The Director General of Foreign Trade (DGFT) has reversed its recent decision to restrict the export obligation period of penicillin and its salts under Duty Exemption Scheme for three months and has issued a fresh notification allowing six months time for exports.

The reduction of time was done after heeding to the complaints from the domestic industry of misuse of penicillin imported through duty exemption channels and the resultant price fall in the domestic market.

The domestic penicillin manufacturers, grouped under Indian Penicillin Manufacturers Association (IPMA) had pointed out that the presence of cheap penicillin from China was shaking the very foundation of the domestic pharmaceutical industry. The association had said that there was an over 50 per cent spurt in import of penicillin-G from China, resulting in more than 40 per cent crash in prices in recent past.

The reduction of the export obligation period was specifically meant to help the domestic industry tide the crisis. The reversal, which came on September 17, 2004, has thus surprised industry observers. According to them, there was no indication that the special restriction for penicillin imports would be taken back within such a short period. "It is not even two months since the earlier notification had come. We are surprised to find the reversal of the decision as things have not improved much on the domestic front during this short time," they say.

The current notification of DGFT says that Sr.No. 15 of "General Note for Chemicals & Allied Products" in the Handbook of Procedures is amended as follows: "Wherever, import of Penicillin and its salts (ITC HS Code No.29411010) or import of 6-APA (ITC HS Code No.29411050) is allowed as an input item under Duty Exemption Scheme, the export obligation period for such licences shall be restricted to six months from the date of clearance of first import consignment. The licensing authority shall make an endorsement in the Advance Licence to this effect. No further extension in export obligation period shall be allowed in these licences."