Do you know India grew its exports fastest in the year 2016-17 to $274.65 billion despite the negative impact of demonetization? With back to back business reforms by the government and emerging e-commerce and ever boosting logistics chain, the world is coming closer to each passing day.
The government of India has taken various steps to ease the polices relating to exports in India and which actually helped in decreasing the corruption and improving the ease of doing business.
Hence, every startup, the entrepreneur must know the legal policies and procedures by which they can start the export business in India. Let us understand the legal aspects relating to starting the export business in India.
Import Export Code (IEC) Registration
Import Export Code (hereinafter referred to as “IEC Code”) is a license mandatory to start an export business in India. This has been made mandatory by the Foreign Trade policy issued by the government of India. No commercial import or export can take place without a valid IEC code. Further, doing export or import without the IEC code is illegal in India.
Here are some basic facts about the IEC code:
- IEC code is nothing but your PAN number registered with Director General of Foreign Trade (DGFT) department.
- The process of getting PAN registered with the DGFT is known as IEC code registration.
- Earlier, a separate number is issued for IEC code; however, in the year 2017, the government amended the policy and made PAN as the universal IEC code (after registration with DGFT).
- IEC code once allotted is valid for lifetime.
- There is no compliance with IEC code. Hence, once allotted, you are free to use in your foreign trade.
- The process of IEC code registration is completely online and hence, no face to face meeting with the department.
Who needs the IEC Code?
Every trader, manufacturer doing any commercial import or export will require the IEC code. Doing any commercial activity without IEC code is illegal in India. The important point is to mark that IEC code is mostly required in case of export of goods. Export of services can be done without IEC code registration. However, IEC code shall be required for export of services in the following two cases:
- To claim any export related benefits
- For some prescribed services in Foreign Trade Policy.
The New IEC Code Registration process
The IEC code registration process has been completely changed by the government in the past few years. The process has been made simple and few documents and a digital signature. There is no face to face meeting with the government officer and hence, there is no chance of corruption or problem of any sort.
Here is the complete new procedure for getting the IEC code in 4 simple steps:
- Gather all required documents: Earlier, whenever we used to discuss the documentation of any sort, the feeling of frustration and confusion went through our mind. However, now you will be delighted after reading the documents list. There is only four documents are required for getting IEC code in India:
| For Individuals/Proprietorship | For Company/LLP/Partnership |
| – PAN Card
– ID proof (Aadhar card/DL etc) – Cancelled Cheque of the current account. – Passport size photo |
– PAN of company/firm
– PAN of authorised person – ID proof (Aadhar card/DL etc) – Cancelled Cheque of the current account. – Passport size photo |
That’s all. Only four simple documents are required that too in the scan.
Apply for digital Signatures: After arranging the documents for digital signature, the next step is to apply for digital signature using any website or local consultant. A class 2 digital signature is required to sign the application at the end and then submit the same to the government.
File the application online: Now since you have all the prerequisites for IEC code registration, it is the time to apply for the filling the application online and then paying the government fees and submitting it online. You may follow the below procedure:
- Visit the DGFT website and create your account using PAN number, mobile number and email.
- After logging into the system, fill all the details properly.
- Upload all the documents as stated in step 1 above.
- Pay the government fees and sign the application using DSC.
- Submit the application.
Follow up & Approval: The last step in IEC registration procedure is to follow up with the application online and wait for the approval. If the application is correctly filed online, then the government department will issue you the IEC certificate online.
Other important registration after IEC code
After getting the IEC code, you are now eligible to start import export business but there are some more licenses and registration you must apply in order to fully able to export or import. Here are some important registrations after IEC code explained:
- RCMC Registration: Registration Cum Membership Certificate (commonly known as RCMC) is a certificate issued by the Export Promotion Councils or board.
There are around 40 Export promotion council and board in India. Every exporter needs to register with any of the export promotion councils based on the product one is selling.
- Hire Freight forwarder: Freight forwarder is the person who books your shipment and tells you the price of shipment according to the size, distance and time of delivery.
- AD Code Registration: Authorised Dealer Code (commonly known as AD code) is a code allotted to every schedule commercial bank. The exporter must register this code (where he is operating the bank account) with the customs authority online.
Conclusion
Taking your business international is no more a challenging task if you know the right tactics. Follow the prescribed legal procedures properly and you will get each and every license easily. Don’t mess up the things otherwise you will lose both time and money. Just be simple, master the basics and go and rule the world.
(Disclaimer: This is a guest post submitted on Techstory by the mentioned authors. All the contents and images in the article have been provided to Techstory by the authors of the article. Techstory is not responsible or liable for any content in this article.)
Image Source: pikabu.ru
About the Author
CA Paras Mehra is a founder of hubco.in, a website for registering company, trademarks, GST and managing business compliances for startups and MSME’s.
