The Directorate General of Foreign Trade (DGFT) issued a clarification on Monday, September 23, regarding the import of spices under the Duty-Free Import Authorisation (DFIA) scheme. According to the DGFT’s policy circular, spices (such as pepper, cardamom, ginger, garlic, etc) are ineligible for import under the DFIA scheme.
Key points of the clarification:
1) All spices, regardless of their intended use (such as flavouring agents), are included under Serial no. 1 of Appendix 4J.
2) Any item listed in Appendix 4J is subject to pre-import conditions.
3) DFIAs cannot be issued for inputs subject to pre-import conditions or where Standard Input Output Norms (SION) prescribe ‘Actual User’ conditions, as per paragraph 4.26(iv) of the Foreign Trade Policy-2023.
What is Serial no. 1 of Appendix 4J?
Serial no. 1 of Appendix 4J categorises spices into sub-categories with different export obligation periods (EOPs) for advance authorisations based on specific uses such as value addition or manufacturing spice oils and oleoresins.
S no. 1(a) specifies the export obligation period for pepper, cardamom, chilies when used for value addition (e.g. crushing, grinding, sterilisation) or for the manufacture of oils and oleoresins.
S no. 1(b) specifies the export obligation period for spices other than pepper/cardamom/ chilies, for the manufacture of spice oils, oleoresins.
S no. 1(c) specifies the export obligation period for all other categories of spices not covered under (a) or (b).
What does the clarification imply?
1) Exporters and importers cannot use DFIA for importing spices regardless of their intended use.
2) Regional authorities are advised to ensure strict compliance while processing DFIA applications to avoid discrepancies.
3) The DGFT’s clarification also emphasises adhering to the Foreign Trade Policy-2023 and Appendix 4J guidelines to avoid penalties or trade disruptions.
What is the DFIA scheme?
The Duty Free Import Authorisation (DFIA) scheme allows Indian exporters to import inputs , raw materials, fuel, catalysts, and other necessary items duty-free to manufacture export products.
The scheme provides a significant cost advantage, which makes Indian goods more competitive in the global market. It reduces the cost of inputs and enables the transferability of the authorisation or imported materials after export obligations are met.
