Project Imports are covered under chapter 98 of ITC HS Classification and cover all goods, which are being imported for initial setting up of a unit or substantial expansion of an existing unit. All goods can be assessed under one customs tariff heading thus obviating any disputes with customs with regard to their classification.
Industrial Plants, Irrigation Projects, Power Projects, Mining Projects, Oil Exploration Projects and certain other projects as notified by the government are covered under the scheme.
Benefits of Import under Project Import Scheme:
Assessment under one heading: thus obviating all disputed with the customs regarding tariff classification.
Concessional Duty: Effective duties under Project Imports are lower than the normal and depends on the kind of Project. For Industrial Projects/ Non Mega Power Projects etc., all items covered under the Project Imports now attracts only 5% Basic Customs Duty. In addition, IGST is leviable which makes the total duty to approx. 24.49 % as against a normal total of 27.73% payable on the Capital Goods alone. The scheme thus offers a saving of approx. 3.24%.
Further, EPCG can also be availed of along with Project Imports. This simultaneous availment of two schemes can lower the export obligations under EPCG scheme.
There is an elaborate procedure to get approval from the ministry and customs clearance to be able to get the benefit. EPCG if availed along with Project Import needs to be taken from the DGFT office.
Role of Andees Team
It is very important to note in the above process, that foresight and experience can play a big role in not only getting permission from the relevant ministry but also registration and monitoring the documentation at each point. Further, in case of delay in projects, timely actions can save a lot of problems and liability in future. Finally, proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, also other schemes, compliances etc.
Andees has been assisting clients and has extensive experience for the whole process of managing the imports under Project Imports and closure of the same for the last more than 15 years. Sound knowledge of Policy & Procedures along with a very qualified and experienced team, Andees has handled lots of complicated matters related to Project Import, saving crores for clients that are MNCs, Indian Corporates, or PSUs. While proper planning during the entire life cycle has helped smooth operations, several complicated matters even at the last stage have been saved by the Andees team from substantial liabilities.
Doing Business in India
Due to the reasons of a large market for various price points, Democratic setup, reasonably well established legal set up, economical manufacturing and outsourcing, availability of large technical and other manpower at economical rates, India is a preferred destination/source/place of business for many companies across the world.
There are however several Regulatory Requirements, Taxation, Import duties, Foreign Trade Export Policy and Procedures, that are necessary to be understood and taken care of, for taking a decision on, and later actually making Investments and doing Trade with India.
Andees is an established consulting firm providing services related to Foreign Trade Policy, Customs, Foreign Investments in India, RBI, and other related matters.
The difference: We undertake the responsibility to finally execute the job. The execution normally includes complete planning, documentation, application preparation, submission, and representation at the authorities, follow up and liaison till the objective / approval / benefit is achieved.
Fee: Our fee is normally pre-defined at the start of the job and not dependent on the no. of hours etc. spent. While a part of the fee is payable at the beginning for efforts towards documentation, application preparation etc. a larger part of the fee is normally payable after the job is completed successfully.
Our advantage: Because of our experience working with a cross-section of Industries on a variety of matters, and liaison with several government departments, we are able to better understand a company business from the perspective of trade and investments with India. This results in our providing practical advice and undertaking the complete job.
Services provided to Foreign Companies:
- General Advice on regulatory issues, procedures related to Trading, Investment and Execution of contracts in India.
- Advice on business structure, indirect tax structure, Import duties in the country related to Imports, Exports, Manufacturing, Contract Execution, how to start an office in India, business in India, where to do business in India etc.
- Presentations on the Investments, Indirect Tax structuring, Imports, Exports Policy, Procedures, Licenses, Incentives, Customs related matters etc.
- Undertaking turnkey job of application preparation, documentation, representation, liaison with various authorities till the finalization for:
- Opening of liaison, branch, project office in India or Setting up a subsidiary co. in India.
- Registration with various authorities required Regular filing of reports etc. with the authorities, accounting etc.
- Licenses, NOC, benefits, tax refunds, drawback etc. from departments regarding Import or export from the country.
- Providing support to foreign companies in India till they are able to establish their own office. This can include providing office space, infrastructure, communication addresses, personnel etc. at a nominal fee.
A foreign enterprise wishing to do business in India has the following options.
This provides an indirect presence in India to the foreign entity. An Indian entity can be appointed as agent of the foreign business. Depending upon the scope of the agency agreement, the agent can buy or sell or provide any other service.
These are owned and controlled by foreign enterprises. However the liaison offices are not allowed to earn any income and are primarily opened by foreign companies to liaise with their customers in India and for promoting export & import. No manufacturing, trading or any other commercial activity is allowed in liaison offices.
The branches are basically an extended arm of the foreign company and can undertake export / import of goods, consultancy, research, coordination with local buyers and sellers, provide technical support for products sold in India, development of software and airline / shipping business. However, branches are not allowed to undertake manufacturing activities except research work in which parent company is engaged. These branches are treated as a foreign company in India.
Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and
- the project is funded directly by inward remittance from abroad; or
- the project is funded by a bilateral or multilateral International Financing Agency, or
- the project has been cleared by an appropriate authority, or
- a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.
Joint Ventures & 100% subsidiary
This is the most sought after route for foreign companies wishing to establish a base in India. For this an Indian company with limited liability is formed in India, whose liabilities are limited to Indian operations only. The Companies once approved are treated like other Indian companies and enjoy all the benefits of being Indian Company. Depending upon the business sector, the investments on repatriation basis are allowed under automatic route or through prior approval by FIPB (Foreign Investment Promotion Board).
Foreign Technology & Know-How
Indian businesses are allowed to buy technical know-how and expertise from foreign enterprises for their businesses. Technology tie-ups involving payment up to US$ 2 million and royalty up to 5% on domestic sales and 8% on exports for a period of 7 years from the date of commercial production are cleared by Reserve Bank under the automatic scheme. Tie-ups involving higher amounts are subject to approval from SIA (Secretariat for Industrial Assistance) on a case-to-case basis.
Products covered under compulsory licensing, products reserved for SSI sector, renewal of technology agreements, or cases where technology was earlier sold to an Indian party also require prior approval from SIA.
Make In India