Paragraphs 4 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 4.21 of the Policy decides in what currency export proceeds must be realised for an Advance Authorisation, and whether exports to SEZ units and developers count towards the export obligation. Paragraph 4.23 lets goods exported under an Advance Authorisation or DFIA be re-imported in the same or substantially the same form, and paragraph 4.42 of the Handbook lets defective imported goods be re-exported. (Paragraph 4.22 is explained separately.)
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. The procedure is taken from Chapter 4 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Notifications and Public Notices should be checked. Where an export has been made and the refund side is in question, our GST refund on exports service can help.
Paragraph 4.21(i) of the Policy says export proceeds are realised in convertible foreign currency or in Indian Rupees, by reference to paragraph 2.53, and sends realisation and non-realisation to paragraphs 2.52 to 2.54. Paragraphs 2.52 and 2.53 were substituted on 20 August 2026 (Notification 30/2026-27), so the cross-reference no longer matches the chapter text. Exports to SEZ units count towards the export obligation if payment comes from the unit's Foreign Currency Account (4.21(ii)); exports to SEZ developers count even if paid in Indian Rupees (4.21(iii)). Re-import of exported goods needs intimation within one month (paragraph 4.23).
What the Policy says
Paragraph 4.21(i): realisation currency
Export proceeds are to be realised in convertible foreign currency or in Indian Rupees as per paragraph 2.53 of the Policy, except as otherwise specified. The provisions on realisation and non-realisation of export proceeds are given in paragraphs 2.52, 2.53 and 2.54.
A point to watch. Paragraph 4.21 cites paragraphs 2.52 and 2.53 as they stood before Notification 30/2026-27 dated 20 August 2026, which substituted both paragraphs. The chapter text of the Policy on the DGFT website consulted on 2 October 2026 prints paragraph 4.21 as above; read the cross-reference as pointing to the paragraphs 2.52 and 2.53 now in force. The substituted text and the earlier text are set out in our article on paragraphs 2.52 and 2.53 of the Policy. For the non-realisation rule of paragraph 2.54, see paragraphs 2.54 and 2.55.
Paragraph 4.21(ii) to (iv): exports to SEZ
| Sub-paragraph | Rule |
|---|---|
| 4.21(ii) | Export to SEZ Units is taken into account for discharge of the export obligation, provided payment is realised from the Foreign Currency Account of the SEZ unit. |
| 4.21(iii) | Export to SEZ Developers or Co-developers can also be taken into account for discharge of the export obligation even if payment is realised in Indian Rupees. |
| 4.21(iv) | The holder files a Bill of Export for export to an SEZ unit, developer or co-developer, in accordance with the procedures in the SEZ Rules, 2006. |
Note the difference. For a unit, the currency of payment matters; for a developer or co-developer it does not. The SEZ Rules, 2006 are named as printed and are not explained here. For SEZ procedures, see our guide on SEZ customs procedures for import and export.
Paragraph 4.23: re-import of exported goods
Goods exported under an Advance Authorisation or DFIA may be re-imported in the same or substantially the same form, subject to such conditions as may be specified by the Department of Revenue. The holder must also inform the Regional Authority which issued the authorisation about the re-import within one month from the date of re-import. The paragraph does not set out the Customs conditions and nothing is said here about duty on re-import; those are matters for the Customs Act and the Department of Revenue. DFIA, the Policy's abbreviation for the duty-exempt import authorisation scheme, is explained in our articles on paragraphs 4.24 to 4.29.
What the Handbook requires: paragraph 4.42
Goods imported against an Advance Authorisation that are found defective or unfit for use may be re-exported, as per Department of Revenue guidelines. The holder must inform the Regional Authority that issued the authorisation before re-export of such defective goods. The Handbook sets no time limit and no form. The words "before re-export" matter: the Regional Authority is told in advance, not after the goods have left. Note the mirror image: paragraph 4.23 of the Policy concerns goods exported and then re-imported, with intimation after; paragraph 4.42 concerns goods imported and then re-exported, with intimation before.
The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (section 5 of the FTDR Act); the Handbook is issued by the Director General under section 6 (section 6 of the FTDR Act). The Policy is not a statute; it binds through the Act and the conditions of each authorisation.
A worked example
Verma Cables Private Limited, an invented manufacturer exporter, holds an Advance Authorisation and ships goods to Sethi Zone Components, an invented SEZ unit. If the SEZ unit pays from its Foreign Currency Account, the shipment counts towards the export obligation (paragraph 4.21(ii)); Verma files a Bill of Export under the SEZ Rules, 2006 (paragraph 4.21(iv)). A second shipment goes to an SEZ developer and is paid in Indian Rupees; it also counts (paragraph 4.21(iii)). A third consignment, sent abroad, comes back because the buyer cancelled; Verma re-imports it in the same form on the conditions the Department of Revenue specifies and informs its Regional Authority within one month (paragraph 4.23). Separately, an imported component turns out defective: before sending it back, Verma informs the Regional Authority (paragraph 4.42 of the Handbook).
Need help with an export-side claim?
Re-imports, SEZ supplies and returned goods each raise a separate refund or credit question. Our GST refund on exports team can look at the export documents and the refund position together.
Key takeaways
- Export proceeds: convertible foreign currency or Indian Rupees by reference to paragraph 2.53 (paragraph 4.21(i)); paragraphs 2.52 and 2.53 were substituted by Notification 30/2026-27 of 20 August 2026.
- SEZ unit exports count if paid from the unit's Foreign Currency Account; SEZ developer exports count even if paid in Indian Rupees (paragraph 4.21(ii) and (iii)).
- A Bill of Export is filed for SEZ exports (paragraph 4.21(iv)).
- Re-import in the same or substantially the same form needs intimation within one month (paragraph 4.23).
- Defective imports can be re-exported with prior intimation to the Regional Authority (Handbook paragraph 4.42).
Read next
- Paragraphs 2.52 and 2.53 of the Foreign Trade Policy, 2023: denomination of export contracts and rupee realisation
- Paragraph 4.20 of the Foreign Trade Policy, 2023: domestic sourcing, Advance Release Order and invalidation letter
- Paragraph 4.22 of the Foreign Trade Policy, 2023: export obligation period and extension
- Export refund in Indian Rupees and the Special Vostro Account
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.