Recently, in Yum Restaurants (I) Pvt. Ltd. vs. Union of India, the Delhi High Court held that no provision in the Foreign Trade Policy denies an Indian subsidiary of a foreign holding company from availing the benefit of Serve From India Scheme (SFIS).   
Facts of the case:
The petitioner (Yum Restaurants (I) Pvt. Ltd) was a company incorporated under the Companies Act, 1956 and has their registered office situated in India. It was engaged in providing wide range of management services to Yum! Asia Franchise Pte. Ltd., Singapore in respect of franchisees located in Nepal, Bangladesh, Sri Lanka, Mauritius etc. the petitioner applied for license (Duty Credit Scrips) in terms of the SFIS under the applicable foreign trade policies for the financial years 2004-05 to 2010-11. The said application was accepted. Subsequently, Yum also applied for benefits under the SFIS, for the financial year 2011-12. The petitioner was denied of the benefits of the “Served from India Scheme” (SFIS), as framed under the foreign trade policy. DGFT have held that the SFIS is not applicable to the petitioners as Yum brand is not essentially an Indian Brand.
Thereafter, Yum was issued communications dated 30.05.2013 and 17.06.2013, inter alia, stating that the Duty Credit Scrips (License) granted to Yum were in contradiction of the objective of the SFIS; Yum was called upon to refund the amount of the Duty Credit Scrips granted earlier and settle the issue.
Aggrieved by the decision of the DGFT, the petitioner appealed to the High Court.

It was held that:
Government of India has introduced “Served from India Scheme” to facilitate exporter of various type of services. The objective of this scheme is to accelerate growth in export of services so as to create a powerful and unique ‘Served From India’ brand, instantly recognized and respected world over.
The provisions of the Foreign Trade Policy indicates that “Indian Service Providers” providing services as listed in the Appendix 41 of the Handbook of Procedures and who have earned free foreign exchange of Rs.10 lacs and more in the current financial year would be entitled duty credit scrips equivalent to 10% of the free foreign exchange earned during the current financial year. The eligibility condition of earning Rs.10 lacs or more is substituted by 5 lacs in case of Individual service providers.
The court stated that the DGFT has misinterpreted the expression “Served from India brand” to be brands of Indian companies, which are recognized as Indian.
The word used “Indian Service Providers”, does not impose a condition on service providers or its shareholders to be an Indian. The conclusion of DGFT that Indian companies having foreign equity cannot be considered as Indian will change the general rule of the company law.
The purpose of granting incentive to Indian Service Providers is to incentivize export from India. This will in turn strengthen such exports and will also ensure that larger quantum of services is outsourced from India.
The Court stated that the DGFT is empowered to interpret the foreign trade policy. But such powers can be exercised only when the plain language of the policy presents an ambiguity. It would not be open for DGFT to introduce new conditions and criteria under the guise of interpreting the policy as that would, clearly, amount to amending the provision of the foreign trade policy.
In view of the aforesaid, the petition was allowed. The court held that the provisions of the Foreign Trade Policy cannot deny an Indian subsidiary of a foreign holding company from availing the benefit of Serve From India Scheme (SFIS). Thus, the decision of DGFT was set aside and SFIS benefit will be available to Indian Subsidiary of Foreign Company.

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