After detecting several cases of misuse of incentives, the Commerce Ministry has tightened the norms governing the Deemed Export benefit scheme, a move expected to save about Rs 1,800 crore to the exchequer annually. The Deemed exports refer to those transactions in which goods supplied to the users do not leave the country and payment for such supplies is received either in Indian currency or in foreign exchange.

Generally supply of goods to projects financed by multi-lateral or bilateral agencies qualify for these benefits.

However, concerned over the cases of misuse, especially in the power sector, the Directorate General of Foreign Trade (DGFT) has decided to send recovery notices to those under its scanner, sources said.

The decision to make the rules tough follows a meeting of Policy Interpretation Committee of DGFT held in March.

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