dgft eou lop loi validity update

DGFT Update on EOU LoP/LoI Validity - Key Takeaways from Public Notice No. 34/2025-26

The Directorate General of Foreign Trade (DGFT) has issued Public Notice No. 34/2025-26 dated 01.12.2025, introducing an important procedural amendment for Export Oriented Units (EOUs), EHTPs, STPs, and BTPs governed under Chapter 6 of the Handbook of Procedures (HBP) 2023/2025-26. This update directly impacts the validity period of Letters of Permission (LoP) / Letters of Intent (LoI) and the manner in which extensions can be obtained.

What has DGFT changed?

DGFT has revised Para 6.34 of Chapter 6 of the HBP, which deals with the validity and extension of LoP/LoI for units operating under the Export Oriented Unit (EOU) and allied schemes. Previously, units were required to apply for extensions at shorter intervals, often resulting in operational uncertainty and increased compliance effort. The revised framework seeks to bring greater clarity, predictability, and ease of doing business. The amended provisions clearly define both initial validity and post-commencement extension timelines, in alignment with FTP 2023 Chapter 6.

Revised rules on LoP/LoI validity and extensions

The operational impact of Public Notice No. 34/2025-26 can be summarised below:

1. Initial implementation period
   The LoP/LoI continues to carry an initial validity period (commonly 2 years) for implementation and commencement of production. DGFT has now explicitly provided for extension of this initial period by 1 additional year in deserving cases, subject to conditions and approval by the competent authority.
2. Extensions after commencement of production
   Once commercial production has commenced, the LoP/LoI may now be extended for a period of up to 5 years at a time. This replaces the earlier practice of shorter, more frequent renewals and provides greater long-term operational visibility. Through this amendment, DGFT aims to rationalise the extension mechanism while retaining regulatory oversight with the Development Commissioner (DC) and other designated authorities under FTP 2023.

Why is this amendment important for EOUs

For both existing and proposed EOUs, this change has meaningful operational and compliance implications:

1. Greater certainty: Extension blocks of up to 5 years allow better planning of capital expenditure, long-term export commitments, and financing arrangements.
2. Reduced compliance load: Fewer extension applications mean less documentation, follow-up, and administrative interaction.
3. Consistency with FTP 2023: FTP 2023 follows an “open-ended” policy approach with procedural refinements through public notices; this amendment strengthens that approach without altering the core EOU framework.

Units facing tight implementation deadlines or frequent renewal requirements now have a clearer and more predictable extension pathway.

What Export Oriented Unit (EOU) should do next

In response to this update, EOU / EHTP / STP / BTP units should:

1. Review the current validity of their LoP/LoI, whether in the implementation phase or operational phase.
2. Assess eligibility for extension under the revised Para 6.34, especially if nearing the end of the 2-year implementation period or an existing operational block.
3. Engage proactively with the Development Commissioner of the concerned zone/SEZ, who continues to be the primary approving authority.
4. Monitor further clarifications from DGFT through additional public notices, trade notices, or FAQs, particularly in cases involving project delays, sector-specific conditions, or restrictions.