Foreign trade in India is regulated by the Foreign Trade (Development and Regulation) Act, 1992, and all relevant provisions and policies are developed by the central government.
The promotion and facilitation of foreign trade in India is managed by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry (MoCI).
An individual or a company should be registered as an EXIM unit before operating in foreign trade activities.
Fig 1: EXIM Procedure
|How does Govt. regulate imports and exports?|| |
Govt. regulates import–export of products and services through provisions in Foreign Trade Policy. It controls the movement of items by levying custom duties and other taxes or by imposing restrictions on exports and imports of specific products/services
|What are SEZ, DTA and EOU?|| |
Special Economic Zones or SEZ are geographical locations, which do not fall under the purview of normal economic laws, instead these zones are governed by special laws that help businesses operate in a hassle-free environment and boost exports
EOU or export-oriented units are business units established under special schemes to export entire production of goods and services (some sales are permissible under ‘Domestic Tariff Area’)
Domestic Tariff Area (DTA) comprises all areas other than SEZ and EOU. Businesses in DTA do not have any export obligations, except in cases when they obtain duty-free inputs or avail incentives under any export promotions/schemes
|When should the Bill of Entry be filled, what are its types?|| |
Bill of Entry can be filed at the time of clearing the goods and after presenting the Import General Manifest (IGM) to the customs officers. It can be categorised into the following types:
Ex-bond Bill of Entry: This bill must be filed when the importer wants to clear the warehoused goods for home consumption on payment of duty
|How to check if any goods require permission/licence for imports and exports?|| |
All goods import of which is permitted only with an authorisation/permission/licence can be checked in Indian Trade Classification (Harmonised System) Schedule 1. The schedule can be downloaded from dgft.gov.in and locating the product, its EXIM code and reading the relevant policy given against it as ‘Free’, restricted, prohibited or STE. For import of goods mentioned in Schedule 1 of ITC (HS) Classification of Export & Import 2012, an application for grant of an ‘Import Authorisation’ needs to be submitted to the concerned regional authority of DGFT in Aayaat Niryaat Form 2B(ANF 2B), along with documents prescribed therein, with two copies of the complete set to DGFT(HQ) at Udyog Bhawan, New Delhi.
|What is IEC and how to get it?|| |
Importer–Exporter Code (IEC) is a 10-digit alphanumeric code required by a person or company to import in or export goods from India. No foreign trade can be performed without obtaining an IEC number (Importers/exporters listed at Para 2.07 of the Handbook of Procedures Vol.1 by DGFT are exempted from obtaining an IEC)
IEC can be obtained from regional offices of DGFT. An application for electronic form (e-IEC) can be submitted online on the DGFT website: Link
|What are Rules of Origin (ROO)?|| |
ROO are the conditions needed to determine the national source of a product for purposes of international trade. It is vital because duties and restrictions in many cases depend upon the source of imports. Rules of Origin are used to implement measures of commercial policy such as antidumping duties and safeguard measures, whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment etc.
|What is export obligation under post export EPCG Scheme and how the same is fixed?|| |
The export obligation under post export EPCG Scheme is equivalent to 85% of 6x the sum of applicable basic duty of customs, additional duty of customs, education cess and secondary and higher education cess paid on goods imported under the said authorisation on FOB basis.
|What are the basic requirements to import goods?|| |
The requirements are as follows:
Every good imported shall be in conformity with Section 11 of the Customs Act 1962, Foreign Trade (Development & Regulation) Act 1992—read with the EXIM policy in force
|What are Free Trade Agreements (FTAs)?|| |
FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them. FTAs normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, and trading). FTAs also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy
|Can we have more than one IECs under a single PAN?|| |
No, only one IEC is issued against a single Permanent Account Number (PAN). If any PAN card holder has more than one IEC, then the extra IECs is disabled
|Which goods are eligible for being financed under the LOCs?|| |
Under the LOCs, export of capital goods, plant and machinery, industrial manufactures, consumer durables and any other items that are eligible for being exported under the 'Exim Policy' of the Government of India can be financed
|Can we avail benefits of basic customs duty under Post Export EPCG if I am not availing CENVAT. How will the export obligation under EPCG be fixed under post export EPCG Scheme?|| |
Duty credit scrip(s) issued under Post Export EPCG Scheme will be issued only in respect of basic customs duty, even when you are not availing CENVAT. Since the concession under Post Export EPCG is confined to basic customs duty, the export obligation shall be fixed with reference to basic customs duty paid by you. However, you will be required to furnish a certificate from central excise regarding not availing CENVAT credit. Such certificate from central excise regarding non-availing of CENVAT credit will not be required where the unit is not registered with central excise
|After how many days will I receive the IEC after filing application for it?|| |
If all documents are in place, IEC number is normally issued within two to three days
|Can an IEC number be modified?|| |
Yes, IEC number can be modified by applying the ANF 2A form
|What is provisional assessment?|| |
Provisional assessment is required when an importer/exporter is unable to produce the necessary documents or information for assessment of duty on goods, or when the necessary documents are needed to produce but the customs officer may deem it necessary to conduct further enquiry for assessing the duty
|What are ‘Project Imports’? What are the advantages of importing under ‘Project Import’ regulations?|| |
Project Imports are the imports of machinery, instruments, and apparatus etc., required for initial establishment of a unit or for substantial expansion of an existing unit. The exported goods are charged at a flat rate of duty under the same tariff heading. Project Imports assessment is a scheme of assessment, which is designed to help expeditious and easy assessment of variety of industrial goods falling under different chapters of the customs tariff.
|What are the benefits of establishing EXIM unit? How to establish an EXIM unit in India?|| |
Incentives under the Foreign Trade Policy can only be availed after registering as an EXIM unit. Following are the key steps to register as an EXIM unit:
Risk coverage policy
|Can a company (public/private/partnership) obtain different IECs for different concerns owned by it?|| |
No. However, the name of each concern owned by such a company may be included in the IEC of the firm in whose name PAN exists, as a branch.
|Can we discharge export obligation under EPCG by selling ITA 1 products in the domestic market?|| |
Yes, supply of ITA-1 items to Domestic Tariff Area (provided realisation is in free foreign exchange) is considered for meeting the export obligation under the EPCG Scheme
|Is PAN number/PAN card essential for IEC? What are the alternatives?|| |
After introduction of GST, PAN is essential for the IEC