India: DGCA releases draft regulations on the civil use of drones

November 7, 2017
GST Registration
ISSUE No. 23
November 07, 2017

India: DGCA releases draft regulations on the civil use of drones

The DirectorateDrones go by many names, such as unmanned aerial vehicles (UAVs) and unmanned aircraft systems (UASs). Yet no matter what the name is, drones.

India: MCA imposes restriction on layers of subsidiaries

The Ministry of Corporate Affairs (hereinafter referred to as the “MCA”), vide notification No. G.S.R 1176(E) dated September 20, 2017.

India: Night Shift for women in Haryana

Recently, the Haryana Government, vide its notification dated August 17, 2017 has provided a long list of compliances and statutory obligations which are to be adhered to by employers, if they wish to employ women for night shifts.

India: Embedded Tax and the Apparel Sector

Goods, Services and taxesIn the wake of the new GST scheme, the exporters of garments in India are facing uncertainty and dilemma as the government decided to slash duty drawback to 2 percent from 7.5 percent with effect from October 1, 2017.

India: Discount Mechanism & Tie in Arrangement Anti-Competitive For Hyundai

competition commission of indiaIn a recent case between Fx Enterprise Solutions India Pvt. Ltd. (hereinafter referred to as the ‘Informant’) and Hyundai Motor India Limited (hereinafter referred to as the ‘Opposite Party’) (Case No. 36 of 2014)

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India: Government enforces BIS Act, introduces new BIS Rules

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India: DGCA releases draft regulations on the civil use of drones

Directorate General of Civil Aviation



Drones go by many names, such as unmanned aerial vehicles (UAVs) and unmanned aircraft systems (UASs). Yet no matter what the name is, drones are basically aircrafts controlled remotely which do not involve an onboard human pilot. Different kinds of techniques could be used to control UAVs’ flights, such as onboard computers which make the control fully autonomous, through the use of a remote control by ground operators, or by operators in another vehicle on land or in the air.

The term unmanned aircraft system (hereinafter referred to as the ‘UAS’) was adopted by the United States Department of Defense (DoD) and the United States Federal Aviation Administration in 2005 according to their Unmanned Aircraft System Roadmap 2005–2030[1] . It is broadly defined as,
“powered, aerial vehicle that does not carry a human operator, uses aerodynamic forces to provide vehicle lift, can fly autonomously or be piloted remotely, can be expendable or recoverable, and can carry a lethal or nonlethal payload.”

Previously, the use of drones were limited to the military. The first large scale use of drones was in 1959, when the U.S. Air Force, concerned about losing pilots over hostile territory, began planning for the use of unmanned aircraft. Since then, the commercial drone industry has undergone significant technological developments. There here have been efforts to regulate the use of UAS to ensure that safety measures are in place even as the industry is seeing an increase in the number of commercial drones being used for defense, agriculture, filming and weather monitoring among others.

In pursuance to the above, the Directorate General of Civil Aviation (hereinafter referred to as the ‘DGCA’) on November 1, 2017, released a draft regulations stipulating the requirements for Operation of Civil Remotely Pilot Aircraft System. Previously, in India, DGCA had on October 7, 2014 released a public notice banning the use of UAS in the country. The notice for the first time recognized the menace of drones and acknowledged the underling safety and privacy issue in it. It conclude by stating that, till the time new regulations are issued, no non-governmental agency, organization, or an individual will launch a UAS in Indian Civil Airspace for any purpose whatsoever.

Further, on April 21, 2016, the DGCA released draft guidelines for obtaining Unique Identification Number and Operation of Civil Unmanned Aircraft System. The said notice defined for the first time, technical concepts such as UA[2] , RPS[3] , C2 link[4] . It acknowledged to a greater extent the potential for misuse of UAS, and further stated that while it will be advantageous to use UAS for damage assessment of property and life in areas affected with natural calamities, surveys, critical infrastructure monitoring including power facilities, ports and pipelines, an unchecked use of UAS and proliferation of it into the recreational field is likely to be misused. It further laid down the guidelines for obtaining UIN & operation of civil UAS. All the UAS operators were required to adhere to these guidelines in the interest of flight safety.

DGCA will register all civil Unmanned Aircraft and issue a Unmanned Aircraft Operator Permit (hereinafter referred to as the UAOP) on a case to case basis.

The salient features of the Draft Regulations are –

  • Categories of RPARemote Pilot Aircraft (hereinafter referred to as the ‘RPA’) for civil purposes are classified into five categories –
    • Nano (Less than or equal to 250 grams)
    • Micro (Greater than 250 grams and less than or equal to 2 kg.)
    • Mini (Greater than 2 kg and less than or equal to 25 kg.)
    • Small (Greater than 25 kg and less than or equal to 150 kg)
    • Large (Greater than 150 kg)
  • ApplicabilityThe guidelines are applicable to all kinds of civil Remotely Piloted Aircraft Systems which are remotely piloted from a Remote Pilot Station.
  • Application ProcessApplications by the DGCA will be processed on a case-to-case basis and the DGCA upon receipt of the application along with the necessary annexures will examine the request for issuance of UIN, UAOP and/or import clearance.
  • Issuance of UIN by DGCA
    It lays down the eligibility of a person who can apply for the license of a civil RPA. The said person must be –
    • a citizen of India
    • Associated with the Central/State Government, or any company/corporation owned or controlled by the Central/State Government.
    • A corporate body –
    • Which is registered in India
    • Having its principal place of business in India
    • Having its chairman and at least two-thirds of its directors as citizens of India
    • Whose substantial ownership and effective control is vested in Indian nationals.
    • Which is registered elsewhere other than India, provided that such company or corporation has leased the RPAs to any organization.

    It further lays down the list of documents to be submitted with DGCA for issuance of UIN.

  •  Issuance of Unmanned Aircraft Operator Permit (UAOP)All civil RPA operations for any purpose whatsoever to require UAOP from the DGCA.In order to require the UAOP, all civil RPA operators shall submit a duly filled application at least seven (7) days prior to actual conduct of operations along with the requisite fees as per Rule 15A of Aircraft Rules, 1937 and the following supporting documents:
    • Permission from Air Traffic Service (hereinafter referred to as “ATS”) provider (civil/defense)
    • Permission of the land/property owner (area used for take-off and landing of RPA)
    • Details of remote pilot(s) and training records
    • Insurance details (as applicable)
    • Security programme as approved by BCAS.
  • The following entities are exempted from requiring the UAOP:
    • Nano RPA operating below 50 ft above ground level in uncontrolled airspace & indoor operations.
    • Micro RPA operating below 200 ft above ground level in uncontrolled airspace and clear of prohibited; restricted and danger areas; Temporary Segregated Areas (TSA) and Temporary Reserved Areas (TRA) as notified by AAI in the Aeronautical Information Publication. However, the user shall intimate the local police authorities before conduct of actual operations.
    • RPA owned and operated by Government security agencies. However, the agency shall intimate local police authorities and concerned ATS Units before conduct of actual operations.

    The UAOP shall be non-transferrable and valid for a term of five (5) years from the date of its issuance, and further can be renewed with subject to fresh security clearance from Ministry of Home Affairs.

  • Security/ Safety/ MaintenanceThe Remotely Piloted Aircraft System (hereinafter referred to as the ‘RPAS’) owner/ operator needs to comply with few standards as follows:
    • To ensure all security measures are in place as enumerated in the Security Programme, as approved by Bureau of Civil Aviation Security (hereinafter referred to as ‘BCAS’).
    • To be responsible for the safe custody, security and access control of the RPAS.
    • To report immediately to the local police/ administration, BCAS and DGCA in case of loss of RPAS.
    • The ground control station (while in use or in store) shall be secured from sabotage or unlawful interference.
    • The owner/operator of all RPA except Nano RPA shall be responsible for notifying any incident/accident involving RPA to the Director of Air Safety, DGCA.
    • To not further sell or dispose-off in any way to any person or firm without prior approval from DGCA.
    • To intimate DGCA for cancellation of UIN, in case the RPA is damaged and cannot be restored to original condition.
    • To carry out maintenance and repair of RPAS in accordance with the manufacturer’s approved procedures.
    • To carry out maintenance of the ground control equipment in accordance with the manufacturer’s recommended inspection and overhaul interval.
    • To not fly the RPA unless he/she is reasonably satisfied that all the control systems including the radio link of the RPA are in good working condition before the flight.
    • To maintain records of each flight as per the format given by DGCA, and make such records available to DGCA on demand.
  • Training Requirements for Remote Pilots All Remote Pilotsshall have attained 18 years of age with thorough ground training equivalent to that undertaken by aircrew of manned aircraft and shall undergo thorough practical training on the control of a RPA in flight, which may consist of a proportion of simulated flight training.
    A Remote Pilot shall be well aware of the no-fly zones, knowledge of radio frequencies, ATC procedures and shall have basic knowledge of multi rotors and fixed wing operations.
  • Equipment RequirementsAll the RPA except Nano shall be equipped with the following equipments:
    • Identification Plate
    • GPS for horizontal and vertical position fixing
    • Autonomous Flight Termination System or Return to Home (RH) option
    • Flashing anti-collision strobe lights
    • RFID and GSM SIM Card Slot for APP based tracking

    The RPA intending to operate at or above 200 ft above ground level shall carry the following equipment in addition to those specified above:

    • SSR transponder (Mode ‘C’ or ‘S’) or Automatic Dependent Surveillance – Broadcast (ADS-B) OUT equipment
    • Barometric equipment with capability for remote subscale setting
    • Geo Fencing capability
    • Detect and Avoid capability

Remote pilot shall be equipped with communication facilities to establish and maintain continuous two-way communication with the concerned ATS unit. The GPS tracking system of the RPA shall be self-powered and tamper/spoofing proof to ensure data relay even in the event of RPA accident.

Airports Authority of India and Indian Air Force shall monitor RPA movements in the country.

  • What are the requirements for Operation of RPA?
    • Irrespective of the weight category all RPA operations are restricted to day operation and within Visual Line of Sight only. RPA shall be operated only when the following meteorological conditions exists
      • During daylight (between sunrise and sunset).
      • In Visual Meteorological Conditions (VMC) with a minimum ground visibility of 5 km and cloud ceiling not less than 450 m (1500 ft).
      • Surface winds of not more than 10 knots.
      • No precipitation (rain, hail or snow) or thunderstorm activities.
    • Irrespective of height, operation of RPA in Mini and above category shall be conducted only after filing flight plan and obtaining following clearances:
      • Nearest ATC Unit
      • Air Defence Clearance (ADC)
      • Flight Information Centre (FIC)
    • The take-off and landing areas should be properly segregated from public access. Designated safe areas should be established by the RPA Operator for emergency RPA holding and flight terminations.
    • RPA are not allowed to fly over clearly defined areas which will be categorized as “No Drone Zone”. No RPA shall be flown:
      • Within an area of 5 km (2.7 NM) from Aerodrome Reference Point of operational airports.
      • Above the Obstacle Limitation Surfaces (OLS) of an operational aerodrome specified in Ministry of Civil Aviation (Height Restrictions for Safeguarding of Aircraft Operations) Rules, 2015
      • Without prior approval, over densely populated areas or over or near an area affecting public safety or where emergency operations are underway
      • Beyond 500 m (horizontal) into sea from coast line provided the location of ground station is on fixed platform over land
      • Within 5 km radius from Vijay Chowk in Delhi
      • Within 500 m from perimeter of strategic locations notified by Ministry of Home Affairs
      • Within 500 m from perimeter of military installations/ facilities
      • From a mobile platform such as a moving vehicle, ship or aircraft
      • Over eco-sensitive zones around National Parks and Wildlife Sanctuaries notified by Ministry of Environment, Forests and Climate Change without prior permission
  • Legal ObligationsUIN and/or UAOP issued by DGCA shall not:
    • Confer on RPAS operator any right against the owner or resident of any land or building or over which the operations are conducted, or prejudice in any way the rights and remedies which a person may have in respect of any injury to persons or damage to property caused directly or indirectly by the RPA
    • Absolve the operator/remote pilot from compliance with any other regulatory requirement, which may exist under the State or local law.

    All civil RPAS operators shall have insurance with the liability that they might incur for any damage to third party resulting from the accident/incident. Breach, if any noticed by any Govt. authority shall be intimated to the concerned state authority for taking necessary action including imposition of penalties under the applicable statutory provisions.


The draft norms which has been put up for public consultations for a month, is a welcome move by the DGCA, and it will pave the way for having a consolidated law relating to future use of drone technologies. India is not the first country to do so, as previously many developed nations have put in place their own domestic legislation related to it.

India: DGCA releases draft regulations on the civil
S. No. Countries Regulation in Place
1 Ireland The Irish Aviation Authority (IAA) requires all UAVs
over 1 kg must be registered with UAVs weighing 4 kg or
more requiring a license to be issued by the IAA.
2 Netherlands As of May 2016, the Dutch police is testing trained bald
eagles to intercept offending UAVs
3 Canada In 2016 Transport Canada proposed the implementation of
new regulations that would require all UAVs over 250
grams to be registered and insured and that operators
would be required to be a minimum age and pass an exam
in order to get a license.
4 South Africa In April 2014, the South African Civil Aviation
Authority announced that it would clamp down on the
illegal flying of UAVs in South African airspace. “Hobby
drones” with a weight of less than 7 kg at altitudes up
to 500m with restricted visual line-of-sight below the
height of the highest obstacle within 300m of the UAV
are allowed.
5 Italy The ENAC (Ente Nazionale per l’Aviazione Civile), that
is, the Italian Civil Aviation Authority for technical
regulation, certification, supervision and control in
the field of civil aviation, issued on May 31, 2016 a
very detailed regulation for all UAV, determining which
types of vehicles can be used, where, for which
purposes, and who can control them.
6 United States From 21 December 2015 all hobby type UAV’s between 250
grams and 25 kilograms needed to be registered with FAA
no later than 19 February 2016 The use of UAVs for law-enforcement purposes is
regulated at a state level.
7 United Kingdom As of 2015, UAV’s under 300g are not controlled by the
CAA guidance’s that include maintaining 50 meters from
person, animal or property. The UAV must still not go
higher than 400ft with a single pilot or 1000ft with a
pilot and spotter, however as with UAV’s above 300g, if
within 400ft of a structure, you are allowed to go 400ft
higher than the structure


India: MCA imposes restriction on layers of subsidiaries

Source :


The Ministry of Corporate Affairs (hereinafter referred to as the “MCA”), vide notification No. G.S.R 1176(E) dated September 20, 2017, has notified the Companies (Restriction on number of layers) Rules, 2017 (hereinafter referred to as the “Rules”). The Rules state that no company, other than which are exempted, shall have more than two layers of subsidiaries. The restriction on companies to have more than two layers of subsidiaries is mandated to primarily check the misuse of multiple layers of subsidiaries and curb diversion/syphoning of funds.

Computation of layers

In computing the number of layers, one layer which consists of one or more wholly-owned subsidiary or subsidiaries shall not be taken into account. It means that if a holding company has a wholly owned subsidiary, then such subsidiary can in turn have two step-down subsidiaries or layers of subsidiaries. However, subsidiaries of the wholly owned subsidiary cannot have any subsidiary. For example, “A” is a holding company which has a wholly owned subsidiary “B”. “B” can have two step-down subsidiaries, “C” and “D”. However, “D” cannot have any subsidiary.


The restriction of two layers of subsidiaries shall not affect a company from acquiring a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country.

Further, the following classes of companies are exempted from such restriction:

  • Banking companies
  • Non-banking financial companies
  • Insurance companies
  • Government companies

Existing companies

The Rules apply prospectively to the existing companies which have more than 2 layers of subsidiaries as on September 20, 2017. However, such companies have to ensure the following:

  • Filing of a return in Form CRL-1 disclosing details specified therein with the Registrar of Companies, within 150 days of commencement of the Rules.
  • Prohibition to have any additional layer of subsidiaries after the commencement of the Rules.
  • In case one or more layers are reduced by such companies subsequent to the commencement of Rules, then such companies shall not have the number of layers beyond the number of layers it has after such reduction or 2 layers as allowed, whichever is more.


If a company contravenes any provision of the Rules, then such company and every officer of the company who is in default, shall be punishable with a fine which may extend to INR 10,000. In case of continuing contravention, the penalty may extend up to INR 1,000 for every day after the first day during which such contravention continues.


The restriction on layers of subsidiaries will keep a vigil on usage of multiple layers of holding-subsidiary structures for purposes of siphoning off or routing of funds. The Rules will also allow concerned authorities to identify which are the ultimate beneficiaries in a complex corporate structures. However, such restriction may create an issue for companies which seek to undertake merger and acquisition involving layer of subsidiaries.


India: Night Shift for women in Haryana

Source :


Recently, the Haryana Government, vide its notification dated August 17, 2017 has provided a long list of compliances and statutory obligations which are to be adhered to by employers, if they wish to employ women for night shifts.

“It is of the very nature of a free society to advance in its standards of what is deemed reasonable and right. Representing as it does a living principle, due process is not confined within a permanent catalogue of what may at a given time be deemed the limits or the essentials of fundamental rights.”[1]

Law and Social Dynamism:

Whether or not women should be allowed to work through night shifts is more of a social question, and in India, with a touch of morality – a moral one too. But with various High Courts such as those of Madras[2] , Andhra Pradesh[3] , Gujrat[4] , Karnataka[5] , all giving an approval nod to employment of women in night shifts, we take it upon ourselves to analyse the aspect from a legal-standpoint.

It happens more than often, the law works as an excellent tool towards removing the ambiguity induced by social ‘ethics’ and moral ‘values’ in society. It harnesses the subjectivity caused due to the two sides of moral view points! A successful legislation is the one where the laws are modified to keep them in pace and at par with the social dynamism of the society. A law behind the societal standards can only diminish to redundancy. Considering the year (1948) that suffixes the Factories Act, it is clear that such an important social legislation should undergo metamorphosis according to the needs of the society. We believe the Haryana Government’s notification could not have come at a more appropriate time, when women are taking non-discriminatory treatment at workplaces with utmost seriousness.

ILO and night shifts:

During 1919, the ILO conventions completely prohibited women workers and employees from working on night shifts except in case of unforeseeable force majeure events. However, according to the International Labour Organizations’ 89th Convention, Article 5-1[6] state that

“5.1 The prohibition of night work for women may be suspended by the Government, after consultation with the employers’ and workers’ organisations concerned, when in case of serious emergency, the national interest demands it:

5.2. Such suspension shall be notified by the Government concerned to the Director-General of the International Labour Office in its annual report on the application of the convention.”

As of now, there are less than 20 countries that do not prohibit women from working at night shifts. In some countries this is not a new situation, in others, such as Barbados, Canada, Guyana, Ireland, Israel, New Zealand, Spain and Surinam, laws prohibiting night work by women workers have been repealed, mostly over the last ten years.


Upon collective perusal of the various cases of the various High Courts , it is clear that the constitutionality of Section 66 of the Factories Act, 1948 has been challenged owing to the perceptions that there is no intelligible differentia for the classification of women, as provided under the Section and prohibition mandated thereof and that there is no rational nexus between such classification and object the law seeks to achieve.

In all the above referred High Court judgements, the validity of Section 66 of the Factories Act, 1948 was challenged for being violative of the fundamental rights enumerated under Articles 14, 15, 19 and 21 of the Constitution of India. Basing its orders upon the detailed observations made by the Hon’ble Madras High Court in Case No. W.P.4604-06 of 1999 and in other matters, the Haryana Government, playing the role of a solemn executor of the Court’s mandate, released a notification allowing women to work in night shifts.

Notification by the State Government of Haryana:

Vide this notification the State Government of Haryana has allowed the employment of women workers in the factories during night shifts i.e. from 07.00 P.M. to 06.00 A.M. The Notification stated that the Hon’ble High Court in this judgment has also laid down certain conditions for employing women in night shift in respect of their security and safety, now the said provision will not create any obstruction to the working of women in the factories during night shifts.
Any factory in the State, registered under the Factories Act, 1948 may apply for this exemption, which would be valid for a year from the date of its publication.

Conditions for exemption:

Out of the 25 different compliances required to be adhered by the employer, under the notification, the major ones are discussed below:

  • Mechanism to Curb Sexual Harassment:
    • Employer’s obligation to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, statement or prosecution of acts of sexual harassment by taking all steps required.
    • Steps such as prohibition of sexually unwelcome behaviors, creating code of conduct to employees, penalizing offenders to prevent sexual harassment, are to be taken by employers and management.
    • Employer to initiate appropriate action in accordance with the penal law and ensure that witnesses are not victimized while dealing with the complaints of sexual harassment.
    • Employer to maintain/ appoint a complaint redressal mechanism by way of a Complaint Committee (preferably headed by a woman and members of NGOs dealing with cases of sexual harassment) or a special counselor in the factory and ensure time-bound treatment of complaints.
    • Women workers are to be employed in batches having atleast 10 women and the total of the women workers employed in a night shift shall not be less than 2/3rd of the total strength.
  • Infrastructural compliances:
    • The employer shall provide:
    • proper lighting,
    • sufficient women security,
    • work sheds to arrive in advance,
    • separate canteen facilities,
    • transportation facility with CCTV installed in all vehicles,
    • medical facilities which would include ambulance at their disposal in appropriate cases,
    • lodging arrangements to have women wardens, etc.
  • SecurityDuring night shift not less than 1/3rdof strength of the supervisors or shift-in-charge or foreman or other supervisory staff shall be women.
  • Welfare:There shall be not less than twelve consecutive hours of rest or gap between the last shifts and the night shift wherever a women worker is changed from day shift to night shift and so also from night shift to day shift.
    Apart from the facilities, which are permissible under the Factories Act, an additional holiday shall be permitted for the women workers during their menstruation period, which shall be a paid holiday for the night shifts.
    The female workers who work in night shifts and regular shifts shall have a monthly meeting through their representatives with principal employer once in eight weeks as grievance day and the employer shall try to comply all just and reasonable grievances.
  • Report to the Inspector of factories:The employer shall send a fortnightly report to the Inspector of Factories about the details of employees engaged during night shifts and shall also send express report whenever there is some untoward incident to the Inspector of Factories and local Police Station as well.


One would observe that the compliances under the said notification are extremely detailed and a commendable effort on the part of the legislature to balance gender equality vis a vis women’s safety. “Corporately speaking”, even though the country is putting up an aggressive effort to ensure the men and women are equal in all walks of life, for factories and corporations where production targets govern every rupee spent, to achieve such infrastructural standards seems a little difficult.

Morally wondering, if so many number of compliances are required just to ensure that women can work at night shifts, then a very dark question stands in our faces- Is women’s safety at work places a matter of statutory obligation of industries or a genuine moral duty of each citizen?


[1] JUSTICE FRANKFURTER, in Wolf v. Colorado

[2] Madras High Court in Case No. W.P.4604-06 of 1999

[3] 2002 (5) ALT 223, (2002) IIILLJ 320 AP

[3] C/SCA/2984/2012

[4] ILR 2008 KAR 2221, 2007 (3) KarLJ 286

[5] International Convention on Night Work of Women employed in Industry (Revised 1948) Convention No. 89

[6] First given by the Madras High Court in Case No. W.P.4604-06 of 1999


India: Embedded Tax and the Apparel Sector

The gst

Source :

Introduction –

The textile and apparel sectors can be referred to as one of the backbones of the Indian economy. It is the single largest instrument based on consumer needs, right after food. The sector is the second largest employer after agriculture with direct employment of over 5 crore and indirect employment of over 6 crore people. Its share of GDP and exports are 6% and 13% respectively. The apparel sector in particular is the most labour intensive sector in the manufacturing industry. When it comes to comparison with two other sectors of proportionate size, it is 80-fold more labour intensive than the automotive industry and 240-fold more intensive than the steel sector.

Present State of Embedded Tax in India –

In the wake of the new GST scheme, the exporters of garments in India are facing uncertainty and dilemma as the government decided to slash duty drawback to 2 percent from 7.5 percent with effect from October 1, 2017. This new step taken by the Government has brought nation-wide unrest and commotion among the exporters. The new rate is considered a direct slap to the already struggling Micro, Small and Medium Enterprises (MSMEs) because of the high duties imposed by foreign countries and the competition it is facing from neighbouring countries like Bangladesh and Sri Lanka. With just 2% as the drawback rate, it would be a Herculian task for the MSMEs to compete and export.

In its effort to tackle this latest challenge faced by the textile and garments industry, the Apparel Export Promotion Council (AEPC), before the commencement of the GST Council’s meeting on October 6, 2017, has urged the Indian government to address the refund of embedded taxes on exports of textiles and garments. These taxes also include the levies on cotton, electricity, and input tax credit restrictions for man-made fibres used in textiles and purchases made from unregistered dealers.

It is the contention of the industry as a whole that the drawback rates at which the Government is planning to operate is not in the best interest of the industry nor the economy. It is expected that such meager drawbacks will definitely lead to a sharp decline in the rate of exports from the nation as a whole. Further, bear in mind that Indian exporters pay 10% duty to have access to the European markets.[1] The rupee overvaluation is yet another factor, which has been haunting the export business and above all this; a new low duty drawback rate means disaster for majority of the MSME units in the apparel exports.

Conclusion –

The only reasonable approach at this point would be to keep up with the previous drawback rate in order to help the smaller industries prevail in the international market. But if there is no turning back, it would be favorable if the Government at the least hold the previous rate until the end of the current Financial Year. This would to an extent provide certain amount of time (even if it is not sufficient) for the industry to prepare itself for the new rate.




India: Discount Mechanism & Tie in Arrangement Anti-Competitive For Hyundai

Discount Mechanism & Tie

Source :

In a recent case between Fx Enterprise Solutions India Pvt. Ltd. (hereinafter referred to as the ‘Informant’) and Hyundai Motor India Limited (hereinafter referred to as the ‘Opposite Party’) (Case No. 36 of 2014), the Competition Commission of India declared that the conditions imposed by the Opposite Party upon its dealers penalizing them in case of giving discount beyond the recommended range and use products like oil/ lubricants from vendors other than specified companies only, amounted to Anti-Competitive practices thus violating the Competition Act, 2002.

Brief facts

The Opposite Party had been entering into dealership arrangements with its dealers, whereby:

  • The dealers were required to obtain prior consent from the Opposite Party before taking up dealerships of another brand.
  • The dealers were bound to procure spare parts, accessories and all other requirements, either directly from the Opposite Party or through vendors approved by them.
  • The Opposite Party imposed a “Discount Control Mechanism” through which dealers were only permitted to provide a maximum permissible discount and the dealers were not authorized to give discount above the recommended range.
  • The Opposite Party had control over the sources of supply for the dealer’s products and ties the purchase of desired cars to the sale of high-priced and unwanted cars to its dealers and the Opposite Party designates sources of supply for complementary goods for dealers as well as, which result in a “tie-in” arrangementsin violation of Section 3(4)(a) of the Act.


The Competition Commission of India elucidated that the practices being carried on by the Opposite Party were anti-competitive under the provisions of Section 3(4) read with 3(1) of the Competition Act, 2002 (hereinafter referred to as “Act”) and ordered them to cease and desist from indulging in such conduct and also imposed a penalty at the rate of 0.3% of the average relevant turnover of the last three financial years of the Opposite Party turnover amounting to Rs. 87 Crores.


The Competition Commission of India arrived at the aforesaid decision based on the following reasons:

  • The Commission interpreted that prior permission from the Opposite Party required under the agreement with the dealer did not impose an exclusive supply obligation in contravention of the Act.
  • The Commission observed that resale price maintenance according to Section 3(4) (e) of the Act is defined as any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it clearly stated that prices lower than those prices may be charged.
  • The Commission held that an agreement which includes monitoring of the maximum permissible discount level through a “Discount Control Mechanism” by the Opposite Party and a penalty punishment mechanism upon non-compliance of the discount scheme resulted in contravention of the provisions of Section 3(4)(e) of the Act, read with Section 3(1) of the Act. The said act of the Opposite Party was considered to result in creation of barriers for new entrants into the market and thus anti-competitive.
  • The Commission discussed Section 3(4) (a) of the Act wherein the “tie in arrangement” was defined as an agreement including any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods.
  • The Commission broadly elaborated the ingredients essential for a “tie-in-arrangement” namely:
    • Presence of two separate products or services capable of being tied.
    • The seller must have sufficient market power with respect to the tying product to appreciably restrain free competition in the market for the tied product.
    • The tying arrangement must affect a “not insubstantial” amount of commerce:
  • The Commission concluded that mandating the dealers to use particular oil/ lubricants by the Opposite Party and penalties imposed on the dealers in case a non-recommended oil is used, would amount to “tie-in arrangement” in contravention of Section 3(4) (a), read with Section 3(1) of the Act. The said act of the Opposite Party would cause hindrance in the improvement of production of goods or provision of services in relation to supply and use of lubricants in the cars particularly when as per the Commission other companies are manufacturing and marketing same grade of lubricants thereby amounting to anti-competitive practice.
  • The Commission clarified that binding to procure spare parts -CNG kits from a specific vendor did not contravene the provisions of the Act. It was formulated that the vehicle manufacturer could legitimately honor the warranties on the ground that the situation leading to the claim in question is causally linked to a failure of a specific spare part provided by an alternative supplier.
  • The Commission further analyzed that although the Opposite Party provides a list of preferred insurance companies, the customers are free to get any insurance from any company or through any other broker without any compulsion.


The Competition Commission of India in its pragmatic approach through this judgment has come to the protection of the honest dealers from the ambit of the big manufactures who may use arm twisting tactics to maximize their profits at their cost. With aim of “Fair Competition for a greater good”, the Competition Commission strives to create just and favorable market conditions for all. It is essential for a healthy market to ensure that it is free from any anti-competitive trade practice which may take place between organizations at different levels of production (vertical agreements). Imposition of restriction on the discounts to be offered by dealers to the customers and preventing the use of products like oils/ lubricants from other than recognized vendors results in practices detrimental to the growth and development of fair market and thus should be prohibited.


India: Are JIO Schemes Unfair?

Jio Business

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2016 witnessed a new entrant in the Telecom market! Jio, which not only came up with jaw dropping customer friendly offers which were not appreciated by its competitors. The new schemes introduced by Jio caused instability and insecurity amongst its competitors in the market with respect to the hold of their customers who drastically started shifting towards the more lucrative schemes being offered.

Free Services

In the pursuit of establishing a foothold in the Telecom Market, Reliance Jio made its presence felt by providing free services for 3 months. It came up with schemes which caused the competitors in market to alter their charges to a significant extent causing disturbance in their prevalent rates of business.

Telecom operators like Bharti Airtel challenged the aforesaid scheme of Jio as being in contravention to the provisions of the Competition Act, 2002, alleging them to be covered under the ambit of predatory pricing. The Competition Commission of India in the said case of Bharti Airtel Limited Vs. Reliance Industries Limited & Reliance Jio Infocomm Limited (Case No. 03 of 2017) held that providing free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with an anti-competitive objective of excluding competition/ competitors. In a competitive market scenario, where there are already big players operating in the market, it would not be anticompetitive for an entrant to incentivise customers towards its own services by giving attractive offers and schemes. Short-term business strategy of an entrant to penetrate the market and establish its identity cannot be considered to be anti-competitive in nature.

Thus, the Competition Commission of India has clearly elucidated via the aforesaid judgement that providing services below the average variable cost does not amount to predatory pricing in contravention to the Competition Act (Section 4) unless it is coupled with abuse of dominant position and in the absence of the dominant position, the question of the abuse of such position does not arise.

iPhone with Jio

In its recent venture, Jio joined hands with Apple where Jio would offer free services worth Rs 18,000 pre-bundled with the iPhone 7 and iPhone 7 Plus. The offer would also extend to other iPhone versions including iPhone 6S, iPhone 6S Plus and iPhone SE as well for a period of 12 months. In India where the market for iPhone still remains expensive such offers are capable of attracting customers in market.

On the point of consideration as to whether such scheme would be anti-competitive under the provisions of the Competition Act, 2002 (Section 3), it is well established that such offers do not amount to anti-competitive practices. Though certain benefits are construed on the customer who purchases iPhone with Jio connection but this does not prevent the customers in the market from purchasing iPhone independently from the market or to buy a Jio connection without an iPhone. Thus, the said scheme is not anti-competitive!

The Competition Commission of India elaborated the aforesaid principle via its judgement in the leading case of Shri Sonam Sharma Vs. Apple Inc. USA, Apple India Pvt. Ltd., Vodafone Essar Limited, Bharti Airtel Limited (Case No. 24/2011) where it was noted that a consumer having a mobile handset (smartphone or otherwise) is free to exercise his choice for availing network services without any restrictions. Furthermore, the network operators do not require any particular handset to be purchased by the customer in order to avail its network services. Moreover, the lock-in arrangement of iPhone to a particular network was for only for a specific period and not perpetual, a fact known to prospective customer. The Commission observed that there is no restriction on consumers to use the network services of Airtel and Vodafone to the extent that the network services can be availed on any mobile handset, even an unlocked iPhone purchased from abroad. Also, a consumer who has purchased a locked iPhone in India and paid the unlocking fees is free to choose the network operator of his choice.


Although the schemes and offers brought forward by Jio would take a great toll on its competitors, they are very much legal in their approach. The Competition Commission of India strives for fair competition for greater good and ensures the prohibition of the practices that may be detrimental to a healthy market.

There may be instances where the goods and services provided by one entity may be remarkably lower priced than another but it is essential to determine the position of such entity in the market before categorizing the said practice as being against the Competition Act. It is only when such an entity in the market enjoys dominant position and reduces their prices for sale strikingly in order to eliminate competition can they be recognized as being predatory pricing which are unlawful.

It is worthwhile to mention that not all tie-in-arrangements end up being anti-competitive and only those agreements which restrict the perpetuation and continuation of fair competition are classified as being opposed to the law.


India: Pilot Implementation of Paperless Processing under SWIFT/ e-Sanchit

Pilot Implementation of Paperless Processing INDIA

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The Central Board of Excise & Customs (hereinafter referred to as “CBEC”) on October 20, 2017, vide circular No.40/2017-(Customs) dated October 13, 2017, launched e- SANCHIT on a pilot basis. The said portal was launched with the aim of facilitating trading across borders and slowly move towards paperless processing and uploading of supporting documents.

With the objective of reducing physical interface between Customs/regulatory agencies and to increase the speed of clearance, it is proposed to introduce a facility to upload digitally signed supporting documents on a pilot basis to be launched shortly. The proposed “Single Window Interface for Trade” (SWIFT), would reduce interface with Governmental agencies, reduce precious time & the cost of doing business in India.

Any registered ICEGATE user can upload the documents.

What is ICEGATE?[1]

Indian Customs Electronic Commerce/Electronic Data interchange (EC/EDI) Gateway (hereinafter referred to as “ICEGATE “) is an online portal that provides e-filing services to the trade and cargo carriers and other clients of Customs Department (collectively called Trading Partner).

ICEGATE is an infrastructure project that fulfils the data communication requirements. Through this facility the department offers a host of services, including electronic filing of the Bill of Entry( import goods declaration), Shipping Bills (export goods declaration) and related electronic messages between Customs and the Trading Partners using communication facilities (E-mail, Web-upload & FTP) using the communication protocols commonly used on the internet. Besides, data is also exchanged between Customs and the various regulatory and licensing agencies such as DGFT, RBI, Ministry of Steel and DGCIS through ICEGATE.

The ICEGATE also provides 24X7 helpdesk facility for its trading partners. To ensure secure filing, it is proposed to use digital signatures on the Bill of Entry and other documents/ messages to be handled on the gateway.

Steps for uploading documents:-

  • Login into ICEGATE website using login credentials.
  • Access the e-SANCHIT application by clicking on e-SANCHIT link provided in menu options.
  • Upload document by clicking on Upload Documents button.
  • Validate the document for digital signature.
  • Submit the document by clicking proper document type from document type drop down and click on the submit button.

What are the mandatory documents that need to be submitted online?

The list of mandatory documents for export/ import of goods from/ into India have already been notified by DGFT notification No. 08/2015-2020[2] dated June 4, 2015, i.e.,

  • Bill of Lading/ Airway Bill
  • Commercial Invoice
  • Commercial Invoice cum Packing List would also be accepted
  • Bill of Entry.

Assessment & Document Verification

Once a Bill of Entry has been filed, Customs officers will be able to access the uploaded electronic versions of supporting documents while viewing or assessing the Bill of Entry on The Indian Customs EDI System (hereinafter referred to as “ICES”). During assessment, ICES provides for a query to be raised in order to call for additional documents or information. In response to a query, supporting documents can also be uploaded online by following the procedure described above. All documents required for the purposes of assessment would be viewed online. In due course, the facility to view supporting documents will also be extended to officers of the Participating Government Agencies (PGAs).

Post Clearance Compliance Verification (PCCV) will be carried out online based on the electronic versions of supporting documents instead of hardcopy dockets of the Bills of Entry.

The Single Window is a much-awaited facility to ease goods clearance procedures at the country’s points of entry and exit.





India: Government enforces BIS Act, introduces new BIS Rules

Government enforces BIS Act

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The Bureau of Indian Standards Act, 2016, (hereinafter referred to as the “Act”) was notified on March 22, 2016. In furtherance to the notification, the Ministry of Consumer Affairs, Food and Public Distribution (hereinafter referred to as the “Ministry”), vide notification number S.O.3295(E) has brought the Act in force with effect from October 12, 2017.

Further, the Ministry, vide notification no. G.S.R. 1266(E). dated October 13, 2017, has notified the Bureau of Indian Standard Rules, 2017 (hereinafter referred to as the “Rules”). These Rules have been notified in supersession of the Bureau of

Indian Standards

Rules, 1987, except Chapter IV A mentioned herein, and the Bureau of Indian Standards (Appointment, Terms and Conditions of Service of Director General) Rules, 1987.
Indian Standards
“Indian Standard” means the standard including any tentative or provisional standard established and published by the Bureau of India Standards (hereinafter referred to as “BIS”), in relation to any goods, article, process, system or service, indicative of the quality and specification of such goods, article, process, system or service. Indian Standard includes

  • Any standard adopted by the Bureau
  • Any standard established and published, or recognised, by the Bureau established under the Bureau of Indian Standard Act, 1986, which was in force immediately before the commencement of the Act;

Establishment of Indian Standards

According to the Rules, the Bureau shall establish Indian Standards in relation to any goods, article, process, system or service and shall reaffirm, amend, revise or withdraw Indian Standards so established as may be necessary. If a standard is being established on the request of the Central Government or the regulator, which is emerging from or has an impact on national policy, the Central Government or the concerned regulator shall be consulted to ensure that the standard is consistent with such policy.

Adoption of other Standards as Indian Standards

The Bureau may, in relation to any goods, article, process, system or service, adopt any standard established by any other institution in India or outside India as an Indian Standard with necessary modifications.

Approval from Bureau to use certain names/ marks

The Bureau prohibits, without its permission, use of the following to deceive or likely to deceive the public[1]

  • any name which so nearly resembles the name of the Bureau as to deceive the public or the name which contains the expression “Indian Standard” or any abbreviation.
  • any title of any patent or mark or trade mark or design, in relation to any goods, article, process, system or service, containing the expressions “Indian Standard” or “Indian Standard Specification” or any abbreviation of such expressions.

However, if any person uses any such name or mark without the previous approval of the Bureau shall make an application to the Bureau for permission to the use thereof, within a period of six months from the date of notification of these Rules and the Bureau may grant permission to such name, mark or trade mark, etc.


[1] Section 26 of the Act

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