India’s New Foreign Trade Policy Allows Gifts of Rakhis and Life-Saving Drugs duty-free, Tightens Provisions for Other Imports

As per the 2015-20 trade policy, whose provisions were extended till March 31 this year, import of gifts was free in case of goods that are otherwise freely importable under India’s foreign trade classification norms. Any other imports required an authorisation from the Directorate General of Foreign Trade (DGFT).
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V.M. MANINATHAN

It may become easier to receive Rakhis and life-saving drugs as gifts from relatives or friends abroad, under India’s new Foreign Trade Policy (FTP), even though it has tightened provisions for other gifts from overseas, including those purchased from global e-commerce portals.

As per the 2015-20 trade policy, whose provisions were extended till March 31 this year, import of gifts was free in case of goods that are otherwise freely importable under India’s foreign trade classification norms. Any other imports required an authorisation from the Directorate General of Foreign Trade (DGFT).

Under The new FTP effective this month, “import of goods, including those purchased from e-commerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited except for life saving drugs/ medicines and Rakhi (but not gifts related to Rakhi).”

“Import of goods as gifts with payment of full applicable duties is allowed,” the new policy states. Rakhis as gifts will attract zero customs duty for cases where the relevant levy is ₹100 or less.

“In the past, ‘gifts’ were being misused in a few instances, to import goods without any duty payment, and this was resulting in leakages and lower customs duty collection,” RSM India director Siddharth Surana told  The Hindu, explaining the rationale for  seeking to tax  all imports as gifts, barring Rakhis and life-saving medicines.

However, the policy doesn’t define “life-saving drugs”, so further clarity may be needed, Mr. Surana signalled. “The other pertinent aspect is that there does not seem to be any monetary limit for the gift and there would be a customs duty incidence on gifts irrespective of the amount. We believe defining a threshold, (say, ₹50,000 per importer per annum) would be imperative and we expect the government to do so,” he underlined.