With its immense population and abundant natural resources, India is becoming a global superpower. As one of the world’s fastest-growing economies, the country has a rapidly expanding industrial sector, making it one of the largest exporters globally.
SME exporters within the country have their pick of several international destinations, from neighboring Asia-Pacific nations to countries in North America and Europe. For instance, India has a healthy trade relationship with the United States, with a trade balance worth nearly US $150 billion.1
While there are numerous opportunities for lucrative export business in India, starting on a solid foundation is critical. And that begins with obtaining the necessary permits and approvals, such as an Indian export license.
This article explains all you need to know about the export license and how to obtain one in India.
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Generally, countries regulate imports and exports as a matter of national and economic security. They consider it important to keep a firm eye on what goods enter their territory and the products allowed to leave the country.
When it concerns exports, countries enforce this regulation by requiring intending exporters to obtain an export license. Sometimes they may also make obtaining an import license a prerequisite to bringing goods into the country.
India, like most countries, requires exporters to obtain authorization for exports. The country’s Foreign Trade Policy (2015-2020) and Foreign Trade (Development and Regulation) Act 1992 make it mandatory to get an Import Export Code (IEC) for export from India.2
The IEC is a 10-digit number that authorizes a business or individual to ship named categories of products out of India. It is issued and administered by the Directorate General of Foreign Trade (DGFT) — a parastatal under the country’s Ministry of Commerce and Industry.
While some countries only require an export license for certain items, India treats the IEC as a condition for engaging in any export activities.3 So, if you intend to extend your business beyond India and serve international buyers, you will need to apply for and receive an export license.
Apart from the fact that an export license is mandatory for exports from India, there are other reasons why a license is necessary:
Therefore, there’s no avoiding collecting an export license in India. To escape the frustration and resource wastage that non-compliance might cause, it’s best to plan early for an IEC.
Since the IEC specifies the goods you’re authorized to export, it’s essential to ask: are there any goods you’re not allowed to ship out of India?
In general terms, India’s Foreign Trade Policy states that all goods may be freely exported. But, like most countries, India limits or bars individuals and private businesses from shipping certain goods. These goods were specified as Negative List items under the Export-Import Policy of 1997–2002.
The classifications of export goods under the Negative List are as follows:
In addition to the products on the Negative List, Indian law also restricts exports to certain countries. This is often the case with countries that have poor diplomatic or political relations with India or those that are current targets of international sanctions that India is obligated to enforce.
You may be barred from shipping Indian goods to these countries, or there may be restrictions on exporting specific goods to those destinations. For instance, the government may not sanction certain chemical compounds for export.
With that sorted, let’s turn next to the details of applying for and obtaining an Import Export Code in India.
Applying for an IEC in India requires applying to the Director-General of Foreign Trade. The entire process can be concluded online, making it relatively convenient for business owners.
However, before launching into the application process, there are a few matters you should attend to first. These include:
With the pre-application matters resolved, you can move forward to file your IEC application with the DGFT.
The application process includes filling out the IEC application form (ANF 2A) and paying an Rs. 500 application fee on the DGFT website. Here are the steps involved:
There are several mandatory documents you must upload during the application process, these include:
In addition, applicants may be required to provide a copy of a current purchase order from an overseas buyer. You may also have to show a No Objection Certificate (NOC) for certain exports. For instance, if you want to ship medical-related products, you might need to show a NOC from the drug monitoring agency.
After your application, the DGFT and allied agencies will consider your request and determine whether to issue an IEC.
The DGFT will pre-screen your application for compliance with stated requirements. If there are no problems, they will forward your application within three days to the ministry or department that has oversight on your chosen export products.
If there are anomalies, such as incomplete information or blurred documents, the DGFT will send you a deficiency letter within three days, asking you to correct or refile those pieces of information. You must respond to the letter within three days as well.
After receiving your application, the concerned ministry or department will review your application and provide their comments or a statement of no objection. They typically must do this within 30 days of receiving the application.
If the ministry or department does not object, the DGFT will send your application to the EXIM Facilitation Committee (EFC). The EFC oversees export-import issues generally and meets once a month.
Once approved by the EFC, your application will be authorized by the DGFT, and you will receive a notification by email informing you of the approval. The DGFT will also share the authorization letter with your JRA, who will then prepare and issue your IEC within three days.
Go to your JRA with your authorization letter and any other requested documents to claim your IEC. Overall, the entire process should take between 30–45 days.
Depending on the nature of your chosen export products, the ministries or departments considering your application can request extra documentation. These requirements vary from application to application, but they might relate to your capacity to handle the export item, where you intend to source from, or further local permits.
It’s also worth noting that your IEC may be subject to terms and conditions relating to the number of items you can export. There may also be restrictions as to the description of these items, minimum pricing, or even the validity of the export license. Although IECs are generally non-renewable and have a lifetime validity once approved.
Obtaining an IEC gives you the legal platform to export goods from India, which is why it’s an important step to take. But your export business isn’t on solid footing until you find a reliable way to find and engage with international buyers who want your products.