The Hindu Business Line : `Third-party exports eligible for DTA sale entitlement'

Under third-party exports, goods manufactured by an EOU are directly sent to a port for export even though a third party obtained the order. In such cases, the foreign exchange is realised in the name of the third party.

New Delhi , Sept. 14

Export-oriented units are eligible to get domestic tariff area (DTA) sale entitlement on exports made through third parties, the Directorate-General of Foreign Trade (DGFT) has said.

This would imply that third-party exports could be counted for arriving at the 50 per cent entitlement available to EOUs for DTA sales. The foreign trade policy allows EOUs, other than those in gems and jewellery sector, to sell goods up to 50 per cent of f.o.b. value of exports in the DTA at a concessional duty.

As the foreign trade procedures specify that export entitlements would accrue to the exporter in whose name foreign exchange earnings are realised, a clarification was sought as to whether exports made by EOUs through third party would be eligible for DTA sale entitlement or not.

The Government has also partially restored a benefit that was available prior to April 2006 to EOUs and units in electronic hardware technology parks and software technology parks.

It has said that supplies made in DTA against foreign exchange remittance received from overseas would be counted for the purpose of fulfilment of net foreign exchange (NFE).

Prior to this year's annual supplement to the foreign trade policy, supplies in DTA against forex remittances from overseas as well as payments from exchange earners' foreign currency (EEFC) account were counted for NFE fulfilment.

This benefit was scrapped in this year's annual supplement.

Faced with representations from EOUs, the Government has now allowed supplies made in DTA against forex remittances received from overseas to be counted for NFE fulfilment.

It has, however, not allowed a similar benefit in respect of payments received from EEFC accounts as the Reserve Bank of India had certain reservations on allowing such a facility.

Citing an example, Mr L.B. Singhal, Director-General of Export Promotion Council for EOUs and SEZs told Business Line that book publishers had raised an issue with Government in the open houses conducted by the Council in Kolkata and Chennai.

The publishers said that they had shifted investments to India when this benefit was available and with its removal, their operations would be impacted.

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