All the business entities that want to legally import/export goods into/from India, have to register themselves with Directorate General of Foreign Trade (DGFT). They will also get an Import Export Code (IEC) on a unique 10-digit number. Besides getting the IEC code, you will need to comply with many more rules like various types of duties & drawback incentives, export quotas, declaration as per foreign trade policy (FTP) etc.
Key Takeaways from this Insight
- IEC is Mandatory – A valid and PAN linked “Import Export Code” (IEC) is mandatory for customs clearance of all your shipments. Know Incentive Schemes – You may know and use various existing incentive schemes such as RODTEP, RoSCTL, & EPCG to save on your input duties. Annual IEC Update –DGFT has mandated that all holders of an IEC have their registration updated with DGFT annually between the months of April & June.
What is the Role of DGFT in Indian Trade?
Directorate General Of Foreign Trade ( DGFT ) is an attached office to the ministry of commerce and industry . It has been assigned mainly with formulation and implementation of foreign policy of india having a prime focus on promoting exports from our country .
This department has responsibility to issue authorisation regarding import and export of goods , regulating trade license , keeping a track of classification of Harmonised System of Nomenclature(HSN ) code for customs assessment etc .
Step-by-Step Process to Register for IEC Online
Documents preparation – Ensure that you have all documents at hand including your PAN card, bank certificate/Cancelled Cheque Leaf, Address Proof such as Electricity Bill or Lease Deed.Apply On DGFT Portal – Go through the official site of DGFT for registration process followed by completion of the application form named ‘ANF-2A’ online.Digital Signatures or Aadhaar e-signs – In order to sign your digital application use either “Class-3 Digital Signature Certificate” or “e-sign via Aadhaar based OTP.”Pay Fees & Get It Done – Make payment for the Government fees online once again after verifying details. You will then receive an Instantly Generated Digital E-IIC which gets transmitted onto the Customs portal called ICEGATE.
Understanding Key Export Incentives & Policies
Indian Government has various schemes to promote Exports which effectively offsets the local tax burden for its industries.
Examples are:
a.) Remission of Duties and Taxes on Exported Products (RODTEP): Refund of embedded Central/State/local duties levied on inputs
b.) Importation of Manufacturing Capital Machinery under Export Promotion Capital Goods(EPCG) Scheme with zero custom duty but with obligation that exporter must fulfill export obligation equal to 6 time amount of customs duty saved during 6 year period.
Frequently Asked Questions
Q. Does an individual need an IEC code?
If you are running as Proprietorship Firm and you plan to export Commercial quantities of goods from India, then Yes, you will have to get an IEC.Personal import / small shipment of gifts – No, you dont need one.
Q. What happens if I do not update my IEC annually?
If you do not keep updating your IEC on DGFT Portal from April to June of each year then your IEC will be de-activated i.e. put into “de-active list”. In this case exporter will not able to file shipping bills and clear customs unless he updates his code.