A lot of opportunities are created in international trade for business and economic expansion. The fastest GDP growth rates globally are seen in countries due to increased exports. The government will ensure these successes by providing incentives for international trade. However, the proper permits and approvals must be obtained by prospective traders before they can conduct business internationally, and one of these approvals is an Import-Export Code (IEC).

An overall introduction to the IEC is provided in this article, where the requirements, steps for registering for the IEC, processes, and the benefits of having this code are explained.

What is an Import-Export Code (IEC)?

An import-export code (IEC) is a 10-digit alphanumeric code given by the regional office of the Director General of Foreign Trade (DGFT), Ministry of Commerce. Every Indian business that wants to trade internationally needs this code.

Importers must declare their IEC number and the bill of lading to customs. This helps officers manage cross-border business and check for illegal imports and exports. Businesses that want to import or export goods and services always need an IEC.

The Government of India made registering for an IEC code mandatory under the Foreign Trade (Development and Regulation) Act, 1992. The code is valid for life; you don't need to file returns. The DGFT, Exports Promotion Council, and Customs Department offer several benefits to importers and exporters with an IEC code. However, if you are importing or exporting goods for personal use, you do not need to register for an IEC code.

When is an IEC required?

The Ministry of Commerce requires an IEC for all exports from India and imports to India. However, you don't need an IEC for goods imported or exported for personal use. Government departments, ministries, and charitable institutions also do not need an IEC.
Traders registered under Goods and Services Tax (GST) do not need an IEC because they can use their Permanent Account Number (PAN) instead. Here are some specific times when an IEC is required:

Clearing Imports

Importers need an IEC before filing for a bill of entry from the DGFT. Customs also need an IEC before clearing imported goods. Businesses usually submit their IEC with the bill of lading for the import.

Payment for Imports

When importers send large payments for their goods through a bank wire transfer, the bank needs to verify their capacity using the IEC code. Financial institutions usually request an IEC when an importer sends money overseas before the payment for an import is made.

Initiating Exports

Customs requests an IEC when an exporter wants to send shipments to ensure they can trade across borders.

Receiving payments from exports

The IEC must prove that one is eligible to participate in cross-border trading. Every authorized business or person who wants to participate in cross-border trading should have an IEC. The receiving bank requires an IEC from the exporter before releasing the funds, which would be paid in foreign currency. This also checks to ensure businesses have an IEC before initiating exports.

However, service imports and exports do not always necessarily require an IEC unless the relevant service provider is getting benefits under the Foreign Trade Policies. The main purpose of the IEC number is to establish a standard of excellence for Indian traders performing cross-border business. It is not to restrict imports or exports, as proven by the ease of obtaining an IEC number. Generally, it takes only 10 to 15 days to obtain an IEC from the DGFT after the initial application.

Requirements for an IEC registration

The eligibility and documents required to register for an import-export code include:

• Two recent passport photos if you are an individual, not a company.

• A copy of your PAN card or your firm's PAN card.

• A valid ID issued by the government, like an Aadhar card, driver's license, voter ID, or international passport.

• A canceled cheque or a current bank account certificate to prevent foreign exchange fraud.

• Provide proof of where you live or your business, such as a rent agreement, sale or lease deed, or utility bills like electricity, telephone, or mobile postpaid.

• A self-addressed envelope with an RS.25 postage stamp to get the IEC certificate by registered post.

• An application letter on your company's letterhead with the subject 'Request for Issue of New IEC Certification.'

How do I get an IEC number?

The Ministry of Commerce permits online submission, handling, and issuance of IEC applications through the Director General of Foreign Trade. Several service providers now offer IEC registration to their clients in India for a fee. However, obtaining an IEC is now more straightforward as importers and exporters can apply for an IEC number from their homes or places of work. The online process for applying for an IEC number includes the following steps:

1. Visit the official DGFT website.
2. Click on 'Apply for IEC' at the bottom of the paragraph titled 'Register for your IEC' on the home page, which will load a new page.
3. Fill in your know-your-customer (KYC) information and the ReCaptcha correctly. Information about the type of business you are applying for, such as importer/exporter, technical authorities, bank officials, etc., and other personal details must be filled in on this page. You also need to fill in your PAN number and PIN code. Click on 'Send OTP' to submit your form and generate a one-time password (OTP).
4. You will be given automatic access to the online application page after entering the generated OTP in the text box provided to fill in the entity details.
5. The application entity details, including branch and director/partner details, must be filled in to provide more specific information about your business and the business partners and directors.
6. Scanned copies of all the required documents need to be uploaded. You must pick the document type (PDF or JPEG) and click the 'Upload' icon, as all the necessary documents are listed here.
7. Pay the IEC registration fee using either debit and credit cards or net banking.
8. The application needs to be reviewed to ensure that there are no errors. You can also print it to inspect it or use it for business purposes.
9. Click on 'Proceed' only after thorough verification of the information on your application.
10. Now click on submit and generate an IEC certificate.
11. Generally, it takes 10 to 15 days to process and issue the IEC code. However, you will get a notification from the office of the DGFT within two days by mail with a corresponding reason for rejection if your application is not accepted.

What are its Benefits?

The main benefit of IEC registration is that it helps local businesses expand their markets across borders. Other benefits include:

• Subsidies: With an IEC, you can get subsidies on the export of goods. These can be export subsidies or tax breaks on imports.

• Tax Relief: The government offers tax relief for imports completed within a certain time frame.

• Cross-Border Payments: The IEC number allows banks and financial institutions to help you transact across borders.

• Verification by Customs: The customs office uses the IEC number to check if a company is legitimate and eligible for importing and exporting.

Frequently Asked Questions (FAQs):

What is the validity of the IEC?

The IEC is valid for a lifetime. You only need to register once. However, you must update your information electronically every year. If not updated, it will be deactivated, and you will need to complete the yearly update to reactivate it.

What is the import-export code?

An import-export code (IEC) is a 10-digit alphanumeric code given by the regional office of the Director General of Foreign Trade (DGFT), Ministry of Commerce, India. It is a business identification number needed for all cross-border trading related to India.

How do I find my IEC?

You can get your IEC from the DGFT website. First, visit the official DGFT website and enter your username and password. Then go to 'IEC' and click 'Manage IEC' under 'Services.' Verify your details and click on 'Print IEC.' You can download the PDF file and print it.

Is IEC required for services?

You only sometimes need an IEC for export services unless the service provider gets benefits from the Foreign Trade Policy.

Is IEC registration required when you have GST?

People or businesses with GST do not need an IEC because their PAN can be used as a new IEC for imports and exports.

How long does it take to get an IEC?

After submitting the required documents, it usually takes 10 to 15 days to get the IEC number, like two recent passport photos, a valid government ID, a copy of the PAN card, a bank account certificate, proof of residence, and an application letter.

Who are exempted from having an IEC?

Government departments, ministries, and some charitable institutions do not need an IEC. Traders registered under GST also do not need an IEC.