For any business looking to cross Indian borders commercially, whether exporting goods, importing raw materials, or engaged in international service delivery, the Import Export Code (IEC) is the mandatory starting point. Issued by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, the IEC is a 10-digit code that serves as the unique identifier for every Indian importer or exporter. In 2022, with global supply chain realignments following COVID-19 and India actively positioning itself as an alternative manufacturing hub, IEC registrations surged.

What is IEC and Who Needs It?

The IEC is required by all businesses engaged in the import or export of goods or services in India. It is governed by the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy. Certain categories are exempt: individuals importing or exporting for personal use unconnected to trade, government departments and ministries, persons importing or exporting certain notified goods. However, for any commercial transaction involving crossing the border, an IEC is mandatory. It has no validity period and is issued for the life of the entity.

The Registration Process

IEC registration is done through the DGFT portal (www.dgft.gov.in). The applicant must submit a completed online application (ANF 2A), along with a digital photo of the firm or applicant, a cancelled cheque bearing the pre-printed name of the applicant, and supporting identity and address documents. The IEC is linked to the applicant's PAN and is issued within 3 to 5 working days. There is a government fee of Rs. 500 for IEC issuance. As of 2022, the DGFT has mandated annual updates to IEC data between April and June each year, failing which the IEC may be deactivated.

IEC and Foreign Trade Policy 2015-20 (Extended)

The Foreign Trade Policy 2015-20 was extended by the government beyond its original expiry date and remained operative through 2022 pending the release of the new FTP 2022, which was eventually released in March 2023. Under the extended policy, IEC holders continued to benefit from export promotion schemes including the Merchandise Exports from India Scheme (MEIS) replacement schemes, the Remission of Duties and Taxes on Export Products (RoDTEP), and the Export Promotion Capital Goods (EPCG) scheme.

2022 Trade Context: PLI Schemes and Export Surge

2022 was a landmark year for India's trade ambitions. India's merchandise exports crossed USD 418 billion in 2021-22, exceeding the government's target of USD 400 billion for the first time. The Production Linked Incentive (PLI) schemes across 14 sectors attracted significant foreign investment and boosted export capacity in sectors including electronics, pharmaceuticals, textiles, food processing, and specialty chemicals. Businesses benefiting from PLI schemes were mandated to have valid IEC registrations as a fundamental compliance requirement.

Services Export and IEC

Businesses exporting services, including IT and ITES companies, consulting firms, and legal and financial service providers, are required to hold an IEC to receive foreign remittances through banking channels. The Foreign Exchange Management Act (FEMA) regulations require IEC for service exporters filing for GST refunds under the zero-rated supply provisions for exports. In 2022, the GST Council clarified that IEC was mandatory for service exporters claiming IGST refunds on zero-rated supplies.

Conclusion

For every business with even aspirational international ambitions, obtaining an IEC is a low-cost, high-return registration. In 2022, India's rising export trajectory makes this more relevant than ever.

 

Need help navigating compliance? Kriotech HR Management offers end-to-end support for all statutory registrations and licensing requirements. Visit us at https://kriotech.in/ or reach out today.

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