Paragraphs 2 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.
Paragraph 2.03 applies India's domestic laws, standards and norms to imports, and allows the DGFT to exempt goods used in making export products. Paragraph 2.03A sets out the conditions on which inputs can be imported without complying with the mandatory Quality Control Orders (QCOs) under an Advance Authorisation, by an Export Oriented Unit or by an SEZ unit or developer. There is no Handbook paragraph for these two provisions; the paragraphs cross-refer to paragraphs 4.36 and 4.40 of the Handbook.
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. Later Notifications, Public Notices and Trade Notices should be checked before you act. For the standards side of imports, see our guides on mandatory BIS certification and QCOs and, if your imported product needs certification, our BIS for importers service.
Under paragraph 2.03(a), domestic laws, rules, standards and safety norms that apply to domestically produced goods apply to imports, mutatis mutandis, unless specifically exempted. Paragraph 2.03(b) lets the DGFT exempt goods used in manufacture of export products. Under paragraph 2.03A, an Advance Authorisation holder can import inputs without QCO compliance only with a pre-import condition, a specific endorsement, and no transfer to the domestic area. The unutilised portion carries a composition fee of 10% of CIF value to the DGFT (paragraph 2.03A(i)(d)). The exemption is for physical exports only.
What the Policy says
Paragraph 2.03: imports must meet domestic norms
- (a) Domestic laws, rules, orders, regulations, technical specifications, environmental, safety and health norms applicable to domestically produced goods apply, mutatis mutandis, to imports, unless specifically exempted.
- (b) Goods to be utilised or consumed in manufacture of export products may be exempted by the DGFT from domestic standards or quality specifications.
- (c) The list of Ministries and Departments whose notifications on mandatory QCOs are exempted by the DGFT for goods utilised or consumed in manufacture of export products is given in Appendix 2Y of the Policy. This article names the Appendix and goes no further.
The clause "mutatis mutandis" means "with the necessary changes". The Policy does not list the laws or the products.
Paragraph 2.03A: inputs under Advance Authorisation, EOU and SEZ
The heading is the importability of items under Advance Authorisation, EOU or SEZ without compliance with the mandatory QCOs, "subjected to the following conditions".
(i) For Advance Authorisation. Our guide on Advance Authorisation export obligation, clubbing and EODC explains the scheme; the conditions of this paragraph are:
| Clause | Condition |
|---|---|
| (a) | Import is with a pre-import condition. The inputs are used in manufacturing the export product (making normal allowance for wastage) and exported under the same authorisation |
| (b) | The exemption must be specifically endorsed in the Advance Authorisation, on the holder's request. Imports without a specific endorsement must comply with the mandatory QCOs |
| (c) | Unutilised imports, or products made from inputs imported without QCO compliance, shall not be transferred to the DTA, even after regularisation of default in export obligation. "Unutilised imports" means imported inputs which have not been accounted for, as per SION or ad-hoc norms, in the product exported under the same authorisation |
| (d) | Unutilised imports are regularised: (1) by destruction in the presence of the jurisdictional GST or Customs authorities, who certify the destruction, or by re-export; and (2) in addition, irrespective of origin, payment of effective duty on MFN basis with interest on the exempted material to the Customs authorities, plus a composition fee equal to 10% of CIF value of unutilised imported inputs to the DGFT. Proof is to be submitted to the concerned Regional Authority before grant of EODC |
| (e) | The exemption is for physical exports only and is not allowed for deemed exports by Advance Authorisation holders |
| (f) | The facility of clubbing under paragraph 4.36 of the Handbook is not available |
| (g) | The export obligation period for such authorisations is as per paragraph 4.40 of the Handbook |
| (h) | Import of inputs without QCO compliance under DFIA (the duty-exempt import authorisation scheme) is not allowed |
| (i) | The exemption is further subject to paragraph 2.03(c) |
The sub-paragraph lettering in the copy is uneven (the clauses run (a) to (i) under (i), and then "(i)" appears again under (ii) and (iii)); this article follows the print.
(ii) For Export Oriented Units. Exemption from mandatory QCOs issued under the BIS Act, 2016 is provided to an EOU on import of inputs required for export production. No DTA clearance is allowed of such inputs or of goods made from them. An undertaking to that effect is submitted to the Customs authorities at the time of importation, with a copy to the concerned Development Commissioner. The exemption is for physical exports only, not deemed exports, and is further subject to paragraph 2.03(c).
(iii) For SEZ. Exemption from QCOs issued under the BIS Act, 2016 is provided to SEZ units or developers for import of all permissible goods, including raw materials, components, consumables, spares and capital goods, within SEZs, in accordance with the SEZ Act, 2005 and rule 27 of the SEZ Rules, 2006 made under it, as printed. It applies only for use of the imported goods within the SEZ for authorised operations. Any removal, transfer or clearance of such goods, or goods made from them, into the DTA is subject to compliance with applicable QCOs, BIS requirements and other laws in force at the time of clearance. An undertaking to that effect is submitted to the Development Commissioner at the time of importation by the SEZ unit or developer. This article does not explain the SEZ Act or its Rules.
A practical example
Granite Hill Appliances, an invented Advance Authorisation holder, imports components that are subject to a mandatory QCO, to make a product it will export. It asks that the exemption be endorsed on the authorisation (clause (b)); without the endorsement the import must meet the QCO. At the end of the export period some components remain unused. They cannot go to the DTA (clause (c)). The company has two courses under clause (d): destroy them in front of the GST or Customs authority and obtain a certificate, or re-export them. In addition it pays the effective duty on MFN basis with interest, and a composition fee of 10% of the CIF value of the unutilised inputs to the DGFT, and sends proof to the Regional Authority before it asks for the EODC. Had the company planned a deemed export instead of a physical export, the exemption would not have been available (clause (e)). For the duty-exempt scheme referred to in clause (h), see our guide on DFIA against Advance Authorisation.
Need help with standards on imports?
If an input or product you import is subject to a mandatory standard, the first question is whether an exemption applies and what it needs. Our team can help with certification and compliance under our BIS for importers service.
Key takeaways
- Domestic laws, standards and norms apply to imports unless exempted (paragraph 2.03(a)).
- The DGFT may exempt goods used in manufacture of export products from domestic standards (paragraph 2.03(b)); Appendix 2Y is named for the Ministries and Departments concerned.
- Under Advance Authorisation the exemption needs a pre-import condition and a specific endorsement.
- Unutilised imports cannot go to the DTA; they are destroyed or re-exported, with effective duty and interest and a composition fee of 10% of CIF value (paragraph 2.03A(i)(c), (d)).
- The exemption is for physical exports only, is not available under DFIA, and SEZ inputs cleared into the DTA must meet QCOs at the time of clearance.
Read next
- Paragraphs 2.00 to 2.02: the policy for imports and exports and ITC(HS)
- Paragraphs 2.04 and 2.11: procedures, applications and application fee
- Mandatory BIS certification: products and QCOs
- Section 5 of the Foreign Trade (Development and Regulation) Act, 1992: the foreign trade policy
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.