DGFT License

With the latest developments in today's global economy, any business house willing to export or import products needs to follow a range of rules and regulations. The main forerunners facilitating this in India are the Directorate General of Foreign Trade. The Directorate General of Foreign Trade (DGFT) is a government agency of the Indian government under the Ministry of Commerce and Industry that regulates and promotes foreign trade. It is concerned with formulating and putting in place policies that would enhance the competitiveness of trade and administering export-import licenses. DGFT also advises on trade-related regulations, incentives, subsidies, etc., and engages with the stakeholders toward the rationalization of trade procedures and increasing India's share in world trade. 

What Is A DGFT (Directorate General Of Foreign Trade) Licence?

DGFT License is an official document allowing permission to companies or any person to conduct international trade from the Government of India. The license shall be administered by the Directorate General of Foreign Trade and hence shall, therefore, be a consideration of paramount value to the company concerned with the import and export of goods. The DGFT comes under the Department of Commerce of the Ministry of Commerce and Industry and formulates policies and guidelines on foreign trade in regulation and promotion.

This license thus becomes crucial for any business entity to export and import products legally and claim several other trade benefits, including duty exemption and FTP incentives. The DGFT license requires the applicant to meet certain criteria and submit documents regarding proof of registration of his or her business and payment of all applicable taxes. It assists in smoothing extra trade activities and making a business compliant with national and international trade laws.

DGFT issues different types of licenses, which help business enterprises conduct international trade. These licenses and services provide support to business firms about cost reduction, technology upgradation, and risk management in trading across borders. Here is the overview of some of the most common licenses:

• Import-Export Code (IEC): This is the fundamental, perhaps the first, essential license for any business intending to import or export goods from India. This ten-digit number is issued by DGFT. A business cannot engage in international trade without this.
• Advance Authorization: This is the license allowing businesses to import materials that would be used to make products bound for export without the payment of any customs duties. It helps trim down production costs, hence making them competitive in the global market.
• Duty-Free Import Authorization (DFIA): Under this scheme, a company can import its goods without the payment of duty, only when those goods are to be used in making export products. It is predominantly for goods of any single export item.
• Export Promotion Capital Goods (EPCG): This license facilitates the imports of machinery and equipment by businesses with reduced or nil customs duty for the production of export goods. It encourages companies to spend on better technology.
• Special Advance Authorization: This is an upgraded version of Advance Authorization, as now, a wide range of materials can be imported duty-free.
• Export Credit Guarantee Corporation (ECGC): This is not any license, but insurance and financial guarantees are given to the exporter. This cover protects against the risks in international trade.

Who Is Eligible To Apply For A DGFT License?

• Citizens of India and Companies: Any Citizen of India or any entity registered as a Company, Partnership, or Proprietorship concerned in India can apply for the DGFT License. 
• Exporter/Importer: Any business concern/exporter dealing with the export of products or goods or involved in the import of goods must mandatorily obtain the DGFT license to avail benefits accruing under various Export Promotion Schemes and also for compliance purposes.
• Manufacturers: Those involved in the manufacturing of products intended for export. Since manufacturers are often required to have licenses to assist export transactions and are provided incentives, they qualify.
• Service Providers: Any person offering a service deemed export promotion-oriented or regulated by international trade can apply.
• Special Economic Zone Units: Any business in a special economic zone can apply, in consideration of their unique needs and advantages related to international trade.
• E-commerce Exporters: With the growth in e-commerce, any business associated with cross-border online sales can also apply for licenses from DGFT.

• Regulatory Compliance: It ensures that the business does not get any legal punishment in connection with the Indian export-import rules, thus removing the risk and making it smoother to conduct trading internationally.
• Benefits from Export: A DGFT license and the keys of an ocean of benefits under the Foreign Trade Policy—duty drawbacks, export subsidies, and tax exemptions, among others—enhance a business's bottom line.
• Market Access to Global Markets: Apart from making imports easier, DGFT licenses allow companies to trade freely across borders and expand their markets all over the world in quest of new opportunities to raise their export volume.
• Procedural Simplification: The license simplifies and streamlines the process of importing goods and materials in a set procedure, which in most cases helps avoid bureaucratic delays and ensures quicker clearances of shipments.
• Credit Facilities: The firms with the DGFT license are assured of getting trade credit and financial support from financial institutions and banks through their reputation for making investments in working capital and growth.
• Trade Data and Records: The license helps maintain proper records of trade data, which are significant for knowledge of trade performance, market analysis, and strategic business decisions.
• Increased Credibility: Having a DGFT license, a company stands as proof of the seriousness toward regulatory policies' prescribed standards and hence uplifts the credibility and reliability of the company in front of its international partners or customers.

ANF-1 Form

This is an Application Form for the Importer Exporter Code and it is very essential to those who are involved in overseas trade. It needs to be filled up correctly with the details of the applicant, his business, and the nature of export activities.

ANF-2N Form

This is the form for applying for an export license for restricted items. Fill in this form with the details of the restricted items that will be exported, specifying their HS codes, quantity, and other details.

Purchase Order

A copy of the purchase order from the buyer or the importer. This document serves to prove that there has been a transaction and proves to have a ready buyer for the products.

Online Payment Proof

Proof of remittance of the declared amount of the application fee online. This shall be in the form of a receipt or confirmation of payment made through DGFT's online portal or any other mode designated by them.

PAN Card

Permanent Account Number card of applicant or business

This is required for identification and verification purposes. It should be a valid PAN issued by the Income Tax Department of India.

Identity and Address Proof

Documents verifying the identity and address of the applicant. This would include any one or more of the combination of documents as mentioned below:

• Any Passport
• Voter ID
• Aadhaar Card
• Utility bills, which are not more than two months old, relating to the place where the Business is situated; can be Electricity Bills, Water Bills, etc.
• Rent agreement or property documents

Cancelled Cheque

A canceled cheque from the applicant's bank account. This is for verifying the bank account details in which any refunds or transactions relating to the license may take place. The cheque must be stamped "CANCELLED" and contain account details with the bank's name.

Additional Documents

• Certificate of Incorporation: Proof of legal entity of the business.
• IEC Number: Importer Exporter Code issued by DGFT.
• Bank Statement: Recent bank statement to verify financial stability.
• Registration Certificate: If applicable, from other regulatory authorities (e.g., Export Promotion Councils).

• Register to DGFT Online Portal: The very initiation while applying for a DGFT license is to get registered on the online-based portal of DGFT. One can log into DGFT's official website to do so. At this step, base registration by creating a user account through email and password is required, after which it will ask for the basic details of the company like its name, address, and contact information. Once registered, will be provided with a user ID and password, which shall be used to log in to the portal at all times for any interaction.
• Select the Applicable Category of License: After logging into the DGFT portal, one has to select the category of license relevant to their business. DGFT issues various license types, like an Importer Exporter Code license that every importer/exporter must compulsorily have for the import and export of goods in the country. Depending on the nature of the business and requirements, may also have to apply for certain licenses or authorizations like an Export Promotion Council certificate or a Special Economic Zone registration. Ensuring the proper category is also very important so that compliance can be made properly with regulations and get necessary permissions for business operations.
• Application Form Filling: Once the relevant category of license has been chosen, one fills up the application form available at the DGFT portal. It requires detailed and correct information about one's business—its legal name, address, nature of business, and directors/partners' details. Ensure that all information provided is accurate and current to avoid any delay or rejection of applications. This form also inquires about the type of license applied for and any other optional information that might relate to an application.
• Scan and Upload All the Required Documents: Online applications will be accompanied by the scanning, uploading, and submitting of various documents as asked by the DGFT. Normally it includes a copy of the PAN card of the company, certificate of incorporation, address proof, and identity proof of its directors or partners. Other additional documents might be required depending on the type of license one is applying for. The documents must all be clear, valid, and properly scanned to make the scrutiny process smooth.
• DGFT Online Application Procedure: The procedure is also effective and user-friendly. Immediately upon submission of the application with all documents, it shall be acknowledged by receipt. A reference number could also be provided on the portal for tracking the status of the application. The processing time of the license would depend on the type of license and the completeness of the documents submitted. One shall be kept updated by the DGFT portal in case any additional requirements or further information are needed.

Corpseed provides DGFT licenses because of the expert guidance, streamlined processes, and deep understanding of compliance requirements. We ensure efficient application handling, timely updates, and tailored support, making your licensing journey smooth and hassle-free.