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On 27 March 2024, DGFT notified an amendment in the Para 10.08 of the Foreign Trade Policy (FTP) and in Chapter 10 of the Handbook of Procedures regarding bulk-licensing.

By strategically reforming the SCOMET licensing system, India is unlocking the export potential of its telecommunication and information security sectors. Striking a balance between economic growth and national security will be essential for navigating this path to success.

Prior to the Amendment

Earlier to the amendment, an export authorisation was mandated for each export/re-export of Telecommunication-related items, and “Information Security items falling category 8A5 of the Special Chemicals, Organisms, Materials, Equipment, and Technologies List (SCOMET list).

Post Amendment

An Indian exporter intending to export/re-export certain Telecommunication-related items and Information Security items falling under category 8A5 can apply for General Authorization for the Export of Telecommunication items (GAET) and General Authorization for the Export of Information Security items (GAEIS) respectively.

The amendment mainly eliminates the need for a case-to-case basis pre-export authorization for the export/re-export of certain items falling under category 8A5.

Purview of GAET/GAEIS

A GAET can be obtained for Telecommunication items under category 8A5 Part 1 excluding technology and software falling thereunder and items as listed in Annexure-I to the GAET. As regards GAEIS, it can be obtained for Information Security items excluding technology under category 8A5 Part 2. While the contents included in both policies may vary, the criteria for obtaining the GAET/GAEIS license and the subsequent obligations after reporting outlined in these policies remain consistent. Hence, the analysis below considers both GAET and GAEIS accordingly.

Eligibility for exporting without pre-export authorisation

Any Indian entity (Indian exporter/exporter) can export without case-to-case pre-export authorization subject to inter alia the following:

· The applicant exporter shall submit an online application in the prescribed format along with certain supporting documents:

• Detailed description of the items sought to be exported.
• End-user certificate from all the entities in the supply chain.
• A list of countries where the exports are sought to be made.
• A declaration on the letterhead of the applicant mentioning the following:

o   If necessary, the applicant will have the option to permit on-site inspections conducted by the DGFT or government-appointed representatives.

o   Items sought to be exported shall not be used for purposes other than those indicated in the EUC.

o   The utilization, alteration, or replication of the items shall not occur without prior consent from the Indian Government.

o   Following the issuance of the GAET/GAEIS, if the licensee is informed by the DGFT or becomes aware, or has reason to suspect, that the item might be intended for military purposes or poses a potential risk of diversion to weapons of mass destruction or missile systems delivery, the exporter will no longer qualify for GAET/GAEIS.

o   Action will be taken against the exporter in case there is any wrong declaration.

• Certified/approved internal compliance program (ICP) by the company’s compliance manager.
• Authorized Economic Operator (AEO) T2 certification.
• In the case of re-export, certain additional documents such as the proof of import should be submitted.

The Inter-Ministerial Working Group (IMWG) will evaluate the aforementioned application and its accompanying documents for the issuance of GAET/GAEIS.

Ongoing Compliance:

1.    After issuance of the GAET/GAEIS and before the actual export

As part of continuous compliance, the applicant must ensure, among other things, the following steps after receiving the GAET/GAEIS but before conducting the actual export:

·         On a quarterly basis, the applicant must provide the details of exports made along with the EUC for each export in prescribed formats. The EUC must be prepared for each entity involved in the supply chain.

·         Existence of an agreement or a purchase order among others

2.    After exports made under GAET/GAEIS

 For exports conducted under GAET/GAEIS, the Indian exporter must submit the following:

·         On a quarterly basis, the applicant must submit post-shipment details for each export/re-export under the GAET/GAEIS for a period of three years.

·         In the case of re-export, certain additional documents such as the proof of import should be submitted.

Any deviation from these requirements may lead to penalties being imposed and/or the suspension or revocation of GAET/GAEIS.

 Additionally, the exporter is obligated to retain electronic copies of all export documents for a duration of five years from the issuance of GAET/GAEIS.

Validity of GAET/GAEIS:

· GAET/GAEIS shall be valid for a period of three (3) years from issuance.

· This is however subject to fulfilling the post-reporting requirements quarterly.

· GAET/GAIES cannot be revalidated as per the HBP.

Other relevant points/conditions for the issuance of GAET/GAEIS

· GAET/GAEIS shall not be issued in case the SCOMET items are used to design, develop, acquire, or manufacture, possess, transport, transfer, and or used for military applications, explosives, chemical biological, nuclear weapons, or missiles capable of delivering weapons of mass destruction and their delivery system.

· GAET/GAEIS shall not be granted for the countries/entities covered under the UNSC embargo or sanctions list, or on assessment of proliferation concerns or national security and foreign policy consideration, etc.

· In case of an amendment to the list of countries to the existing list of countries submitted with the application, the applicant must obtain prior permission.

· IMWG has the right to deny the GAET/GAEIS without providing any reasons.

Outlook of the Development

India is recognised as the 2nd largest market globally for its telecoms and Information security services.

The GAET/GAEIS policy is an enabler to bolster this sector, aiming to increase timely exports while adhering to export control regulations. This progressive change aligns with India’s vision of promoting global exports under the #AtmanirbharBharat initiative.

In conclusion, the DGFT has been playing a pivotal role in issuing liberalized policies. The GAET/GAEIS is a great and welcome step in the right direction given the geopolitical and economic concerns being felt globally. This policy not only facilitates increased trade opportunities for Indian exporters but also underscores the Govt's role in supporting businesses during turbulent times.

Article contributed by Deepankar Khare, Joint Director, MAIT