Transitional protection for export policy changes must be justified; exclusion of existing commitments was held arbitrary.

A notification amending the export policy was treated as validly issued by the Central Government because it expressly invoked Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992 and was published in the Gazette, so the authority challenge failed. However, the exclusion of non-basmati rice exporters from the transitional protection in paragraph 1.05 of the Foreign Trade Policy, 2023 was held unsustainable where no cogent reasons or material justified denying relief to existing commitments. The note treats this as contrary to legitimate expectation, Article 14 non-arbitrariness, and the requirement of reasonable restriction under Article 19(1)(g).

---

---

Issues: (i) Whether the notification amending the export policy was without authority because it was signed by the Director General of Foreign Trade. (ii) Whether denial of the transitional arrangement under paragraph 1.05 of the Foreign Trade Policy, 2023, while converting non-basmati rice export from free to prohibited, was arbitrary and unsustainable.

Issue (i): Whether the notification amending the export policy was without authority because it was signed by the Director General of Foreign Trade.

Analysis: The notification expressly stated that it was issued by the Central Government in exercise of powers under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992 and was published in the Gazette of India. The signatory acted as Ex-Officio Additional Secretary to the Government of India. The challenge that the notification lacked authority was therefore inconsistent with the statutory and constitutional position governing issuance of executive instruments.

Conclusion: The challenge on lack of authority failed and the notification was held to be issued by the Central Government.

Issue (ii): Whether denial of the transitional arrangement under paragraph 1.05 of the Foreign Trade Policy, 2023, while converting non-basmati rice export from free to prohibited, was arbitrary and unsustainable.

Analysis: Paragraph 1.05 of the Foreign Trade Policy, 2023 contemplates prospective application of policy changes and protects pre-existing commitments in specified circumstances, including commitments through irrevocable commercial letters of credit. The impugned notification made the transitional arrangement inapplicable, yet no reasons or verifiable material were produced to justify excluding non-basmati rice from that protective regime. The Court treated this omission as significant in view of the exporters' legitimate expectation, the non-arbitrariness requirement under Article 14, and the settled principle that policy changes affecting existing contractual obligations must be supported by cogent justification. The restriction was also viewed as affecting the freedom of trade under Article 19(1)(g), which must satisfy the standard of reasonable restriction.

Conclusion: The denial of the transitional arrangement was held to be bad in law, and the benefit of paragraph 1.05 was directed to be available to the petitioners if its conditions were satisfied.

Final Conclusion: The policy amendment was upheld in principle, but the exclusion of transitional protection for existing export commitments was set aside to the extent necessary to preserve the petitioners' entitlement under the existing policy framework.

Ratio Decidendi: A policy change affecting export rights may operate prospectively, but exclusion of transitional protection for existing commitments is vulnerable when unsupported by reasons or cogent material and when it defeats legitimate expectation in a manner that is arbitrary under Article 14.

---