Thursday, March 29, 2018,

An inordinate delay in fixation of ad-hoc norms by Norms Committee in Director-General of Foreign Trade (DGFT) and its rectification has hampered fulfillment of export obligation of pharmaceutical exporters and caused financial constraints to them.

Exporters have to fulfill their obligation through exports for importing raw material free of duty under various schemes including Advance Authorisation. The ad-hoc norms are supposed to be fixed by Norms Committee in four months. If norms are not finalized within the stipulated time period, exporters have to pay customs duty and applicable interest on unfulfilled export obligation.

On the basis of orders received from buyers, exporters apply to advance licenses to clear material under Advance Authorisation Scheme. Exporters are submitting complete application in seven sets along with documents/technical details as per Appendix 4E to regional authorities and in turn regional authorities issue licenses and send all documents to Norms Committee, DGFT, New Delhi for fixation of norms. 

As per Appendix 4E, exporters need to furnish details of imported items for manufacture of export products.

There is an inordinate delay in fixation of ad-hoc norms by Norms Committee. Para 4.16(i) of Hand Book and Procedure (Vol.1 22 edition: 2015-20) reads as “Where norms are not finalized y Norms Committee in time limit for fixation of norms of four months from the date of receipt of complete application along with documents/technical details as per Appendix 4E, norms as applied for may be treated as final”. 

Currently fixation of norms takes about eight to ten months from the date of issue of authorisation. Whatever norms are ratified by Norms Committee are not as per the authorisations issued to the exporters. In many cases there are unintentional errors by authorities while issuing letters to the exporters. To rectify the same it again takes another eight to ten months' time. Delay in norms fixation and its rectification is also leading to increase in interest liabilities of exporters and also serious risk of exporters being included under Denied Entities List (DEL) by regional authorities for no fault of theirs.

Taking serious note of this, industry body Indian Drug Manufacturers' Association (IDMA) had called on DGFT Alok Vardhan Chaturvedi drawing his attention to the issue. 

IDMA in its representation to DGFT said “Several member-exporters have informed us that their norms are not ratified within the time limit. If norms are not finalized within the stipulated time period, exporters have to pay customs duty and applicable interest on unfulfilled export obligation. Since norms are not fixed by the authorities in time as per Foreign Trade Policy 2015-20, the exporter should not be penalised and at the same time, the concerned authorities may be directed to justify delay in fixing norms within stipulated timelines.”