Madras High Court upholds export restrictions on strategic baryte, orders DGFT to decide pending licence application within four weeks

Gimpex Private Limited, a mineral exporter, had purchased Grade A and Grade B Baryte from the Andhra Pradesh Mineral Development Corporation Limited under export-only arrangements.

On 17 April 2026, the Union changed those grades from “Free” to “Restricted” for export; the company then held approximately 1,89,500 MT of stock at Chennai Port, procured and paid for before the change.

It had no Irrevocable Commercial Letter of Credit (ICLC) and sought to export under the transitional protection in paragraph 1.05(b) of the Foreign Trade Policy, 2023.

Its application for a restricted export authorisation, filed on 22 April 2026, remained undecided while the Government reviewed Baryte export policy.

The petitioners challenged the notification and the ICLC condition, and sought a declaration of eligibility for transitional protection.

1. Whether the notification operated retrospectively or defeated a vested right to export stock procured before its effective date.

2. Whether the petitioners could rely on legitimate expectation or promissory estoppel against the change in export policy.

3. Whether the notification was arbitrary or imposed an unreasonable restriction under Article 19(1)(g) because it provided no transition period.

4. Whether paragraph 1.05(b) of the Foreign Trade Policy, 2023 was unconstitutional because it conditioned transitional protection on holding an ICLC.

5. Whether the DGFT could leave the petitioners’ restricted export authorisation application undecided pending a policy review.

Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992 empower the Government to prohibit, restrict or regulate exports and amend the Foreign Trade Policy; a policy change applies prospectively unless otherwise provided.

Under paragraphs 1.05(b) and 2.01 of the Foreign Trade Policy, 2023, the policy in force on the date of export generally governs, subject to the stated transitional protection, including protection for qualifying pre-existing ICLC commitments.

A prospective change does not retrospectively impair a completed transaction merely because it affects stock held for future export; a vested right requires completion of the relevant legal requirements (DGFT v. Kanak Exports; Union of India v. Asian Food Industries).

Legitimate expectation and promissory estoppel do not prevent a policy change justified by overriding public interest, absent a sufficiently clear promise (State of Jharkhand v. Brahmputra Metallics Ltd.; Kasinka Trading v. Union of India).

Economic policy is reviewable for illegality or arbitrariness, but courts ordinarily defer to reasoned economic and strategic choices; restrictions on trade must serve the public interest under Article 19(6), with proportionality assessed by reference to the measure’s purpose and means (Modern Dental College v. State of Madhya Pradesh).

Under Article 14, a classification is valid where it rests on an intelligible differentia rationally connected to its purpose.

The notification governed exports made on or after 17 April 2026; the petitioners had not shipped the goods or completed the relevant export clearances before that date, so procurement and storage at the port did not create a vested right to export under the former policy.

The prior “Free” classification and APMDCL’s export-only tenders were not promises by the Union that the policy would remain unchanged, while the stated concern about declining reserves of a strategic mineral supplied a public-interest basis for the change.

The restricted licensing regime was not an outright ban and was rationally connected to conserving Baryte for strategic needs.

The Court upheld the ICLC distinction because an ICLC is bank-backed, independently verifiable and difficult to alter, unlike other private payment or order arrangements; the petitioners’ lack of an ICLC meant they did not qualify for the transitional exception, although they were not required to anticipate the policy change.

However, leaving all licence applications pending indefinitely would make a restriction operate as a prohibition in practice. The DGFT therefore had to decide the petitioners’ application within a reasonable, fixed period, considering both the stock-related hardship and national-security concerns.

It also rejected the request to clear shipping bills without a licence.

The DGFT was directed to provide a personal hearing and decide the application for restricted export authorisation, by a reasoned order, within four weeks; the pending policy review could not by itself justify leaving the application undecided.