DGFT extends export obligation period as Indian exporters face tariff pressures

In a move aimed at easing the burden on exporters grappling with rising US tariffs, the government has extended the time limit for fulfilling export obligations under the Advance Authorization Scheme.

The Directorate General of Foreign Trade (DGFT) has amended the Foreign Trade Policy (FTP) 2023, extending the Export Obligation (EO) period for Advance Authorisation holders, Export Oriented Units (EOUs), and SEZs from 6 months to 18 months. This relaxation applies to imports of raw materials subjected to mandatory Quality Control Orders (QCOs), including chemicals and petrochemicals.

Until now, exporters had just 180 days from the clearance of such imports to complete their exports. With the new notification, all authorisation holders will now have 18 months, in line with Para 4.40 of the Handbook of Procedures.

The Advance Authorization Scheme allows importers to bring in duty-free raw materials for export production without adhering to QCOs for those inputs, ensuring a steady flow of export operations. A significant share of these authorisations caters to the chemical sector, underlining the importance of the policy change.

“The Government of India remains committed to strengthening the Chemicals and Petrochemicals landscape through targeted strategies, acknowledging its pivotal role in economic growth. In 2024-25, the sector’s export contributions reached USD 46.4 billion — 10.6% of the country’s total exports — reinforcing its critical status,” the statement said.

The initiative is expected to ease financial pressures from rising input costs, guarantee raw material availability, and bolster the competitiveness of Indian chemical products globally. The Department of Chemicals and Petrochemicals and DGFT’s steps, the government said, reflect a forward-looking and strategic vision.

The extension is expected to provide significant relief to exporters in chemicals, petrochemicals, and pharmaceuticals, who are already facing challenges from higher US tariffs. The additional time will help them plan production and exports more efficiently, while also absorbing global trade shocks.