Licences
AnAdvanceLicenceisgrantedfortheduty-freeimportofinputssubjecttothefulfilment
ofspecified time-bound export obligation andvalue addition. Advance Licences mayeither
bevalue based orquantity based.
(a) Value-Based Advance Licences
Under avalue-based advance licence, anyoftheinputs specified inthelicence
maybeimported within thetotalc.i.f. value indicated forthose inputs, except for
notified sensitive items. Thesensitive items maybeimported onlytotheextent of
thequantity orvalue specified inthelicence.G/LIC/N/3/IND/1
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(b) Quantity-Based Advance Licences
Thequantity-based advance licence willindicate thenames anddescription
ofitems tobeimported andexported, thequantity ofeachitemofimport orincase
where thequantity cannot beindicated thevalue oftheitems, thec.i.f.value ofimports
andquantity andf.o.b. value ofexports. Thequantity ofeachitemofimport shall
beallowed inaccordance withthestandard input-output norms asmentioned above
based onthequantity ofgoods tobeexported. Inrespect ofitems forwhich nonorms
existinthestatement ofstandard input-output norms, thequantitative norms maybe
approved bythecompetent authority. These licences aretransferable subject to
laid-down conditions.
(ii) Passbook Scheme
Thescheme hasbeenintroduced witheffect from1April 1995. Manufacturer exporters
andExportHouses/TradingHouses/StarTradingHouses/Super-StarTradingHousesareeligible
tomake applications under thisscheme tothedesignated authorities ineachoftheCustoms
Houses atDelhi, Bombay, Calcutta andMadras. Thescheme applies totheexport products
forwhich standard input-output norms havebeenpublished. Onexport ofgoods, thepassbook
holders become eligible forcredit equivalent tothebasic dutypayable ontheinputs usedfor
themanufacture oftherelevant export product. Thepassbook isvalid fortwoyears andthe
credit available therein canbeusedforaperiod ofthree years forpayment ofCustoms duty
onimport ofpermissible items.
(iii) Advance Intermediate Licence
Suchlicences arequantity based andareissued toregistered manufacturer exporters
forimport ofbasic inputs formanufacture andsupply ofintermediate products under atie-up
arrangement,toanothermanufacturer-exporter,calledtheultimateexporter,holdingtheAdvance
Licence, forfurther processing intothefinalproduct forexport. Theobjective ofthescheme
istointegrate theproduction activities ofthetwoindigenous manufacturers, withtheoptimum
utilization oftheindigenous infrastructure toachieve ahigher value addition. Imports are
allowed inaccordance withthestandard input-output norms asmentioned above.
(iv) Special Imprest Licence
TheSpecial Imprest Licence isgranted forduty-free import ofnecessary inputs to
main/sub-contractor forthemanufacture andsupply ofproducts toprojects financed by
multilateral orbilateral agencies/Funds asnotified bytheDepartment ofEconomic Affairs,
EOU/EPZ Units Electronic Hardware Technology Parks (EHTPs), fertilizer plants, anyproject
notified bytheMinistry ofFinance, Department ofEconomic Affairs andalsotosuchprojects
inthepower, oilandgassector towhich thebenefit isextended bytheMinistry ofFinance.
TheSpecial Imprest Licence isaquantity-based licence.
(v) Value-based Intermediate Licence
Steel producers supplying steel totheexporters ofengineering goods under the
EngineeringProductsExport(ReplenishmentofIronandSteelIntermediate)Schemeareeligible
tomakeapplicationsfortheselicences.Applicationscanbemadebothonproductionprogramme
basis inanticipation ofthesupply orders aswellasaftermaking thesupplies onthestrength
ofRelease Advices. After thesupplies havebeencompleted andtheDEEC Book redeemed,G/LIC/N/3/IND/1
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thelicences orthematerial imported thereunder canbetransferred among theproducers of
IronandSteel Intermediates.
Aduty-free licence-holder (including transferees) may, instead ofmaking imports,
alsoprocure therawmaterials etc., from indigenous sources through Advance Release
Order/Back-to-back inland letter ofcredit. TheAdvance Release Order isissued against
quantity-based licences aswellasvalue-based advance licences where thequantity oftheitem
hasbeenspecified.
2. DEEMED EXPORTS
Under thepolicy, theconcept ofdeemed exports cover those transactions inwhich
goods supplied donotleave thecountry, andthepayment forthegoods isreceived bythe
supplier inIndian Rupees butthesupplies earnorsaveforeign exchange forthecountry. There
areseven categories ofsupplies which aretreated asdeemed exports. Suchsupplies areeligible
forthefollowing benefits:
- Duty Exemption Scheme;
- Duty Drawback Scheme;
- Refund ofTerminal Excise Duty; and
- Special Import Licence @5percentoff.o.b. value ofsupplies made.
3. EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME
UndertheEPCGScheme,thepermittedcapitalgoodsmaybeimportedataconcessional
rateofcustoms dutyof15percentorthesamemaybesourced fromthedomestic manufacturers
subject toanexport obligation offourtimes thec.i.f. value ofimports. Thedomestic
manufacturers, permitted tosupply thecapital goods under thisscheme toanEPCG licence
holder, canalsoimport therequisite components ataconcessional rateofcustoms dutyof15
percent. Besides, thescheme isalsoavailable totheservice providers forrendering services
forwhich thepayments arereceived inafreely convertible currency. On1May1995, in
addition totheimport ataconcessional customs dutyof15percent,another window forthe
import ofcapital goods atzeroduty, against obligation ofsixtimes thevalue ofimports on
f.o.b. basis orfourtimes thevalue ofimports onN.F.E. basis tobedischarged inaperiod
ofeight years, hasbeenopened.
4. Theexporters ofspecified gemandjewellery products areeligible forgrant of
replenishment licences attherateandfortheitems mentioned intheExport andImport Policy
toimport andreplenish theirinputs. Such licences aretransferable.
ExportHouses/TradingHouses/StarTradingHouses/Super-StarTradingHouses(defined
asthose companies theexports ofwhich haveaveraged 10,50,250and750crores ornetforeign
exchange earnings of6,30,125and400crores inthepreceding three years andhavebeen
15,75,300and1,000 crores ornetforeign exchange earnings of12,60,150and600crores
intheprevious year) areentitled toSpecial Import Licences @4,5,6and11percentofthe
f.o.b. value ofexports made or6,8.5,11and16percentofnetforeign exchange earnings
onexports inthepreceding licensing year. OnepercentextraSILisalsopermitted toexporters
ofSSI,handloom andhandicraft products including hand-knotted carpets, silkproducts and
sports goods provided theexport oftheseproducts ismorethan50percentoftheirtotalexport.
TheExport andImport Policy isannounced atthebeginning ofeachfinancial year,
andisvalidforaspecified period. Thecurrent policy isvalid foraperiod offiveyears fromG/LIC/N/3/IND/1
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April 1992 toMarch 1997. TheHandbook ofProcedures isalsopublished simultaneously
indicating indetail theprocedures tobefollowed formaking applications forimport licences.
Export andImport Policy andtheHandbook ofProcedures arepriced publications.
Theamounts ofimports tobemade fromdifferent countries arenotpublished inthe
Import Policy Book. Imports areallowed from allcountries oftheworld except Fiji,Iraq,
Serbia andMontenegro.
II. Asalready indicated, aquota system forrestricting imports doesnotexistinIndia.
Theimport policy isvalid foraspecified period. Under thecurrent policy, import ofallitems other
thanthose covered bytheNegative ListofImports orbyanyother lawisallowed freely.
III. Thisquestion isalsorelevant onlyincases where aquota system ismaintained and
isnotapplicable tothesystem operative inIndia.
Theitems appearing intheNegative ListofImports oftheExport andImport Policy (other
thanthose imports which areprohibited orcanalized) maybeallowed against Specific Import Licences
orinaccordance withthePublic Notice issued forthispurpose. Suchitems aresubject toActual User
Conditions1unless thiscondition isspecifically dispensed with.
IV. Asalready stated, India doesnothavequota restrictions onimports.
V. Thetime-limit forprocessing various types ofapplication varies anditmaybebetween
twoand30days.
VI. Import licences, wherever required, areissued withaspecified period ofvalidity for
shipment ofgoods. Itisuptotheimporter toimport goods anytimeduring thevalidity period of
theimport licence. Generally, thegoods should beshipped from theexporting country, onlyafter
theimport licence isissued, andlicences cannot ordinarily begranted forthegoods which havealready
arrived attheport.
VII. ImportapplicationsaresubmittedtotheOfficeoftheDirector-GeneralofForeignTrade,
NewDelhi oritsregional offices, asthecasemaybe.Thepractice ofrouting licence applications
through thesponsoring authorities hasbeendispensed with. Such applications arenowconsidered
byaSpecial Licensing Committee, wherever necessary, constituted forthispurpose.
VIII. There arenoquota restrictions. Allitems except those covered bytheNegative List
ofImports canbeimported without anyrestriction. Items appearing intheNegative List(other than
those imports which areprohibited orcanalized) maybeimported against Specific Licences orin
accordance withthePublic Notice issued forthispurpose.
IX. Atpresent,noimportsintoIndiaarebeingmadeunderbilateralquotasorexportrestraint
arrangements.
X. Asstated inIX,noimports aremade intoindia onthebasis ofexport permits.
1Actual User Conditions: capital goods, rawmaterials, intermediates, components, consumables, spares,
parts, accessories, instruments andother goods, which areimportable without anyrestriction, maybeimported
byanyperson whether heisanActual User ornot.However, ifsuchimports require alicence, theActual User
alonecanimportsuchgoodsunlesstheActualUserConditionisspecificallydispensedwithbyalicensingauthority.G/LIC/N/3/IND/1
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XI. Against export ofgemandjewellery items, theitems required inthemanufacture of
export products areallowed forimport. Similarly, under theExport Promotion Capital Goods (EPCG)
Scheme,capitalgoodsmaybeimportedataconcessionalrateofcustomsdutysubjecttoexportobligation
tobefulfilled overaperiod oftime.
7. Animporter must obtain animport licence before shipment ofthegoods from theoverseas
country. However, ingenuine cases goods shipped before theissue ofanimport licence butafter
submission oftheconnected import application, canbeallowed tobecleared bytheCustoms.
Licences aregranted asperprovisions contained intheExport andImport Policy inforce.
Within theframework ofthepolicy, theissue ofalicence canbeexpedited tomeetexigencies.
Applications forimport licences aretobesubmitted by28February ofthelicensing yearending
on31March unless otherwise specified.
8. Thelicensing authority mayrefuse togrant animport licence:
(i) iftheapplicant hascontravened anylawrelating tocustoms orforeign exchange;
(ii) ifithasbeendecided bytheCentral Government tocanalize imports anddistribution
thereof through special orspecialized agencies;
(iii) ifanyaction against theapplicant ispending under theForeign Trade (Development
andRegulation) Act,1992, orrules andorders made thereunder;
(iv) iftheapplicant failstopayanypenalty imposed onhimunder thesaidAct;
(v) iftheapplicant isnoteligible foralicence inaccordance withanyprovisions ofthe
Export andImport Policy; and
(vi) ifnoforeign exchange isavailable forthepurpose.
Thereasons forrefusal aregenerally given totheapplicant.
ELIGIBILITY OFIMPORTERS TOAPPLY FOR LICENCE
9. Inthecaseofimports requiring licences, alleligible persons, firms andinstitutions canapply.
DOCUMENTATIONALANDOTHERREQUIREMENTSFORAPPLICATIONFORLICENCE
10. Asample form forimport ofrestricted items isattached.2Thisform indicates thetypeof
information andthedocuments normally required forprocessing theapplication. Thisispublished
intheHandbook ofExport andImport Procedures.
11. Thedocuments required upon actual importation are,besides theimport licence:
- shipping documents;
- commercial invoices; and
- ifrequired, certificates oforigin.
2Available forconsultation intheSecretariat (Market Access Division).G/LIC/N/3/IND/1
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12. Feesarecharged onapplication forlicences according tothevalue ofimports tobemade.
Thepresent ratesare:Rs200where thevalue doesnotexceed Rs50,000, andRs2forevery Rs1,000
orpartthereof, subject toamaximum ofRs1.5lakh(where thevalue exceeds Rs1Crore).
13. There isnodeposit oradvance payment requirement associated withtheissueofimport licences.
CONDITIONS OFLICENSING
14. Animport licence shallnormally beendorsed withaperiod ofvalidity of12months. However,
alicence forimport ofcapital goods shallnormally beendorsed withaperiod ofvalidity of24months.
Thelicence mayberevalidated onmerits forsuchperiods asthelicensing authority maydeem fit.
15. No.
16. Replenishment Licences issued toexporters ofallspecified gemandjewellery products are
freely transferable. Inaddition, theAdvance Licences issued under theDutyExemption Scheme except
Special Imprest Licences andIntermediate Advance Licences canalsobetransferred afterthelicence
holder hasfulfilled theexport obligation.
17. Thefollowing conditions areapplicable toimport licences:
(i) importlicencesarenotnormallytransferable,exceptReplenishmentLicencesandSpecial
Import Licences;
(ii) thegoods covered bythelicence shallnotbedisposed ofexcept inaccordance with
theprovisions ofthepolicy orinthemanner specified bythelicensing authority in
thelicence;
(iii) thegoods forimport ofwhich alicence isgranted shallbetheproperty ofthelicensee
atthetimeofimport anduptothetimeofclearance through Customs;
(iv) thegoods fortheimport ofwhich alicence isgranted shallbenewgoods, unless
otherwise stated inthelicence;
(v) unless otherwise specified, therawmaterials, components andspares imported shall
beusedonlyinthelicence holder 'sfactory. These maybeprocessed inthefactory
ofanother manufacturing unit,butnoportion thereof shallbesoldtoanyparty. The
goods soprocessed shallbeutilized inthemanufacturing process undertaken bythe
licensee.
OTHER PROCEDURAL REQUIREMENTS
18. No.
19. Foreign exchange isprovided bytheauthorized dealers inforeign exchange forimport ofgoods.
Only forimport ofitems appearing intheNegative ListofImports, animport licence isrequired by
theauthorized dealers inforeign exchange. Normal banking procedures apply forobtaining theforeign
exchange.