1. What
is the purpose of notification No. 5 dated 24.04.2017 issued by DGFT?
DGFT has
amended SCOMET from time to time in order to implement India’s international
commitments and obligations in the field of non-proliferation while simultaneously
ensuring that trade facilitation is accorded the highest priority.
This
notification to update SCOMET is part of India’s continuing obligations as a
member of the Missile Technology Control Regime (MTCR) and as an adherent to
the Nuclear Suppliers Group (NSG) Guidelines. Importantly, a significant number
of changes to SCOMET have been carried out to adopt the regulations and lists
of the Wassenaar Arrangement and the Australia Group, two multilateral export
control regimes that India wishes to join.
2. How
will industry benefit by the adoption of these additional regulations?
Government and
industry have a responsibility to ensure that Indian exports are not accessed
by proliferators, terrorist groups and non-state actors. Any export that inadvertently
lands up in the wrong hands may have implications for our national security and
affect Brand India. These regulations are an important step to address such
concerns.
Further, global
supply chains are increasingly interconnected. India’s trading partners would
like to be assured that India’s regulations are in line with the highest
standards. Adoption of these regulations is expected to act as an enabler for a
greater role for Indian industry in global supply chains for high technology
and value added items and strategic sector items.
3. When
do these changes come into effect?
The changes
come into effect on 1 May 2017. Please note that the entire SCOMET list has
been re-issued and all previous notifications in this regard stand rescinded.
4. What
about contracts and purchase orders in the pipeline?
Any
application filed with DGFT or Department of Defence Production on or after
1 May 2017 will be subject to the new regulations.
5.
How do I know whether my item now
falls in the ambit of the amended SCOMET?
(1) Trade
and industry members are requested to study the notification No. 5 dated 24.04.2017 carefully and in particular the following:
·
Categories 1D, 3D, 6 and 8 of SCOMET
and the exemptions and exclusions set out for relevant items;
·
Commodity Identification Note of
SCOMET (for arriving at the proper
classification and licensing jurisdiction)
·
SCOMET Glossary (for the definitions of terms)
(2) Industry
associations such as FICCI, CII and ASSOCHAM were made aware of the anticipated
changes to Category 6 and 8. These associations as well as others are being
requested to inform their members about the changes to the regulations.
(3) DGFT
in coordination with the relevant Government Departments plans to conduct
industry outreach awareness events in the coming months to update the
stakeholders.
6.
What are the specific facilitation
measures that have been announced?
(1) The
time for processing SCOMET applications is being brought down further from 45
days to 30 days. (Please refer to para 2.82 of the Handbook of Procedures)
(2) For
chemicals covered in the new Category 1D, prior authorisation will not be
required if the export is to forty-one notified countries. (Please refer to
Category 1D of SCOMET)
7. What
are the specific changes with regard to defence exports?
(1) The
list of Military Stores (notification No. 5 dated 24.04.2017 has been rescinded.
Please refer now to Category 6 of SCOMET (Munitions List) for the items that
would now be under export regulations with effect from 1 May 2017.
(2) Department
of Defence Production (DDP) would continue to be the licensing authority for
Category 6 items, subject to some exceptions.
(3) DDP
would be issuing a revised Standard Operating Procedure to clarify the
implications
8.
What are the specific changes with
regard to chemicals?
(1) Export
of chemicals specified in Category 1C to a country that is not a State Party to
the Chemical Weapons Convention would now require a Government signed End-Use
Certificate. This requirement is in keeping with India’s commitments under the
said Convention.
(2) Twenty-five
chemicals have been notified under a new Category 1D. However, export of these
chemicals to the forty one countries that are members of the Australia Group
would not require a prior authorisation.
(3) Notification no. 5 dated 24.04.2017 has been rescinded since the three chemicals covered in the
notification are now included in Category 1D.
9. There
appear to be many changes with regard to the IT sector. Is it true that the IT
sector will be affected?
At first
glance, it may appear that there are many new regulations for the IT sector.
But if you go through the provisions carefully, it may be noted that:
(a) Software
and Technology in the public domain is excluded from the purview of
regulations.
(b) There
are specific exemptions and exclusions set forth in Category 8 of SCOMET.
DGFT is
planning specific industry outreach for the IT sector. All concerns of the IT
sector would be addressed.
10. What
is the new provision regarding maintenance of records?
Every SCOMET
authorisation holder shall maintain the specified records in manual or
electronic form for a period of 5 years. Please refer to para 2.73(c) of the
Handbook of Procedures as amended vide Public Notice No. 4 dated 24.04.2017.
11. Why
has Government introduced regulations for non-SCOMET items?
Para 2.72(b) of the
Handbook of Procedures as amended vide Public Notice No. 4 dated 24.04.2017 provides
that export can be regulated if the exporter has been notified in writing by
DGFT or he knows or has reason to believe that an item not covered in the
SCOMET list has a potential risk of use in or diversion to weapons of mass
destruction or in their missile system or military end use (including by
terrorists and non-state actors). In such a case, the process for authorising
export would be similar to the one for SCOMET.
The basis for
this provision exists in the FTDR Act 1992 and the WMD Act 2005. It is a widely
accepted and adopted international best practice that is in line with
Government’s non-proliferation policy of ensuring that India’s exports do not
inadvertently land up in the wrong hands for illicit use.
