Import & export disputes
involving India.

Why import and export disputes arise

In our experience, the primary cause of import and export disputes is quality of goods exported. Under many export contracts, the importer only has an opportunity to inspect the goods when the consignment reaches them — and by that time, in the ordinary course, the exporter has already been paid. Even where the consignment moves on a collection basis, the importer can only inspect the goods after retiring the documents. The importer is therefore often exposed to a delay between paying and discovering the defect.

Other recurring causes of dispute include:

• Non-supply of goods after confirmation of order.
• Non-payment of an agreed commission.
• Non-adherence to the agreed delivery schedule.
• Delayed or non-shipment arising from a change in government regulations or market conditions.
• Unethical commercial dealings on the part of the exporter.

The DGFT has established a centralised Trade Disputes Cell within the office of the Director General of Foreign Trade, Ministry of Commerce, New Delhi, to deal with complaints from foreign buyers concerning import and export disputes with Indian exporters.

Enforcement action against an erring exporter

Where an Indian exporter has committed a breach — non-payment of commission, supply of sub-standard goods, failure to adhere to the delivery schedule, or unethical commercial dealings — enforcement action can be taken in the office of the DGFT under the following provisions:

Export (Control) Order — Clause 7.
Where the breach relates to a period before 19 June 1992, the Central Government, the DGFT, or an authorised officer may debar the exporter from exporting any goods, where a wilful breach of contract has been committed.

Foreign Trade (Development & Regulation) Act, 1992 — Section 8.
Where the breach relates to a period on or after 19 June 1992, the DGFT has the power to suspend or cancel the Importer / Exporter Code Number. This power may be exercised where the DGFT has reason to believe that the exporter has committed an economic offence, or that any person has made an export or import in a manner gravely prejudicial to India's trade relations with any foreign country, to the interests of other persons engaged in imports or exports, or which has brought disrepute to the credit or the goods of the country.

Section 9(4) and Rule 10, Foreign Trade (Regulation) Rules, 1993.
Section 9(4) empowers the DGFT, or the officer authorised by him to grant an Authorisation, to suspend or cancel any Authorisation granted under the Act. Rule 10 of the 1993 Rules lays down the conditions — including cases where the Authorisation was obtained by fraud, suppression of facts, or misrepresentation, and where the licensee has contravened the law relating to Customs or Foreign Exchange.

Section 11(2) and Rule 11, Foreign Trade (Regulation) Rules, 1993.
Section 11(2) provides for the imposition of a fiscal penalty where a person makes, abets, or attempts to make any import or export in contravention of the Act, the Rules, the Orders made under it, or the Export-Import Policy. Rule 11 requires an exporter to state in the shipping bill or other prescribed document the value, quality, and description of the goods to the best of his knowledge and belief, and to certify that the quality and specification are in accordance with the terms of the export contract.

Foreign Trade Policy — Paragraph 3.9.
Paragraph 3.9 of the Foreign Trade Policy empowers the DGFT to take action against an exporter where it comes to his notice, or he has reason to believe, that the exporter has made an export in a manner gravely prejudicial to India's trade relations, to the interests of other persons engaged in exports or imports, or which has brought disrepute to the credit or goods of the country.

Registering authority powers.
The DGFT has further powers, under the Hand Book of Procedures, to direct a Registering Authority to register or de-register an exporter, or to issue other directions consistent with the Act. Registering Authorities — Export Promotion Councils, Commodity Boards, and similar bodies — may themselves take appropriate action on an application for registration where there are prima facie reasons to believe that the exporter has indulged in any form of unfair, corrupt, or fraudulent practice.

Before any penal action is taken, the exporter must be given an adequate opportunity to explain his position — by way of a Show Cause Notice and, where requested, a personal hearing, as per the applicable rules.

Quality control and pre-shipment inspection

Certain export products have been notified for compulsory quality control and pre-shipment inspection prior to export. Penal action can be taken under the Export (Quality Control & Inspection) Act, 1963 (as amended in 1984) against exporters who do not conform to the applicable standards or to the provisions of the Act for those products.

Beyond the Foreign Trade Act and the Quality Control Act, other statutes apply to particular categories of goods — including the Indian Coffee Act, the Tea Act, the Coir Industry Act, the Dangerous Drugs Act, and the Customs Act. Together, these laws are designed to ensure that only goods meeting the applicable standards are exported.

Complaint adjudication and dispute resolution

Despite these provisions, complaints from foreign buyers do arise. The Ministry of Commerce's stated approach is that, in order to develop India's export trade on a sustained basis, and to improve the image of Indian exports in the international market, such complaints should be checked, sorted out, and resolved quickly and amicably before any question of penal action arises. At the same time, the policy encourages exporters to reduce complaints and disputes to the minimum.

Complaints are made to the DGFT in the prescribed form, with supporting documents. The Trade Disputes Cell within the DGFT's office handles these matters.

Legal recourse for foreign importers

Beyond the regulatory route at the DGFT, a foreign importer has two further options in India:

• Civil proceedings. Filing a civil suit for damages before the appropriate court having jurisdiction over the Indian exporter.
• Criminal complaint. Where the facts disclose a prima facie criminal offence, lodging a criminal complaint before the appropriate authority.

The choice between the regulatory route, civil proceedings, criminal complaint, or a combination of these depends on what the client actually needs — a refund, damages, a specific performance, or a sanction against the exporter that prevents recurrence.

Our work in import and export disputes

We have extensive experience handling import and export disputes in India. Our work typically includes:

• Advising on the appropriate remedy — regulatory complaint to the DGFT, civil proceedings, criminal complaint, or a combination.
• Preparing and filing complaints before the DGFT and the Trade Disputes Cell.
• Drafting and filing civil suits for damages, recovery, or specific performance in the appropriate Indian court.
• Instituting criminal complaints where the facts disclose a prima facie offence.
• Representing the client before the DGFT, the Registering Authorities, and the Indian courts.
• Coordinating with foreign counsel where the dispute spans jurisdictions and where the client also needs advice under their own law.
• Advising on the drafting of export contracts to reduce the risk of disputes at the outset — including inspection rights, payment terms, and dispute resolution clauses.

Note: The information on this page is provided for general understanding only. The correct remedy in any import or export dispute depends on the facts of the transaction, the terms of the contract, and the applicable regulatory framework. We strongly recommend that you obtain case-specific advice before taking any step.