Deemed Exports Under FTP explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Deemed exports are supplies of India-made goods that do not physically leave the country but are treated as exports under the Foreign Trade Policy 2023 — such as supplies to EOUs or against advance/EPCG authorisations. They attract benefits like advance authorisation, deemed export drawback and, historically, terminal excise duty refund.
Overview
Not every export involves goods crossing the border. The Foreign Trade Policy recognises that certain domestic supplies support the export effort or earn foreign exchange, and treats them as deemed exports. This lets domestic suppliers to exporters and to specified projects enjoy export-linked benefits even though the goods stay in India.
Legal Basis
Deemed exports are defined and governed by the Foreign Trade Policy 2023 (the chapter on Deemed Exports) issued under the Foreign Trade (Development and Regulation) Act, 1992, with procedural detail in the Handbook of Procedures. The GST treatment of notified deemed exports flows from separate notifications under the CGST Act, 2017. The concept predates GST and originally interacted with terminal excise duty and central excise.
Categories of Deemed Exports
Under FTP 2023, the following supplies are typically regarded as deemed exports (subject to the specific conditions of each category):
- Supply of goods against an Advance Authorisation / Advance Authorisation for annual requirement / DFIA.
- Supply of goods to Export Oriented Units (EOUs), EHTP, STP or BTP units.
- Supply of capital goods against an EPCG authorisation.
- Supply of goods to projects financed by multilateral or bilateral agencies under international competitive bidding.
- Supply to mega power projects and certain notified infrastructure / nuclear projects.
Benefits
| Benefit | Nature |
|---|---|
| Advance Authorisation | Duty-free import of inputs used to manufacture the deemed-export supply. |
| Deemed Export Drawback | Refund of customs duty component on inputs, on the pattern of drawback. |
| Terminal Excise Duty refund | Refund of TED where duty was paid and exemption was not available (largely subsumed post-GST). |
| GST refund (notified cases) | Refund of tax on notified deemed-export supplies, to supplier or recipient per notification. |
The precise benefit available depends on the category of supply and whether the duty was exempted upfront or paid and then refunded.
Deemed Exports and GST
Under GST, the government has notified certain supplies as deemed exports — for example supplies against advance authorisation, to EOUs and of capital goods against EPCG. Such supplies are not zero-rated like physical exports; instead GST is charged and is refundable, and the refund may be claimed by either the supplier or the recipient depending on the arrangement. This GST benefit runs parallel to, and separately from, the FTP benefit.
Worked Illustration
A domestic manufacturer supplies machinery worth ₹1 crore to an EOU. Although the machinery never leaves India, the supply is a deemed export. The supplier may claim deemed export benefits under the FTP (such as drawback on the customs component of inputs) and, if the supply is a notified deemed export under GST, the GST charged can be claimed as a refund per the relevant notification.
Common Pitfalls
- Assuming deemed exports are zero-rated under GST — they are taxable but refundable, unlike physical exports.
- Missing the documentation (authorisation, disclaimer, proof of receipt by the EOU/project) needed to claim benefits.
- Confusing which party — supplier or recipient — is entitled to claim in a given category.
- Overlooking time limits for filing the deemed-export benefit and refund claims.