DFIA for Free of Cost and Paid Material

4.57

An exporter may apply for a DFIA for import of items as per SION, some or all of which may also include items that are supplied free of cost.

In such cases, for calculation of value addition, the notional value of free of cost inputs along with value of other duty-free inputs shall be taken into consideration. However, if all the inputs are supplied free of cost, the exporter shall also have the option to follow the provision prescribed in paragraph 4.2.7 of the Policy.

In such cases, a specific endorsement shall be made on the exchange control copy of the DFIA disallowing remittances for the material being supplied free of cost. All inputs imported shall be utilised in the manufacturing of the product except the wastage.

The value addition in the case of such DFIAs would be computed by adding the notional value of the free of cost material to both the CIF value of imports and FOB value of exports.