The Directorate General of Foreign Trade ( DGFT ) has recently announced an amendment concerning the deposit requirements for exporters failing to meet minimum value addition criteria. The deposit has been reduced from the deposit from 3% to 1%.
In a public notice dated July 16, 2024 (Public Notice No. 14/2024-25), DGFT has revised Para 4.49 (b) of the Handbook of Procedures, 2023.
Under the existing regulations outlined in Para 4.49 (b), exporters who fulfil their export obligations in terms of quantity but fall short in terms of value addition are subject to penalties. Specifically, if the value addition falls below the prescribed minimum, exporters were required to deposit an amount equal to 3% of the shortfall in the Free on Board (FOB) value in Indian Rupees. This deposit was to be made through the DGFT website.
However, with the new amendment, DGFT has reduced this deposit requirement significantly. According to the amended Para 4.49 (b), exporters facing a shortfall in value addition below the prescribed minimum will now need to deposit only 1% of the shortfall in FOB value in Indian Rupees.
By reducing the composition fee, the DGFT paves the way for ease of doing business and reducing compliances.
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