Terms of India’s Intra-company Transfer Licence Broadened

The government of India has liberalised the terms under which companies can use the Global Authorisation for Intra-Company Transfers (‘GAICT’), under an amendment made on the 13th June.

Prior to the amendment, only companies re-exporting certain imported items on the Special Chemicals, Organisms, Materials, Equipment and Technologies (‘SCOMET’) control list, to their foreign parent or subsidiary of a foreign parent were eligible to apply for the GAICT.

Under the terms of the amendment, any Indian company intending to export or re-export certain SCOMET items to its foreign parent or another subsidiary of a foreign parent or its foreign subsidiary can apply for a GAICT, obviating the need for a case-to-case basis pre-export authorisation for the export/re-export of the SCOMET Items/Software/Technology. There are some exceptions to the relevant items, and the authorisation is limited to exports to certain countries.

Lawyers at the firm Economic Laws Practice (‘ELP’) note in a client briefing on the development, that amongst the conditions required for companies to use the authorisation it is essential that:

• The export is an intra-company transfer by an exporter i.e., Indian parent company to its foreign subsidiary (or) Indian subsidiary of a foreign company to its foreign parent/another subsidiary of the foreign parent;
• ‘If a third party i.e., an end-user is involved in the supply chain, such third party should be a foreign parent/another subsidiary of the foreign parent company or a subsidiary of an Indian company.

They say that the policy ‘provides further impetus [to the technology sector] sector for increasing and facilitating timely exports within the four corners of the regulations concerning export control.’
But they also note that a degree of vigilance is required if companies are to use the GAICT – for example, they point out that while the authorisation is valid for exports to the Russian Federation, ‘Given the sanctions which have been announced against Russia, it is critical to note, that while India has no sanctions against Russia, the exporters/re-exporters directly or otherwise may require to take a cautious approach on this behalf before violating any of the regulations operating in the US, European Union, and the UK among others.’
https://content.dgft.gov.in/Website/dgftprod/43d855b9-3799-4095-b9ea-f39c357b2732/English%20PN%20GAICT.pdf