Government widens definition of group cos under FTP, includes LLPs

NEW DELHI: The government widened the category of group companies under the foreign trade policy by including Limited Liability Partnership (LLP) firms.

The move comes at a time when the government is taking every possible step to boost exports amid sluggish economic growth. With the inclusion, LLPs would be eligible to claim benefits under the government's foreign trade policy.

Under the policy, group companies get duty benefits under different export promotion schemes. In a notification today, the Directorate General of Foreign Trade ( DGFT) has included LLPs in the definition of 'Group Company'.

"...foreign trade policy has been amended to include LLPs in the definition of 'Group Company'. Neither partnership nor proprietorship firm would come within the ambit of definition of a 'Group Company'," it said.

LLP is a hybrid between a company and a partnership firm. As it allows unlimited number of partners with limited liabiity, it is popular for consulting and accountancy businesses.

For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of group, the group company should have been in existence at least two years prior to date of application under any of export promotion schemes.

Group Company means two or more enterprises which directly or indirectly are in a position to exercise 26 per cent, or ore of voting rights in other firm or appoint more than 50 per cent of members of board of directors in the other enterprise.

Export growth eased to a five-month low of 5.86 per cent in November due to a fall in shipments of petroleum goods and rough diamonds.


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