FTP Amnesty Scheme 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.
The one-time FTP Amnesty Scheme announced with the Foreign Trade Policy 2023 let holders in default under Advance Authorisation and EPCG regularise by paying the exempted customs duties with interest capped at 100% of those duties. That window has closed; defaults are now regularised under the ordinary Handbook of Procedures route.
How Export Obligation Arises
Several Foreign Trade Policy schemes work on the same bargain: the government forgoes duty at import, and the exporter commits to export. Two schemes account for most obligations:
- Advance Authorisation — duty-free import of inputs physically incorporated in the export product, against an obligation to export the resultant product within a specified period, with a stipulated value addition.
- EPCG — import of capital goods at zero or concessional duty, against an obligation to export a multiple of the duty saved within a specified period.
The obligation is real, tracked, and enforced. It survives changes in the business, and it does not lapse simply because the market moved.
Why Defaults Happen
Rarely through bad faith. The recurring causes are:
- An overseas buyer or market that disappeared after the capital goods were imported
- Capacity commissioned late, compressing the obligation period
- Currency movement that made the export unviable at the committed value
- Product line discontinued or specification superseded
- Documentation gaps — exports actually made but not correctly linked to the authorisation
That last one is worth dwelling on. A meaningful share of apparent defaults are documentation failures, not commercial ones: the exports happened, but the shipping bills did not carry the authorisation details, or the e-BRCs were never mapped. Before treating a default as real, reconcile it.
The One-Time Amnesty Scheme
Announced with the Foreign Trade Policy 2023, the Amnesty Scheme addressed a backlog of old, unclosed authorisations where accumulated interest had grown far beyond the duty involved, making regularisation economically impossible and leaving cases stuck indefinitely.
Its central features:
| Feature | Effect |
|---|---|
| Coverage | Defaults under Advance Authorisation and EPCG |
| Payment required | Customs duties exempted on the unfulfilled portion |
| Interest | Capped at 100% of the exempted duties |
| Interest on additional and special additional customs duty | Not payable |
| Nature | One-time window, with successive extensions of the application deadline |
| Outcome | Authorisation closed; the holder returned to good standing |
The interest cap was the substance of the relief. Where interest had accumulated over a decade, capping it at the duty amount frequently reduced the payable sum dramatically and made closure viable.
The scheme has closed. Its final application deadline passed after the extensions granted, and it is not open to fresh applications. Exporters occasionally still encounter advice suggesting otherwise — check the current DGFT position rather than acting on it.
Regularising a Default Now
The ordinary route under the Handbook of Procedures remains available, and the sequence is:
- Reconcile first. Pull every shipping bill and e-BRC for the period and check whether exports were made but not linked. Getting a shipping bill amended to reflect the authorisation is far cheaper than paying duty on a fulfilled obligation.
- Quantify the shortfall — in value or quantity terms as the authorisation requires — and compute the proportionate duty saved on the unfulfilled portion.
- Check whether an extension is still available. Extension on payment of the prescribed composition fee, applied for within the permitted window, is substantially cheaper than regularisation.
- Pay the duty with interest on the unfulfilled portion, through the prescribed challan, and obtain proof of payment.
- Apply for closure (redemption) with the authorisation, shipping bills, e-BRCs, the reconciliation statement and the payment evidence.
- Obtain the redemption or closure letter and retain it. This is the document that proves the matter is finished.
Preventing the Problem
- Track obligation from day one. Maintain a register per authorisation showing the obligation, the period, exports linked to date, and the balance.
- Put the authorisation number on the shipping bill. This single discipline prevents most documentation-driven defaults.
- Map e-BRCs to authorisations as they are issued, not at closure.
- Apply for extension before expiry. The composition fee is a fraction of duty plus interest.
- Do not import more than you can realistically export against. Under EPCG in particular, the obligation is a multiple of the duty saved, and an over-optimistic capital import creates an obligation the business cannot service.
- Close authorisations promptly once fulfilled. Open authorisations that were actually completed still block new ones.
Practical Tips
- Run an annual reconciliation of all open authorisations, and treat it as a board-level item where the exposure is material.
- Where a business is being sold or restructured, open export obligations are a diligence item — they travel with the entity.
- Keep redemption letters permanently; they are asked for years later.
- If an old default is blocking new authorisations, quantify it properly before assuming it is unaffordable — a reconciliation often reduces it substantially.