Court grants SFIS benefits to subsidiaries of foreign companies, emphasizing policy compliance and fair interpretation.

The court allowed the petitions, setting aside the decisions denying SFIS benefits to subsidiaries of foreign companies. The court held that the term "Indian Service Providers" in the FTP does not exclude subsidiaries of foreign companies and that the DGFT's decision amounted to an unauthorized amendment of the policy. The court emphasized that the DGFT must act within the policy's framework and cannot introduce new conditions under the guise of interpretation. The petitioners, as Indian companies, were deemed entitled to SFIS benefits under the relevant provisions of the FTP.

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Issues Involved:
1. Denial of benefits under the Served from India Scheme (SFIS) to subsidiaries of foreign companies.
2. Interpretation of the term "Indian Service Providers" under the Foreign Trade Policy (FTP).
3. Jurisdiction and power of the Director General of Foreign Trade (DGFT) in interpreting and amending the FTP.

Issue-Wise Detailed Analysis:

1. Denial of Benefits under the SFIS to Subsidiaries of Foreign Companies:
The petitioners, subsidiaries of foreign companies, challenged the decision of the DGFT denying them benefits under the SFIS. The DGFT and Policy Interpretation Committee (PIC) held that the SFIS is not applicable to subsidiaries of foreign companies as it does not further the objective of creating a "Served from India" brand. The petitioners argued that the SFIS should apply to all "Indian Service Providers" meeting the specified criteria, without distinction based on the nationality of shareholders.

2. Interpretation of the Term "Indian Service Providers" under the FTP:
The core controversy was whether the petitioners could be denied SFIS benefits solely because they were subsidiaries of foreign companies. The DGFT interpreted the term "Indian Service Providers" to exclude such subsidiaries, based on the objective of creating a unique "Served from India" brand. The court found this interpretation unsustainable, stating that the term "Served from India brand" refers to the objective of accelerating growth in export of services from India, not to the trade names or trademarks of individual service providers. The court emphasized that the FTP's language did not support excluding subsidiaries of foreign companies from SFIS benefits.

3. Jurisdiction and Power of the DGFT in Interpreting and Amending the FTP:
The court examined the legal framework under the Foreign Trade (Development and Regulation) Act, 1992, which empowers the Central Government to formulate and amend the export and import policy. The DGFT's role is to implement the policy and interpret its provisions, but not to amend or alter it. The court held that the DGFT's decision to exclude subsidiaries of foreign companies from SFIS benefits amounted to an unauthorized amendment of the FTP. The court cited precedents establishing that the DGFT must act within the policy's framework and cannot introduce new conditions under the guise of interpretation.

Separate Judgments Delivered:
The court noted that the decisions of the DGFT/PIC, denying SFIS benefits to the petitioners, were made without considering the relevant provisions of FTP 2004-09. The court found no ambiguity in the language of FTP 2004-09, which entitled "All Service Providers" meeting the eligibility criteria to SFIS benefits. The court concluded that the DGFT's interpretation to exclude subsidiaries of foreign companies was without basis and application of mind, rendering the decision unsustainable.

Conclusion:
The court allowed the petitions, setting aside the DGFT/PIC decisions and communications withdrawing the SFIS benefits. The court reaffirmed that the petitioners, as Indian companies incorporated under the Companies Act, 1956, are entitled to SFIS benefits for services exported prior to 26.08.2009 under FTP 2004-09 and for services exported after that date under FTP 2009-14. The judgment emphasized the distinction between interpreting and amending the policy, underscoring the DGFT's limited jurisdiction in this regard.

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