Introduction
Imports into India and exports from India, especially of dual use items, are strictly regulated under the laws of India. This is to ensure compliance with global mandates acceded to by India.
Dual use items are items which, though used regularly for civilian purposes, could also be of use for military application. Internationally, numerous arrangements/agreements are in place to ensure that such items capable of dual use do not end up being used for the wrong purposes.
India has come a long way in aligning itself with global export control regimes. As a member of the Missile Technology Control Regime, the Wassenaar Arrangement, and the Australia Group, and by harmonizing its policies with the Nuclear Suppliers Group, India has shown its commitment to non-proliferation. One of the key obligations under the UN Security Council Resolution 1540 is to ensure that non-state actors, particularly those involved in terrorism, do not get access to weapons of mass destruction ('WMDs') or their delivery systems. In line with these global norms, India has set up a legal and procedural framework for regulating the export of dual-use items, including sensitive technology and software.
As India seeks to enhance its exports multi-fold in the coming years, care must be exercised to ensure that export compliance is not compromised.
Legal framework governing export of dual-use exports
The export of dual-use goods and related technologies is primarily governed by two key legislations in India:
* Chapter IVA of the Foreign Trade (Development and Regulation) Act, 1992 ('FTDR Act')
* The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 ('WMD Act')
The WMD Act is an act to prohibit unlawful activities, in relation to weapons of mass destruction and their delivery systems.1 It is a law of very wide significance and regulates any and all dealings with weapons of mass destruction including, but not limited to, export of WMD.
FTDR Act's control on dual use applies specifically for goods being exported from India. While there might be an overlap between the goods covered under the FTDR Act and WMD Act, there are also goods covered under only 1 of the two laws.
In this Article we will focus on the restrictions on export of dual use goods under the FTDR Act.
SCOMET list & Catch All Controls
Foreign Trade Policy 20232 ('FTP') and the Handbook of Procedures3 ('HBP') have been issued under the FTDR Act. They provide detailed guidelines on the export of dual-use items through the SCOMET4 (Special Chemicals, Organisms, Materials, Equipment and Technologies) list. The SCOMET list, notified under Appendix 3 to Schedule 2 of the ITC (HS), lays out items that are either prohibited for export or can be exported only with specific authorization.
Other than the Dual Use items listed under SCOMET, export of non-listed Dual Use items is also regulated under the Catch all Control ('CAC') provisions under FTP/FTDR Act and the WMD Act. Under CAC, items not listed in SCOMET List also can be subject to export restriction/prohibition. As per Para 10.05 of FTP, the CAC provision is triggered only in the following scenarios:
1. The exporter has been notified in writing by the DGFT; or
2. The exporter 'knows' or 'has reason to believe' that an item not covered in the SCOMET list has a 'potential risk of use' in or diversion to weapons of mass destruction or in their missile system or military end use (including by terrorists and non-state actors).
Thus, apart from a positive list of goods, through CAC, the ambit of regulation has been made very wide. Even knowledge, suspicion of potential capability of misuse of the item in question is sufficient for the SCOMET to apply. Thus, exporters are expected to be highly vigilant and act with integrity.
Why is Export Control Compliance crucial?
Non-compliance with export control regulations under the FTDR Act can lead to serious legal consequences. Exporters may face:
* Confiscation as well as imposition of penalties under the Customs Act, 19625.
* Suspension or cancellation of their Import-Export Code as well as confiscation of goods under the FTDR Act6;
* Imposition of penalty under the FTDR Act7.
The Role of Internal Compliance Programs
Considering the implications of non-compliance with the above-mentioned legal provisions, the need for exporters proactively assessing the nature of their goods and ensuring that proper internal checks are in place becomes important, especially in respect of the unlisted Dual use items. This is where the role of Internal Compliance Program ('ICP') becomes relevant. The ICP concept stems from the best practice guidelines under the Wassenaar Arrangement, which encourages member states to promote internal compliance mechanisms among exporters. The idea is simple: if exporters build strong internal systems to assess and manage export risks, the chances of unintentional violations go down drastically.
In India, the FTP includes a Voluntary Self-Disclosure ('VSD') provision (para 10.11), which allows exporters to come forward in case they discover that export control provisions of the FTDR Act, Customs Act, or any SCOMET regulation have not been complied with. The DGFT, via Public Notice No. 40/2024-24 dated 15 January 2025, has clarified that if an exporter has implemented or improved their ICP, it may be taken as a mitigating factor when deciding penalties or corrective actions. In fact, the VSD form (Appendix 100) requires a self-certified copy of the company's ICP or that of the parent company, if applicable.
What makes a good ICP?
The DGFT has laid out some key elements for an effective ICP8. These include:
* Defined internal responsibilities and oversight
* Procedures for export screening
* Pre-shipment verification and controls
* Regular internal audits or reviews
* Ongoing training for staff
* Clear documentation and record-keeping
* Systems for self-reporting and corrective actions
Of course, how these elements are implemented will depend on the company's size, structure, product lines, and customer base. A small exporter will have a very different setup from a multinational company, but the principles remain the same.
Mandatory ICP for General Authorization Schemes
An ICP is now mandatory for certain export schemes. These include:
* Global Authorization for Inter-Company Transfers (GAICT)
* General Authorization for Export of Drones (GAED)
* Telecommunication (GAET)
* Information Security items (GAEIS)
* Open General Export License (OGEL) under the Department of Defence Production (DDP)
These schemes are designed to make the export process faster and easier by allowing blanket approvals for multiple shipments, typically valid for 2–3 years. But having an ICP is a pre-condition.
Conclusion
An ICP is the need of the hour for the exporters in India to safeguard themselves from consequences of any non-compliance under the export control regime. Ramping up their ICP will ensure that the export shipments are not withheld by customs. This will in turn help them to safeguard their commercial interests, i.e. adhere to the timelines as agreed upon with the other party and ensure fulfillment of contractual obligations, thereby promoting goodwill for timely delivery of Indian products in international market
Also, India's push for indigenous manufacturing under 'Make in India' and 'Aatmanirbhar Bharat' can only succeed if our regulatory framework supports it. That means giving exporters clarity, reducing red tape, and helping them comply rather than penalizing honest mistakes. The DGFT's formal recognition of ICPs is a step in the right direction. It gives exporters a structured way to comply with the law, avoid inadvertent violations, and keep their business running smoothly. In that sense, ICPs are not just a legal requirement but they are a strategic tool. Strict and utmost compliance with the law will ensure higher regard for Indian goods among the international customers, who will now be able to confidently purchase 'Made in India' goods, while being certain that all necessary regulatory approvals have been complied with.
Footnotes
1. Preamble to WMD Act
2. Chapter 10 of the FTP formulated under Section 5 of the FTDR Act
3. Chapter 10 of the HBP; HBP has been notified under Para 1.03 of the FTP.
4. Para 11.50 of the FTP defines 'SCOMET' as 'SCOMET' is the nomenclature for dual use items of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). Export of dual-use items and technologies under India's FTP is regulated. It is either prohibited or is permitted under an Authorisation.
5. Sections 113 and 114, the Customs Act, 1962
6. Sections 14D, 11(8) of FTDR Act
7. Sections 11(2) and 11(3) of FTDR Act
8. Handbook on India's
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