An Indian manufacturer may spend several months identifying an overseas supplier, negotiating machinery specifications and arranging foreign currency payments. However, one incorrect assumption about the Importer Exporter Code, ITC(HS) classification or DGFT authorization can stop the entire shipment at Customs.
Having an IEC does not automatically permit a business to import every product into India. Certain goods require a restricted import authorization, while others may need BIS certification, WPC approval, LMPC registration, FSSAI clearance, CDSCO permission or CPCB EPR registration before Customs clearance.
A qualified DGFT license consultant in India helps importers and exporters examine the complete compliance chain before the purchase order, advance payment or shipment is finalised. This reduces the possibility of Customs holds, demurrage charges, licence rejection and delayed production.
The compliance review should normally cover:
The Directorate General of Foreign Trade administers India’s Foreign Trade Policy under the Foreign Trade Development and Regulation Act, 1992. The current Foreign Trade Policy came into effect on 1 April 2023 and continues until amended or replaced through official notifications and public notices.
The expression “DGFT licence” is commonly used for multiple registrations and authorizations available through the DGFT portal. It does not refer to one universal licence for every import-export transaction.
A business may require an IEC for ordinary import-export activities, a restricted import authorization for controlled goods, an Advance Authorization for duty-free input imports or an EPCG authorization for importing eligible capital goods at concessional customs duty.
Common DGFT registrations and authorizations include:
The correct authorization depends on the product, ITC(HS) code, quantity, value, end use, exporting country, importing country and applicable policy conditions.
An IEC is a 10-character identification number connected with the PAN of the business entity. It is generally required by importers and exporters for Customs filing, foreign-exchange transactions and international trade documentation.
However, IEC registration is not equal to permission for importing restricted goods. A company can have a valid IEC and still be unable to clear a shipment where the relevant 8-digit ITC(HS) code is classified as restricted.
For example, an importer may have:
Despite having these documents, Customs can withhold the shipment where the product requires a restricted import authorization or another mandatory product approval.
Every IEC holder must also update or confirm its IEC details online during April to June each year. Even where there is no change in the business information, the entity is expected to complete a no-change confirmation.
Important IEC compliance points include:
India follows an 8-digit ITC(HS) classification system for determining import and export policy. Schedule I deals with import policy, while Schedule II covers export policy.
A product should not be classified only on the basis of the commercial name used by the supplier. Classification may depend on material composition, technical function, principal use, power capacity, product configuration and the relevant section or chapter notes.
For example, an importer describing equipment merely as an “industrial machine” may overlook whether it is classified as electrical equipment, mechanical equipment, testing equipment, waste-processing machinery or used capital goods.
A classification mistake can affect:
The ITC(HS) classification should match across the:
Even a minor mismatch in model number, capacity, composition or product description can generate a Customs query.
A restricted import authorization is required where the applicable ITC(HS) policy identifies the product as restricted. The goods cannot ordinarily be imported only on the basis of an IEC.
Applications for restricted imports are generally filed online in the prescribed DGFT form. Depending on the nature of the goods, DGFT may obtain comments from a technical ministry or place the application before the EXIM Facilitation Committee.
The committee generally examines factors such as:
The EXIM Facilitation Committee normally meets periodically, often once in a month. An incomplete application can therefore miss one review cycle and move to the next available meeting.
A restricted import authorization may specify:
The importer must check every licence condition before the supplier dispatches the goods.
The first step is identifying the correct 8-digit ITC(HS) code. The applicant should collect product specifications, catalogues, composition details, photographs and intended-use information.
Classification should be finalised before selecting the DGFT application category.
Documents commonly reviewed include:
The IEC should be active and linked correctly with the DGFT account. The registered office, factory address, GST details and bank account should be consistent with the application documents.
Where the importer is operating through multiple branches or factories, the relevant unit should be included correctly in the IEC profile.
The review should cover:
A product classified as freely importable can still require approval under another Indian law. Foreign Trade Policy conditions generally require imported goods to comply with the technical, safety, health and environmental requirements applicable to equivalent domestically manufactured products.
Depending on the product, the importer may require:
Importers of electronics, batteries, plastic-packaged products, tyres and environmentally sensitive goods should complete the environmental compliance review before shipment.
The application should be supported by consistent technical, financial and legal documents. The product description mentioned in the invoice should not differ materially from the description in the licence application.
The applicant may need to provide:
DGFT may issue a deficiency letter seeking clarification or additional evidence. The applicant should respond to every observation separately.
A proper deficiency response should contain:
Submitting the same incomplete document again can lead to repeated deferment or rejection.
After the authorization is issued, the importer should verify all details before arranging shipment.
The authorization should be checked for:
Any discrepancy should be corrected through an amendment before the goods arrive in India.
The exact documentation depends on the authorization. A restricted import application will not have the same document set as an EPCG or Advance Authorization application.
However, most applications require a combination of legal, financial, technical and transaction-related evidence.
The applicant may require:
The applicant may require:
The technical file may include:
Depending on the product, the applicant may need:
A properly indexed submission may include 15 to 30 individual documents, depending on the complexity of the application.
Government fees differ according to the type and value of the authorization. DGFT revised several application-fee provisions through a public notice issued in April 2025.
The applicable fee should be verified on the portal at the time of filing.
| Application type | Indicative government fee |
|---|---|
| New IEC application | ₹500 |
| Export licence for restricted goods | ₹1,000 |
| SCOMET application | ₹1,000 |
| Restricted import authorization | 0.1% of CIF or authorization value |
| Minimum restricted import fee | ₹500 |
| Maximum restricted import fee | ₹1,00,000 |
| AA, DFIA or EPCG for eligible MSMEs up to ₹1 crore | ₹100 |
| AA, DFIA or EPCG for eligible MSMEs above ₹1 crore | ₹5,000 |
| AA, DFIA or EPCG for non-MSMEs | 0.1% of authorization value |
| Import Monitoring System registration | ₹500 per application |
The government fee is separate from:
For example, a restricted import application involving goods valued at ₹75 lakh may attract a government fee calculated at 0.1%, subject to the applicable minimum and maximum limits.
At 0.1%, the basic calculation would be:
₹75,00,000 x 0.1% = ₹7,500
The actual payable amount should be confirmed through the DGFT portal.
There is no single processing timeline for every DGFT application. A straightforward IEC application and a restricted import application requiring technical-ministry approval cannot be compared.
An electronically complete IEC application may be processed relatively quickly where PAN, bank and address verification is successful. A restricted licence may take longer where technical comments, committee consideration or additional evidence is required.
The processing period is influenced by:
Businesses should plan for regulatory approval before shipment.
A practical internal timeline may include:
These are planning estimates and not guaranteed government timelines.
Advance Authorization allows duty-free import of eligible inputs that are physically incorporated into an exported product. Certain consumables, fuel, oil, catalysts and packaging materials may also qualify where permitted by the applicable norms.
The quantity of duty-free input is usually determined through:
For many standard authorizations:
Consider a manufacturer that imports ₹50 lakh of raw material without paying the eligible customs duty under Advance Authorization. The financial benefit may improve working capital, but the company must maintain complete records of import, production, wastage and export.
The company should maintain:
Failure to complete the export obligation can lead to customs-duty recovery, interest, composition charges and DGFT proceedings.
The Export Promotion Capital Goods Scheme allows eligible capital goods to be imported at zero or concessional customs duty, subject to export-obligation conditions.
The scheme may be used by eligible manufacturers, merchant exporters connected with supporting manufacturers and certain service providers.
The general specific export obligation is calculated as:
6 times the duties, taxes and cess saved
For example, where an importer saves ₹25 lakh in eligible duties:
₹25 lakh x 6 = ₹1.50 crore
The business may therefore be required to complete a specific export obligation of ₹1.50 crore within the prescribed 6-year period.
Important EPCG numbers include:
The business should not select EPCG only because it reduces the initial machinery cost. Management should first determine whether the expected export turnover is sufficient to complete both the specific and average export obligations.
An EPCG feasibility assessment should review:
| Regulation or approval | Main requirement | Numerical timeline | Applicable entity | Major risk |
|---|---|---|---|---|
| FTDR Act, 1992 | Follow FTP, Rules and authorizations | Continuous | Importers and exporters | Penalty and licence action |
| Foreign Trade Policy 2023 | Follow ITC(HS) policy | Effective from 1 April 2023 | Merchandise traders | Incorrect policy treatment |
| IEC | Obtain and maintain IEC | Confirm from April to June | Importers and exporters | IEC deactivation |
| Restricted import authorization | Obtain permission before import | Validity as stated in licence | Restricted-item importers | Customs hold |
| Advance Authorization | Complete imports and exports within conditions | Commonly 12 months and 18 months | Export manufacturers | Duty recovery |
| EPCG | Complete export obligation | 6 times duty saved in 6 years | Eligible exporters | EODC failure |
| Product-specific approval | Obtain BIS, EPR or other approval | Before import or sale | Regulated product importers | Customs and market action |
The table shows that DGFT compliance is not limited to obtaining a registration number. Most schemes create ongoing obligations after the authorization has been issued.
Rajiv was the operations head of a medium-sized automotive-components manufacturer in Pune. His company planned to import a used automated machining line from Germany to increase production capacity by approximately 35%.
The machinery value was around ₹1.10 crore. The company had already paid a 20% advance of ₹22 lakh and expected the equipment to arrive within 6 weeks.
Rajiv believed the company was ready because it had:
Before dispatch, the finance team asked for an independent DGFT compliance review. The review identified 4 issues.
First, the commercial invoice used a broad product description that did not clearly match the proposed ITC(HS) classification.
Second, the Chartered Engineer certificate did not mention the residual life, manufacturing year, serial numbers or present condition of all 7 major equipment components.
Third, the factory address mentioned in the supporting documents was different from the installation address shown in the purchase agreement.
Fourth, the company had not examined whether the machinery import conditions required a specific DGFT permission or additional Customs documentation.
The shipment was held back for 9 working days. During this period, the company corrected the invoice description, obtained a revised Chartered Engineer report, aligned the factory address and completed the authorization review.
The revised technical file contained:
The company incurred additional documentation expenses, but it avoided sending a ₹1.10 crore shipment with incomplete supporting evidence.
Rajiv later explained the practical impact to management: delaying dispatch by 9 working days was uncomfortable, but an unresolved Customs hold could have delayed installation by several weeks and created demurrage, detention and production-loss exposure.
This case shows why a DGFT review should happen before shipment. A documentation gap identified at the supplier’s warehouse can be corrected. The same gap identified after the container reaches an Indian port can become a financial and operational crisis.
A contravention under the FTDR framework can attract a penalty of not less than ₹10,000 and up to 5 times the value of the relevant goods, services or technology, whichever is greater.
For goods valued at ₹50 lakh, the maximum exposure under a 5-times calculation can theoretically reach:
₹50 lakh x 5 = ₹2.50 crore
The actual penalty depends on the facts, violation and adjudication.
The authorities may suspend or cancel an IEC in specified circumstances after following the applicable legal process.
An inactive or suspended IEC can affect:
Where restricted goods arrive without the correct authorization, Customs may withhold clearance.
The importer may face:
Non-fulfilment of Advance Authorization or EPCG conditions can result in:
Section 15 of the Environment Protection Act should not be treated as a routine DGFT penalty. It may become relevant only where the imported goods or business activity also violates an environmental law.
CPCB portal suspension, environmental compensation or SPCB refusal may arise where the business deals with products or wastes regulated under:
A normal DGFT application should not include environmental penalties unless an environmental regulation actually applies.
A DGFT consultant should not merely upload forms. The consultant should identify the complete legal and operational pathway for the transaction.
The assignment may begin with ITC(HS) classification and continue until the authorization is closed.
Typical support includes:
For regulated products, the consultant should also coordinate:
Import-export approvals should be examined before the commercial transaction becomes irreversible.
A business that identifies a licence requirement after paying the supplier may have limited negotiating power. A company that discovers the requirement after shipment may also face freight, storage and detention costs.
Early planning allows the importer to:
The cost of advance compliance is generally more predictable than the cost of rectifying an uncleared shipment.
A DGFT license consultant in India helps businesses move beyond basic IEC registration and examine the complete import-export compliance chain.
The process normally involves an 8-digit ITC(HS) classification, 10-character IEC verification, policy review, authorization assessment, product-approval mapping and Customs documentation.
Where a business uses Advance Authorization, it may need to monitor a 12-month import validity and an 18-month export-obligation period. Under EPCG, the business may undertake an export obligation equal to 6 times the duty saved over a 6-year period.
A restricted import transaction can involve government fees ranging from a minimum of ₹500 to a maximum of ₹1,00,000, depending on the applicable calculation and authorization value. However, the potential cost of a Customs hold, production delay or FTDR penalty can be substantially higher.
Businesses should therefore complete classification, authorization and product-compliance checks before issuing the final purchase order or allowing the supplier to dispatch the goods.
Structured documentation, realistic timelines and continuous licence monitoring help protect working capital, production schedules and long-term import-export operations.
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