1 Trade agreements
1.1 Which bilateral, regional and multilateral trade agreements have effect in your jurisdiction?
India is a long-serving member of the World Trade Organization and recognises the strategic value of international trade as a powerful avenue for economic and strategic cooperation. India's objective of economic integration is facilitated through the following types of trade arrangements:
|Preferential trade agreements||
|Free trade agreements||
|Comprehensive economic cooperation agreements||
|Comprehensive economic partnership agreements||
In addition, India is a signatory to:
- a unilateral Duty-Free Tariff Preference Scheme with 35 least developed countries (eg, Cambodia, Tanzania, Bangladesh); and
- the Agreement on Global System of Trade Preference Among Developing Countries (April 1998).
Pursuant to these agreements, India has enacted domestic laws (ie, rules under the Customs Tariff Act 1975) under which import duty benefits are provided to eligible goods, subject to origin requirements, imported from partner countries.
1.2 Which authorities are responsible for the negotiation of trade agreements? What does this process typically involve and how long does it take?
The Department of Commerce (DoC), functioning under the aegis of the Ministry of Commerce and Industry, is responsible for increasing India's international trade. The DoC initiates, negotiates and administratively coordinates the recognition of trade agreements under domestic law.
Typically, the process involves meetings between the DoC and representatives of the counterparty nations, who form committees/working groups to discuss various trade-related issues, such as:
- agreed tariff lines;
- frameworks for tariff reduction or elimination; and
- origin rules.
The DoC also undertakes stakeholder consultations and invites comments, suggestions and representations from relevant stakeholders to take informed positions. This process has no specific timeline and the urgency is determined by the pace of the principal negotiation. In the last few years, DoC has shown urgency and has executed early harvest agreements while negotiating the definitive agreement.
1.3 Do interim provisions apply while new trade agreements are under negotiation?
India executes interim trade agreements in the form of early harvest agreements; however, these agreements do not come into effect until the enactment of domestic legislation by the government. Without such domestic recognition, the interim arrangement is not effective and is only for the countries to abide by.
2 Customs and imports
2.1 What laws and regulations govern customs in your jurisdiction?
The Customs Act 1962, read with the Customs Tariff Act and the Foreign Trade (Development and Regulation) Act 1992 (FTDR Act') (and the rules, regulations, notifications and orders issued thereunder), governs the customs administration in India.
As India is a signatory to the International Convention on the Harmonized Commodity Description and Coding System 1983, it has adopted the Indian Trade Classification (Harmonised System) 2022 (ITC(HS)). Imports are made in accordance with the ITC(HS) based import policy prescribed under Schedule 1 appended to the Foreign Trade Policy 2015-2020 (FTP) framed under the FTDR Act (‘Import Policy'). Import duties are levied depending on the ITC(HS) classification of goods provided under the First Schedule appended to the Customs Tariff Act (‘Import Tariff').
2.2 Which authority is responsible for enforcing the customs regulations? What powers does it have?
The Central Board of Indirect Taxes and Customs (CBIC) (previously known as the Central Board of Excise & Customs), which operates as part of the Department of Revenue under the Ministry of Finance, is the nodal enforcement body for customs in India. CBIC is responsible for the formulation and implementation of policies concerning the levy and collection of customs duties, central excise duties and goods and services tax (GST). CBIC is the apex administrative authority and controls the customs administration. The commissioners of customs, operating under the administrative control of CBIC, have extensive statutorily defined administrative, judicial and enforcement powers, including police powers. The commissioners monitor the following, among other things:
- imports and exports;
- tax policies;
- taxpayer services;
- compliance management; and
2.3 What is the authority's general approach to enforcing the customs regulations? How vigorously are the rules enforced?
The customs laws are strictly and vigorously enforced, including compliance vis-à-vis domestic regulatory laws. The customs administration takes a proactive approach towards revenue collection, assessment, valuation and compliance with import conditions, and all activities are closely monitored.
2.4 What customs import tariffs and duties apply in your jurisdiction? How are they levied?
The Customs Tariff Act provides the statutory basis for the levy of customs duties. The average import duty imposed on goods in India is 42.78%, which comprises:
- basic customs duty;
- integrated GST; and
- social welfare surcharge.
Additional levies, cesses and surcharges (eg, countervailing duties, anti-dumping duties, safeguard duties, national calamity and contingent duties, GST compensation cess, agriculture and infrastructure development cess) are further imposed on specified goods as may be notified.
2.5 What types of preferential tariffs are available in your jurisdiction? What are the criteria for eligibility?
Preferential tariffs agreed under the respective trade arrangements are incorporated into domestic law under the Customs Tariff Act, which is available on the import of eligible products, subject to compliance with origin criteria. The preferential tariff may be either a nil rate of customs duty or a concessional rate of customs duty.
In addition to the specific rules on trade agreements, India has implemented the Customs (Administration of Rules of Origin under Trade Agreements) Rules 2020 (CAROTAR), which require importers to follow specified procedures pertaining to origin criteria, the issuance and submission of a certificate of origin and corroborative information. CAROTAR also:
- provides for verification to be undertaken in a timely manner; and
- sets out the actions which may be undertaken if the subject goods do not meet the origin criteria, such as denial of benefit of preferential rate, imposition of penalty and initiation of proceedings for prosecution.
2.6 Are tariffs applied to safeguard national security?
India does not apply or impose tariffs for national security reasons. If the import of any product may be considered detrimental to national security, the import is simply prohibited. For example, India has banned the import of 5G equipment and parts thereof originating in China on the grounds of national security.
2.7 What import controls and restrictions apply in your jurisdiction? What exemptions are available?
Imports are strictly regulated in accordance with the Import Policy and the Import Tariff (see question 2.1). Generally, the import of products is categorised under the following categories:
- Prohibited: Items which are not permitted to be imported.
- Restricted: Imports permitted under an import licence/authorisation/permit granted by the Office of the Director General Foreign Trade (DGFT).
- State trading enterprises (STEs): Imports allowed only through specified STEs subject to specific conditions laid out in the Foreign Trade Policy.
- Free: Imports which do not require any licence/authorisation/permit from the DGFT.
The Import Policy also provides prohibitions/restrictions prescribed under other Indian regulatory laws to be complied with.
The exemptions from import duties are usually conditional and are granted based on:
- the ITC(HS) classification of the product;
- usage; or
- the status of the importer (eg, educational institutions, research institutions).
Exemptions are granted only for a specified period.
2.8 How are customs and import decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?
The adjudication process under the Customs Act is bifurcated into two stages:
- the quasi-judicial stage, which begins from the level of the commissioners of customs and their subordinate officers and continues to the level of the Customs Excise and Service Tax Appellate Tribunal (CESTAT); and
- the judicial stage, which begins with CESTAT, proceeds to the jurisdictional high court and ends at the Supreme Court of India.
The adjudication mechanism provides for statutory timelines within which adjudication must be initiated and completed.
The key differences between the adjudication stages are as follows:
- At the initial level, the dispute is adjudicated by the customs commissioner or any officer subordinate to the commissioner, commonly known as the ‘adjudicating authority'.
- An order of the adjudicating authority may be appealed to the customs commissioner (appeals) or CESTAT, depending on the quantum of duty.
- An order of CESTAT may be appealed to either the high court or the Supreme Court, depending on the issue involved. An appeal can be brought to the Supreme Court only if the dispute pertains to classification or valuation of goods; for all other matters, the appeal must be brought before the high court.
- A decision of the high court may be appealed to the Supreme Court.
The timelines are as follows.
|Authority passing the order||Appeal to||Period for filing appeal|
|Assistant/deputy commissioner||Commissioner (Appeals)||60 days, not exceeding 90 days|
|Customs commissioner||CESTAT||120 days|
|Customs commissioner (appeals)||CESTAT||120 days|
|CESTAT||High court||180 days|
|CESTAT (classification or valuation issue)||Supreme Court||60 days|
|High court||Supreme Court||60 days|
An alternative channel for the resolution of disputes without prolonged litigation is through the Customs & Central Excise Settlement Commission. This commission can only be approached once and provides an exemption from criminal prosecution. In addition, a writ remedy is also available to aggrieved persons against customs decisions, especially in case of a violation of the principles of natural justice.
2.9 What penalties are imposed for breach of the customs rules?
The penalties for breach of customs provisions are contingent on the violation committed. Broadly, the penalties are invoked in three situations:
- Possession of good liable for confiscation: Anyone that is in possession of goods which have been imported in violation of any import condition is liable for payment of customs duty, interest and a penalty of up to five times the value of the goods.
- Non-payment or short payment of customs duty: If a person does not discharge the applicable customs duty, it will be liable to pay a penalty equal to the duty so determined. Further, in case of any mis-statement or suppression of facts, a penalty of up to five times the value of goods can be imposed.
- Unspecified offences: Violations of any provisions which have no specific penalty prescribed attract a fixed penalty of INR 400,000 for each violation.
Apart from levying penalties, Customs is also empowered to initiate a criminal prosecution, which can result in imprisonment for up to seven years.
3.1 What export controls and restrictions apply in your jurisdiction? What exemptions are available?
Similar to imports, exports are cumulatively governed under the Foreign Trade (Development and Regulation) Act and the Foreign Trade Policy 2015-2020 (FTP) issued thereunder, read with the Customs Act and the Customs Tariff Act. Exports are made in accordance with the Indian Trade Classification (Harmonised System) 2022 (ITC(HS)) based export policy prescribed under Schedule 2 appended to the FTP (‘Export Policy'); and export duties are levied depending on the ITC (HS) classification of goods provided under the Second Schedule appended to the Customs Tariff Act (‘Export Tariff').
The Export Policy classifies products into three categories, based on the ITC(HS) classification and the classification under the special/sensitive categories of products:
- Free: Exports allowed without restriction.
- Restricted: Exports allowed, subject to procurement of the relevant registration/licence/authorisation.
- Prohibited: Exports not allowed.
Similar to imports, as per the Export Policy, exports must comply with other regulatory laws as may apply, such as:
- the Explosive Substances Act 1908;
- the Narcotic Drugs and Psychotropic Substances Act 1985;
- the Environment Protection Act 1986;
- the Atomic Energy Act 1962; and
- the Arms Act 1959 and the Arms Rules 1962.
As India is a signatory to major multilateral export control regimes (eg, the Missile Technology Control Regime, the Wassenaar Arrangement and the Australia Group) and international conventions on non-proliferation (eg, the Chemical Weapons Convention and the Biological and Toxic Weapons Convention), the export of sensitive/special materials included on the list of "Special Chemicals, Organisms, Materials, Equipment and Technologies" under the FTP (‘SCOMET List') is restricted. The SCOMET List assigns goods to eight broad categories, which are further subdivided based on the use, technical and functional features of the product. The export of goods covered under the SCOMET List requires a mandatory licence/authorisation for export issued by the relevant user ministry.
The duties applicable to the export of goods are provided under the Second Schedule appended to the Customs Tariff Act (‘Export Tariff'). The export duty for most goods is nil rated and imposed only on a few types of goods, such as coffee, tea, specified spices and specified rice varieties.
3.2 Which authority is responsible for enforcing the export controls? What powers does it have?
Exports are cumulatively governed by the Directorate General of Foreign Trade (DGFT) and Indian Customs.
3.3 What is the authority's general approach to enforcing the export controls? How vigorously are the rules enforced?
The DGFT, along with the customs administration, closely monitors and vigorously enforces trade in export control goods, such as SCOMET items, to prevent their use for illegitimate purposes.
3.4 How are export decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?
The procedure to challenge any export decision is governed under the specific law under which the decision was passed (eg, the Customs Act or the Foreign Trade (Development and Regulation) Act (‘FTDR Act')). The procedure to be followed under the Customs Act is similar to the procedure and stages for imports (see question 2.8).
If a decision has been made specifically on a violation of the FTDR Act or the rules or regulations made thereunder, the adjudication stages are as follows:
- At the initial stage, the dispute is heard either by the DGFT or by any other officer under its delegation.
- An appeal will lie with either:
- the central government, where the order was passed by the DGFT; or
- the DGFT, where the order was passed by any officer below the DGFT.
- Any challenge to the order passed at the appellate stage may be preferred by way of a writ petition before the jurisdictional high court or the Supreme Court.
The central government also has the power to review an order passed by the DGFT.
3.5 What penalties are imposed for breach of export controls?
Violations of export controls are cumulatively governed under the FTDR Act and the Customs Act. An exporter that violates or contravenes the laws may be subject to:
- cancellation/suspension of its importer-exporter code;
- refusal to grant or renew a licence, or cancellation or refusal of a certificate, scrip or any other instrument bestowing financial or fiscal benefit;
- a fine of up to five times the value of the goods;
- proceedings for the confiscation of goods, if they have not crossed the customs border; and
- criminal prosecution for imprisonment of the offender for up to seven years, with or without a fine.
In case of violation of the conditions applicable to products covered under the SCOMET List, the penal implications (imprisonment) provided under the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act 2005 may also apply. Further, punitive proceedings under foreign exchange laws may also be initiated.
4 Trade remedies
4.1 What laws and regulations govern trade remedies in your jurisdiction?
India imposes trade remedies as tariff measures in the form of anti-dumping duties (ADDs), safeguard duties (SGDs) and countervailing duties (CVDs) on imported goods, under Section 12 of the Customs Act read with Sections 8B, 9 and 9A of the Customs Tariff Act and the following subsidiary laws:
- the Customs Tariff (Identification and Assessment of Safeguard Measures) Rules 1997;
- the Customs Tariff (Transitional Product Specific Safeguard Duty) Rules 2002;
- the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules 1995; and
- the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules 1995.
Trade remedies also extend with respect to trade agreements and are enforced through the following rules:
- the India-Singapore Trade Agreement (Safeguard Measures) Rules 2009;
- the India-Association of Southeast Asian Nations Trade in Goods Agreement (Safeguard Measures) Rules, 2016;
- the India-Malaysia Comprehensive Economic Cooperation Agreement (Bilateral Safeguard Measures) Rules 2017; and
- the India-Japan Comprehensive Economic Partnership Agreement (Bilateral Safeguard Measures) Rules 2017.
In addition, India can impose safeguard measures by way of quantitative restrictions under the Foreign Trade (Development and Regulation) Act read with the Safeguard Measures (Quantitative Restrictions) Rules 2012.
4.2 Which authority is responsible for enforcing the trade remedy regulations? What powers does it have?
The Directorate General of Trade Remedies (DGTR), functioning under the aegis of the Department of Commerce and the Ministry of Commerce and Industry, conducts trade remedy investigations (ie, investigations to determine the need to impose ADDs, SGD and CVDs). The DGTR is a recommending authority and the final decision is issued by the Ministry of Finance.
4.3 What is the authority's general approach to enforcing the trade remedy regulations? How vigorously are the rules enforced?
Based on the DGTR's recommendation, the Ministry of Finance imposes trade remedy measures by issuing a notification. These measures take the form of a levy (ADDs, CVDs or SGDs), which is strictly applied. The Ministry of Finance has the authority to reject the DGTR's recommendation by not enforcing the relevant remedial measures. The recommendations are usually implemented, although there have been instances in which the ministry has not implemented the DGTR's recommendations.
4.4 How is a trade remedy action initiated in your jurisdiction and on what grounds? Can the authority initiate an action ex officio?
ADDs and CVDs: The domestic industry files an application requesting the initiation of an original investigation and a sunset review investigation) as provided under the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules 1995 and the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules. Exporters and importers are permitted to initiate:
- mid-term reviews;
- anti-absorption reviews; and
- anti-circumvention investigations.
New exporters (in an investigation that has already concluded) are permitted to seek a new shipper review.
SDGs: The domestic industry can initiate an original investigation, as per the Customs Tariff (Identification and Assessment of Safeguard Measures) Rules. Mid-term reviews are also permitted for cases where SGDs are imposed for more than three years.
In exceptional cases, the DGTR may initiate an investigation itself, based on information received from Customs.
From a process perspective, the application filed by or on behalf of the domestic industry must:
- be representative of the Indian industry; and
- meet a market share of at least 25%.
The application must also include the following details:
- a detailed description and customs classification of the product under consideration;
- the period of investigation and the corresponding injury period. The injury analysis period must be at least 120 days prior to the date of application;
- details of like articles produced by the domestic industry;
- a list of other interested parties (eg, exporters, importers, users, registered associations and other Indian producers);
- details of the domestic industry and the Indian industry as a whole;
- information on imports and segregation methodology;
- information on normal value, export price and dumping margins or evidence of subsidies;
- details of material injury suffered by the domestic injury and a causal link between imports and injury; and
- details of any threat of material injury and the likelihood of recurrence/continuation of the dumped/subsidised imports.
4.5 What does the action typically involve and how long does it take?
On receiving an application, the DGTR scrutinises the application and, if approved, an investigation is initiated and an initiation notification is issued. At the time of issuance of the initiation notification, all known interested parties – including the respective embassies of the exporting countries – are informed of the investigation.
In the case of CVD investigations, a consultation process is undertaken with the subject countries and an investigation is initiated if the consultation fails. In case of anti-circumvention investigations, the DGTR is statutorily bound to inform the country being investigated in advance.
Post initiation of an investigation by the DGTR, the broad framework of the investigation process and the relevant timelines are as follows:
- Interested parties have 37 days from the date of initiation to provide responses.
- The DGTR verifies the data and processes of the parties, which is followed by an oral hearing. Subsequent to the hearings, participants must submit their submissions in writing. Only submissions of interested parties are entertained, which must be submitted in response to the questionnaire.
- The preliminary findings are typically issued within 100 days of initiation and may include recommendation to impose duties by the Ministry of Finance.
- In the final stage of the investigation, a disclosure statement is issued and all parties must submit their comments. Subsequent to assessment of the comments received from the parties, the DGTR issues its final findings as follows:
- Original/mid-term review/anti-circumvention/anti-absorption investigations: Within 12 months of the date of initiation.
- Sunset review investigations: Within 12 months of the date of initiation and up to three months prior to expiry of the duties.
- Safeguard investigations: Within eight months of the date of initiation.
If the DGTR's findings and the recommendations are accepted by the Ministry of Finance, it will issue an imposition notification for the concerned levy. This notification must be published within three months of the date of publication of the final findings.
4.6 How can interested parties defend against a trade remedy action in your jurisdiction?
The initiation notification is shared with known exporters and importers, and the embassies of the concerned countries. All interested parties are given 37 days from the date of initiation to confirm their participation and submit their responses to the questionnaire. The extension of timelines is at the DGTR's discretion. Exporters are also given an opportunity to present their facts during oral hearings and provide comments on the disclosure statement prior to issuance of the final findings.
4.7 How are trade remedy decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?
An aggrieved party may file an appeal before the Customs Excise and Service Tax Appellate Tribunal within 90 days of the date of acceptance or rejection by the Ministry of Finance. An appeal can be filed to dispute the existence, degree and effect of injury determined by the DGTR; each appeal is evaluated on merits and decided accordingly. The timeframe for final adjudication of the appeal will depend on the facts and issues involved; there is no statutorily defined period within which an appeal must be decided.
4.8 What strategies should be considered to ensure compliance with a trade remedy decision? What penalties are imposed for non-compliance?
Compliance with trade remedy orders is strictly monitored by Customs. In case of any deviation from practice, process or work undertaken during the life of the investigation, the same should be duly informed to the DGTR along with sufficient cause or economic justification.
Practices such as the transhipment of goods and circumvention to escape CVDs, ADDs or SGDs are not permitted. Therefore, importers which attract these levies must mandatorily comply with and pay the applicable duties. Should the exporter/importer attempt to circumvent duties in any manner, this will be investigated by the DGTR; a positive conclusion of circumvention may lead to the retrospective imposition of duties.
Importers may consider altering their procurement sources and may import either from:
- a different country (on which the levy has not been imposed); or
- a different exporter from the same country if a lower duty has been imposed on that exporter.
However, in both cases, imports will be allowed subject to the satisfaction of Customs concerning the compliance with applicable laws, including the valuations norms and origin criteria, which are strictly monitored and enforced.
5 Trade barriers
5.1 What laws and regulations govern trade barriers in your jurisdiction?
Trade barriers can take the form of tariff measures and non-tariff measures. Tariff measures include increases in the rate of levies or the imposition of additional levies under the Customs Act read with the Customs Tariff Act. Non-tariff measures pertain to the requirements prescribed under other Indian laws, such as regulatory laws (ie, laws dealing with subject matter such as food safety, consumer protection, defence, drugs and cosmetics or telecommunications). These requirements (eg, licence, registration, authorisation) are deemed to be incorporated as policy conditions under the prevailing Foreign Trade Policy 2015-2020.
5.2 Which authority is responsible for enforcing the trade barrier regulations? What powers does it have?
The Directorate General of Foreign Trade (DGFT), the Central Board of Indirect Taxes and Customs (CBIC) and regulatory authorities work closely to supervise and monitor the import/export trade and ensure compliance with trade barriers (tariffs or otherwise). Each authority has extensive statutorily defined administrative, judicial and enforcement powers.
5.3 What is the authority's general approach to enforcing the trade barrier regulations? How vigorously are the rules enforced?
There is strict and vigorous enforcement of the trade barriers through compliance and monitoring vis-à-vis domestic regulatory laws. The DGFT, CBIC and the officers appointed under the regulatory laws adopt a proactive approach.
5.4 How is a trade barrier action initiated in your jurisdiction and on what grounds?
The decision to impose trade barriers is undertaken by the executive wing, in consultation with the relevant user ministries and departments. Tariff-based trade barriers are enacted through amendments to the customs laws, while non-tariff barriers are implemented through executive instruments enacted under delegated powers. Trade barriers can be imposed due to political, retaliatory or national security reasons.
5.5 What does the action typically involve and how long does it take?
Trade barriers have:
- immediate effect in the case of increased tariffs; and
- either immediate or delayed effect in the case of compliance requirements.
For example, where the import of product must meet quality standards, 12 months of advance notice is given in order to ensure compliance.
5.6 What measures can the authority take against a foreign trade barrier?
In responding to unwarranted foreign trade barriers, the Indian government may impose retaliatory trade barriers to restrict imports and exports to and from the foreign nation. These also include actions in the form of sanctions and embargos. Typically, based on the product and the national and international circumstances surrounding a product, the following types of trade barriers are imposed:
- tariff trade barriers – that is, the imposition of retaliatory tariffs (eg, India imposed retaliatory tariffs on certain goods originating from the United States in response to increased tariffs imposed by the United States on Indian origin steel and aluminium products); and
- non-tariff trade barriers – that is, the imposition of qualitative and quantitative restrictions and conditions such as licence, quota or certification requirements on imports or export of specified products, (eg, mandatory licence/registration for the import of specified food products, medical devices and wireless equipment).
India may also choose to follow the World Trade Organization (WTO) dispute resolution process. Traditionally, a dispute can be raised before the WTO Panel, whose decision can be appealed to the WTO Appellate Body. The government may also resort to non-traditional channels such as mutually agreed solutions or arbitration, as per Articles 5 and 25 of the Dispute Settlement Understanding Agreement, respectively.
These actions may be initiated either suo moto or based on representations from members of the trade affected by such foreign trade barriers.
5.7 What non-tariff trade barriers are imposed in your jurisdiction?
Non-tariff trade barriers can take the form of imposition of qualitative and quantitative restrictions and conditions such as licences, quotas or certification requirements on the import or export of specified products. Compliance with these conditions is managed by Customs at the time of import or export, either directly or through regulating authorities appointed for this purpose. Examples of such measures include the following:
- Bureau of Indian Standards (BIS) registration and certification are mandatory for the import of products which are covered under the BIS compulsory registration scheme;
- Registration under the metrology laws is required for the import of pre-packed commodities;
- Licences under the food safety laws are mandatory for the import of specified categories of food products;
- Wireless licences under the telecommunications laws are mandatory for the import of wireless equipment;
- Licences for the import of specified drugs, cosmetics and medical devices are mandatory under the drugs and cosmetics laws; and
- Licences for the import of specified categories of arms and ammunition are required as per the arms and munitions laws.
6.1 What laws and regulations govern sanctions in your jurisdiction?
Currently, India does not prohibit the import or export of goods based on trade or economic sanctions imposed by the United States or the European Union; it only recognises sanctions imposed under the United Nations (Security Council) Act 1947 (UNSCA).
Under the UNSCA, India is authorised to take any measures to give effect to any decision of the UN Security Council. While India does not have a specific legislative framework that implements sanctions in general, it does utilise different frameworks to implement different types of sanctions. For example:
- the Unlawful Activities Prevention Act 1967 grants powers to authorities to prevent, monitor and report suspected and identified unlawful activities;
- the Indian Ministry of Home Affairs (MHA) has issued the Prevention and Suppression of Terrorism (Implementation of Security Council Resolutions) Order 2007, pursuant to which the MHA has notified a list of individuals, groups and organisations which are suspected of being terrorist organisations. This list is also amended by the Indian Ministry of External Affairs (MEA) from time to time; and
- India also utilises the framework under the Foreign Trade (Development and Regulation) Act 1992 and the Foreign Exchange Management Act 1999 to restrict trade with specified countries or people based on the statutory framework framed thereunder.
6.2 Which authority is responsible for enforcing the sanctions regulations? What powers does it have?
India does not have a designated authority that is responsible for enforcing sanctions. The Directorate General of Foreign Trade (DGFT) is responsible for enforcing sanctions issued vide the Foreign Trade Policy 2015-2020 (FTP); and the MHA and the MEA are generally responsible for regulating sanctions against specific sanctioned persons under UN Security Council regulations.
6.3 What is the authority's general approach to enforcing the sanctions regulations? How vigorously are the rules enforced?
Given the crucial role that sanctions regime plays in international geopolitics and diplomacy, the implementing and monitoring authority addresses breaches vigorously.
6.4 What countries are currently subject to sanctions in your jurisdiction?
As yet, India has not imposed any sanctions against any specific country. In consonance with the resolutions passed by the United Nations Security Council, India prohibits the import and export of specified goods (eg, oil or refined oil products, arms and defence vehicles, modular refineries and related materials) to and from the following countries:
- the Islamic State in Iraq and the Levant (ISIL also known as Daesh);
- the Al Nusrah Front and other individuals, groups, undertakings and entities associated with Al Qaida;
- the Democratic People's Republic of Korea;
- Iran; and
6.5 Are individuals or companies subject to sanctions in your jurisdiction?
India has not imposed any sanctions on any specific individuals or companies. However, the DGFT is authorised to initiate action against persons and to include their names on the Denied Entity List. The DGFT will decide to do so based on guidelines framed by it, which provide the following grounds for inclusion, among others:
- breach of any law relating to customs, the FTP or foreign exchange;
- the incorrect or false submission of details in any applications, including documents submitted in support; and
- wrongful or fraudulent claim of benefits.
6.6 How are sanction decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?
As there is no specialised legislative framework dealing with sanctions in India, there is no general procedure for challenging the same. If the imposed action is connected to a specific statute, the remedies available in that statute may be sought by the aggrieved person. Constitutional remedies may also be invoked under the general law.
6.7 What strategies should be considered to ensure compliance with a sanction decision? What penalties are imposed for non-compliance?
Thorough and effective due diligence is advisable to ensure compliance with a sanction decision. Failure to comply with a sanction decision will make the entity liable for penalties under the laws that govern sanctions. Further, it should be ensured that when undertaking trade in any goods, materials or technology, the supply chain does not cross or interlink with countries and/or companies on which sanctions have been imposed, as in such case the company undertaking such an exercise is also liable to be sanctioned.
7 Trends and predictions
7.1 How would you describe the current legal landscape and prevailing trends affecting international trade in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms or the negotiation of new trade agreements?
Indian trade and fiscal policies seek to encourage the development of domestic manufacturing industries, in order to eliminate import dependencies. Accordingly, the Indian government has undertaken various measures to protect the domestic manufacturing industry.
On the customs front, periodical rate rationalisations for goods in various sectors have been undertaken to discourage the import of such goods (eg, edible products; mineral and fuel-based products; chemicals; textile products; information technology, electronics and renewable energy sector products). Further, the government has established the Manufacturing and Other Operations in a Customs Bonded Warehouse Scheme, with the aim of providing a competitive advantage to India as a manufacturing hub. Under this scheme, an enterprise can import goods with deferred customs duty and zero interest liability to manufacture goods in the customs bonded warehouse, with no investment threshold or export obligation applicable in this regard.
8 Tips and traps
8.1 What are your top tips for ensuring compliance with the regulatory framework for international trade and what potential sticking points would you highlight?
Companies should undertake thorough due diligence to ascertain the conditions which apply to their imports and under the prevailing laws and ensure strict compliance with those laws. They should also undertake regular health checks and audits for their supply chain and its operations, to identify recent changes in law and the associated implications.
Vikram Naik and Raarah Gurjar contributed to this Guide.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.