Circular No. 20/2025-Customs, Dated 24-07-2025
1. Background
The Central Board of Indirect Taxes and Customs (CBIC) has issued a circular to clarify the correlation requirements of inputs with export products under the Duty-Free Import Authorisation (DFIA) Scheme, as governed by the Foreign Trade Policy (FTP), 2023.
2. Key Clarification on Input Correlation
The circular draws a clear distinction based on the relevant paragraphs of the FTP:
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Paragraph 4.29 Inputs: For inputs listed under Para 4.29, importers must establish technical correlation between the imported inputs and the exported product. This includes alignment of:
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- Technical characteristics
- Quality
- Specifications
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Paragraphs 4.12 and 4.28(iv) Inputs: For inputs falling under Para 4.12 and Para 4.28(iv), the requirement is more relaxed. Exporters are only required to:
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Declare the specific name of the input
- Mention the quantity used in the exported product
No disclosure of technical details, quality standards, or specifications is necessary for these categories.
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3. Implications for Importers and Exporters
- Importers must review the classification of their inputs under the FTP to determine the extent of correlation documentation required.
- Only those dealing with Para 4.29 items need to prepare detailed technical justifications.
- For other categories, simplified declaration suffices, aiding in ease of compliance and trade facilitation.
4. Direction to Trade and Customs Authorities
The CBIC has instructed customs formations and trade associations to:
- Issue relevant Public Notices and Standing Orders
- Ensure that both officers and exporters are informed about the updated correlation requirements
- Promote uniformity in application and avoid procedural delays during clearances
5. Summary
This clarification by the CBIC helps streamline the documentation process under the DFIA Scheme by distinguishing the input categories that necessitate technical correlation. It ensures that compliance burdens are proportionate and policy-aligned, while also facilitating a smoother trade process.
