Did you know about Import for Export?

Import for Export – norms of freely movable goods given by the FTP

Did you know about Import for Export?
We can export goods that we have imported in same or in substantially same form provided they fall under the norms of freely movable goods given by the FTP.
These are useful for Indian traders when fulfilling conditions.

# How these are useful for Indian traders?

Let’s take an example of an organic clothing company. The company sells organic cotton clothes inside the country as well as across borders. Due to technological constraints, the company manufactures the clothes in Korea and import them to India and then after packaging and branding them they sell them. This provided following benefits :

Taxpayer can claim a refund in GST in the following scenarios :

Achieving economies of scales by saving on technology and labour for manufacturing.
Achieving world class standards in the manufacturing process.
And by selling the goods outside the country, the trader is also earning foreign currency.

# Conditions for such exports -

Goods imported, in accordance with FTP, may be exported in same or substantially the same form without an Authorisation provided that item to be imported or exported is not restricted for import or export in ITC (HS).
Goods, including capital goods (both new and second hand), may be imported for export provided:
1. Importer clears goods under Customs Bond;
2. Goods are freely exportable, i.e., are not “Restricted”/ “Prohibited”/ subject to “exclusive trading through State Trading Enterprises” or any conditionality/ requirement as may be required under Schedule 2 – Export Policy of the ITC (HS);
3. Export is against freely Convertible currency.
Goods in (b) above will include ‘Restricted’ goods for import (except ‘Prohibited’ items).
Capital goods, which are freely importable and freely exportable, may be imported for export on execution of LUT/BG with Customs Authority.
1. Goods imported against payment in freely convertible currency would be permitted for export only against payment in freely convertible currency, unless otherwise notified by DGFT.
2. Export of such goods to the notified countries (presently only Iran) would be permitted against payment in Indian Rupees, subject to minimum 15% value addition.
3. However, re-export of food, medicine and medical equipment, namely, items covered under ITC(HS) Chapters 2 to 4, 7 to 11, 15 to 21, 23, 30 and items under headings 9018, 9019, 9020, 9021 & 9022 of Chapter-90 of ITC(HS) will not be subject to minimum value addition requirement for export to Iran. Exports of these items to Iran shall, however, be subject to all other conditions of FTP 2015-20 and ITC (HS) 2012, as applicable. Bird’s eggs covered under ITC (HS) 0407 & 0408 and Rice covered under ITC (HS) 1006 are not covered under this dispensation, as at II (a) above.
4. Exports under this dispensation, as at II(b) and (c) above shall not be eligible for any export incentives.

We understand that the plethora of conditions and rules mentioned along with complex definitions are difficult to comprehend all at once. Hence, we at Bizbrains are always available to resolve your queries and doubts, however big or small

For more content and updates follow us on LinkedIn, Twitter and Facebook; our handle is Bizbrains Advisors. Get a heads up on various schemes on export-import activity and let us know your thoughts in comment section!