India — Sanctions & Embargoes

India does not operate a comprehensive autonomous sanctions regime comparable to OFAC or the EU's restrictive-measures framework. Instead, India's sanctions architecture rests primarily on implementation of United Nations Security Council (UNSC) sanctions under the United Nations (Security Council) Act, 1947 (Act 43 of 1947, "UNSCA"), supplemented by limited domestic counter-terrorism measures and trade controls.

The United Nations (Security Council) Act, 1947 empowers the Central Government to give effect to any decision of the UN Security Council calling for measures not involving the use of armed force. Section 2 of the UNSCA authorizes the Central Government to make orders, published in the Official Gazette, to implement UNSC resolutions and to provide for punishment of persons contravening such orders. These orders (commonly referred to as "UNSCA Orders") transpose UNSC resolutions adopted under Chapter VII of the UN Charter into binding Indian domestic law. Section 2 further permits the Central Government to make any provisions necessary to carry out UNSC decisions and to prescribe penalties—by way of fine or imprisonment, or both—for violations. The statute does not prescribe a uniform penalty schedule; sanctions for breach are established in the individual orders issued under Section 2. India has issued UNSCA Orders implementing economic sanctions (asset freezes, arms embargoes, travel bans, commodity-specific prohibitions) against individuals, organizations, and countries designated by the Security Council, including sanctions related to the Democratic People's Republic of Korea (DPRK), ISIL (Da'esh) & Al-Qaida (under UNSC Resolutions 1267 (1999), 1989 (2011), and successors), and other country-specific programs.

The Unlawful Activities (Prevention) Act, 1967 ("UAPA"), as amended, provides the statutory foundation for India's domestic counter-terrorism designations. The UAPA preamble (as amended in 2004 and 2008) expressly recites the Government's power under the UNSCA to implement UNSC counter-terrorism resolutions and states Parliament's intent to make special provisions to prevent and cope with terrorist activities. Section 35 of the UAPA empowers the Central Government, by notification in the Official Gazette, to declare an association unlawful if it is involved in terrorism or has as its object any unlawful activity; organizations so designated are listed in the First Schedule to the Act. Section 51A of the UAPA, inserted in 2008 to give effect to UNSC Resolutions 1267 (1999) and successor resolutions, prohibits any person from holding funds or financial assets, or making funds or financial assets available, directly or indirectly, for the benefit of any individual or entity listed in the Second, Third, or Fourth Schedules to the Act. The Second and Third Schedules incorporate UNSC-listed terrorist individuals and entities; the Fourth Schedule permits domestic designation of individuals. Violations of Section 51A are punishable under the general penalty provisions of the UAPA. The Act does not specify the enforcing ministry by name; operational practice assigns designation authority to the Ministry of Home Affairs (which maintains the Schedules through gazette notifications) and enforcement responsibility to financial regulators and law-enforcement agencies, but these allocations are not codified in the statute itself.

Trade-based sanctions and export controls rest on the Foreign Trade (Development and Regulation) Act, 1992 ("FTDR Act"). Section 3 of the FTDR Act empowers the Central Government to make provision for regulating or prohibiting imports and exports in the public interest or for the conservation of foreign exchange; this power is exercised through the Foreign Trade Policy (FTP) and public notices issued by the Director General of Foreign Trade (DGFT). Chapter 2 of the FTP sets forth country- and commodity-specific prohibitions and restrictions. In 2019, India amended the FTP to impose a blanket prohibition on both direct and indirect import or transit of goods originating in or exported from Pakistan—India's first autonomous trade sanction against a country beyond UNSC mandates. The FTDR Act does not, however, establish a secondary-sanctions regime; it governs only goods crossing India's borders and does not purport to penalize third-country transactions.

India does not impose secondary sanctions. Indian sanctions law does not penalize foreign parties for transactions with countries or persons subject to sanctions imposed by other jurisdictions (such as U.S. OFAC programs or EU autonomous measures). India has consistently stated it does not subscribe to unilateral sanctions imposed outside the UNSC framework. Consequently, Indian companies and financial institutions face sanctions exposure when their activities touch U.S. or EU jurisdictions, involve U.S.-dollar clearing, or otherwise trigger extraterritorial application of foreign sanctions law—but not under Indian domestic law itself.

The division of implementation and enforcement responsibilities among Indian government agencies—Ministry of External Affairs for UNSC sanctions coordination, Ministry of Home Affairs for UAPA designations, Reserve Bank of India for financial-sector compliance, Directorate General of Foreign Trade for import/export controls, and the Central Board of Indirect Taxes and Customs for border enforcement—is established by executive practice and administrative circulars rather than by the enabling statutes themselves. The statutes empower the "Central Government" without specifying which ministry or department exercises the delegated authority.

Source: United Nations (Security Council) Act, 1947 (Act 43 of 1947), Ministry of External Affairs Source: Unlawful Activities (Prevention) Act, 1967 (Act 37 of 1967), Ministry of Home Affairs

Financial institutions in India—including banks, non-banking financial companies (NBFCs), payment-service providers, as well as Designated Non-Financial Businesses and Professions (DNFBPs) such as real estate agents and dealers in precious metals/stones—face mandatory screening and asset-freeze obligations under Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA). This compliance regime was significantly expanded by the Ministry of Home Affairs (MHA) Corrigendum dated August 29, 2023, which amended the operative MHA Procedure of May 4, 2023, by explicitly extending these obligations to DNFBPs and “any other person” who comes into possession or control of assets of a designated individual or entity.

Section 51A prohibits any person from holding funds or financial assets, or making them available, directly or indirectly, for the benefit of any individual or entity listed in the Second, Third, or Fourth Schedules to the UAPA. The schedules incorporate UNSC and domestic terror designations. The current (as amended) MHA Procedure, operative from August 29, 2023, mandates:

Screening and Detection.

• Financial institutions must screen all prospective and existing customers at onboarding, at each Know-Your-Customer (KYC)/AML review, and whenever updated lists are circulated by the Ministry of External Affairs (MEA) or MHA.
• DNFBPs and any business or individual subject to notification are also required to freeze assets or property immediately upon awareness (by business operations or official notification) that they possess or control funds or property of a listed person.

Immediate Asset Freeze.

• The asset freeze is mandatory upon a match between a customer (or counterparty) and a listed individual/entity. The Procedure makes clear such a freeze does not require prior customer notice, regulator or court approval, or a particular evidentiary threshold—any positive identification triggers mandatory action.

Reporting Requirements.

• Within 24 hours of the freeze, financial institutions, DNFBPs, and others must notify: (1) their principal officer/compliance head, (2) the Financial Intelligence Unit – India (FIU-IND), and (3) the Joint Secretary (CTCR), Ministry of Home Affairs—the nodal UAPA officer. The Corrigendum (para 7(i)(a)) formalizes this reporting for DNFBPs and "any other person."

Duration and Delisting.

• The freeze remains until formal delisting from applicable Schedules by the UNSC or Government of India. Financial institutions and DNFBPs cannot unilaterally release the freeze, even if presented with evidence of mistaken identity—the request must be escalated to the MHA's CTCR Division. Requests received should be forwarded electronically as described in the Procedure.

Penalties and Enforcement.

• There is no specific penalty clause for Section 51A; violations are prosecuted under the UAPA’s general penalty regime—these can include fines and imprisonment. Regulatory agencies (RBI, SEBI, IRDAI for financial institutions; sectoral regulators or authorities for DNFBPs) may impose administrative penalties in addition.

Expanded Applicability.

• The August 2023 Corrigendum expands covered entities and clarifies “any person” with knowledge/control of listed assets is subject to the Procedure—not just regulated financial institutions.

This section reflects law and procedure as updated to August 29, 2023. For further detail on DNFBP/non-bank compliance, see the separate guide section on asset-freeze procedure for non-financial businesses (#51a-asset-freeze-non-bank-entities).

Source: Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967, Ministry of Home Affairs (as amended Aug. 29, 2023) Source: Corrigendum to Procedure for Implementation of Section 51A of the UAPA (MHA, Aug. 29, 2023) Source: Unlawful Activities (Prevention) Act, 1967 (Act 37 of 1967), Ministry of Home Affairs

Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA) prohibits any person from holding funds or financial assets, or making funds or financial assets available, for the benefit of individuals or entities listed in the Second, Third, or Fourth Schedules to the UAPA (United Nations Security Council–designated terrorists under resolutions 1267/1989/2253 and 1988, and domestic terror designees). Violations—holding funds for a listed person, failing to freeze an account upon detecting a match during customer screening, or unfreezing an account without authorization from the Ministry of Home Affairs—expose the financial institution and its officers to criminal prosecution under the UAPA and administrative sanctions by financial regulators (Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India).

## Criminal penalties under the UAPA

The UAPA does not prescribe a specific penalty for contravention of Section 51A. The Act empowers the Central Government to freeze, seize, or attach funds held for listed individuals or entities and to prohibit making funds available for their benefit, but it does not couple this power with a standalone penalty clause. Instead, violations of Section 51A are prosecuted under the general penalty provisions of the UAPA.

Section 13 of the UAPA makes it an offense to be a member of a terrorist organization listed in the First Schedule or to invite support for such an organization; conviction carries imprisonment for a term which may extend to ten years and is also liable to fine. Section 17 criminalizes raising funds for a terrorist act; conviction carries imprisonment which may extend to life imprisonment and is also liable to fine. Section 18 criminalizes conspiracy to commit a terrorist act; conviction carries the same punishment as if the person had committed the terrorist act itself. A financial institution that knowingly holds or releases funds for a listed terrorist individual or entity, or that fails to freeze an account with the intent to aid a listed person, may be prosecuted under one or more of these provisions, depending on the facts and the degree of knowledge or intent established.

Section 23 imposes enhanced penalties where a person contravenes the Explosives Act, the Arms Act, or related statutes "with intent to aid any terrorist or terrorist organisation." In such cases, the court shall impose imprisonment for a term not less than five years but which may extend to life imprisonment, and the person is also liable to fine. Where a Section 51A violation is accompanied by proof of intent to aid a listed terrorist, the prosecution may invoke Section 23 to secure the enhanced minimum sentence. The statute does not define "intent to aid" by reference to a monetary threshold or a specific act; the trial court determines intent based on the evidence.

For negligent or inadvertent violations—such as a failure to update screening databases promptly after the Ministry of External Affairs circulates a revised UNSC sanctions list, or an erroneous unfreezing due to a name-matching error—the prosecution may proceed under the general unlawful-activity or conspiracy provisions without invoking the enhanced-penalty framework. The UAPA does not establish a uniform fine schedule, a civil-monetary-penalty regime, or a strict-liability offense for Section 51A compliance failures. All prosecutions under the UAPA require proof of knowledge, intent, or participation in unlawful activity; negligence alone may not suffice for conviction absent statutory specification.

Jurisdiction and procedure. Offenses under the UAPA are investigated by the National Investigation Agency (NIA), state police counter-terrorism units, or, in cases involving proceeds of terrorism, the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA). Prosecution is conducted before Special Courts designated under Section 11 or Section 21 of the UAPA. Section 45 of the UAPA provides that no court shall take cognizance of any offense punishable under Chapters IV or VI of the Act (which include the terrorism-related offenses) except with the previous sanction of the Central Government or the State Government, or of such officer as the Central Government or State Government may authorize. This sanction requirement insulates financial institutions from private prosecution but exposes them to the enforcement discretion of the Ministry of Home Affairs (which administers the UAPA) and the prosecuting agencies.

## Enforcement developments and regulatory updates (2026)

Since June 2026, there have been two notable changes affecting the Section 51A enforcement framework:

• Delisting of an entity from the UNSC Sanctions List (March 3, 2026): The Reserve Bank of India issued a circular notifying all regulated entities that a party had been removed from the ISIL/Al-Qaida Sanctions List, and that the sanctions and asset-freeze obligations under Section 51A no longer apply to that party. This development shows that de-listing actions have immediate and binding repercussions on Indian compliance requirements and the status of previously frozen assets.

• RBI Directive on List Updates (April 29, 2026): The Reserve Bank of India issued a further communication to all regulated institutions via an updated Master Direction (RBI/2026-27/42), mandating immediate system updates by all entities upon circulation of new or amended UNSC sanctions lists under Section 51A of UAPA. The circular reinforces the obligation of financial entities to ensure real-time compliance and rapid adjustment in systems and procedures as the UNSC lists change. It also reiterates the importance of not releasing funds or assets frozen under Section 51A until formal notification of delisting.

These events underscore that the practical obligations for Indian banks and regulated entities under Section 51A remain directly tied to routine and timely updates from Indian authorities, and that failure to adjust screening and compliance processes in pace with international and domestic updates may expose institutions to both administrative sanctions and potential criminal liability.

## Administrative sanctions by financial regulators

The Ministry of Home Affairs "Procedure for Implementation of Section 51A of the UAPA" (revised May 4, 2023) sets out the operational steps that financial institutions, financial regulators (RBI, SEBI, IRDAI), and law-enforcement agencies must follow to give effect to the statutory prohibition. The procedure specifies that financial institutions must screen all prospective and existing customers against the UNSC sanctions lists and the UAPA Schedules, freeze accounts immediately upon identifying a match, and report the freeze within 24 hours to their principal officer (the officer designated under the Prevention of Money Laundering Act for AML/CFT compliance), the Financial Intelligence Unit – India (FIU-IND), and the Joint Secretary (Counter-Terrorism and Counter-Radicalization Division) of the Ministry of Home Affairs. The procedure does not itself prescribe penalties for non-compliance; it directs financial regulators to "ensure meticulous compliance" by their regulated entities and contemplates that violations will be addressed through the regulators' respective enforcement powers under the Banking Regulation Act, 1949, the SEBI Act, 1992, and the Insurance Act, 1938.

RBI enforcement (banks and non-banking financial companies). The RBI has incorporated the MHA procedure into its Master Direction on Know Your Customer (KYC) and its Master Direction on Prevention of Money Laundering (PML) and Combating the Financing of Terrorism (CFT). Banks, NBFCs, payment system operators, and other RBI-regulated entities are required to implement the Section 51A screening and freezing obligations as part of their KYC and AML/CFT compliance programs. Violations are subject to penalties under the Banking Regulation Act, 1949, and the Payment and Settlement Systems Act, 2007, but the RBI Master Directions themselves do not quantify the penalty amounts or specify the enforcement procedure for Section 51A compliance failures distinct from general KYC lapses. The MHA procedure states that financial regulators receive copies of freeze reports from FIU-IND and the CTCR Division and may take "appropriate action" under their respective statutes, but it does not elaborate on what constitutes appropriate action or set a penalty schedule.

Unable to confirm the specific monetary penalty limits or administrative sanctions that the RBI, SEBI, or IRDAI may impose for a Section 51A screening or freezing failure, as distinct from other KYC or AML/CFT violations, as of 2026-06-17. The regulators' public enforcement-action press releases and orders typically cite non-compliance with "KYC norms" or "AML/CFT guidelines" without specifying whether the underlying failure involved Section 51A UNSC/UAPA screening or other customer-due-diligence deficiencies.

## Coordination between criminal and administrative enforcement

A single Section 51A compliance failure—for example, failing to freeze the account of a person newly added to the UNSC ISIL/Al-Qaida Sanctions List—can trigger both criminal investigation (by the NIA, state police, or the Enforcement Directorate under the UAPA or PMLA) and administrative enforcement (by the financial institution's principal regulator). The MHA procedure contemplates that the Joint Secretary (CTCR) of the Ministry of Home Affairs, upon receiving a freeze report or a complaint, may refer the matter to law-enforcement agencies for investigation or may close it as a compliance lapse if the institution promptly corrected the error and reported it voluntarily. The procedure does not set threshold criteria (such as the amount frozen, the duration of non-compliance, or the number of listed persons affected) that trigger mandatory criminal referral versus administrative resolution.

In practice, the division of labor appears to be: administrative penalties for negligent screening or database-update delays; criminal investigation for knowing or intentional releases of funds to listed terrorists, or for failures coupled with other indicators of terrorist financing (such as structuring transactions, false reporting, or collusion with the listed person). However, the statute and the MHA procedure do not codify this division, and both enforcement tracks remain available for any Section 51A violation.

## Cross-border sanctions-compliance exposure

Indian financial institutions with U.S.-dollar correspondent-banking relationships, U.S. branches or subsidiaries, or operations in European Union or United Kingdom jurisdictions face separate sanctions-compliance obligations under foreign law. The U.S. Office of Foreign Assets Control (OFAC) enforces U.S. sanctions programs extraterritorially against non-U.S. financial institutions that process U.S.-dollar transactions, use U.S. financial infrastructure, or have a U.S. nexus; violations can result in civil monetary penalties, loss of correspondent-banking access, and criminal prosecution under the International Emergency Economic Powers Act (IEEPA). EU member-state competent authorities and the UK Office of Financial Sanctions Implementation (OFSI) enforce EU and UK autonomous sanctions and impose penalties under their respective domestic regulations.

Indian law does not recognize or enforce unilateral foreign sanctions as a matter of domestic Indian law. India has consistently stated it does not subscribe to sanctions imposed outside the United Nations Security Council framework. Consequently, an Indian financial institution that processes a transaction for a party designated under U.S. OFAC sectoral sanctions (such as certain Russian or Iranian entities) or EU autonomous restrictive measures (such as Belarus sanctions) does not violate Indian law unless that party is also listed under a UNSC resolution or the UAPA Schedules. However, the institution faces foreign enforcement exposure and, in practice, many Indian banks implement layered screening (UNSC/UAPA lists plus OFAC SDN, EU consolidated list, UK OFSI list) to manage the risk of losing U.S.-dollar correspondent access or EU/UK market access. Failure to comply with foreign sanctions law exposes the institution to foreign penalties, de-risking by correspondent banks, and reputational damage; it does not constitute a violation of the UAPA or Indian sanctions law.

Source: Unlawful Activities (Prevention) Act, 1967 (Act 37 of 1967), Ministry of Home Affairs Source: Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967, Ministry of Home Affairs (May 4, 2023)

India’s implementation of United Nations Security Council (UNSC) asset-freeze obligations—including resolutions 1267/1989/2253 (ISIL/Al-Qaida), 1988 (Taliban), and successors—remains anchored in the United Nations (Security Council) Act, 1947 and Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA). Previously, there was no published Government of India procedure detailing the process for seeking humanitarian exemptions (e.g., unfreezing funds for basic or extraordinary expenses) or clarifying which authority handled such requests.

Material development since June 2026: The Ministry of Home Affairs (MHA) has issued new publicly available guidance, including an FAQ: “Delisting of Individuals/Entities under UNSCR 1267 & UAPA and unfreezing of assets,” addressing both the delisting process and the possibility of unfreezing assets, including in humanitarian scenarios. The revised and amended MHA Procedures (including Corrigenda to the Procedure for Implementation of Section 51A, as of August 29, 2023) now expressly reference requests for unfreezing of funds post-delisting or in exceptional circumstance and clarify procedural steps for financial institutions and affected individuals.

Updated procedure highlights:

• The MHA FAQ (Par. 9–13) now states that persons whose assets are frozen under Section 51A may apply to the MHA’s Counter-Terrorism and Counter-Radicalization (CTCR) Division for unfreezing, either after delisting or for basic expenses if permitted by UNSC exemptions (Resolution 1452/2002, etc.). The request must be submitted in writing, conforming to evidentiary/documentation requirements set by MHA.
• The MHA Procedure (as amended) clarifies that any unfreezing application should be forwarded by financial institutions directly to Joint Secretary (CTCR Division), who will review the claim and, where relevant, coordinate with the Ministry of External Affairs (MEA) for processing at the UNSC sanction committee level, if necessary, or for domestic decision if based on standing humanitarian exemptions under recent UNSC resolutions (e.g., Resolution 2664/2022).
• The amended Procedure and FAQ outline, in broad terms, the type of documentation (needs assessment, supporting bills, etc.) to be furnished by applicants. The CTCR Division, as nodal authority, determines merit and next steps.

Policy context and open points:

• The UNSC framework establishes differentiated processes for basic (notification/no-objection regime) and extraordinary (case-by-case approval) expenses, as well as a cross-cutting humanitarian carve-out via Resolution 2664.
• India’s official statements (e.g., Explanation of Vote on Resolution 2664) continue to emphasize caution to avoid abuse but do not exempt India from the obligation to implement binding UNSC exemptions.
• There is still no detailed published Indian timeline, application form, or review standard; practitioners should rely on the published FAQ and MHA Procedure, submit evidence as specified, and monitor for future procedural clarifications.

Caution: The existence of the MHA FAQ and revised Procedure is a material update: Indian practitioners must now consult these publications for the unfreezing/humanitarian exemption process. As of this update, the FAQ and Procedure remain the central published authorities, but further amendments or implementing details may follow.

Source: MHA FAQ – Delisting of Individuals/Entities under UNSCR 1267 & UAPA and unfreezing of assets (2023) Source: Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967, as amended (Aug. 29, 2023), Ministry of Home Affairs Source: United Nations (Security Council) Act, 1947 (Act 43 of 1947), Ministry of External Affairs

India regulates exports of dual-use, munitions, and nuclear-related items—including software and technology—through the SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) framework, structured under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) and detailed in the Foreign Trade Policy (FTP). The SCOMET list (Appendix 3 to Schedule 2 of ITC (HS) Classification) is harmonized with the guidelines and control lists of key international regimes (NSG, MTCR, WA, Australia Group).

## 2025–26 Framework Update — Notification No. 31/2025–26 A material update took effect with DGFT Notification No. 31/2025-26 issued September 23, 2025 (effective October 23, 2025), superseding prior versions of Appendix 3. This update:

• Restructured SCOMET control categories by further aligning with international control lists;
• Modified several item definitions, enhanced catch-all controls, and clarified conditions for technology and software exports;
• Updated the Munitions List annex.

## March 2026 Licensing and Procedural Enhancements In March 2026, DGFT introduced additional procedural and compliance reforms applicable to SCOMET items:

• General Authorizations Introduced: Blanket authorizations were made available (notably General Authorization for Intra-Company Transfers (GAICT) and General Authorization for Export to Certain Destinations (GAEC)), reducing the need for repeated individual licensing for eligible repeat exports.
• Stock & Sale Authorization Expansion: The stock-and-sale license regime was liberalized to allow distribution to affiliates, OEMs, and approved contract manufacturers under defined reporting and end-use controls.
• Unified Application Portal: A single online application form now covers all SCOMET items and jurisdictions, replacing previously category- or destination-specific forms.
• Temporary Export for Exhibition/Demo: The permitted re-import period for such items was extended from 90 to 120 days; testing and evaluation are now recognized as valid temporary export reasons.
• Voluntary Disclosure and Compliance: Revised procedures formally encourage voluntary disclosure of compliance failures—aligned with best practices for mitigation during penalty adjudication—and specify structured reporting for post-export monitoring.

## Licensing Authorities and Process

• Categories 1–8 and Munitions List: Applications are reviewed by DGFT Headquarters, assessed by the Inter-Ministerial Working Group (IMWG) according to updated FTP/Handbook guidelines (including new Appendix 10A, proformas in Appendix 10J(i–iii)).
• Category 0 (Nuclear): The Department of Atomic Energy (DAE) remains the authority, subject to Atomic Energy Act, 1962 and separate DAE guidelines.

## Special Considerations

• Exports to Iran: Remain subject to Annex B of UNSC resolution 2231 (2015) and require MEA approval.
• Technology Transfer/Brokering: Expanded controls apply to deemed exports, brokering, and supply of technical assistance to non-Indian nationals or third countries, per updated SCOMET and HBP definitions.

## Penalties Violations are subject to action under the FTDR Act, Customs Act, and, in cases linked to terrorism, UAPA. DGFT may place violators on the Denied Entity List (DEL).

This section reflects SCOMET law and practice as updated by DGFT Notification No. 31/2025-26 (Sept. 23, 2025 / Oct. 23, 2025) and the procedural reforms of March 2026.

Source: Appendix 3 to Schedule 2 of ITC(HS) Classification of Export and Import Items (SCOMET List, updated Sept 23, 2025/Mar 2026), Directorate General of Foreign Trade Source: DGFT Notification No. 31/2025-26, 23 September 2025 Source: Foreign Trade Policy 2023, Chapter 10: SCOMET, Directorate General of Foreign Trade

An individual or entity that has been designated as a terrorist under Section 35 of the Unlawful Activities (Prevention) Act, 1967 (UAPA) and listed in the Fourth Schedule (domestic designation by the Indian government) or that has been incorporated into the Second or Third Schedules (individuals and entities designated by the United Nations Security Council under resolutions 1267 (1999), 1989 (2011), 2253 (2015) for ISIL/Al-Qaida, and resolution 1988 (2011) for Taliban) may seek de-listing — permanent removal from the sanctions list, lifting of the asset freeze imposed under Section 51A of the UAPA, and restoration of access to the financial system. The de-listing procedure differs depending on whether the person was designated domestically under the UAPA or by the UNSC.

## De-listing from the UAPA Fourth Schedule (Indian domestic designations)

The Ministry of Home Affairs (MHA) "Procedure for designation and delisting of terrorist individual/organisation on the basis of UNSCR 1267 and UNSCR 1373 and delisting thereof" (file number 14012/06/2022/CFT-82, dated September 12, 2023) states that "The request for delisting of individual/ organisation, designated under the UAPA and the UNSCR 1373 (2001), are dealt with as per Section 36 of the Unlawful Activities (Prevention) Act, 1967, and 'the Procedure for Admission and Disposal of Application Rule, 2004', as amended from time to time."

Section 36 of the UAPA permits any person aggrieved by a designation under Section 35 to make an application to the Central Government for revocation or modification of the designation. Section 37 of the UAPA requires the Central Government to constitute one or more Review Committees to hear such applications. Each Review Committee consists of a Chairperson (who must be a person who is, or has been, a Judge of a High Court, appointed by the Central Government with the concurrence of the Chief Justice if the appointee is a sitting judge) and up to three other members possessing qualifications prescribed by the Central Government.

The Procedure for Admission and Disposal of Application Rule, 2004 (the statutory instrument implementing Section 36) sets out the procedural steps for filing and adjudicating de-listing applications. The applicant must submit a written application to the Joint Secretary (Counter-Terrorism and Counter-Radicalization Division), Ministry of Home Affairs, the nodal officer for UAPA administration and counter-terrorist-financing compliance. The application must set forth the grounds for de-listing, provide evidence that the applicant does not meet the criteria for designation under Section 35 of the UAPA (which requires that the Central Government believe, on reasonable grounds, that the individual or entity is involved in terrorism), and explain any change in circumstances since the original designation (such as cessation of terrorist activity, renunciation of affiliation with a terrorist organization, or mistaken identity).

Timeline. The UAPA does not prescribe a statutory deadline for the Review Committee to decide an application or for the Central Government to issue a final de-listing order. In practice, the timeline depends on the complexity of the case, the availability of intelligence and law-enforcement assessments from the Intelligence Bureau, the National Investigation Agency (NIA), and other security agencies, and the frequency of Review Committee sittings. The MHA procedure does not publish a service standard or commit to a review period (such as 90 days or 180 days).

Standard of review. The Review Committee assesses whether the applicant continues to meet the designation criteria under Section 35 — namely, whether the Central Government continues to believe, on reasonable grounds, that the individual or organization is involved in terrorism. Section 35(3) of the UAPA specifies that an organization is deemed to be involved in terrorism if it commits or participates in acts of terrorism, prepares for terrorism, promotes or encourages terrorism (including by inciting others to commit terrorist acts), or is otherwise involved in terrorism. The Review Committee may consider intelligence assessments, law-enforcement reports, judicial findings (such as acquittals in criminal proceedings, or the absence of prosecution after a prolonged period), and the applicant's own evidence of changed circumstances. The Review Committee's recommendation is advisory; the final decision rests with the Central Government (acting through the Ministry of Home Affairs).

Outcome. If the Review Committee recommends de-listing and the Central Government accepts the recommendation, the MHA issues a gazette notification removing the individual or entity from the Fourth Schedule. The notification is published in the Official Gazette of India and circulated to the Ministry of External Affairs (MEA), financial regulators (Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India), the Financial Intelligence Unit – India (FIU-IND), the Central Board of Indirect Taxes and Customs (CBIC), and the UAPA nodal officers in each state and union territory. Upon publication of the de-listing notification, the asset freeze imposed under Section 51A ceases to apply, and financial institutions must unfreeze the person's accounts and restore normal banking services. If the Review Committee recommends against de-listing, or if the Central Government rejects a favorable recommendation, the applicant has no statutory right of appeal to a court under the UAPA itself. The applicant may, however, file a writ petition in the High Court under Article 226 of the Constitution of India or in the Supreme Court under Article 32, challenging the designation or the refusal to de-list on grounds of constitutional invalidity, procedural unfairness, or absence of evidence. Indian courts have recognized that UAPA designations are subject to judicial review for compliance with principles of natural justice and proportionality, but the threshold for overturning an executive designation on national-security grounds is high.

## De-listing from the UNSC 1267/1989/2253 (ISIL/Al-Qaida) and 1988 (Taliban) sanctions lists

The Second and Third Schedules to the UAPA incorporate by reference the individuals and entities designated by the UNSC Committee pursuant to resolutions 1267 (1999), 1989 (2011), and 2253 (2015) (the ISIL/Al-Qaida sanctions regime) and the UNSC Committee pursuant to resolution 1988 (2011) (the Taliban sanctions regime). These designations are made by the UNSC sanctions committees, not by the Indian government. India, as a UN member state, is bound by Chapter VII resolutions and implements UNSC designations through the United Nations (Security Council) Act, 1947 and the UAPA.

Ombudsperson mechanism. Individuals, groups, undertakings, or entities seeking to be removed from the ISIL (Da'esh) and Al-Qaida Sanctions List may submit a de-listing request to the Office of the Ombudsperson, an independent and impartial official appointed by the United Nations Secretary-General pursuant to UNSC Resolution 1904 (2009) and successors. The Ombudsperson process is the only procedure available for de-listing from the 1267/1989/2253 regime; listed persons may not petition the UNSC Committee directly. The Ombudsperson receives the application, gathers information from the designating state (the UN member state that originally proposed the listing) and other member states (including India, if the person has connections to India or if India has relevant information), meets with the petitioner (in person or virtually, at the petitioner's request), and submits a Comprehensive Report to the UNSC Committee with a recommendation to grant or deny the de-listing request. The UNSC Committee must decide whether to de-list the person within 60 days of receiving the Ombudsperson's report. If the Committee takes no action within 60 days, the Ombudsperson's recommendation is deemed to be accepted. If the Ombudsperson recommends de-listing and at least one Committee member (representing a UN member state) objects, the matter may be referred to the Security Council plenary for a decision by vote. The Ombudsperson process typically takes 12 to 30 months from submission of the application to a final Committee decision.

Focal Point mechanism for other UNSC sanctions regimes. For UNSC sanctions regimes other than the 1267/1989/2253 ISIL/Al-Qaida list — including the 1988 Taliban list, sanctions on the Democratic People's Republic of Korea (DPRK), and other country-specific programs — de-listing requests are submitted to the Focal Point for De-listing (established by UNSC Resolution 1730 (2006)). The Focal Point transmits the de-listing request to the designating state and the relevant UNSC sanctions committee. De-listing requires consensus among all Committee members (representing the 15 members of the Security Council); any member may block a de-listing by withholding consent. The Focal Point mechanism does not include an independent Ombudsperson, does not provide for a face-to-face meeting with the petitioner, and does not guarantee a timeline or a reasoned decision. In practice, de-listing through the Focal Point is more difficult and slower than through the Ombudsperson process.

Application procedure. The Ombudsperson application form and detailed instructions are published at https://www.un.org/securitycouncil/ombudsperson/application. The petitioner must provide identifying information (full name, aliases, date of birth, nationality, passport numbers, addresses), the permanent reference number assigned by the UNSC Committee (the "QDi" or "QDe" number for individuals and entities on the ISIL/Al-Qaida list), the grounds for de-listing (mistaken identity, case of mistaken identity, no reasonable basis for the original designation, changed circumstances, completion of sentence or rehabilitation), and supporting evidence (official identity documents, court judgments, certificates of renunciation of terrorist affiliation, letters of support from community leaders or former associates). The petitioner may retain legal counsel; several international law firms and NGOs specialize in UNSC de-listing advocacy. The petitioner does not need to apply through the Government of India or any other member state; individuals may apply directly to the Ombudsperson.

India's role. When the Ombudsperson or the Focal Point transmits a de-listing request to India (because the petitioner is an Indian national, resides in India, or has financial or organizational ties to India), the Ministry of External Affairs coordinates the Government of India's response. MEA consults with the Ministry of Home Affairs (which administers the UAPA and maintains intelligence and law-enforcement assessments of designated terrorists), the Intelligence Bureau, the National Investigation Agency, and other security agencies to determine whether India supports or opposes the de-listing. India may submit information to the Ombudsperson or the UNSC Committee supporting or opposing the request. If the UNSC Committee de-lists the person, the MEA notifies the MHA, the financial regulators (RBI, SEBI, IRDAI), FIU-IND, and CBIC. The Second or Third Schedule to the UAPA is automatically updated to reflect the UNSC Committee's decision; India does not issue a separate domestic de-listing notification for UNSC-listed persons. Financial institutions receive notification of the de-listing through their principal regulators and through the UNSC Committee's public press release (published at https://www.un.org/securitycouncil/sanctions/1267/press-releases). The updated consolidated ISIL/Al-Qaida Sanctions List and Taliban Sanctions List are published at www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list and https://www.un.org/securitycouncil/sanctions/1988/materials, respectively.

Requests forwarded by Indian financial institutions. The MHA Procedure for Implementation of Section 51A of the UAPA (revised May 4, 2023) and numerous Reserve Bank of India circulars implementing Section 51A specify that "any request for de-listing received by any [financial institution] is to be forwarded electronically to Joint Secretary (CTCR), MHA for consideration." A financial institution that receives a de-listing request from an account holder whose funds are frozen under Section 51A must forward the request to the Joint Secretary (Counter-Terrorism and Counter-Radicalization Division), Ministry of Home Affairs (contact: jscrcr-mha@gov.in; fax 011-23092569; telephone 011-23092736). The financial institution does not decide the request, grant interim relief, or unfreeze the account pending the MHA's or the Ombudsperson's decision. If the listed person is on a UNSC list (Second or Third Schedule), the MHA will coordinate with MEA, and MEA may submit the request to the Ombudsperson or the Focal Point on behalf of the individual (or advise the individual to apply directly to the Ombudsperson). If the listed person is on the Fourth Schedule (Indian domestic designation), the MHA will treat the request as an application under Section 36 of the UAPA and refer it to the Review Committee.

Practical consequence: two parallel tracks. A person who is designated both (i) by the UNSC Committee (and therefore appears in the Second or Third Schedule to the UAPA) and (ii) separately by the Indian government under Section 35 (and therefore appears in the Fourth Schedule) must pursue two de-listing procedures: an Ombudsperson or Focal Point petition for removal from the UNSC list (which will remove them from the Second or Third Schedule automatically) and a Review Committee application under Section 36 for removal from the Fourth Schedule. Removal from one list does not compel removal from the other. The Indian government retains discretion to maintain a domestic Fourth Schedule designation even after the UNSC de-lists the person, if the government believes on its own assessment that the person remains involved in terrorism.

Source: Procedure for designation and delisting of terrorist individual/organisation on the basis of UNSCR 1267 and UNSCR 1373 and delisting thereof, Ministry of Home Affairs (September 12, 2023) Source: Unlawful Activities (Prevention) Act, 1967 (Act 37 of 1967), Ministry of Home Affairs Source: Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967, Ministry of Home Affairs (May 4, 2023)

India imposed a prohibition on import of all goods originating in or exported from Pakistan, effective May 2, 2025, marking the country's first comprehensive autonomous trade embargo against a sovereign state. The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, issued a notification on May 2, 2025, prohibiting the import of all goods originating in or exported from Pakistan to India. The prohibition is imposed under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), which empowers the Central Government to make provisions for regulating or prohibiting imports and exports in the public interest, for the conservation of foreign exchange, or for the implementation of international agreements.

## Scope of the prohibition

The DGFT notification prohibits "direct or indirect import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, … with immediate effect, until further orders." The restriction is imposed in the interest of national security and public policy. The prohibition applies to:

• All goods originating in Pakistan, regardless of the Harmonized System (HS) classification, tariff treatment, or prior import-policy status (free, restricted, or canalized);
• All goods exported from Pakistan, whether manufactured in Pakistan or trans-shipped through Pakistan from a third country; and
• Direct and indirect imports, a formulation understood to include goods of Pakistani origin routed through third countries to obscure origin.

The notification specifies that any exception to this prohibition will require approval of the Government of India. No standing exemptions, general licences, or de minimis thresholds have been published. The prohibition remains in force "until further orders" from the Central Government; no sunset date or review period is specified.

Unable to confirm the precise regulatory citation (paragraph number, FTP 2023 section reference, or official gazette publication details) for the DGFT notification dated May 2, 2025, as of 2026-06-01.

## Enforcement and related measures

The Central Board of Indirect Taxes and Customs (CBIC), under the Ministry of Finance, enforces import prohibitions at all customs ports, airports, land customs stations, and inland container depots through refusal of Bill of Entry clearance. The Press Information Bureau announcement of May 3, 2025, confirms that the prohibition was issued by DGFT and applies to all goods originating in or exported from Pakistan, but does not detail the operational instructions to customs officers, the treatment of goods in transit at the effective date, or the procedure for seeking case-by-case government approval of exemptions.

Contemporaneous press reports indicate that the Directorate General of Shipping (DGS) issued a separate notification prohibiting ships bearing the Pakistan flag from visiting any Indian port and prohibiting Indian-flag ships from visiting any port in Pakistan, citing the need to ensure "safety of Indian assets, cargo and connected infrastructure." The Department of Posts reportedly suspended exchange of inbound mail and parcels from Pakistan through air and surface routes. Unable to confirm the official citation, legal authority, or full text of the DGS or Department of Posts orders as of 2026-06-01.

## Background: escalation from tariff barriers to outright prohibition

India's May 2025 prohibition is the culmination of a series of trade-restrictive measures imposed since 2019. Following the February 14, 2019, Pulwama terror attack in Jammu and Kashmir, India raised the customs duty on all goods imported from Pakistan to 200 percent (from varying Most Favoured Nation (MFN) rates) and withdrew Pakistan's MFN status under the World Trade Organization (WTO) framework, invoking the national-security exception under Article XXI of the General Agreement on Tariffs and Trade (GATT). The 200-percent duty effectively priced Pakistani goods out of the Indian market; imports remained legally permitted but economically infeasible. India had granted MFN status to Pakistan in 1996; Pakistan had never reciprocated.

India closed the Attari-Wagah land customs station to commercial goods traffic in April 2025, following the Pahalgam terror attack on April 22, 2025. Attari had been the only operational land border crossing for bilateral India-Pakistan trade.

The May 2025 prohibition converts the de facto embargo (the 200-percent duty rendered imports uneconomical) into a de jure prohibition. Even goods that an importer might be willing to import despite the prohibitive duty are now barred by law. Press reports cite trade data showing that bilateral trade between India and Pakistan had already collapsed by the time of the prohibition: India's imports from Pakistan in the April 2024–January 2025 period totaled approximately USD 0.42 million, limited to niche items such as figs, herbs, certain chemicals, and Himalayan pink salt, down from USD 2.88 million in FY 2023-24 and USD 488.5 million in FY 2017-18 (before the 2019 measures). Unable to confirm these trade figures from an official Indian government source as of 2026-06-01.

Pakistan announced a reciprocal suspension of all trade with India on May 4, 2025, in response to India's prohibition. Unable to confirm the legal instrument, citation, or full scope of Pakistan's reciprocal measure as of 2026-06-01.

## Legal basis and WTO implications

The DGFT notification cites national security and public policy as the legal grounds for the prohibition. The FTDR Act, Section 3(2), empowers the Central Government to make provisions by order for "prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order,— (a) the import or export of goods of any specified description." Section 5 of the FTDR Act provides that the Central Government may, by notification in the Official Gazette, formulate and announce a foreign trade policy and make amendments to it. The Act does not itself define "public interest" or enumerate the circumstances under which national-security restrictions may be imposed; it delegates that determination to the Central Government.

India has not issued a separate public statement (beyond the DGFT notification and the Press Information Bureau release) clarifying whether the prohibition is imposed under the FTDR Act's general public-interest authority or invokes the WTO national-security exception (GATT Article XXI(b)(iii), which permits a member to take "any action which it considers necessary for the protection of its essential security interests … taken in time of war or other emergency in international relations"). India's invocation of "national security" in the context of Pakistan trade measures is consistent with its prior use of the GATT Article XXI carve-out when it withdrew MFN status in 2019.

WTO rules do not prohibit a member from imposing import bans for national-security reasons; however, the member bears the burden of justifying the measure if challenged in WTO dispute-settlement proceedings. Pakistan could theoretically file a WTO complaint alleging that India's prohibition violates India's tariff bindings and national-treatment obligations under GATT Articles II and III, but Pakistan would need to overcome India's Article XXI defence. The WTO Appellate Body (currently non-functional) has held that Article XXI is justiciable—a panel may review whether the invoking member's characterization of an "emergency in international relations" is plausible—but panels afford members wide discretion in defining their essential security interests. No WTO dispute-settlement proceeding concerning India's Pakistan import prohibition has been initiated as of June 1, 2026.

## Practical compliance requirements for Indian importers

Indian importers who previously sourced goods from Pakistan (or who sourced goods of third-country origin trans-shipped through Pakistan) must:

• Cease all import activity involving Pakistan-origin goods, regardless of prior contractual commitments, letters of credit, or advance payments. Customs authorities will refuse Bill of Entry clearance for goods originating in or exported from Pakistan.
• Verify the origin of goods trans-shipped through third countries to ensure that no component or input originates in Pakistan. The DGFT notification prohibits both "direct or indirect" imports. Importers should request certificates of origin from the exporting country and may face enhanced customs scrutiny for goods shipped from countries with known re-export activity.
• Notify foreign suppliers and cancel purchase orders for Pakistan-origin goods or goods trans-shipped through Pakistan. Goods refused entry must be re-exported at the importer's expense or destroyed.

India does not impose secondary sanctions. The DGFT prohibition applies only to imports into India of goods originating in or exported from Pakistan. It does not penalize third-country trade with Pakistan, Indian companies' operations in third countries that source Pakistani goods for sale outside India, or financial institutions that process payments for Pakistan-related trade not involving India.

However, the prohibition does affect transit trade: goods destined for third countries (Nepal, Bhutan, Afghanistan) that would ordinarily transit through India are now prohibited if those goods originate in or are exported from Pakistan.

## Distinction from UNSC sanctions framework

India's Pakistan prohibition is an autonomous trade sanction imposed under domestic law (the FTDR Act and the Foreign Trade Policy 2023) for national-security and public-policy reasons. It is not an implementation of a United Nations Security Council resolution. India's sanctions architecture otherwise rests primarily on implementation of UNSC sanctions under the United Nations (Security Council) Act, 1947, and the Unlawful Activities (Prevention) Act, 1967 (see the sections on the legal framework, financial-institution compliance under Section 51A of the UAPA, and humanitarian exemptions under UNSC resolutions). The Pakistan prohibition represents India's first significant departure from the UNSC-only sanctions framework and its first comprehensive autonomous embargo against a sovereign state. Unlike UNSC-mandated sanctions, which apply to all UN member states and typically include humanitarian exemptions and delisting procedures, India's Pakistan prohibition is unilateral, contains no published exemption procedure (other than case-by-case government approval), and has no scheduled review or expiration date.

Source: Government Prohibits Import of All Goods Originating in or exported from Pakistan to India, Press Information Bureau, Ministry of Commerce and Industry (May 3, 2025) Source: Foreign Trade (Development and Regulation) Act, 1992 (Act 22 of 1992), Section 3(2) and Section 5, Ministry of Commerce and Industry

Substantial changes to DGFT's procedures and substantive permissions for prohibited or restricted exports occurred in April–May 2026 and must be reflected in current guidance.

Wheat Exports (April 2026 Update):

• DGFT Notification No. 13/2026-27 (27 April 2026) maintains wheat (HS 10011900 & 10019910) as prohibited for export but permits an additional quota of 25 lakh metric tonnes (LMT) to be exported, subject to strict procedure.
• The operative procedure is detailed in DGFT Public Notice No. 05/2026‑27 (30 April 2026):
• Applications must be submitted via the DGFT portal between 1–10 May 2026.
• Eligibility: Exporters must demonstrate turnover/track record as specified (including minimum turnover for large exporters, capped quotas for cooperatives and state trading enterprises, as well as a designated MSME allotment).
• Quota allocation is at DGFT's discretion based on sectoral allocation and compliance with documentation/justification requirements, and all authorizations are non-transferable and valid for six months only.
• Shipments are subject to end-use, compliance, and export documentation checks as mandated in the Public Notice.

Sugar Exports (May 2026 Update):

• DGFT Notification No. 16/2026-27 (13 May 2026) changes export policy for sugar (HS 1701 14 90 & 1701 99 90) from "Restricted" to "Prohibited" until 30 September 2026, or until further orders.
• Explicit statutory exemptions exist for:

• Export under CXL and TRQ quotas to the EU/USA; • Export under the Advance Authorization Scheme for manufacturing inputs; • Government-to-government food security-related shipments; • "Export pipeline" consignments—goods already loaded, handed over to customs, or with irrevocable shipping documentation before the notification—subject to documentary proof and customs validation.

• The Transitional Arrangement under Para 1.05 of FTP 2023 does not apply to these prohibitions; there is no automatic relief for prior contracts not falling within the defined exceptions.

General Practice and Application:

• All exemptions or permissions for prohibited/restricted goods must be processed through the DGFT portal (https://dgft.gov.in), with supporting justification, evidence, and documents as detailed in relevant Public Notices/Notifications and FTP Chapter 2.
• Approval is discretionary; there is no automatic entitlement. Appeals may be made per FTDR Act S.15 or FTP 2023 Para 1.12, with judicial review only on traditional grounds.
• These 2026 developments materially update the prior regime and must be checked for further amendment in subsequent statutory instruments and DGFT notifications.

Source: DGFT Notification No. 13/2026-27, 27 April 2026 Source: DGFT Public Notice No. 05/2026-27, 30 April 2026 Source: DGFT Notification No. 16/2026-27, 13 May 2026 Source: Foreign Trade Policy 2023, Chapter 2, DGFT

Indian law does not recognize or enforce unilateral sanctions imposed by foreign jurisdictions—including those issued by the United States (OFAC), the European Union, or the United Kingdom (OFSI)—as a matter of domestic Indian law. Statutory compliance for Indian businesses and financial institutions is governed by Indian legislation: the Unlawful Activities (Prevention) Act, 1967 (UAPA), Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), and the United Nations (Security Council) Act, 1947. The primary Indian regime, including the Reserve Bank of India (RBI) Master Directions on Know Your Customer (KYC) and AML/CFT compliance, continues to require regulated entities to conduct due diligence and screening against United Nations Security Council (UNSC) and Indian designated lists—not foreign lists such as OFAC, EU, or UK programs.

However, periodic updates to the RBI directions reflect ongoing adoption of new UNSC sanctions and domestic requirements. In late March and April 2026, RBI issued updated screening and compliance notifications for regulated entities in connection with the addition of new individuals to the UNSC ISIL & Al-Qaida Sanctions List. Key notifications include:

• RBI Notification No. RBI/2025-26/251 (dated March 27, 2026) and Notification No. RBI/2026-27/01 (April 1, 2026), requiring all banks and regulated entities to update screening protocols and freeze assets per Section 51A of the UAPA upon receipt of new or amended UNSC or UAPA Schedules.
• RBI directions reiterate that funds/assets related to newly listed individuals or entities must be frozen immediately and reports filed with the Financial Intelligence Unit – India (FIU-IND) and Joint Secretary (CTCR), MHA.

Despite these enhancements to official procedure, Indian regulators remain silent on non-Indian sanctions, leaving risk-mitigation to each financial institution. RBI guidance does not require Indian entities to comply with or screen for OFAC, EU, or UK sanctions lists unless those parties are also designated under UNSC or Indian law. Indian institutions, however, frequently screen against foreign sanctions lists to preserve their international correspondent access and mitigate cross-border commercial risks—especially for transactions involving U.S. dollar clearing, SWIFT transfers, or operations involving foreign branches.

There is still no provision in Indian law or RBI regulation (including published Master Directions and the cited 2026 notifications) that either mandates or forbids compliance with unilateral foreign sanctions. Indian law does not shield institutions from business consequences imposed by foreign counterparties, nor does it prohibit the rejection of a transaction out of concern for foreign-sanctions risk. As of June 2026, no RBI circular, notification, or order compels or protects Indian institutions dealing with foreign sanctions risk.

This update incorporates the additional RBI compliance directives of March–April 2026 and clarifies current business and regulatory practice for Indian entities facing foreign sanctions exposure.

Source: Reserve Bank of India, KYC Directions, 2016 (as hosted by rbidocs.gov.in, Part VI and para 39) Source: RBI Notification No. RBI/2025-26/251, March 27, 2026 Source: RBI Notification No. RBI/2026-27/01, April 1, 2026

Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA) extends mandatory asset-freeze and transaction-prohibition duties to “any person,” not just regulated financial institutions. This means corporates, service providers, intermediaries (including brokers, insurers, warehouse operators, and property managers), and individuals in possession or control of funds, property, or "economic resources" for a designated person or entity (as per UAPA Schedules tied to the UN terrorism lists and Indian domestic designations) must act when required under law. The Ministry of Home Affairs (MHA) “Procedure for Implementation of Section 51A” (May 4, 2023) expressly encompasses all such non-financial actors alongside banks and reporting entities.

Key compliance steps for non-financial entities:

• Trigger and scope: Unlike regulated financial institutions, non-financial businesses are not subject to ongoing or proactive sanctions screening, but Section 51A is triggered if such a business becomes aware (through operations, regulator/agency notification, or bank correspondence) that it is holding, possessing, or controlling funds or assets for a designated person.

• Asset freeze: Upon such identification, the entity is required to immediately freeze the asset or property—preventing its use, withdrawal, transfer, or disposal. The MHA procedure is explicit (“Any person, entity, or authority… shall prevent dealing in / transfer of funds, financial assets, or economic resources with designated individuals/entities.”) The freeze is mandatory and does not require a court order or further MHA direction.

• Notification requirements: Within 24 hours of effecting the freeze, the entity must inform: (1) its own compliance lead or responsible officer; (2) the Financial Intelligence Unit – India (FIU-IND); and (3) the Joint Secretary (Counter-Terrorism and Counter-Radicalization), MHA. The 2023 procedure requires details of the person/entity, asset nature and value, and date/circumstances—but it does not specify a standardized form or electronic reporting portal as of June 2026. Notice is commonly by official letter or secure email to the Joint Secretary (CTCR), with parallel SMS or phone call if directed by agency protocol. Where the MHA updates this in future, entities must comply with any new forms or channels.

• No unilateral unfreezing: Only written government direction (de-listing or humanitarian exemption under the relevant procedure) allows access to be restored. The business must not unfreeze or release assets on its own authority, even if it believes there is an error or hardship claim; all requests must be escalated to MHA under the applicable delisting or exemption track.

• Penalties and enforcement: The UAPA does not specify a tailored administrative penalty for Section 51A reporting failures by non-financial entities. Failures fall under the Act’s general penalty provisions (including fines and, for willful or knowing non-compliance, imprisonment), as referenced in Section 13 and related parts of the UAPA. The process for enforcement is not described in detail for unregulated entities and will depend on Ministry and law enforcement discretion in each case.

• Records retention: The UAPA and MHA procedure do not specify a records-retention period for non-banks; retention of freeze correspondence and notifications for at least five years is best practice under general AML/CFT compliance but not dictated by Indian statute or the present MHA procedure.

Source: Procedure for Implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967, Ministry of Home Affairs (May 4, 2023)

India's sanctions and trade-control compliance for sensitive exports rests on both statutory licensing (via SCOMET and the Foreign Trade Policy) and a set of mandatory end-use and end-user controls. These controls are foundational to meeting India's obligations under multilateral export control regimes—the Wassenaar Arrangement, MTCR, Australia Group, and agreements to implement UNSC Resolution 1540—which require governments to prevent the diversion of exported dual-use items, arms, or proliferation-sensitive technologies to unauthorized uses or users.

## End-use and end-user screening requirements

Exporters of any item on the SCOMET list (including dual-use chemicals, electronics, munitions, and nuclear- or missile-related technologies) must obtain an End-Use Certificate (EUC) for every export license application. The EUC:

• Is required from the foreign buyer, consignee, and (if different) each intermediate or ultimate end-user.
• Must be on entity letterhead, signed and stamped by an authorized signatory.
• Must declare the specific end-use—civilian, military, research, or otherwise—the site of use, and affirm non-retransfer to other parties (except as allowed by Indian authorities).
• Must explicitly commit: (a) no use in connection with chemical, biological, nuclear, or missile technology; (b) no diversion into weapons of mass destruction or delivery systems; (c) post-shipment on-site verification if required by the Government of India.

Proformas and formats mandated for different SCOMET categories are found in Appendix 10J (i–iii) of the Handbook of Procedures. For “stock-and-sale” (distributor chain) permissions, a specific format applies, as do additional undertakings about the control of downstream distribution.

## Denial policy and red-flag parties

While India does not publish a consolidated “denied parties list” analogous to the US or EU, the Directorate General of Foreign Trade (DGFT), in evaluating SCOMET licenses, actively vets the credentials and background of all parties listed in the EUC against intelligence and security databases. Section 10.02 of the Foreign Trade Policy and Chapter 10 of the Handbook of Procedures instruct DGFT to consider "the credentials and details of the parties involved, national security, and international relations.” The IMWG (Inter-Ministerial Working Group) may deny a license if there is any red-flag about diversion, risk of WMD-related end-use, or concern about proliferation. India automatically refuses export to parties under UN Security Council or domestic UAPA sanctioning, and may block exports to entities suspected of illicit procurement, circumvention, or terrorism.

Exporters are expected to conduct independent due diligence: verifying the buyer’s bona fides, researching negative press or government warnings, and flagging suspicious requests (unusual route, vague end-use, pressure for rapid delivery, non-transparent corporate structures). SCOMET guidelines advise exporters to halt and report possible suspicious approaches or discovered anomalies in end-user intent.

## Official guidance

DGFT periodically issues trade notices reminding exporters of their due diligence and end-use control obligations (see Trade Notice No. 58/2020-21 and Handbook of Procedures Chapter 10). Procedurally, failure to screen end-users or to obtain proper EUC exposes exporters to enforcement under the Foreign Trade (Development and Regulation) Act, and in serious cases, prosecution under the Unlawful Activities (Prevention) Act or related statutes.

## Cross-jurisdictional note

Unlike some foreign regimes, Indian law does not treat the absence of a denied parties list as a compliance safe harbor—exporters are expected to actively screen and not rely solely on DGFT licensing as a substitute for core diligence. Indian exporters with global operations should additionally screen for foreign denied parties or embargoes if the supply chain traverses foreign jurisdictions.

Source: Handbook of Procedures 2023, Chapter 10, End Use and End User Certificates (DGFT) Source: Foreign Trade Policy 2023, Chapter 10, Para 10.02, End-use control and denial policy (DGFT)

The Denied Entity List (DEL) is an administrative list maintained by the Directorate General of Foreign Trade (DGFT) under Chapter 2.80 of the Foreign Trade Policy (FTP) 2023 and Paragraph 2.80 of the Handbook of Procedures (HBP) 2023. Placement on the DEL bars an entity from obtaining export or import authorizations under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). The DEL is distinct from terrorism-based and SCOMET-related controls; it is used to enforce compliance with India’s trade regulation regime, not to punish criminal or security offenses.

Basis for Listing: As specified in FTP 2023, an entity may be listed on the DEL for breach of FGFT authorizations, failure to fulfill export obligations, misdeclaration, or other violations of the FTP, HBP, or conditions of licence/authorization. Listing is implemented by DGFT through an order. The FTP and HBP do not explicitly require a prior hearing before listing, but they do direct that the reason for inclusion on the DEL is stated in the order, and the affected entity may file a representation for removal. Listing can occur even if an appeal is pending, unless a stay order is produced or the appeal results in relief; HBP 2.80 states that entities "may" be put on the DEL “pending fulfillment of any obligation.”

Consequences of Listing: Once on the DEL, an entity becomes ineligible for new or renewed authorizations, import/export licences, and related permissions under the FTP. All regional DGFT offices and Indian customs authorities are directed not to process applications from a DEL-listed entity. The DGFT notifies relevant authorities but does not specify a timeline or method of publication for the listing; practical experience is that the DEL is published and updated on the DGFT portal.

Removal Procedure: DEL removal is governed by HBP 2023, Paragraph 2.80. The affected entity must submit proof of compliance—such as fulfillment of export obligations, payment of dues, or production of a stay or appellate order—to the original DGFT authority. Removal is at the discretion of DGFT and is based on documentary evidence provided; there is no explicit statutory timeline for review or required time-to-decision. Once satisfied, DGFT issues an order removing the entity from the DEL and informs the relevant authorities. The FTP and HBP do not guarantee the right to interim de-listing; removal awaits full compliance or satisfactory legal disposition.

Practice Note: While the DEL is not a criminal or asset-freeze list, listing significantly disrupts a company’s ability to engage in cross-border trade; removal is not automatic upon application and often takes follow-up with the adjudicating office if urgent. Statements about financial institutions or counterparties using DEL for compliance risk are not set by the FTP/HBP but are common business practice.

This section reflects provisions current as of FTP 2023 (effective April 1, 2023) and HBP 2023. The FTP and HBP are periodically updated; practitioners should consult the current DGFT portal for the latest DEL notifications and procedures.

Source: Foreign Trade Policy 2023, Chapter 2.80: Denied Entity List — listing and removal, Directorate General of Foreign Trade Source: Handbook of Procedures 2023, Para 2.80 — DEL listing and delisting procedure, DGFT

Indian sanctions and trade controls are primarily territorial in scope: restrictions generally apply to the import into, export from, or trade through Indian customs territory—not to goods that merely transit the country en route to other destinations, unless a government notification specifically states otherwise. Under Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), the Central Government may prohibit, restrict, or regulate imports or exports in all or specified classes of cases. However, the FTDR Act itself does not expressly define or regulate transit or transshipment as a distinct activity, and standard interpretations by DGFT treat cross-India transit without entry for home consumption as falling outside the default scope of import/export restrictions. Import is typically defined as goods entering for home consumption; export as goods cleared by customs for shipment abroad.

That baseline is overridden when a specific order, notification, or embargo extends restrictions to transit or transshipment. For example, the May 2025 Pakistan trade ban prohibits not just direct import but also "direct or indirect import or transit of all goods originating in or exported from Pakistan." This language, as communicated in the Press Information Bureau’s official release, empowers Indian customs authorities to block Pakistani-origin goods at any point in Indian territory—including for goods under customs bond and even if their declared destination is a third country. The “indirect” and “transit” language is occasionally used in other embargoes, but not as a uniform standard: always check the exact wording in the Public Notice, FTP chapter, or DGFT notification applicable to a given sanction or restriction. Absent such expansive language, mere movement through Indian territory under customs supervision is not automatically prohibited.

For SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) and export-control items, standard FTDR Act and FTP rules require licensing of exports, re-exports, and brokering by Indian persons, but restrictions on transit or transshipment of goods not entering Indian commerce are not specified in the general policy documents. DGFT and customs authorities retain wide discretion to detain or refuse passage of goods found to violate notified prohibitions or embargoes under Section 3(2), but there is no general, extraterritorial bar on brokering or transshipment solely on the basis of foreign-sourced restrictions.

India does not operate a “secondary sanctions” regime: Indian law penalizes only persons, goods, or transactions with a territorial or legal connection to India. Nonetheless, parties with global trade footprints should remain aware that carrying or arranging transit for embargoed goods across India may be unlawful if the relevant Indian government notification extends the prohibition to such activity, as with the Pakistan case.

Unable to confirm the existence of a general, published DGFT notification or Customs Circular providing a single authoritative definition or treatment of “transit” and “transshipment” for embargo purposes as of 2026-06-16. Practitioners should review the text of each prohibition or order for transit-specific language.

Source: Foreign Trade (Development and Regulation) Act, 1992, Section 3(2), Ministry of Commerce and Industry Source: Government Prohibits Import of All Goods Originating in or exported from Pakistan to India, Press Information Bureau, Ministry of Commerce and Industry (May 3, 2025)

The Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) is India’s primary legal tool for enforcing export controls, SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) restrictions, and autonomous trade sanctions outside the terrorism sphere. Penalties for breach—unauthorized exports, violations of embargoes, or failure to comply with licence conditions—are governed by Chapter IV of the FTDR Act (Sections 11–14) and the DGFT’s Handbook of Procedures 2023 (notably Chapter 10 for SCOMET cases).

Civil and criminal penalties. Section 11 authorizes an adjudicating officer to impose a penalty up to “one thousand rupees or five times the value of the goods in respect of which the contravention is made, whichever is more.” The same section permits confiscation of the goods, conveyances, and relevant property. For serious violations, Section 15 provides for criminal prosecution—imprisonment up to three years and additional fines—though the statute does not distinguish particular classes of cases (e.g., terrorism-linked or commercial offenses) beyond the statutory maximums. The FTDR Act does not set a de minimis threshold or treat entities differently by company size or sector. If a provision for lower or mitigated penalties is applied, this typically reflects the adjudicating authority’s discretion, not an explicit rule.

Adjudication and appeals. Section 13 lays out the procedure: an adjudicating officer must follow a show-cause and hearing process before imposing penalties. Section 14 allows an aggrieved party to appeal to the Appellate Authority within such period and subject to such procedures as are prescribed by the FTDR Act. The FTDR Act itself does not specify a time limit for appeal in the main text—the deadline is typically detailed in administrative rules or notification. Higher appeals (on questions of law) may be escalated to a High Court.

Voluntary self-disclosure and mitigation. For SCOMET violations, Chapter 10 of the Handbook of Procedures 2023 provides that exporters/importers may make a voluntary disclosure if they identify a breach not committed with mala fide intent. Such disclosure may be considered during penalty adjudication; the scope or amount of mitigation is not quantified in the published Handbook itself.

Denied Entity List (DEL) consequences. Entities found in violation may be placed on the Denied Entity List, as provided in Paragraph 2.80 of the Handbook. DEL placement effectively blocks the entity from obtaining new import/export authorizations under the FTDR Act. Removal from the list requires showing compliance or successful appeal, as set out in the Handbook and underlying policy.

Customs and parallel enforcement. While the FTDR Act calls for penalties and confiscation in its own right, export-control breaches frequently trigger parallel enforcement under the Customs Act, 1962, especially at the border or in cases of unauthorized export/import. However, specifics of Customs Act proceedings are outside the FTDR Act and are governed by customs law and implementing orders.

Practice notes. Penalty exposure depends on the value of goods, the facts presented, and the adjudicator’s findings. In practice, voluntary self-reporting and non-malicious breaches may result in lower penalties, but entitlement to mitigation is not codified in the statute or Handbook. The penalty and enforcement regime described here reflects the FTDR Act and Handbook provisions as published and available as of June 2026. Where further detail is required (penalty schedules, appeal periods, customs parallel actions), practitioners must consult current notifications and rules as posted by DGFT and the Ministry of Commerce and Industry.

Source: Foreign Trade (Development and Regulation) Act, 1992, Chapter IV: Penalties and Confiscation, Ministry of Commerce and Industry Source: Handbook of Procedures 2023, Chapter 10: SCOMET Enforcement and Voluntary Disclosures, DGFT

India’s SCOMET regime, rooted in the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), regulates not just the physical export of dual-use goods but also specific forms of brokering, technical assistance, and the so-called “deemed export” of controlled technology. The Directorate General of Foreign Trade (DGFT) sets out these requirements in the Foreign Trade Policy (FTP) 2023 and the Handbook of Procedures (HBP) 2023—a framework with direct impact on Indian companies, service providers, and individual professionals engaged in sensitive tech or knowledge work.

Brokering controls: Chapter 10 of HBP 2023 and Appendix 3 to Schedule 2 of the ITC(HS) Classification (SCOMET List) require any Indian party conducting "brokering" of SCOMET-listed items—defined as arranging, negotiating, or facilitating sales or transfers of such items between third parties—to first obtain a specific authorization from DGFT. This applies regardless of whether the actual goods or technology ever enter Indian territory. Brokering includes introducing parties or negotiating contracts that would result in a transfer of SCOMET-listed items if completed. The Inter-Ministerial Working Group (IMWG) in DGFT evaluates brokering licence applications based on the item, destination, and parties’ credentials. Activities excluded from “brokering” or exempted are described in the Handbook and should be reviewed case-by-case; not all intermediary services require an authorization, and coverage is specific to listed categories and scenarios.

Technical assistance and deemed exports: The SCOMET List and Chapter 10 of the Handbook define “export” to include the transfer of technology (including through e-mail, shared servers, cloud storage, or meetings) to foreign persons. The requirement for DGFT authorization applies to the supply or disclosure of controlled technology or know-how, whether to parties abroad or (in some cases) to non-Indian nationals within India. The Handbook clarifies that, for certain SCOMET categories, making technical data available to a foreign national inside India—such as an employee or visiting researcher—may constitute a "deemed export." Whether an authorization is required depends on the SCOMET category and the specific type of technology or assistance; exporters are directed to seek guidance from DGFT if there is uncertainty about the trigger.

Compliance note: Brokering and technical assistance controls under Indian law are not generic—they attach only to the activities, categories, and parties specifically identified in Appendix 3 and the Handbook. Failure to obtain necessary DGFT authorization for covered activities triggers the sanctions for violations under the FTDR Act as described in the general SCOMET enforcement framework (see separate Penalties section); specifics of the penalty are determined by the nature and value of the transaction and by the adjudication process. The current policy language is nuanced and requires close attention to the definitions and procedures in the Handbook and SCOMET List: blanket equivalence with US/EU deemed-export controls is not warranted.

Source: Handbook of Procedures 2023, Chapter 10 — SCOMET brokering, technology transfer, and deemed exports (DGFT) Source: Appendix 3 to Schedule 2 of ITC(HS) — SCOMET List, Brokering and Technical Assistance Provisions, DGFT