Government Eases Export Obligations Amid West Asia Crisis: What You Need to Know
New Measures to Support Exporters
New Delhi: In response to the challenges faced by exporters due to the ongoing crisis in West Asia, the government has announced relaxations regarding export obligations. This decision comes as the trading sector struggles with the logistics of moving goods, as detailed in a recent notification.
The Directorate General of Foreign Trade (DGFT) has stated that the export obligation (EO) period for certain advance authorisations and EPCG authorisations, which were set to expire between March 1, 2026, and May 31, 2026, will now be automatically extended to August 31, 2026, without the need for a composition fee.
The Export Promotion Capital Goods (EPCG) scheme allows domestic companies to import machinery without duties, provided they fulfill specific export commitments.
This new relaxation adds to the existing provisions under the foreign trade policy, which already allows for extensions upon payment of fees.
Exporters had been advocating for these extensions to help them meet their obligations amidst rising challenges.
Previously, the exporting community faced high tariffs from the US and is now contending with disruptions caused by the recent conflict involving the US and Israel's actions against Iran. This situation has led to significant shipping delays.
Additionally, the ongoing conflict has resulted in increased sea and air freight costs, along with rising insurance premiums. If these issues continue, they may hinder the competitive pricing of Indian products in international markets.
India's exports saw a slight increase of 0.61% to reach USD 36.56 billion in January, while the trade deficit expanded to a three-month peak of USD 34.68 billion.
The commerce ministry has clarified that the extension will be granted automatically, meaning exporters do not need to submit separate applications or pay any fees to benefit from this measure.
This initiative aims to provide exporters with greater operational flexibility in light of the current geopolitical challenges affecting global trade and logistics.
The relaxation pertains to advance authorisations, including those for annual requirements and special advance authorisations, as well as EPCG authorisations. Compliance with export obligations will be verified by regional DGFT authorities when issuing the Export Obligation Discharge Certificate (EODC) or during the closure or regularisation of authorisations.
Customs authorities have also been notified to facilitate exports according to the updated EO timelines.
This step underscores the government's ongoing commitment to supporting exporters and ensuring that temporary global disruptions do not negatively impact India's export performance or compliance with export promotion schemes.