Are Multinational Companies Excluded From Benefits Of 'Served From India Scheme'?

December 29,2017
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Tarun Gulati, Partner, PDS Legal
Shashi Mathews, Principal Associate


Over the years, India has positioned itself as a global hub for providing a wide array of services, such as technical consultancy, management consultancy, etc. A large number of companies have set up offices in India to tap into a readily available, well-trained and highly skilled workforce. Apart from job creation, exports of services is the most important source of foreign exchange. Much before the term “Make In India” was coined for creating a policy initiative for the manufacturing sector, the government of the day had formulated a scheme for boosting service exports called “Served From India Scheme (‘SFIS’). The Ministry of Commerce and Industry introduced the SFIS in the Foreign Trade Policy (‘FTP’) 2004-09 to accelerate growth in export of services from India. This scheme entitled ‘all service providers’ (amended to ‘All Indian service providers’ and then ‘Indian service providers’ in the subsequent Foreign Trade Policy) specified under the concerned SFIS, having total foreign exchange earnings above the stipulated threshold, to an incentive in the form of a duty credit scrip. This scrip could then be used for import of any capital goods including spares, office equipment etc provided that it was a part of their main line of business. Services eligible for benefit under the SFIS were specified in an Appendix and included professional services, tourism and travel related services, financial services, management consulting services, etc.

SFIS as originally formulated was a simple scheme, which apart from defining the objectives, prescribed the eligibility conditions, the services which were entitled to the benefits of the scheme as well as a negative list of services which were either not entitled to the benefits at all or were allowed the benefit at a lower rate.


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