Exports and Imports free unless regulated	2.1		Exports and Imports shall be free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. The item wise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time.
Compliance with Laws	2.2		Every exporter or importer shall comply with the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Rules and Orders made thereunder, the provisions of this Policy and the terms and conditions of any licence/certificate/permission granted to him, as well as provisions of any other law for the time being in force. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless the shipment parcel is accompanied by Kimberley Process (KP) Certificate required under the procedure specified by the Gem & Jewellery Export Promotion Council (GJEPC).
Interpretation of Policy	2.3		If any question or doubt arises in respect of the interpretation of any provision contained in this Policy, or regarding the classification of any item in the ITC(HS) or Handbook (Vol.1) or Handbook (Vol.2), or Schedule Of DEPB Rate the said question or doubt shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding. If any question or doubt arises whether a licence/ certificate/permission has been issued in accordance with this Policy or if any question or doubt arises touching upon the scope and content of such documents, the same shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding.
Procedure	2.4		The Director General of Foreign Trade may, in any case or class of cases, specify the procedure to be followed by an exporter or importer or by any licensing or any other competent authority for the purpose of implementing the provisions of the Act, the Rules and the Orders made thereunder and this Policy. Such procedures shall be included in the Handbook (Vol.1), Handbook (Vol.2), Schedule of DEPB Rate and in ITC(HS) and published by means of a Public Notice. Such procedures may, in like manner, be amended from time to time. The Handbook (Vol.1) is a supplement to the Foreign Trade Policy and contains relevant procedures and other details. The procedure of availing benefits under various schemes of the Policy are given in the Handbook (Vol.1).
Exemption from Policy/ Procedure	2.5		Any request for relaxation of the provisions of this Policy or of any procedure, on the ground that there is genuine hardship to the applicant or that a strict application of the Policy or the procedure is likely to have an adverse impact on trade, may be made to the Director General of Foreign Trade for such relief as may be necessary. The Director General of Foreign Trade may pass such orders or grant such relaxation or relief, as he may deem fit and proper. The Director General of Foreign Trade may, in public interest, exempt any person or class or category of persons from any provision of this Policy or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting Advance Licensing Committee (ALC) if the request is in respect of a provision of Chapter-4 (excluding any provision relating to Gem & Jewellery sector) and EPCG Committee if the request is in respect of a provision of Chapter-5 of the Policy/ Procedure. However, any such request in respect of a provision other than Chapter-4, Chapter-5 and Gem & Jewellery sector as given above may be considered only after consulting Policy Relaxation Committee.
Principles of Restriction	2.6		DGFT may, through a notification, adopt and enforce any measure necessary for:-
			i	Protection of public morals.
			ii	Protection of human, animal or plant life or health.
			iii	Protection of patents, trademarks and copyrights and the prevention of deceptive practices.
			iv	Prevention of use of prison labour.
			v	Protection of national treasures of artistic, historic or archaeological value.
			vi	Conservation of exhaustible natural resources.
			vii	Protection of trade of fissionable material or material from which they are derived; and
			viii	Prevention of traffic in arms, ammunition and implements of war.
Restricted Goods	2.7		Any goods, the export or import of which is restricted under ITC(HS) may be exported or imported only in accordance with a licence/ certificate/ permission or a public notice issued in this behalf.
Terms and Conditions of a Licence/ Certificate/ Permission	2.8		Every licence/certificate/permission shall be valid for the period of validity specified in the licence/ certificate/ permission and shall contain such terms and conditions as may be specified by the licensing authority which may include:
			(a)		The quantity, description and value of the goods;
			(b)		Actual User condition;
			(c)		Export obligation;
			(d)		The value addition to be achieved; and
			(e)		The minimum export price.
Licence/ Certificate/ Permission not a Right	2.9		No person may claim a licence/certificate/ permission as a right and the Director General of Foreign Trade or the licensing authority shall have the power to refuse to grant or renew a licence/certificate/permission in accordance with the provisions of the Act and the Rules made there under.
Penalty	2.10		If a licence/certificate/permission holder violates any condition of the licence/certificate/ permission or fails to fulfill the export obligation, he shall be liable for action in accordance with the Act, the Rules and Orders made there under, the Policy and any other law for the time being in force.
State Trading	2.11		Any goods, the import or export of which is governed through exclusive or special privileges granted to State Trading Enterprise(s), may be imported or exported by the State Trading Enterprise(s) as specified in the ITC(HS) Book subject to the conditions specified therein. The Director General of Foreign Trade may, however, grant a licence/certificate/permission to any other person to import or export any of these goods.  In respect of goods the import or export of which is governed through exclusive or special privileges granted to State Trading Enterprise(s), the State Trading Enterprise(s) shall make any such purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale. These enterprises shall act in a non discriminatory manner and shall afford the enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales.
Importer-Exporter Code Number	2.12		No export or import shall be made by any person without an Importer-Exporter Code (IEC) number unless specifically exempted. An Importer-Exporter Code (IEC) number shall be granted on application by the competent authority in accordance with the procedure specified in the Handbook (Vol.1).
Trade with Neighbouring Countries	2.13		The Director General of Foreign Trade may issue, from time to time, such instructions or frame such schemes as may be required to promote trade and strengthen economic ties with neighbouring countries.
Transit Facility	2.14		Transit of goods through India from or to countries adjacent to India shall be regulated in accordance with the bilateral treaties between India and those countries and will be subject to such restrictions as may be specified by DGFT in accordance with International Conventions.
Trade with Russia under Debt-Repayment Agreement	2.15		In the case of trade with Russia under the Debt Repayment Agreement, the Director General of Foreign Trade may issue, from time to time, such instructions or frame such schemes as may be required, and anything contained in this Policy, in so far as it is inconsistent with such instructions or schemes, shall not apply.
Actual User Condition	2.16		Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, which are importable without any restriction, may be imported by any person.  However, if such imports require a licence/ certificate/permission, the actual user alone may import such goods unless the actual user condition is specifically dispensed with by the licensing authority.
Second Hand Goods	2.17		All second hand goods, excepting second hand capital goods, shall be restricted for imports and may be imported only in accordance with the provisions of this Policy, ITC(HS), Handbook (Vol.1), Public Notice or a licence/certificate/permission issued in this behalf.  Import of second hand capital goods, including refurbished/ reconditioned spares, shall be allowed freely.
Import of samples	2.18		Import of samples shall be governed by the provisions given in Handbook (Vol.1).
Import of Gifts	2.19		Import of gifts shall be permitted where such goods are otherwise freely importable under this Policy. In other cases, a Customs Clearance Permit (CCP) shall be required from the DGFT.
Passenger Baggage	2.20		Bonafide household goods and personal effects may be imported as part of passenger baggage as per the limits, terms and conditions thereof in the Baggage Rules notified by the Ministry of Finance.  Samples of such items that are otherwise freely importable under this Policy may also be imported as part of passenger baggage without a licence/certificate/permission.  Exporters coming from abroad are also allowed to import drawings, patterns, labels, price tags, buttons, belts, trimming and embellishments required for export, as part of their passenger baggage without a licence/certificate/permission.
Import on Export basis	2.21		New or second hand capital goods, equipments, components, parts and accessories, containers meant for packing of goods for exports, jigs, fixtures, dies and moulds http://dgftcom.nic.in/exim/2000/not/not02/not0302.htm may be imported for export without a licence/certificate/permission on execution of Legal Undertaking/Bank Guarantee with the Customs Authorities provided that the item is freely exportable without any conditionality/requirement of licence/ permission as may be required under ITC(HS) Schedule II.
Re-import of goods repaired abroad	2.22		Capital goods, equipments, components, parts and accessories, whether imported or indigenous, except those restricted under ITC (HS) may be sent abroad for repairs, testing, quality improvement or upgradation or standardization of technology and re-imported without a licence/certificate/permission.
Import of goods used in projects abroad	2.23		After completion of the projects abroad, project contractors may import, without a licence/ certificate/ permission, used goods including capital goods provided they have been used for at least one year.
Sale on High Seas	2.24		Sale of goods on high seas for import into India may be made subject to this Policy or any other law for the time being in force.
Import under Lease Financing	2.25		Permission of licensing authority is not required for import of new capital goods under lease financing.
Clearance of Goods from Customs	2.26		The goods already imported/shipped/arrived, in advance, but not cleared from Customs may also be cleared against the licence/ certificate/ permission issued subsequently.
Execution of BG/ LUT	2.27		Wherever any duty free import is allowed or where otherwise specifically stated, the importer shall execute a Legal Undertaking (LUT)/Bank Guarantee (BG)/ Bond with the Customs Authority before clearance of goods through the Customs, in the manner as may be prescribed. In case of indigenous sourcing, the licence/ certificate/ permission holder shall furnish LUT / BG / Bond to the licensing authority before sourcing the material from the indigenous supplier/nominated agency.
Exemption from Bank Guarantee	2.27.1		All the exporters who have an export turnover of at least Rupees 5 crore in the current or preceding licencing year and have a good track record of three years of exports will be exempted from furnishing a BG for any of the schemes under this Policy and may furnish a LUT in lieu of BG.
Private/ Public Bonded Warehouses for Imports	2.28		Private/Public bonded warehouses may be set up in the Domestic Tariff Area as per the terms and conditions of notification issued by Department of Revenue. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and warehouse them in such private/public bonded warehouses. Such goods may be cleared for home consumption in accordance with the provisions of this Policy and against Licence/certificate/ permission, wherever required. Customs duty as applicable shall be paid at the time of clearance of such goods. If such goods are not cleared for home consumption within a period of one year or such extended period as the custom authorities may permit, the importer of such goods shall re-export the goods.
Free Exports	2.29		All goods may be exported without any restriction except to the extent such exports are regulated by ITC(HS) or any other provision of this Policy or any other law for the time being in force. The Director General of Foreign Trade may, however, specify through a public notice such terms and conditions according to which any goods, not included in the ITC(HS), may be exported without a licence/ certificate/ permission.
Export of Samples	2.30		Export of samples and Free of charge goods shall be governed by the provisions given in Handbook (Vol.1).
Export of Passenger Baggage	2.31		Bonafide personal baggage may be exported either along with the passenger or, if unaccompanied, within one year before or after the passenger's departure from India. However, items mentioned as Restricted in ITC(HS) shall require a licence/certificate/permission.
Export of Gifts	2.32		Goods, including edible items, of value not exceeding Rs.5,00,000/- in a licensing year, may be exported as a gift. However, items mentioned as restricted for exports in ITC(HS) shall not be exported as a gift, without a licence/certificate/permission.
Export of Spares	2.33		Warranty spares, whether indigenous or imported, of plant, equipment, machinery, automobiles or any other goods, except those restricted under ITC (HS), may be exported along with the main equipment or subsequently but within the contracted warranty period of such goods subject to approval of RBI.
Third Party Exports	2.34		Third party exports, as defined in Chapter 9 shall be allowed under the Policy.
Export of Imported Goods	2.35		Goods imported, in accordance with this Policy, may be exported in the same or substantially the same form without a licence/certificate/permission provided that the item to be imported or exported is not mentioned as restricted for import or export in the ITC(HS). Exports of such goods imported against payment in freely convertible currency would be permitted against payment in freely convertible currency.
	2.36		Goods, including those mentioned as restricted item for import (except prohibited items) may be imported under Customs Bond for export in freely convertible currency without a licence/ certificate/ permission provided that the item is freely exportable without any conditionality/ requirement of licence/permission as may be required under ITC (HS) Schedule II.
Export of Replacement Goods	2.37		Goods or parts thereof on being exported and found defective/damaged or otherwise unfit for use may be replaced free of charge by the exporter and such goods shall be allowed clearance by the customs authorities provided that the replacement goods are not mentioned as restricted items for exports in ITC(HS).
Export of Repaired Goods	2.38		Goods or parts, except restricted under ITC (HS), thereof on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shall be allowed clearance without a licence/ certificate/permission and in accordance with customs notification issued in this behalf.
Private Bonded Warehouses for Exports	2.39		Private bonded warehouses exclusively for exports may be set up in DTA as per the terms and conditions of the notifications issued by Department of Revenue. Such warehouses shall be entitled to procure the goods from domestic manufacturers without payment of duty. The supplies made by a domestic supplier to the notified warehouses shall be treated as physical exports provided the payments for the same are made in free foreign exchange.
Denomination of Export Contracts	2.40		All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but the export proceeds shall be realised in freely convertible currency. However export proceeds against specific exports may also be realized in rupees provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of ACU or Nepal or Bhutan. Additionally, the rupee payment through the Vostro account must be against payment in free foreign currency by the buyer in his non resident bank account. The free foreign exchange remitted by the buyer to his non resident bank (after deducting the bank service charges) on account of this transaction would be taken as the export realization under the export promotion schemes of this Policy. Contracts for which payments are received through the Asian Clearing Union (ACU) shall be denominated in ACU Dollar. The Central Government may relax the provisions of this paragraph in appropriate cases. Export contracts and Invoices can be denominated in Indian rupees against EXIM Bank/ Government of India line of credit.
Realisation of Export Proceeds	2.41		If an exporter fails to realise the export proceeds within the time specified by the Reserve Bank of India, he shall, without prejudice to any liability or penalty under any law for the time being in force, be liable to action in accordance with the provisions of the Act, the Rules and Orders made there under and the provisions of this Policy.
Free movement of export goods	2.42		Consignments of items meant for exports shall not be withheld /delayed for any reason by any agency of the Central/State Government. In case of any doubt, the authorities concerned may ask for an undertaking from the exporter.
No seizure of Stock	2.42.1		No seizure of stock shall be made by any agency so as to disrupt the manufacturing activity and delivery schedule of export goods. In exceptional cases, the concerned agency may seize the stock on the basis of prima facie evidence. However, such seizure should be lifted within 7 days.
Export Promotion Councils	2.43		The basic objective of Export Promotion Councils is to promote and develop the exports of the country. Each Council is responsible for the promotion of a particular group of products, projects and services. The list of the councils, and their main functions are given in Handbook (Vol.1).
Registration -cum-Membership Certificate	2.44		Any person, applying for (i) a licence/ certificate/ permission to import/ export, [except items listed as restricted items in ITC(HS)] or (ii) any other benefit or concession under this policy shall be required to furnish Registration-cum-Membership Certificate (RCMC) granted by the competent authority in accordance with the procedure specified in the Handbook (Vol.1) unless specifically exempted under the Policy.
	2.45		Deleted
Trade Facilitation through EDI Initiatives	2.45.1		It is endeavor of the Government to work towards greater simplification, standardization and harmonization of trade documents using international best practices. As a step in this direction DGFT shall move towards an automated environment for electronic filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community partners including Customs and Banks.
DGCI&S Commercial Trade Data	2.45.2		To enable the users to make commercial decisions in a more professional manner, DGCI&S trade data shall be made available with a minimum time lag in a query based structured format on a commercial criteria.
Fiscal Incentives to promote EDI Initiatives adoption	2.45.3		With a view to promote the use of Information Technology, DGFT will provide fiscal incentives to the user community. The details are enumerated in the Handbook (Vol.I).
Regularization of EO default and settlement of customs duty and interest through Settlement Commission	2.46		With a view to providing assistance to firms who have defaulted under the Foreign Trade Policy for reasons beyond their control as also facilitating the merger, acquisition and rehabilitation of sick units, it has been decided to empower the Settlement Commission in the Central Board of Excise and Customs to decide such cases also with effect from 01.04.2005.
	2.47		Deleted.
Remission of Service Tax in DTA	2.48.1		For all goods and services which are exported from units in Domestic Tariff Area (DTA) and units in EOU/EHTP/STP/BTP remission of service tax levied shall be allowed.
Exemption from Service Tax in SEZ	2.48.2		Units in SEZ shall be exempted from service tax.
GRIEVANCE REDRESSAL
DGFT as a facilitator of exports/ imports	2.49		DGFT has a commitment to function as a facilitator of exports and imports. Our focus is on good governance, which depends on clean, transparent and accountable delivery systems.
Citizen’s Charter	2.49.1		DGFT has in place a Citizen’s Charter which lays down its commitment to serve importers and exporters. It also gives time schedules for providing services to clients, and details of grievance committees at different levels.
Grievance Redressal Mechanism	2.49.2		In order to facilitate speedy redressal of grievances of trade and industry, a new grievance redressal mechanism has been put in place by a Government Resolution.  The Government is committed to resolving all outstanding problems and disputes pertaining to the past policy periods through the Grievance Redressal Committee set up on 27.10.2004, for condoning delays, regularizing breaches by exporters in bonafide cases, resolving disputes over entitlements, granting extensions for utilization of licences etc.
	2.49.3		Deleted