International trade creates tremendous opportunities for business and economic expansion. India has steadily nurtured its global trade profile over the past decade, and last year, the country’s exports increased by 20%.1 As a result, the country saw the fastest GDP growth rates globally, between 2013 and 2018.2
The government continues to ensure these successes by providing incentives for international trade. However, prospective traders need to obtain the right permits and approvals before they can conduct business internationally. An Import-Export Code (IEC) is one of these approvals.
This article provides an overall introduction to the IEC. It explains the requirements, processes, steps for registering for the IEC, and the benefits of having this code.
Table of Contents
An import-export code (IEC) is a key business identification number required for all international trading in India. This 10-digit alpha-numeric code is given by the regional office of the Director General of Foreign Trade (DGFT), Ministry of Commerce. The code is important for all Indian businesses who want to enjoy the benefits of International trade.
The Importer usually declares their IEC number together with the bill of lading to customs. This helps the officials effectively administrate cross-border business and also curb illegal imports and exports. The import-export code is a necessity for businesses intending to explore either importation or exportation of goods and services.
The government of India makes registering for IEC code mandatory under the Foreign Trade (Development and Regulation) Act, 1992.3 The perk, however, is that it doesn’t require any filing of returns and has lifetime validity.
The IEC code also avails importers and exporters of several benefits provided by the DGFT, the Exports Promotion Council, and the Customs Department. It should be noted however that persons who are importing or exporting goods for personal use are not required to register for an IEC code.
The ministry of commerce requires an IEC for all exports from India or imports to India with the exemption of goods imported or exported for personal use and not for commercial usage. An IEC is not also required for imports and exports done by government departments, ministries, and other charitable institutions.
Additionally, traders who are registered under Goods and Service Tax (GST) are not obligated to have an IEC. They can use their Permanent Account Number (PAN) as a new IEC for imports and exports. Here are some specific instances where an IEC is required:
However, IEC is not always necessary for service imports and exports unless the relevant service provider is receiving benefits under the Foreign Trade Policies. The purpose of the IEC number is to establish a standard of excellence among Indian enterprises conducting cross-border business, not to restrict imports or exports.
The ease of obtaining an IEC number proves this. Securing an IEC from the DGFT only takes 10-15 days after the initial application. The criteria for successful IEC applications are covered in the section below.
Several qualifications and documents are required before one can register for an import-export code. Let’s take a look at them:
The Ministry of Commerce through the Director General of Foreign Trade now permits the online submission, handling, and issuance of IEC applications. Several service providers have also found a niche in IEC registration which they offer to their clients in India at a fee. However, the process of getting an IEC is now easier than ever as prospective importers and exporters can apply for an IEC number from the convenience of their homes or places of work. Let's proceed step by step.
The fundamental advantage of IEC registration is that it enables local industries and businesses to expand the boundaries of their markets across their borders.
An import-export code (IEC) is a 10-digit alpha-numeric code given by the regional office of the Director General of Foreign Trade (DGFT), Ministry of Commerce, India that serves as a key business identification number required for all cross-border trading related to India.
The IEC can be obtained via the DGFT website and also monitored via the same means using the following six steps.
The IEC code has lifetime validity and only needs to be registered once. However, the DGFT requires every IEC holder to update their information electronically every year. Failure to do this would lead to deactivation. To reactivate your IEC, all you have to do is complete the yearly update.
IEC is not required to export services except when the service provider benefits from the Foreign Trade Policy.
IEC is not required for persons or businesses with GST. These groups of people can use their PAN as a new IEC for imports and exports.
After submitting the documents required, that is, two recent passport photographs, a copy of PAN card, valid government ID, bank account certificate, proof of residence, and application letter, it takes 10 – 15 days for the IEC number to be ready.
The classes of people exempted from having an IEC are government departments, ministries, and other notified charitable institutions. Additionally, traders who have registered under GST are not obligated to have an IEC.
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References:
1. https://commerce.gov.in/trade-statistics/
2. https://www.timesnownews.com/amp/business-economy/economy/article/india-becoming-worlds-fastest-growing-economy-shows-imf-data-5-points/333792
3. https://www.cbic.gov.in/htdocs-cbec/customs/cs-act/formatted-htmls/cs-fortrade-regulation
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