The system of import and export in India is governed by India’s Export Import (EXIM) Policy formulated by the Ministry of Commerce.
Generally, free Import and export of all goods are permitted. The permitted or excepted category of goods are regulated by the EXIM Policy or any other law for the time being in force.
Obtaining an Importer-Exporter Code (IEC) is a prerequisite for the import and export of goods. The Regional Authority (RA) of Director General of Foreign Trade (DGFT) is the issuing authority of IEC.
Issuance of IEC is governed by the Foreign Trade (Development & Regulation) Act, 1992 and Foreign Trade Policy 2015-20. No export or import of goods is permitted for clearance by the customs unless the importer or exporter has obtained an IEC.
The Foreign Trade (Development and Regulation) Act, 1992
The Foreign Trade (Development and Regulation) Act, 1992 is provided for the development and regulation of foreign trade. It is for facilitating imports into, and augmenting exports from, India and for matters connected therein.
Under Section 7 of the said Act, no person shall make any import or export except under an Importer-Exporter Code number.
The IEC is granted by the Director-General of Foreign Trade. The Section also provided that no Importer-Exporter Code number shall be necessary for:
- when benefits under the Foreign Trade Policy are not availed by the exporter or importer; or
- those dealing with specified services or technologies.
Application and issuance of IEC
According to Para 1.11 of the Foreign Trade Policy, 2015-20, IEC is mandatory for export from or import to India.
DGFT issues Importer Exporter Code in electronic form (e-IEC). For issuance of e-IEC an application can be made on DGFT (http//:dgft.gov.in).
Applicant can upload the documents and pay the requisite fee through Net banking. Applicant shall, however, submit the application duly signed digitally. Processing of such applications by Regional Authority (RAs) of DGFT would be done online.
A digitally signed e-IEC would normally be issued or e-mailed to the applicant within 2 working days
In case the application is incomplete or otherwise ineligible, the same shall be rejected and a rejection letter or e-mail (with reasons for rejection) would be sent to the applicant.
Application for issue of e-IEC can also be made from eBiz platform (https://www.ebiz.gov.in)
IEC is a 10-character alpha-numeric number allotted to a person that is mandatory for undertaking for any export or import activities.
The following details /documents (scanned copies) may be submitted along with the application:
- Digital photograph of the signatory applicant
- Copy of the PAN card of the business entity in whose name import/export would be done.
- Cancelled cheque bearing entity’s pre-printed name or Bank certificate in prescribed format ANF-2A(I)
When an e-IEC is approved by the competent authority, applicant is informed through e-mail. The applicant shall click on “Application Status”. Then fill and submit the requisite details in “Online IEC Application” webpage of DGFT website. The e-IEC can now be viewed and printed.
Application for IEC can be made through http//:dgft.gov.in and also be made from eBiz platform https://www.ebiz.gov.in
As per Para 2.08 of Handbook of Procedures, Exporters or Importers shall file an application in ANF 2A format for grant of e-IEC. Those who have digital signatures can sign and apply online along with the requisite documents.
Others may take a printout of the application, sign the undertaking/ declaration, upload the same with other requisite documents. Thereafter, submit the signed copy of the online application form to the concerned jurisdictional RA either through post or by hand.
Time Bound Disposal of Applications for IEC
RA shall dispose of applications expeditiously. Normally two days’ time schedule shall be followed to dispose of IEC applications, provided it is complete in all respects and is accompanied by prescribed fees and documents.
Modification of IEC
An application for modification shall be filed with the concerned jurisdictional Regional Authority from where IEC was originally issued.
An application for modification may be made for change in details like name, address, constitution, ownership in Proprietorship firms, change in nature of the firm e.g. from proprietorship to partnership etc. Change in constitution, however, does not include change in Directors of Public Limited Company.
For any modification in IEC:
- Applications may be submitted online through digital signature (Class-II or Class-III),
- remittance of applicable fees and
- upload of requisite documents corresponding to the changes sought.
ANF-1 contains the profile of the importer/exporter. IEC Holder shall be responsible for updating the same as and when a change takes place immediately or in any case at least once in a year.
Exemption for IEC Number
No export or import shall be made by any person without obtaining an IEC number unless specifically exempted.
The category of importers and exporters as provided under para 2.07 of the Handbook of Procedures (2015-20) are exempted from obtaining IEC.
Further, exemption from obtaining IEC shall not be applicable for export of Special Chemicals, Organisms, Materials, Equipments and Technologies (SCOMET) as listed in Appendix – 3, Schedule 2 of ITC (HS).
However, Ministries /Departments of Central or State Government are exempted from this requirement.
Suspension and cancellation of Importer-Exporter Code Number
Sec. 8 of the Foreign Trade (Development and Regulation) Act, 1992 provides for the suspension and cancellation of Importer-Exporter Code number. Accordingly, the Director General or any other officer authorised by him may suspend or cancel the IEC.
The suspension or cancellation of IEC may be caused under the following circumstances:
- When the holder has contravened any of the following provisions:
- the Foreign Trade (Development and Regulation) Act, 1992, or
- any rules or orders made thereunder, or
- the Foreign Trade Policy, or
- any other law for the time being in force relating to Central Excise, Customs, GST or Foreign Exchange
2. The holder of IEC has committed any other economic offence under any other law for the time being in force.
3. When the Director General or any other officer authorised by him has reason to believe that he has made an export or import:
(i) in a manner prejudicial to the trade relations of India with any foreign country; or
(ii) prejudicial to the interests of other persons engaged in imports or exports; or
(iii) has brought disrepute to the credit or the goods of, or services or technology provided from, the country.
(iv) when he who imports or exports specified goods or services or technology, in contravention of any provision of this Act or any rules or orders made thereunder or the Foreign Trade Policy.
The Director-General, before cancel or suspend the IEC, shall
- call for the record or any other information, after giving to that person a notice in writing and
- give him a reasonable opportunity of being heard.
Effect of Suspension or Cancellation of IEC
Where any Importer-exporter Code Number granted to a person has been suspended or cancelled as stated above, that person shall not be entitled to import or export any goods or services or technology except under a Special Licence, granted by the Director General to that person.
The provision for Special Licence is provided in Rule 3 and Rule 4 of the Foreign Trade (Regulation) Rules, 1993.
Accordingly, upon suspension or cancellation of an IEC, the Director General may, based on an application by the holder of that IEC, in accordance with the provisions of the policy, grant to him a special licence.
The Special Licence is granted when the Director General satisfies the following conditions:
- The denial of a Special Licence is likely to affect the foreign trade of India adversely; or
- The suspension or cancellation of the Importer -Exporter Code Number is likely to lead to non-fulfilment of any obligation by India under any international agreement.
The Rule 3 also provides that the Special Licence granted to any person shall be non-transferable.
Surrender of IEC
If an IEC holder does not wish to operate the allotted IEC, he may surrender the same to the issuing authority. On receipt of such application, the issuing authority shall immediately cancel the IEC and electronically transmit it to DGFT and Customs authorities.
Validity of IEC
An IEC will be issued in prescribed format [ANF-2(A)(II)] and an IEC allotted to an applicant shall have permanent validity unless cancelled or suspended by the competent authority. The IEC will cover all branches / divisions / units / factories of the applicant.
Other Provisions related to IEC
Only one IEC shall be issued against a single PAN. Multiple IECs against a single PAN stands deactivated suo-motu after 31.03.2015.
Provisions under Rule 12 of the Foreign Trade (Regulation) Rules, 1993 mandates that, on the importation into or exportation out of any Customs port of any goods, the importer or exporter shall state the Importer-exporter Code Number allotted to him by the competent authority on:
- the Bill of Entry or
- the Shipping Bill or,
- in any other documents prescribed by rules made under the Act or the Customs Act, 1962 (52 of 1962)
Changes Introduced In IEC Post to the Introduction of GST
As a measure of ease of doing business, to keep the identity of an entity uniform across Ministries/Departments, with the implementation of GST, PAN of an entity has been decided to be used for the purpose of IEC.
For new applicants, application for IEC will be made to DGFT and applicant’s PAN will be authorised as IEC. Further, for existing IEC holders, necessary changes in the system are being carried out by DGFT so that their PAN become their IEC.
Accordingly, IEC holders are required to quote their PAN in place of existing IEC in all their future documentation with effect from the notified date.
Launch of New DGFT Platform and Digital Delivery of IEC Related Services
As part of Digital India Programme and for Ease of Doing Business, DGFT has undertaken an initiative to revamp its services delivery mechanisms to promote and facilitate foreign trade.
As a step in that direction, the first phase of a new digital platform of DGFT is scheduled to Go-Live on 13th July 2020. The platform will become accessible through the existing website: https://www.dgft.gov.in
In the first phase, the website will be catering to the services related to the IEC issuance, modification, amendments etc. Other online modules relating to Advance Authorisation, EPCG, and Exports Obligation Discharge are going to be the part of next phase.
The next phase will be rolled out subsequently after the first phase stabilises.
The IEC is mandatory for companies and businesses to conduct a business that deals with import and export. It is the primary proof of a firm as an Exporter or Importer in India.
IEC is effective for the lifetime of an entity and no renewal is required. Once it is obtained, it could be used by the entity against all export and import transactions.
DGFT is the statutory authority manages the businesses concerned with issuance of IEC. In Hamid Fahim Ansari V. Commissioner Of Customs (Import), Nava Sheva, the Bombay High Court held that where a person has obtained IEC number by misrepresenting the Ministry of Commerce and Industry and Director General of Foreign Trade, it is for that body to take action.