Deemed Exports – an equalizer for Indian manufacturers

The objective of the scheme is to provide a level field for Indian manufacturers. Let us understand this by an example: An exporter of fine jewellery makes $500,000 of foreign exchange by exporting jewellery items to USA and Canada. Now, he uses precise instruments manufactured and designed by some Indian manufacturer. The manufacturer is upset that the exporter is getting all the incentives and appreciation by the government while he is getting nothing and so, he asks the government to recognise and value his contribution in providing foreign currency to the govt by aiding the jeweller and by reducing cost of import of precise instruments. To value the contributions of such manufacturers and organisations, the concept of Deemed exports was introduced.

1. Deemed Exports” refers to supplies of goods manufactured in India (and not services) which are notified as deemed exports under Section 147 of the CGST/SGST Act, 2017. The supplies do not leave India. The payment for such supplies is received either in Indian rupees or in convertible foreign exchange.
2. Deemed Exports” for the purpose of this FTP refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as specified in Paragraph 7.02 below shall be regarded as “Deemed Exports” provided goods are manufactured in India.

1. Supply of goods against Advance Authorisation / Advance Authorisation for annual requirement /DFIA
2. Supply of goods to EOU / STP / EHTP /BTP
3. Supply of capital goods against EPCG Authorisation
4. Supply of goods to projects financed by multilateral or bilateral Agencies / Funds as notified by Department of Economic Affairs (DEA), MoF, where legal agreements provide for tender evaluation without including customs duty.
5. Supply and installation of goods and equipment (single responsibility of turnkey contracts) to projects financed by multilateral or bilateral Agencies/Funds as notified by Department of Economic Affairs (DEA), MoF.

1. Advance Authorisation / Advance Authorisation for annual requirement /DFIA.
2. Deemed Export Drawback.
3. Refund of terminal excise duty for excisable goods :

1. Supplies shall be made directly to entities listed in the Para 7.02. Third party supply shall not be eligible for benefits/exemption.
2. In all cases, supplies shall be made directly to the designated Projects/ Agencies/ Units/ Advance Authorisation/ EPCG Authorisation holder. Sub-contractors may, however, make supplies to main contractor instead of supplying directly to designated Projects/ Agencies. Payments in such cases shall be made to sub-contractor by main-contractor and not by project Authority.
3. Supply of domestically manufactured goods by an Indian Sub- contractor to any Indian or foreign main contractor, directly at the designated project’s/ Agency’s site, shall also be eligible for deemed export benefit provided name of sub-contractor is indicated either originally or subsequently (but before the date of supply of such goods) in the main contract. In such cases payment shall be made directly to sub-contractor by the Project Authority.
4. Steel manufacturers supplying steel against Advance Authorization, through their Service Centers/ Distributors/ Dealers/ Stock yards, shall also be eligible to claim duty drawback provided such supplies.