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Alerts & Updates 8th May 2025

SCOMET Update: DGFT issues Public Notice amending SCOMET policy on the Stock & Sale export authorization of SCOMET List items

Authors

Ambarish Sathianathan Partner | Mumbai
Sanjay Notani Partner | Mumbai
Harika Bakaraju Principal Associate | Mumbai
Shantanu Singh Associate | Mumbai

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  • Dear Reader,

    We are writing to you with an important update concerning the SCOMET policy on the Stock & Sale export authorization of SCOMET items.

    Background The Directorate General of Foreign Trade (DGFT) maintains the SCOMET list, which includes dual-use items – goods, software, and technologies that can be used for both civilian and military applications, including weapons of mass destruction. The list is organized into eight (8) categories. Export of SCOMET items is permitted only with export authorization, unless the item is specifically exempted or prohibited.

    Currently, the Foreign Trade Policy (FTP), read with para 10.10 of the Handbook of Procedures (HBP), sets out the process for obtaining “Stock and Sale” export authorizations for the SCOMET items (excludingCategory 0, Category 3A401, Category 6 and transfer for technology under any category)from an Indian exporter to an entity abroad for subsequent transfer to the ultimate end users. Exporters are required to submit applications in the prescribed format along with supporting documents.
    Scope of Proposed Amendment The DGFT, vide Public Notice No. 04/2025-2026 dated May 6, 2025, amended para 10.10 of the HBP to give effect to the following:

    • Expanding the scope of entities eligible to be a “Stockist”: In addition to being a subsidiary/principal (parent) company abroad of an Indian exporter, a stockist entity can also be an affiliate of (i) an Indian exporter, (ii) Indian or Foreign Original Equipment Manufacturer (OEM), (iii) Indian or Foreign Electronic Manufacturing Services (EMS), and (iv) Indian or Foreign Contract Manufacturer (CM).
    • “Electronic Manufacturing Services” defined: EMS is defined “as a business service provided by companies that specialize in the manufacturing, assembly, testing, repair and sometimes design of electronic products for OEMs. These providers are responsible for assembling electronic components and devices based on the customer’s specifications, and the services are often provided at a cost-effective price compared to setting up internal manufacturing facilities.”
    • “Contract Manufacturer” explained: CM could be considered “based on additional documents submitted by the Indian company, such as an AEO certification, contract/agreement between the Indian company and its Original Equipment Manufacturer, etc.”
    • Additional documentation prescribed: In addition to the documents prescribed under the existing policy, the application should also be accompanied with:
    • A copy of AEO certificate, in case of OEMs/CMS/CM.
    • An undertaking on the letterhead that the applicant exporter would apply separately for a fresh authorization in line with the applicable policy if the licensee has been notified in writing by the DGFT of if they know or have reason to believe that the item is intended for military end use or has a potential risk of use in or diversion to weapons of mass destruction (WMD) or in delivery of their missile system.
    • A copy of corporate registration/business registration or certificate of incorporation of the stockist entities in destination countries.
    Way Forward/What should companies do? An applicant must now follow the revised framework under para 10.10 of HBP to obtain export authorizations for Stock & Sale, including by submitting applications along with supporting documentation, as prescribed. For further details on the process, applicable formats/documentation, please refer to the link here.
Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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