Update: DGFT Notification on debonding of secondhand IT assets from SEZ to DTA

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Update: DGFT Notification on debonding of secondhand IT assets from SEZ to DTA

Tejasvi

@tejasvi

January 5, 2024

Public Policy

129

Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industries has issued a notification to amend Para 2.31 of Foreign Trade Policy 2023 (FTP) regarding transfer of used Information Technology (IT) assets from Special Economic Zones (SEZ) to Domestic Tariff Area (DTA).

Prior to issue of the notification, SEZ authorities were treating clearance of goods from SEZ to DTA as import of 'second hand/used goods'. As a result, provisions prescribed under Para 2.31 of FTP relating to import of secondhand goods apply on such DTA clearances. As per para 2.31 of FTP, import of secondhand IT products is restricted. The importer is required to get permission/ authorisation from DGFT before importing these products.

Now, the DGFT has allowed movement of used IT Assets from SEZ To DTA without a license, subject to the following conditions:

Such used IT assets may be moved from SEZ To DTA for the further use in their DTA operations given that there is minimum usage of 2 years in SEZ and that the goods are not older than 5 years from the date of manufacture.
In case a unit is closing its operation in SEZ and relocating to DTA, import of used IT assets from SEZ to DTA is allowed without a license, given that the goods are not older than 5 years from the date of manufacturing. However, IT assets that have entered the SEZ area in second hand/ used/ old condition and have been used in the SEZ area for less than 2 years are not covered.
No exemption from any regulatory requirement (i.e., CRO, WPC, RoHS) was availed at the time of import of used asset into the SEZ.

We had been advocating on this issue for more than 1 year. This is a welcome clarification and in line with nasscom’s recommendation to the government. This will provide certainty to the industry.

In case you have any feedback or face any issues while dealing with ground level authorities, please write to tejasvi@nasscon.in.

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Tejasvi