Since its inception, India’s import and export policies have been developed and implemented by the Directorate General of Foreign Trade (DGFT). For international trade to run smoothly, it collaborates closely with authorities and businesspeople.
Defining DGFT
To export and import in India, you need a license from the Directorate General of Foreign Trade (DGFT). It develops and enforces international trade guidelines. To improve national economic growth, DGFT implements laws and regulations, issues export licences, introduces unique trade incentives, and fosters favourable ties with overseas trading partners.
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Purposes and Duties of the DGFT
DGFT implements India’s trade policies. DGFT’s other roles are:
Making and implementing trade policy
DGFT formulates and announces international trade export processes. Exporting is simplified.
Importer/exporter certificates
The Directorate General of Foreign Trade (DGFT) assigns every importer and exporter in India an IEC. Businesses with a PAN can get one.
Continue classifying products using ITC-HS codes
DGFT manages the ITC HS code to strengthen foreign trade policies. Using this code, companies and entrepreneurs can specify which goods to sell in which countries.
Exporting proscribed items
India restricts some exports. Exporting these goods requires a DGFT license or authorization.
Products that need a license from the Directorate General of Foreign Trade (DGFT) include:
- handmade woollen carpets and floor coverings
- handcrafted items
- dairy produce
- honey
- edible products of animal origin
- edible fruits and nuts
- cereal
- oil seeds and fruits
- straw and fodder
- sugar and sugar confectionaries
- fruit, nut, and cereal preparations
- organic chemicals
- pharmaceutical products
- fertilizers
- tea, coffee, and spices
- essential oils, perfumes, cosmetics
- Instruments and accessories for making music
- Cotton, jute, and their derivatives
- Silk and its derivatives
- Wood and wood goods
Authorizations and Accreditations from DGFT
DGFT has begun implementing paperless transactions for a variety of export paperwork. The following are examples of DGFT-issued licenses and certifications:
IEC
All Indian exporters and importers are required to obtain IEC. A 10-digit number that will remain active for the duration of a company.
A valid certificate from the DGFT
For capital goods, the DGFT license is effective for 24 months, and for raw materials, it’s effective for 18 months.
e-BRC
Foreign exchange realization from banks can be transmitted electronically to the DGFT system via the e-BRC technology.
Authentication of Origin Document
A Certificate of Origin (COO) is a document required for exporting goods that verifies the goods produced and processed in the exporting country.
A valid license to practice EPCG
Capital goods used in pre-production, production, or post-production can be imported duty-free under the Export Promotion Capital Goods (EPCG) scheme, provided that an export obligation is met.
DGFT’s export promotion initiatives
The Directorate General of Foreign Trade (DGFT) has implemented several programmes to increase India’s exports with the hopes of addressing inefficiencies in the country’s infrastructure and influencing a shift in trade policy. Examples of such plans include:
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MEIS
The purpose of the Merchandise Exports from India Scheme (MEIS) is to provide incentives to exporters to make up for the inefficiencies in infrastructure and other costs connected with shipping goods out of India.
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The RoSCTL Scheme
Embedded state and central taxes on clothing are eligible for a refund according to the Rebate of State and Central Taxes and Levies (RoSCTL) system. Credit scrips are used to pay import taxes as an export incentive.
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SEIS
When it comes to promoting the export of notified services from India, the Service Export from India scheme was put into action. Exporters of notified services are eligible for a bonus of between 3 and 7 per cent of their net foreign exchange revenues through this program.
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RoDTEP scheme
The Indian government implemented the RoDTEP program to provide financial incentives and tax breaks to the country’s exporters. As part of this program, exporters are eligible to receive a rebate on all levels of government for any taxes or fees they forked over in preparation for export.
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Advance Authorization Scheme
If you’re a manufacturer, you can import raw materials duty-free through the Advance Authorization programme. Every product has a maximum allowable number of DGFT inputs.
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Duty-free Import Authorization
As part of this plan, export manufacturers will be able to import raw materials, energy sources, fuel, and oil duty-free. Only items with established Standard Input Output Norms (SION) are eligible for DFIA issuance.
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Deemed exports scheme
Products made in India and shipped just within the country are considered “deemed exports.” The Deemed Exports scheme provides duty-free inputs and exemptions from taxes or tariffs paid in India to strengthen India’s local industry.
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NIRVIK scheme
The Export Credit Guarantee Corporation of India (ECGC) offers loan coverage of up to 90% of interest and principal on loans issued in India through their Niryat Rin Vikas Yojana (NIRVIK) program. The goal of this initiative is to support local exporters by reducing the cost of insurance policies and expanding access to capital.
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Exporters are eligible for a GST refund
According to the Goods and Services Tax (GST), exports are considered zero-rated supplies, allowing the exporter to recoup the GST they initially paid on their raw materials (goods or raw material purchased to be utilized in the manufacturing of the final product, i.e. the output).
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EOU scheme
The goal of the Export Oriented Units scheme is to raise India’s exports and hence its earnings abroad. Under this plan, exporters are exempt from paying duties while acquiring inputs like raw materials and capital goods from either domestic or foreign suppliers.
