Are you compliant with the regulatory framework as an Indian exporter of agri-products?
India has a wide range of agri-products, which includes, crops, fruits, vegetables as well as the by-product of cattle, sheep, poultry, that is milk and eggs. The rural population of India is largely engaged in the business of agriculture products and the Government of India aims to increase manifold the Agricultural exports in the next few years enabling farmers to get benefits of export opportunities.
Agricultural production relatively remained unaffected by the Covid-19 induced lockdown and witnessed an increase of 18.49% in its export of agri-products. Even during the pandemic, the Government brought out changes to existing laws and regulations for export of agriculture products from India like requirement for obtaining Certificate of Inspection, Verification Regulation and couple of others elucidated below for promotion of exports. This in a way shows that such exporters involved in business of exporting agri-products need to be aware and compliant of the laws and regulations applicable for export purposes.
Key Laws applicable for export of agri-products:
- Foreign Trade (Development and Regulation) Act, 1992
- Foreign Trade (Regulation) Rules, 1993
- Export Quality Control and Inspection Act, 1963
- Food Safety and Standards Act, 2006
- Agricultural & Processed Food Products Export Development Authority Act,1985
- Customs (Verification of Identity and Compliance) Regulations, 2021
Some of the export documentation you may require for export of agri-products:
- Documents Related to Agriculture goods: Invoice, Packing List and Certificate of Origin
- Documents Related to Shipment: Mate Receipt, Shipping Bill in case of exports through Sea-route /Airway Bill in case of exports through Airways.
- Documents Related to Payment: Letter of Credit, Bill of Exchange
- Documents Related to quality of goods: Phytosanitary Certificate, GLOBAL GAP Certification and Health Certificate
- Documents Organic Certification: In case the goods produce is based on organic farming.
- Documents Related to Foreign Exchange Regulations: Self Declaration Form/ GR Form
- Other Document: Bank Realization.
Key regulatory compliances for exporting agri-products:
The key compliance requirements for exporting of agricultural products are:
Obtain and Update Importer-Exporter Code (IEC) every year: Any Exporter Company must obtain a 10-digit Importer-Exporter Code from the official website of DGFT by registering under it. A recent amendment requires the IEC holder to validate as well as update their IEC once every year. This is a mandatory requirement, and any deviation from such compliance can lead to de-activation of the IEC.
Registration under Agricultural & Processed Food Products Export Development Authority (AEPDA): Exporter must register under AEPDA within 1 month from starting such business and obtain the Register-Cum-Membership-Certificate (RCMC). Such certificates can be applied online as well.
Adherence to the currency requirements while dealing with export contracts: The exporter needs to adhere to the currency requirements as per the export contracts entered between the exporter and the buyer and comply on a regular basis.
Adherence to the manner of obtaining receipt for export: An Account needs to be maintained by the exporter to manage the receipt for exports. As an exporter one needs to adhere in the prescribed manner for the purpose of obtaining payments. A receipt must be made by debit to FCNR/NRE account which is maintained by the buyer. If the amount of export is below fifteen lakh rupees, a receipt must be made from the rupee account. There are different requirements for various countries. For instance, all transactions relating to export between a person residing in India and a person residing in Nepal must be settled in Indian currency. Contravention of such compliance can lead to imposing of heavy penalty.
Commercial Quality and Phytosanitary Requirements: The exporter needs to obtain a quality certificate by applying to the export inspection agency. It must be obtained from APEDA. The phytosanitary certificates acts as a proof, that such product was originally inspected in the origin country and are free from quarantine pests and diseases.
Verification Regulation for New Exporters: Persons newly involved in the business of exports can be subjected to verification by the Commissioner of Customs under Customs (Verification of Identity and Compliance) Regulations, 2021.
Declaration of Goods by the Exporter: Before exporting, an exporter must declare about the same through an Export Declaration Form and submit it to the Commissioner of Customs. It must contain the details about the value of such goods. In case, the value cannot be ascertained of a particular agriculture product, the exporter must determine the same in accordance with the fair market value prevailing in the export market.
With the Government of India continuously trying to ease the processes, policies, and procedures towards export of agri-products by bringing out reforms to existing regulations and introducing schemes to benefit the exporters financially, it is the utmost responsibility of the exporter to ensure compliance with the laws and regulations in place all the time some of which have been enlisted above. Tracking of key regulatory compliance and risk management goes hand in hand, hence adherence to key regulatory compliance for exporting agri-products is a must to avoid any legal and penal consequences and avail the benefits being floated by the Government.
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Written by: Amanya Gangawat
Edited by: Anchal Sharma
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