Draft revised policy on Global Authorisation for Intra-Company Transfer (GAICT)

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Draft revised policy on Global Authorisation for Intra-Company Transfer (GAICT)

Garima Prakash

@GarimaP

July 23, 2021

Public Policy

201

In response to NASSCOM’s suggestions to revise the Global Authorization for Intra-Company Transfer (GAICT) policy, the Directorate General of Foreign Trade (DGFT) has published a revised draft of the GAICT policy. Our previous representations on the revision of GAICT can be found here and here.

The revised draft has incorporated most of NASSCOM's suggestions, including:

GAICT policy to be applicable for export and/or re-export of SCOMET items.
Intra-company transfers from an Indian parent company to its foreign subsidiary have been proposed to be made eligible, in addition to the existing eligibility of transfers between Indian subsidiary of foreign company to its foreign parent/another subsidiary of foreign parent company.
A third-party may also be involvement in the supply chain and included in the GAICT authorisation if the end-user is a foreign parent/subsidiary of foreign parent company or a subsidiary of Indian company.
GAICT is eligible to be granted for carrying out services, such as, design, encryption, research, development, delivery, validation, testing. This is only an indicative list of services, subject to final approval on a case-to-case basis.
In case of re-exports, GAICT is eligible to be granted where the item had been imported under a license exception or a temporary licence.

Few additional changes have been proposed by the DGFT, such as:

GAICT policy to be applicable only to SCOMET Category 8 items, software and technology (except certain items under Annexure I, such as, materials that absorb electromagnetic radiation, certain microwave transistors, certain radio equipment, certain sonars/sensors, certain unmanned submersible vehicles, certain robots, along with software and technology used for producing such items etc.)
Transfers under GAICT are eligible only to certain notified countries, these include all WA Participating States. Transfers to United Nations Security Council (UNSC) sanctioned destinations or countries is also excluded.
Undertaking to be submitted by a company allowing for on-site inspection by government of India, if needed.
Applicant will not be eligible for GAICT if he knows or has reason to believe that an item may be intended for military end use, even if the GAICT licence has already been granted.
Validity of GAICT will be for a period of three years from the date of issue of GAICT, irrespective of the expiry, irrespective of the validity of the MSA, intra-company contract or licence exception (in case of re-exports).

In addition to the above, NASSCOM had made some suggestions for appropriate revisions in proforma ANF 2O(b) and Appendix 2S(iv). The revised versions of these forms are yet to be notified by the DGFT.

The revised draft of the GAICT policy has been attached below. This is open for public consultation until 1 August 2021. In order for us to make a timely submission to the DGFT, kindly send your inputs/suggestions for further improvement of this draft to garima@nasscom.in, latest by 28 July 2021.

Background to the GAICT policy:

On July 24, 2019 the DGFT vide Public Notice 20 inserted Para 2.79F to the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 which introduced the GAICT policy. Under the GAICT policy, eligible exporters do not require pre-export authorisation for intra-company re-export of imported SCOMET items, software and technology under certain SCOMET categories. Thereafter, on March 17, 2020, DGFT, vide Public Notice No. 65/2015-20 issued application form (ANF 2 O (b)) and end use certificate (EUC) for further implementation of the GAICT policy.

DGFT GAICT exportcontrol SCOMET MeitY IT/TeS exports SCOMETlicence exportauthorisation

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Garima Prakash

Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech