Many proposals of foreign direct investment for setting up duty free shops at airport/ports are being considered by the Foreign Investment Promotion Board (FIPB). FIPB considers these proposals in totality (i.e. if it includes technical collaboration/industrial license apart from foreign investment) for composite approval or, otherwise keeping in view sectoral requirements and the sectoral policies vis-a-vis the proposal(s). The recommendation of FIPB in respect of these proposals is only for foreign financial and technical collaboration. Foreign investors will, however, need to take other prescribed clearances separately. This is in accordance with the guidelines issued by the Department of Industrial Policy and Promotion, Secretariat of Industrial Assistance (FC Division) under the Press Note No. 3 (1997 series) dated 07.01.1997.

2. In this context, the FIPB’s approval is only for the purpose of permitting foreign investment and any such approval does not automatically confer a right on the applicant to open a duty free shop at any port. The observance of any conditions stipulated under the Customs Act, 1962 and rules and regulations made thereunder is mandatory. CBEC has laid down instructions, conditions and guidelines for setting up private bonded warehouse from time-to-time, notably under circulars Nos. 68/95 dated 15.6.95, 99/95 dated 20.9.95, 28/96-Cus dated 14.5.96 and 18/2007-Cus dated 24.04.2007. At present, duty free shops can only be set up in the Customs areas.

3. It is therefore reiterated that jurisdictional Commissioners of Customs/Central Excise are required to ensure that the conditions, restrictions and guidelines issued in this regard and statutory requirements are followed scrupulously before grant of a license for setting up a duty free shop even in cases where the FIPB has approved the proposal.

4. Difficulties, if any, in implementation of these circular, may be brought to the notice of the Directorate General of Export Promotion, New Delhi.

5. Receipt of this may kindly be acknowledged.

Yours faithfully
(M.Vinod Kumar)
Addl. Director General

F. No. DGEP/FIPB/100/2008

ieport.com - India's Premier portal on Customs matters