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Contributed on September 21, 2020

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Nasscom Representation to DGFT on Regulatory Issues Related to Export of SCOMET Items, including Global Authorisation for Intra-Company Transfer (GAICT) scheme

Blog: NASSCOM Official Blog

On 21^st September 2020, NASSCOM submitted a representation to DGFT, to communicate the feedback which NASSCOM has received from the industry on the Global Authorisation for Intra-Company Transfer (GAICT) scheme as well as certain other regulatory issues related to export of SCOMET items. The representation refers to Public Notice 20 which notified the GAICT scheme, Public Notice 65 for implementation of GAICT. For background of GAICT scheme, Public Notice 20 and Public Notice 65, please see here.

The representation requests DGFT for the following in relation to the GAICT scheme:

1. Clarification that GAICT covers re-export of SCOMET items which have already been imported at the time of applying for GAICT, and SCOMET items which may be imported by the exporter within the GAICT validity period.
2. Include items/software/technology imported under bulk authorisations under the coverage of the GAICT scheme.
3. Exclude the need for providing ‘Product model No./part No.’ and ask for only ‘Generic Description of export item/s including technical specification’ under Table 2A (Details of SCOMET items), ANF 2 O(b).
4. Ask for Technical drawings (Information on Product/Technology) and Technical Specifications/Data Sheets/Brochures of the product (s) only where applicable, under Table 8 (Type of supporting documents submitted to DGFT), ANF 2 O(b).
5. Delete the requirement that the use of an item which is re-exported under GAICT shall not be changed, nor the item modified or replicated without the prior consent of the Government of India (under Appendix 2 S (iv)), as this is in contradiction to paragraph F of Public Notice 20 which states that further re-export/re-transfer of the item/software/technology from the foreign parent company or its subsidiary to end users in other countries would be subject to the export control regulations of the country of the foreign parent company or its subsidiary.

Additionally, NASSCOM submitted a detailed note explaining the need for intervention by the DGFT to address certain regulatory issues related to export of SCOMET items:

6. Introduction of a process for voluntary self-disclosures and categorise violations which would be treated as minor violations, for which a warning letter may be issued without initiating further enforcement proceedings.
7. Provision of a classification request option to exporters to ensure that when in doubt, an exporter can confirm whether the product intended to be exported is a SCOMET regulated item.
8. Clarification that export licence will not be required in case of a cloud-based storefront setting where users do not download a software application from the storefront but instead utilize the software application, including all its features and functions in the cloud, without downloading the product.
9. Providing a licence exception mechanism on the lines of a Technology and Software under Restriction (TSR) Exception as it exists under US export control laws, applicable for exports of certain software/technology to countries which pose a low-risk of proliferation.
10. Providing for a licence exception in certain cases (termed a ‘foreign technology re-export authorisation’) with periodic reporting obligations on exporters, for the export of foreign owned technology which is imported on ‘Work for Hire’ basis by an Indian company.
11. Amending the GAICT scheme to cover re-exports of third-party entities in India where such re-exports form part of an approved supply chain under a GAICT authorisation, so that a third-party entity will not need to separately apply for a SCOMET licence for exports related to the supply chain covered under the GAICT authorisation.

In case, you have any additional comments/inputs on this matter, please write to garima@nasscom.in.

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