Deemed Exports in India
Meaning, Benefits, and Examples
In India’s foreign trade, the word “export” usually means sending goods outside the country. But India’s Foreign Trade Policy (FTP) also recognizes some special transactions within India as “exports,” even when the goods do not cross borders.
These special supplies are known as Deemed Exports.
Deemed Exports are supplies of goods made within India that are treated as exports for policy benefits, even though the goods remain inside the country.
The idea is simple:
If the supply supports export production or strategic national projects, the government treats it like an export.
Under Deemed Exports, manufacturers and suppliers are eligible for benefits similar to normal exports, such as duty refunds and tax rebates.
Key Features of Deemed Exports
- Goods do not leave India.
- Payment can be received in Indian Rupees (INR).
- They apply only to goods, not services.
- Suppliers or recipients can claim refunds and benefits.
- The supply must fall under specific categories listed in India’s Foreign Trade Policy.
Why is Deemed Export Important
The concept is designed to support:
- Export-oriented units (EOUs)
- Manufacturing industries
- Mega power and nuclear projects
- Projects funded by international agencies
- Capital goods procurement under competitive bidding
By treating domestic supplies as exports, India encourages industries to source locally rather than import, saving precious foreign exchange.
Major Categories of Deemed Exports
Here are the most common situations where a domestic supply is treated as a deemed export:
- Supply to Advance Authorization (AA) Holders
When Indian manufacturers supply raw materials to exporters holding Advance Authorization. - Supply of Capital Goods to EPCG License Holders
Machinery supplied under the Export Promotion Capital Goods scheme. - Supplies to 100% Export Oriented Units (EOUs)
Goods used for producing export items. - Supplies to SEZ Units/Developers
Certain supplies to Special Economic Zones qualify for deemed export benefits. - Supplies to Projects Funded by International Agencies
For example, World Bank, ADB, or UN-funded projects. - Supplies to Mega Power Projects
Government-approved large power generation projects. - Supplies to Nuclear Power Projects Through Competitive Bidding
High-value components supplied to NPCIL or similar projects. - Supplies under International Competitive Bidding (ICB)
Capital goods supplied under global tender processes
To know more about Deemed Export read Part-2