DGFT issues new guidelines for voluntary disclosure of SCOMET violations to boost pharma exports

 

In a significant move to bolster India’s export control framework, the Directorate General of Foreign Trade (DGFT) has issued a Standard Operating Procedure (SOP) for the voluntary disclosure of non-compliance and violations related to the export of special chemicals, organisms, materials, equipment, and technologies (SCOMET) items.

“The issuance of this SOP marks a crucial step in reinforcing India’s non-proliferation commitments while promoting ethical trade practices. Pharma exporters are encouraged to familiarize themselves with the guidelines and proactively disclose any inadvertent lapses to avoid stringent penalties,” DGFT said.

Santosh Kumar Sarangi, director general of foreign trade, emphasized the importance of voluntary disclosure in maintaining transparency and accountability in India's export ecosystem. "Transparency is key to strengthening export compliance. This SOP provides exporters with an opportunity to voluntarily disclose any inadvertent violations, ensuring corrective actions while mitigating legal consequences," he stated.

The newly issued SOP recognizes that responsible exporters may sometimes fail to comply with the export control provisions under various regulatory acts. The initiative aims to encourage voluntary disclosures, thereby raising awareness and minimizing non-compliance incidents.

The Inter-Ministerial Working Group (IMWG) within the DGFT will evaluate voluntary disclosures on a case-by-case basis, considering them as mitigating factors while determining administrative penalties, if any. However, the disclosure framework does not apply to violations involving SCOMET Category 0 and certain Chemical Weapons Convention (CWC) schedules.

The SOP lists several types of violations including unauthorized export of SCOMET-listed items without prior authorization, export to United Nations Security Council (UNSC) sanctioned entities, unauthorized access or transfer of technical data, failure to comply with reporting and record-keeping requirements and unauthorized site visits or access to sensitive documentation by foreign entities.

Despite voluntary disclosure, violations may still result in penalties or administrative actions, including potential criminal prosecution. The IMWG will evaluate disclosures based on factors such as intent, systemic lapses, prior violations, and the degree of cooperation with authorities.

Pharma exporters identifying a compliance breach are required to notify the DGFT immediately and submit all relevant documentation within 30 days. Required documents include Disclosure Proforma, licensing and shipping documents, end-user certificates and related agreements.

Failure to submit complete disclosures within the prescribed timeline may lead to the rejection of voluntary disclosure as a mitigating factor and could trigger further regulatory action.

All voluntary disclosures will be reviewed by the IMWG, which will recommend appropriate actions to the DGFT. These actions may include accepting the disclosure with no further action required, issuing a show cause notice (SCN) and imposing administrative penalties or other sanctions for serious violations.

Sarangi reiterated that the DGFT remains committed to ensuring national security while facilitating compliant trade. “We urge exporters to take proactive steps in maintaining adherence to SCOMET regulations. This initiative serves as a safeguard for responsible traders, ensuring compliance while maintaining India’s international trade integrity,” he remarked.