DGFT Compliance for Indian Exporters: Key Requirements
The Directorate General of Foreign Trade (DGFT) regulates India's export-import policy. For exporters, DGFT compliance is mandatory and involves several registrations, licenses, and ongoing compliance requirements. Here is what every Indian exporter needs to know.
IEC Registration
The Importer Exporter Code (IEC) is a 10-digit PAN-based code mandatory for all importers and exporters. Without IEC, no customs clearance is possible. It is issued by DGFT regional offices and is a one-time registration with no renewal required. Application is done online at dgft.gov.in. Banks also require IEC for foreign remittances.
RCMC Registration
The Registration-cum-Membership Certificate (RCMC) is issued by Export Promotion Councils (EPCs) relevant to your product. RCMC is required to avail export incentives and is mandatory for applying for DGFT licenses. For example, marble exporters register with CAPEXIL, handicraft exporters with EPCH, chemical exporters with CHEMEXCIL.
Foreign Trade Policy (FTP)
The Foreign Trade Policy (FTP) is announced by DGFT every 5 years (currently FTP 2023-28). It contains the entire framework of export incentives, import licensing, advance authorization, EPCG schemes, and prohibitions/restrictions. Every exporter should be familiar with the FTP chapters relevant to their product category.
Advance Authorization Scheme
Advance Authorization allows duty-free import of raw materials used in manufacturing export products. Norms for input-output ratios are pre-fixed by DGFT for common products. For non-standard products, exporters must apply for fixation of norms. Export obligation must be fulfilled within 18 months (extendable). Failure to meet export obligation attracts heavy duty and interest.
Duty Drawback
Duty Drawback is a refund of customs duty and central excise paid on inputs used in exported goods. All Industry Rate (AIR) drawback is a fixed percentage notified by CBIC. Brand Rate drawback is for products not covered under AIR. Claims must be filed within 3 years of export. Aura has helped exporters claim drawback they did not know they were eligible for.
Prohibited and Restricted Exports
Some goods require export licenses or are prohibited. Prohibited: Wild animals, human skeleton, tallow, sandalwood. Restricted (need DGFT license): Wheat, non-basmati rice, certain chemicals. Exporters must check the ITC(HS) Export Policy Schedule before assuming free export. Violations can result in seizure, penalty, and criminal prosecution.
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