Transitional protection for existing commercial commitments under foreign trade policy

Transitional provisions contained in trade policies, such as Paragraph 1.05(b) of the Foreign Trade Policy 2015-2020, are constructed to protect valid commercial commitments entered into prior to new trade restrictions. When an item permitted freely for import is subsequently subjected to restrictions like Minimum Import Price, transitional clauses allow imports where irrevocable commercial Letters of Credit were established before the restriction took legal effect. Paragraph 1.05(b) forms an integral part of trade notifications referencing it, ensuring commercial continuity and protecting importers who acted on pre-existing trade regimes. For operationalizing such irrevocable Letters of Credit, compliance with registration procedures with jurisdictional Regional Authorities within the specified timeframe entitles the importer to full protection. Denying transitional protection to contracts finalized before the official Gazette publication of restrictions undermines the explicit purpose of trade policy provisions. Such protections preserve legitimate expectations and prevent arbitrary disruption of ongoing international commercial transactions. (Viraj Impex Pvt. Ltd. v. Union of India & Anr. | 2026 INSC 80)