Who Needs an IEC

An IEC is required by any person who:

• Imports goods into India, for any commercial purpose
• Exports goods from India
• Needs to clear consignments through Customs, since the IEC is quoted on every bill of entry and shipping bill
• Needs to remit or receive foreign exchange through a bank in connection with trade
• Wishes to claim benefits under the Foreign Trade Policy — RoDTEP, duty drawback, Advance Authorisation, EPCG and similar

Service exporters are in a slightly different position. An IEC is not ordinarily mandatory for the export of services, but it becomes necessary where the service provider wishes to avail benefits under the Foreign Trade Policy, and many banks and counterparties ask for it in any event.

Exemptions

The Foreign Trade Policy and Handbook of Procedures exempt certain categories, and provide permanent IEC numbers to be quoted instead of obtaining one:

• Import or export of goods for personal use, not connected with trade, manufacture or agriculture
• Ministries and Departments of the Central and State Governments
• Diplomatic personnel and notified categories
• Import or export from or to Nepal, Bhutan and Myanmar through specified border areas, and to China through specified passes, where the CIF value of a single consignment does not exceed the prescribed limit
• Certain notified charitable institutions and specified organisations

The categories and value limits are set out in the Foreign Trade Policy and Handbook of Procedures and are amended from time to time.

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The Application

Documents required

Address proof may be a sale deed, lease or rent agreement, electricity bill, landline or postpaid mobile bill, or a memorandum of understanding. Where the address proof is not in the name of the applicant entity, a no objection certificate from the owner of the premises must be furnished along with the address proof, uploaded as a single document.

Bank proof must be either a cancelled cheque bearing the pre-printed name of the applicant entity, or a bank certificate in the prescribed format. A cheque without the pre-printed name is a common cause of rejection.

The process

1. Create a user account on the DGFT portal
2. File the application online in the prescribed form, entering entity, branch, director or partner, and bank details
3. Upload documents in the prescribed formats and sizes
4. Pay the application fee of ₹500 online
5. Sign using Aadhaar-based e-sign or a digital signature certificate
6. Grant — the IEC certificate is generated and made available for download, and the details are transmitted electronically to Customs systems

Timeline: commonly within one to two working days where the application is complete, and in many cases the certificate is system-generated almost immediately. Where documents are deficient, a deficiency is raised and must be answered before grant.

The IEC is your PAN. Since the move to a PAN-based system, the IEC number is the same as the entity’s PAN. One PAN means one IEC — a business cannot hold multiple IECs, though it can add branches and additional addresses to the same IEC.

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The Obligation Most Holders Forget: Annual Updation

Paragraph 2.05 of the Foreign Trade Policy requires an IEC holder to update its IEC electronically every year during the period April to June, and to confirm the particulars even where there has been no change.

Consequence of not updating: the IEC is deactivated. Once deactivated:

• Shipping bills and bills of entry will not process
• Consignments are held at the port, and demurrage and detention charges accrue
• Authorised dealer banks will not process trade remittances
• Applications for authorisations and benefits under the Foreign Trade Policy cannot be filed

Reactivation is possible on successful updation, and is ordinarily processed quickly — but it is without prejudice to any other action that may be taken for the non-compliance, and it does not recover the cost of the delay.

Also update within the prescribed period on any change in the constitution of the entity, address, branches, directors or partners, or bank details. An IEC that does not match the particulars on the shipping bill, the GST registration or the bank records will create problems at exactly the point when they cannot be fixed quickly.

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What Has to Sit Alongside the IEC

An IEC alone does not enable a shipment. The practical set-up usually requires:

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Classification and Policy Status: ITC(HS)

Every item is classified under the ITC(HS) schedules — Schedule 1 governing imports and Schedule 2 governing exports — and each entry carries a policy status:

Determining the correct HS code and its policy status before the order is placed is one of the most valuable pre-shipment steps a trader can take. A misclassified item can convert a routine consignment into a detained one, with penalties under the Customs Act in addition to the trade policy consequences.

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Export Promotion Schemes an IEC Unlocks

Most of these require a valid RCMC in addition to the IEC, and all of them require the IEC to be active.

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Suspension, Cancellation and the Denied Entity List

Section 8 of the FTDR Act, 1992 empowers the Director General or an authorised officer to suspend or cancel an IEC where the holder:

• Has contravened any law relating to central excise, customs or foreign exchange
• Has made an export or import in a manner prejudicial to the trade relations of India or to the interests of other persons engaged in imports or exports
• Has brought disrepute to the credit or the goods of the country

A reasonable opportunity of being heard must be given before suspension or cancellation.

Section 11 provides for penalty for contravention of the Act, the Rules, the Orders or the Foreign Trade Policy, on a scale linked to the value of the goods or services in respect of which the contravention was made.

The DGFT also maintains a Denied Entity List. Placement on it blocks the issue of authorisations, scrips and benefits, and is commonly triggered by failure to fulfil export obligations under Advance Authorisation or EPCG, non-submission of prescribed documents, or non-realisation of export proceeds.

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Continuing Obligations After the IEC

• Annual updation between April and June, without fail
• Modification of particulars within the prescribed period of any change
• Realisation and repatriation of export proceeds within the period prescribed under the foreign exchange regulations, with reconciliation through the EDPMS system. Import payments are similarly tracked through IDPMS
• Fulfilment of export obligations where authorisations have been availed, with timely submission of redemption or closure applications
• Record retention of shipping bills, bills of entry, invoices, packing lists, bills of lading or airway bills, certificates of origin and bank realisation documentation
• Product-specific compliance on every consignment, not merely at the time of first registration

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Common Mistakes

1. Missing the April to June updation, and discovering the deactivation when a consignment is already at the port
2. AD Code not registered at the specific port from which the shipment is being made, so the shipping bill cannot generate
3. Applying with a cancelled cheque that does not carry the pre-printed entity name
4. Address proof not in the entity’s name and no no objection certificate from the owner
5. IEC particulars not matching the GST registration, bank records or Customs data
6. Assuming an IEC alone permits import of a restricted item, when a separate DGFT authorisation is required
7. Misclassifying the HS code, and discovering the policy restriction after the goods have shipped
8. Exporting SCOMET-listed items, including technology and technical data, without authorisation
9. Not obtaining an RCMC, and losing eligibility for Foreign Trade Policy benefits
10. Not filing the Letter of Undertaking and unnecessarily paying IGST on exports, then having to claim refunds
11. Export proceeds not realised within the prescribed period, leading to EDPMS entries remaining open and Denied Entity List exposure
12. Export obligations under EPCG or Advance Authorisation not monitored, and closure applications not filed
13. Failing to update on a change in constitution, so the IEC continues to reflect an entity that no longer exists in that form
14. Attempting to obtain a second IEC for the same PAN

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How Delhi Legal Company Assists

• IEC application — eligibility check, document preparation, portal filing and follow-up through to grant
• Modification and updation — annual updation management, changes in constitution, address, branches, directors and bank details, and reactivation of deactivated IECs
• Trade set-up — AD Code registration with the bank and at each port, ICEGATE registration, GST registration and Letter of Undertaking filing
• RCMC — identifying the correct Export Promotion Council or Commodity Board and obtaining membership
• Classification and policy advice — ITC(HS) classification, policy status, and whether an authorisation is required before the order is placed
• Authorisations — Advance Authorisation, EPCG, DFIA, restricted item authorisations and SCOMET applications, with export obligation monitoring and redemption
• Product regulatory approvals — coordination of FSSAI, BIS, CDSCO, quarantine, Legal Metrology and environmental registrations for the specific product
• Enforcement and disputes — replies to DGFT show cause notices under Sections 8 and 11, representation in suspension and cancellation proceedings, removal from the Denied Entity List, and Customs adjudication and appeals

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Frequently Asked Questions (FAQs)

1. What is an Import Export Code?

A. It is the code granted by the Director General of Foreign Trade under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, without which no person may make any import or export. It is quoted on every bill of entry and shipping bill and is required for trade remittances through banks.

2. Who needs an IEC?

A. Anyone importing or exporting goods commercially, anyone who needs to clear consignments through Customs, and anyone remitting or receiving foreign exchange in connection with trade. It is not ordinarily mandatory for the export of services, but it becomes necessary where the service exporter wishes to claim benefits under the Foreign Trade Policy.

3. Is there a turnover threshold?

A. No. Unlike GST, there is no threshold. A single commercial import or export requires an IEC, regardless of value.

4. What is the IEC number?

A. Since the shift to a PAN-based system, the IEC is the same as the entity’s PAN. One PAN means one IEC, so a single entity cannot hold more than one code, although branches and additional addresses can be added to the same IEC.

5. How long does it take and what does it cost?

A. The application fee is ₹500, paid online. Where the application is complete, the certificate is commonly generated within one to two working days, and in many cases almost immediately. Deficiencies in documents are the usual cause of delay.

6. What documents are required?

A. PAN of the entity, proof of address of the business premises, proof of the firm’s bank account, details and identity documents of the proprietor, partners, directors, karta or trustees, and Aadhaar for e-signing or a digital signature certificate. Partnerships, LLPs, companies, HUFs, societies and trusts additionally furnish their constitution documents.

7. My electricity bill is in my landlord’s name. Is that acceptable?

A. Yes, provided you also furnish a no objection certificate from the owner of the premises in favour of your firm, uploaded along with the address proof. Address proof not in the applicant’s name and without an NOC is one of the most common reasons for a deficiency being raised.

8. What bank proof is accepted?

A. A cancelled cheque bearing the pre-printed name of the applicant entity, or a bank certificate in the prescribed format. A cheque without the pre-printed name, or in a personal name where the applicant is a firm or company, will not be accepted.

9. Does an IEC expire?

A. It has no expiry date, but it must be updated electronically every year between April and June, even where nothing has changed. An IEC that is not updated is deactivated, which stops customs filings and bank remittances until it is reactivated.

10. What happens if I miss the annual updation?

A. The IEC is deactivated. Shipping bills and bills of entry will not process, consignments are held at port with demurrage accruing, and banks will not process trade remittances. Reactivation follows successful updation and is usually quick, but it is without prejudice to any other action for the non-compliance and does not recover the delay costs.

11. My IEC has been deactivated. How do I reactivate it?

A. By completing the updation on the DGFT portal and confirming the particulars. Where other issues exist, such as pending export obligations or Denied Entity List entries, those must be addressed separately, and reactivation alone will not restore the ability to obtain authorisations and benefits.

12. What do I do if my address or directors change?

A. Apply for modification of the IEC on the DGFT portal within the prescribed period. An IEC that does not match your GST registration, bank records and Customs data will create problems precisely when a consignment is in transit and cannot wait.

13. Can I import anything once I have an IEC?

A. No. Every item is classified under the ITC(HS) schedules and carries a policy status — Free, Restricted, Prohibited, or importable only through a State Trading Enterprise. Restricted items require a separate DGFT authorisation, and prohibited items cannot be imported at all. The classification and policy status should be checked before the order is placed.

14. What is an AD Code and why do I need it?

A. An Authorised Dealer Code is issued by your bank and must be registered at each port or inland container depot from which you ship. Without registration at that specific location, the shipping bill will not generate, which is a frequent and entirely avoidable cause of first-shipment delays.

15. Do I need GST registration as well?

A. In most cases yes. Importers pay IGST on imports and need a GSTIN to take input tax credit, and exporters need registration to claim refunds. Registration is also compulsory under Section 24 of the CGST Act for persons making inter-State supplies.

16. How do I export without paying IGST?

A. By filing a Letter of Undertaking in Form GST RFD-11, which permits export of goods or services without payment of integrated tax. It must be filed for each financial year. The alternative is to export on payment of IGST and claim a refund, which locks up working capital.

17. What is an RCMC and do I need one?

A. A Registration-cum-Membership Certificate issued by the relevant Export Promotion Council or Commodity Board. It is required to claim most benefits under the Foreign Trade Policy, so an exporter intending to use RoDTEP, Advance Authorisation, EPCG or similar schemes will need one in addition to the IEC.

18. What export benefits does an IEC give access to?

A. The IEC is the gateway to the Foreign Trade Policy schemes — RoDTEP, duty drawback, Advance Authorisation, EPCG, DFIA, RoSCTL, deemed export benefits and Status Holder recognition. Most of these additionally require an RCMC, and all require the IEC to be active.

19. What is SCOMET?

A. The Special Chemicals, Organisms, Materials, Equipment and Technologies list, which controls the export of dual-use and sensitive items and requires a separate authorisation from the DGFT. It covers intangible transfers, including transmission of technical data and the provision of technical assistance, not only physical shipments.

20. Can my IEC be suspended or cancelled?

A. Yes. Section 8 of the FTDR Act permits suspension or cancellation where the holder has contravened any law relating to central excise, customs or foreign exchange, has traded in a manner prejudicial to India’s trade relations or to other traders, or has brought disrepute to the credit or goods of the country. A reasonable opportunity of being heard must be given.

21. What is the Denied Entity List?

A. A list maintained by the DGFT of entities against whom action has been taken. Placement on it blocks the issue of authorisations, scrips and benefits. It is commonly triggered by failure to fulfil export obligations under Advance Authorisation or EPCG, non-submission of prescribed documents, or non-realisation of export proceeds.

22. What penalties apply for contravention?

A. Section 11 of the FTDR Act provides for penalty for contravention of the Act, Rules, Orders or Foreign Trade Policy, on a scale linked to the value of the goods or services concerned. Contraventions of customs law in the same transaction attract separate consequences under the Customs Act, 1962.

23. Do I have to bring my export proceeds back within a time limit?

A. Yes. Export proceeds must be realised and repatriated within the period prescribed under the foreign exchange regulations, and the position is tracked through the EDPMS system. Entries left unreconciled become a compliance issue with both the bank and the DGFT, and can lead to Denied Entity List exposure.

24. I only export services. Do I need an IEC?

A. Not ordinarily, since the mandatory requirement is framed around import and export of goods. However you will need one to claim benefits under the Foreign Trade Policy, and in practice many banks and overseas counterparties ask for it, so most service exporters obtain one.

25. Can I surrender my IEC?

A. Yes. An application may be made to the DGFT to surrender the IEC, on which it is cancelled and the cancellation is communicated to Customs and the relevant authorities. Any pending export obligations, authorisations and unreconciled remittances should be closed first.

26. What does Delhi Legal Company charge for IEC work?

A. It depends on whether the engagement is a standalone IEC application, a full export set-up including AD Code, ICEGATE, LUT and RCMC, or representation in a suspension, cancellation or Denied Entity List matter. We quote in writing with the government fee shown separately, and we begin by checking the classification and policy status of what you actually intend to trade.