Paragraph 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.
Paragraph 7.07 gives four conditions common to deemed export benefits: supplies go directly to the listed entity, sub-contractors may supply to a main contractor in a defined way, an Indian sub-contractor can supply at the project site if named in the main contract, and steel manufacturers may deliver through service centres on conditions. The Handbook (paragraphs 7.00 to 7.02) says who applies, where, and what criteria apply for each category of supply.
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 7 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. Supplies that qualify for the Policy benefits may also qualify for a GST refund; our GST refund on deemed exports service covers that claim.
Under paragraph 7.07(i), supplies are made directly to the entities in paragraph 7.02; third-party supply is not eligible. A sub-contractor may supply to the main contractor instead of the project, with payment made by the main contractor (7.07(ii)). An Indian sub-contractor supplying at the project site qualifies if named in the main contract, with payment by the Project Authority (7.07(iii)). Steel through service centres is eligible on the conditions in 7.07(iv).
What the Policy says in paragraph 7.07
(i) Direct supply. Supplies are made directly to the entities listed in paragraph 7.02. Third-party supply is not eligible for benefits or exemption.
(ii) Designated recipients and sub-contractors. In all cases supplies are made directly to the designated projects, agencies, units, Advance Authorisation holders or EPCG Authorisation holders. Sub-contractors may, however, make supplies to the main contractor instead of supplying directly to designated projects or agencies. In such cases payments are made to the sub-contractor by the main contractor and not by the Project Authority.
(iii) Sub-contractor at the project site. Supply of domestically manufactured goods by an Indian sub-contractor to any Indian or foreign main contractor, directly at the designated project's or agency's site, is also eligible for deemed export benefit, provided the sub-contractor's name is indicated, either originally or subsequently (but before the date of supply of the goods), in the main contract. In such cases payment is made directly to the sub-contractor by the Project Authority.
(iv) Steel through service centres. Steel manufacturers supplying steel against an Advance Authorisation under paragraph 7.02(a), through their service centres, distributors, dealers or stock yards, are also eligible to claim duty drawback, if the supplies are made in accordance with the Ministry of Steel office memorandum the paragraph cites (dated 27.5.2020, read with the memorandum dated 24.6.2020, as amended from time to time). The invoice against such supplies is raised by the manufacturer on the Advance Authorisation holder. Delivery can be made through the service centres, distributors, dealers or stock yards, which raise the tax invoice on the steel manufacturer bearing a cross-reference for such supplies. The memorandum itself is outside this article.
| Situation | Who is paid | Condition |
|---|---|---|
| Direct supply to a listed entity | The supplier | Supplier is not a third party (7.07(i)) |
| Sub-contractor supplies to the main contractor | Sub-contractor, by the main contractor | Not by the Project Authority (7.07(ii)) |
| Indian sub-contractor supplies at the project site | Sub-contractor, directly by the Project Authority | Name in the main contract before the date of supply (7.07(iii)) |
| Steel via service centres, against Advance Authorisation | Manufacturer invoices the holder | Ministry of Steel memorandum followed (7.07(iv)) |
Procedure under the Handbook
Paragraph 7.00. The policy on deemed exports is in Chapter 7 of the Policy.
Paragraph 7.01 (who applies, and where).
- (a) The supplier or recipient of goods applies for deemed export benefits in ANF-7A, with the documents prescribed there, to the jurisdictional RA as per Appendix 1A (named only), except for category (b) of paragraph 7.02.
- (b) For supply of goods to EOUs only, the DTA supplier claims benefits from the jurisdictional RA, and the recipient EOU applies to the jurisdictional Development Commissioner of SEZ as per Appendix 6J (named only) for claiming benefits, provided the supplier has not claimed any benefit from the RA.
Paragraph 7.02 (criteria for claiming benefits).
| Category | What the Handbook says |
|---|---|
| (a) Supply to Advance Authorisation or DFIA holder | (i) For intermediate goods against an Invalidation Letter issued under paragraph 4.30 of the Handbook, the application for the Advance Authorisation to import duty-exempt inputs is made as per Chapter 4 of the Handbook; terminal excise duty (TED) refund is given in accordance with paragraph 7.03(c) of the Policy, provided there is no exemption. (ii) For supply against an ARO, the Chapter 4 procedure is followed; TED refund under paragraph 7.03(c); duty drawback under paragraph 7.06 of the Policy. |
| (b) Supply to EOU, EHTP, STP or BTP | An Advance Authorisation or DFIA can be obtained as per Chapter 4 of the Handbook for exemption from payment of TED; the procedure of Excise Circular 851/9/2007-CX dated 3.5.2007 read with circular 10/2009-Cus dated 25.2.2009 is followed for removal of goods against CT-3. TED refund is given under paragraph 7.03(c), provided there is no exemption. If no Advance Authorisation is obtained for duty-exempt inputs against such supply, the drawback claim for basic customs duty paid on inputs is filed with the DC concerned. A DTA unit claims benefits from the concerned RA. |
| (c) Supply to an EPCG holder against Invalidation Letter | Application for Advance Authorisation or DFIA is made per Chapter 4 of the Handbook. If not obtained for duty-exempt inputs, duty drawback is allowed on basic customs duty paid on inputs used in the resultant product. |
| (d) to (g) Other categories | An Advance Authorisation or DFIA for duty-exempt inputs may be obtained against a Project Authority Certificate as per Appendix 7C (named only). If not obtained, a claim for duty drawback of basic customs duty may be filed as per ANF-7A. TED refund for projects in paragraph 7.08(iii)(a) of the Policy, for eligible items covered under Schedule IV of the Central Excise Act, 1944, is available provided there is no exemption. |
Read with the Policy, note that paragraph 7.02 of the Handbook, in category (d) to (g), refers to "paragraph 7.08(iii)(a)" for projects, while paragraph 7.08(iii)(a) of the Policy speaks of supplies of fuel to EOUs. Both are printed; neither is reconciled here.
Example with invented names
Vindhya Cable Works Pvt Ltd is a sub-contractor to a foreign main contractor building a power transmission project financed by a notified multilateral agency. Its supply of domestically manufactured cable is delivered at the project site. Under paragraph 7.07(iii) it qualifies if its name appears in the main contract before the date of supply; the Project Authority then pays it directly. If it instead sells to the main contractor away from the site, paragraph 7.07(ii) applies and the main contractor pays it. For its application in ANF-7A, the Handbook (paragraph 7.01(a)) sends it to the jurisdictional RA.
Points to watch
- Third-party supply is not eligible (7.07(i)); who invoices whom decides eligibility.
- The sub-contractor's name must be in the main contract before the date of supply (7.07(iii)).
- Steel through service centres: the manufacturer, not the centre, invoices the Advance Authorisation holder (7.07(iv)).
- For supplies to EOUs, the recipient may claim only if the supplier has not (Handbook paragraph 7.01(b)).
Related reading and the Act
The categories and benefits are in paragraphs 7.00 to 7.02 and paragraphs 7.03 to 7.06 and 7.08 of the Policy. For the GST side of supplies to EOUs, see EOU Deemed Export Refund: When the Recipient Claims. The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992; the Handbook is issued under section 6. The Policy is not a statute; it binds through the Act and the conditions of each authorisation.
Need help with a deemed export structure?
Who invoices whom and who pays whom is often the whole question. Our GST refund on deemed exports team can review the contract chain and the invoices before you claim.
Key takeaways
- Paragraph 7.07(i): supply directly to the listed entity; third-party supply is not eligible.
- Paragraph 7.07(ii): sub-contractor supplies to the main contractor, paid by the main contractor.
- Paragraph 7.07(iii): sub-contractor at the project site must be named in the main contract before supply; paid by the Project Authority.
- Paragraph 7.07(iv): steel through service centres only against an Advance Authorisation and under the Ministry of Steel memorandum.
- Handbook paragraph 7.01: ANF-7A to the jurisdictional RA; EOU supplies have a supplier-first rule.
Read next
- Paragraphs 7.03 to 7.06 and 7.08 of the Foreign Trade Policy, 2023: benefits for deemed exports
- Paragraphs 7.03 to 7.05, 7.07 and 7.09 of the Handbook of Procedures, 2023: claiming deemed export benefits
- Deemed Export Refunds: Who Claims, and the Undertakings
- Deemed Exports Under FTP: Categories and Benefits
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.