Paragraphs 7 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.
A deemed export is a supply of goods that does not leave the country but is treated like an export for certain benefits. Paragraph 7.00 states the purpose of Chapter 7, paragraph 7.01 defines a deemed export (separately for the Policy and for GST), and paragraph 7.02 lists the categories of supply: three by a manufacturer and four by a main contractor or sub-contractor.
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 Handbook procedure that goes with these categories is taken up in our article on paragraph 7.07, and the benefits are explained in our article on paragraphs 7.03 to 7.06 and 7.08. Later Notifications, Public Notices and Trade Notices should be checked. If you supply against any of these categories and want to know how the GST side is claimed, see our GST refund on deemed exports service.
Paragraph 7.01(i): for the Policy, a deemed export is a transaction in which the goods do not leave the country and payment is received in Indian rupees or in foreign exchange; supplies of the paragraph 7.02 kind count if the goods are manufactured in India. Paragraph 7.01(ii): for GST, deemed exports are only the supplies notified under section 147 of the CGST/SGST Act. Paragraph 7.02: categories (a) to (c) by a manufacturer and (d) to (g) by a main or sub-contractor.
Paragraph 7.00 and paragraph 7.01
Paragraph 7.00 (objective). To provide a level-playing field to domestic manufacturers and to promote Make in India, in certain specified cases, as may be decided by the Government from time to time.
Paragraph 7.01(i) (for the Policy). "Deemed Exports" for the purpose of the Policy refer to transactions in which goods supplied do not leave the country, and payment for such supplies is received either in Indian rupees or in foreign exchange. Supply of goods as specified in paragraph 7.02 is regarded as a deemed export provided the goods are manufactured in India.
Paragraph 7.01(ii) (for GST). "Deemed Exports" for GST include only the supplies notified under section 147 of the CGST/SGST Act on the recommendations of the GST Council. The benefits of GST and the conditions applicable to them are as specified by the GST Council and the relevant rules and notifications. This article gives no GST rule. For the GST side see Deemed Exports under GST, Section 147 of the CGST Act, 2017 and Deemed Exports: FTP Para 7.02 Against GST Notification 48/2017, which compares the Policy list with the GST notification.
Paragraph 7.02: the categories of supply
The paragraph says that supply of goods under categories (a) to (c) by a manufacturer, and under categories (d) to (g) by a main contractor or sub-contractor, is regarded as a deemed export.
A. Supply by a manufacturer
| Category | Supply |
|---|---|
| (a) | Goods against an Advance Authorisation, an Advance Authorisation for annual requirement or a DFIA (the duty-exempt import authorisation scheme the Policy abbreviates as DFIA). |
| (b) | Goods to an EOU, STP, EHTP or BTP unit. |
| (c) | Capital goods against an EPCG Authorisation. |
B. Supply by a main or sub-contractor
| Category | Supply |
|---|---|
| (d)(i) | Goods to projects financed by multilateral or bilateral agencies or funds as notified by the Department of Economic Affairs (DEA), Ministry of Finance, where the legal agreements provide for tender evaluation without including customs duty. |
| (d)(ii) | Supply and installation of goods and equipment (single responsibility of turnkey contracts) to such projects, for which bids have been invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for goods manufactured abroad. |
| (d)(iii), (iv) | Supplies in this category are under International Competitive Bidding (ICB) in accordance with the procedures of those agencies or funds. A list of agencies covered is in Appendix 7A (named only). |
| (e)(i) | Goods to any project or purpose for which the Ministry of Finance, by Customs Notification 50/2017-Customs dated 30.6.2017 as amended, permits import at zero basic customs duty subject to its conditions. Deemed export benefits are available only if the supply is made under the ICB procedure. |
| (e)(ii) | Goods required for setting up a mega power project, as specified in list 31 at serial 598 of that Notification, subject to its conditions; the project must conform to the threshold generation capacity specified in that Notification. |
| (e)(iii) | For mega power projects, the ICB condition is not mandatory if the requisite quantum of power has been tied up through tariff-based competitive bidding, or if the project has been awarded through tariff-based competitive bidding. |
| (f) | Goods to the United Nations or an international organisation for official use, or supplied to projects financed by the United Nations or an international organisation approved by the Government of India under section 3 of the United Nations (Privileges and Immunities) Act, 1947. The list of such organisations and the conditions are in Customs Notification 84/97-Customs dated 11.11.1997, as amended. A list of agencies covered is in Appendix 7B (named only). |
| (g) | Goods to nuclear power projects, if: (i) the goods are required for setting up a nuclear power project specified in list 32 at serial 602 of Customs Notification 50/2017-Customs dated 30.6.2017, as amended, subject to its conditions; (ii) the project has a capacity of 440 MW or more; (iii) a certificate to that effect is issued by an officer not below the rank of Joint Secretary to the Government of India in the Department of Atomic Energy; and (iv) the tender is invited through national competitive bidding (NCB) or ICB. |
The Customs notifications are named as the paragraph prints them; their lists are not read out here.
Example with invented names
Surya Structural Fabricators Pvt Ltd manufactures steel structures in India. It supplies them (1) to an exporter that holds an Advance Authorisation, which fits category (a); and (2) directly to a hydro project financed by a multilateral agency notified by the DEA, where bids were invited through International Competitive Bidding. Category (d)(i) may fit that second sale. For a sale to a nuclear power project, category (g) requires a project capacity of 440 MW or more, the Atomic Energy certificate and NCB or ICB tender, among other conditions. Which benefits follow is a separate question answered by paragraphs 7.03 to 7.08.
Points to watch
- A sale must fit a category in paragraph 7.02 to be a deemed export for the Policy; paragraph 7.01(ii) is narrower for GST.
- Goods must be manufactured in India (paragraph 7.01(i)).
- Categories (d)(i), (d)(ii), (e)(i) and (f) turn on notifications of other departments; the current text of those notifications is outside this article.
- The GST position follows section 147 and the notifications under it, which do not always match the Policy list.
Related reading and the Act
For the Policy's benefits, see paragraphs 7.03 to 7.06 and 7.08; for conditions, paragraph 7.07. A guide to categories and benefits: Deemed Exports Under FTP: Categories and Benefits. The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The Policy is not a statute; it binds through the Act and the conditions of each authorisation.
Need help with a deemed export claim?
The Policy category, the GST notification and the project paperwork must all line up before a claim is filed. Our GST refund on deemed exports team can check them with you.
Key takeaways
- Paragraph 7.01(i): goods stay in India; payment in Indian rupees or foreign exchange; goods manufactured in India.
- Paragraph 7.01(ii): for GST, only supplies notified under section 147 are deemed exports.
- Paragraph 7.02(a) to (c): supplies by a manufacturer against an Advance Authorisation, to EOU, STP, EHTP or BTP units, and of capital goods against EPCG.
- Paragraph 7.02(d) to (g): supplies to funded projects, zero-duty projects and mega power projects, United Nations bodies and nuclear power projects of 440 MW or more.
- ICB is a condition in several categories; for mega power projects it can be waived on tariff-based competitive bidding.
Read next
- Paragraphs 7.03 to 7.06 and 7.08 of the Foreign Trade Policy, 2023: benefits for deemed exports
- Paragraph 7.07 of the Foreign Trade Policy, 2023: common conditions for deemed export benefits
- Deemed Exports: FTP Para 7.02 Against GST Notification 48/2017
- How to Claim a GST Refund on Deemed Exports
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.