DGFT as a Facilitator of Exports

Students are the best resource for any teacher. He keeps himself updated as his students share their experiences with him without fear. As a teacher of International Trade, my experience is no different.

Another interesting aspect is that most of my students are in the field of International Trade and hence are in touch with government offices like DGFT, Customs etc. Over the period of the last 15 months, there has been increased frustration on account of redemption of various authorisations, particularly Advance Authorisation. Looking at the despair in their eyes, I have thought of explaining the factual details of Advance Authorisation cases. And my observations are as under:

When I studied two Monthly MIS Reports on Export Promotion Schemes (May 2023 & January 2024) from the Ministry of Commerce and Industry. I noted a few interesting things.

Note: The data for Advanced Authorisation and EPCG Scheme of Mumbai RA has not been received; therefore, June 2023 data has been used

The regional office of DGFT Mumbai has unredeemed cases totaling 8,968 with an export obligation value of 4,45,254 crores. The total number of unredeemed cases reported by all 24 offices of DGFT is 36,833 with an export obligation value of 7,73,291 crores.

Authorisations issued:

Mumbai DGFT has issued 26.58% of total authorisations simultaneously are responsible for monitoring of 55.10% of total export obligation value covered under authorisations issued across India.

Unredeemed:

Mumbai DGFT has 24.35% of total unredeemed cases (57.58% of total export obligation value under duty exemption scheme).

In short, the pendency of unredeemed cases is really huge at Mumbai DGFT level. While there may be several reasons for not redeeming the cases like shortage of staff, shortage of authorized officers etc. etc. the impact on the exporting community is far too difficult to accept. The prime reasons for serious impact is on account of:

a) Getting the name of the company in Denied Entity List (DEL)

b) Receiving show cause notices for unredeemed authorisations from custom authorities

c) Demanding 100% Bank Guarantee for future clearances against current and valid Advance Authorisations

(Even if you are a 2 star/3 star/4 star export house, bank guarantee is being demanded)

This being the case, redemption of cases where export obligation has already been completed should be done on a top priority basis. In practice, a lot of my students have complained that their cases are pending even when redemption application was filed 6 months back.

When I look at the current export status (April 2023 – January 2024) the merchandise export is less by $18.18 billion when compared to same period last year (as per latest press release of Ministry of Commerce).

When entire documentary requirements for redemption are online, why is the pendency so large? If there is shortage of officers, then the government should come out with automatic redemption based on the actual data covered by specific authorisation. Shipping Bill, Bill of Entry and BRCs are available online. Exporters can submit comparative statement as per approved norms, supported by CA Certificate including payment of duty and interest if any. On the basis of such a submission, redemption should be given. Government can take additional declaration from the exporter that in case something is found wrong, government will take necessary action.

When we have a target of 1000 billion exports, we need to work on effective solutions. Entry into the denied entity list discourages genuine exporter. Not only this, it also reflects adversely on his reputation with other agencies like banks, ECGC etc. etc.

In addition, my students fear losing their job because of failure to get redemption.

I expect DGFT as a facilitator should take serious note of the above facts and should ensure maximum pending cases are closed before 31st March 2024.

Your views are welcome.

Sudhakar Kasture