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DGFT issues notification to introduce amendments to simplify export under advance authorisation scheme
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Shardul Nautiyal, Mumbai
August 26 , 2024
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In a significant step to bolster the ease of doing business and reduce regulatory hurdles for the pharmaceutical industry, the Directorate General of Foreign Trade (DGFT) has issued a notification to introduce crucial amendments to Chapter 4 of the Handbook of Procedures, 2023, aimed at simplifying export procedures for pharmaceutical manufacturers and exporters operating under the advance authorisation scheme.
The amendments, effective immediately, are part of the government’s ongoing initiative to reduce the compliance burden on exporters, particularly in industries dealing with complex regulatory requirements such as pharmaceuticals. By easing documentation requirements and offering greater flexibility in re-export provisions, the revised guidelines seek to streamline operations and foster a more business-friendly environment in India.
Key Amendments to Chapter 4 of the Handbook of Procedures includes broader acceptance of shipping bills.
The previous rule mandated exporters to provide a Destruction Certificate for unutilized imported material. Now, under the new amendment, all types of shipping bills—whether free or otherwise—can be submitted in lieu of the Destruction Certificate, provided the unutilized materials have been exported after the expiry of the Export Obligation period.
The earlier guidelines required exporters to re-export any unutilized materials to the same supplier to avoid penalties. The amendment has now eliminated this requirement. Exporters can now re-export the unutilized materials without the obligation to return them to the same supplier, offering greater flexibility and reducing logistical complications.
The new amendments offer a waiver of Destruction Certificate. Exporters who fail to fully utilize imported materials under the Advance Authorisation Scheme can now avoid the submission of a Destruction Certificate if they export the remaining quantity. This waiver is applicable as long as the exact description and technical characteristics of the exported drug match the specifications of the item described in the Advance Authorisation. However, exporters must still pay applicable customs duties and interest on any unutilized materials.
This move will ensure enhanced compliance measures. Despite the removal of some burdensome requirements, the government maintains safeguards to ensure compliance with customs regulations. Exporters will continue to be held accountable for any unutilized duty-free materials that are not destroyed or re-exported in accordance with the revised guidelines.
The pharmaceutical sector has long faced regulatory challenges, particularly concerning the handling of duty-free imported materials under the Advance Authorisation Scheme. With these amendments, the government aims to alleviate some of the industry's operational constraints.
Santosh Kumar Sarangi, director general, DGFT and Ex-Officio additional secretary to the Government of India, stated, “These amendments are part of a broader initiative to simplify export processes and reduce the compliance burden on businesses, enabling them to focus on growth and innovation. The changes are particularly relevant to exporters dealing with pharmaceuticals and chemicals, where regulatory compliance has historically been cumbersome and time-consuming.”
The pharmaceutical sector, which contributes significantly to India's export economy, is expected to benefit from these amendments. Exporters now have more flexibility in managing their imported materials, reducing costs and time associated with regulatory compliance. The amendments also offer relief to exporters who previously faced penalties for not fully utilizing imported materials by providing more pragmatic re-export options.
This announcement marks another effort by the ministry of commerce and industry to support the growth of Indian exporters by aligning regulations with modern business practices. The focus on reducing compliance burden and improving the ease of doing business is expected to have far-reaching impacts on India’s export economy, particularly in a high-growth sector like pharmaceuticals.
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