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Export Licences: A Guide to Obtaining and Using Them in India

sahil bajaj

Sahil Bajaj

Senior Specialist - Marketing @ Shiprocket

June 7, 2024

8 min read

Understanding export permits is crucial if you want to export goods from India. An export licence is a formal document issued by the government, allowing you to ship products abroad. What is an export licence, why you need one, and how to find out which commodities need an export licence are all covered in this article. To ensure your exports adhere to Indian rules, we’ll go over the essentials and assist you in getting through the process efficiently.

Export Licences

What is an Export Licence?

A licence to export products, which authorises exporting certain commodities from one nation to another, is necessary. An export licence records commodities as they leave the nation and guarantees regulatory compliance, unlike an import licence, which permits items to enter a country.

India uses the Harmonized System of Nomenclature (HSN)-based Indian Trade Clarification (ITC) system for classifying commodities. Goods classified as “restricted” under ITC-HS require an export permit. With a few exceptions, the Foreign Trade Policy (FTP) permits the unrestricted export of most products. Live animals, endangered species, sandalwood, and specific agricultural products are common goods requiring an export licence.

Exporters must follow these guidelines to avoid legal issues and trade restrictions. Even though most commodities might not require one, adhering to export control laws is essential for smooth international business operations.

The Importance of Export Licences

Expanding Your Market

With the help of an export licence, your company may access new markets and attract clients globally. Usually, this leads to increased revenue. For instance, when an Indian businessperson exports to the United States, they can make more money in dollars than in rupees, improving their living standard back home. 

No Need for Return Filing

Being exempt from return filing obligations is a big benefit of having an export permit. Once you get the licence you do not need to follow the standard processes to keep its validity. It is not necessary to file returns with the Directorate General of Foreign Trade (DGFT), even in cases of repeated export transactions.

Access to Government Incentives

Under its Foreign Trade Policy, the Indian government offers a range of incentives to assist exporters. The Remission of Duties or Taxes on Export Products (RoDTEP) scheme and the Service Exports from India Scheme (SEIS) are two programs you can use if you have an export permit. Additional benefits include Duty Drawbacks on customs, excise charges, and service taxes; a Duty Exemption and Remission Scheme; and a Duty-Free Import Authorization Scheme (DFIA).

No Annual Renewal Requirements

As long as your company operates, your export licence is still in effect. Updating or renewing annually is not necessary. You only need to turn in the licence and send a formal application to the DGFT to inform them that you want to stop using it.

Streamlined Application Process

The application process is a quick and simple way to get an export licence. Applying is available to both registered and unregistered firms, and you should receive your licence code within 10 working days as long as all the paperwork is submitted on time. If enrolled with the GST system, your GSTIN will be your transaction identification, negating the need for a separate Importer Exporter Code (IEC).

Essential Documents for Obtaining an Export Licence

Several important documents must be included with your export licence application. Here’s a simple list to get you started:

  • Exporter and importer profiles: Complete the application for an export licence of restricted items using the ANF-2N and ANF-1 forms.
  • Contract Agreement or Purchase Order: Provide a copy of the foreign buyer’s contract agreement or purchase order.
  • Evidence of Payment: Attest to the application fee’s online payment.
  • Copy of PAN Card: The Permanent Account Number (PAN) card copy should be attached.
  • Identity Proof: Please send a copy of your proof of identity.
  • Address Proof: Please send a duplicate of your proof of address.
  • Include a bank certificate or a voided check with your application for verification.
  • NOC for Apartments: A No Objection Certificate (NOC) from the owner should be included if your company is based out of a rental property.

Step-by-Step Guide: Applying for an Export Licence

You can successfully submit an application for an export licence in accordance with DGFT requirements by doing the following steps:

  1. Visit the online portal for DGFT: Go to the DGFT web portal first. Navigate to the ‘Apply for IEC‘ menu.
  2. Fill Out Online Form: After being sent to an online form, you will be asked for your name, email address, and mobile number. A one-time password (OTP) for verification will be sent to your phone. Click ‘Submit’ once you have entered the OTP.
  3. Give details about the company: Next, provide information about your company, LLP, or firm, such as the creation date, PAN, and account numbers. Click ‘Submit’ when finished.
  4. Pay Fees: Once the relevant paperwork has been completed, you must use an electronic fund transfer to pay the required costs.
  5. Obtain an E-com Reference Number: Your IEC code application form will provide an E-com reference number once the payments have been paid.
  6. Apply online at the DGFT Office: Take this application and send it to the DGFT office in charge of your region, together with the E-com reference number.
  7. DGFT verification: The information you supplied in your application will be checked by the DGFT. You will receive an IEC licence in the mail in 3–7 days once your verification is completed.

Different Types of Export Licences

For international trading, various permissions are needed in each country. The export licence categories that you may require are as follows:

  1. Licences for Individual Dual Use

If the end user is typically an individual, exporters are the only ones eligible for this licence. It simplifies exporters to ship goods to other countries because it covers a wide range of products. For example, Mr. X from the United States can use this licence to export items to Ms. Y in England.

  1. Open General Export Licence (OGEL)

To enable defence exports of specified components to certain nations, the Ministry of Defense established the Open General Export Licence (OGEL). The Department of Defence Production is in charge of processing and approving OGEL applications. Depending on the situation, there may be variations in the procedure for acquiring an OGEL.

  1. Brokering activities licences

Licences are needed for operations related to brokering. Brokering is the process by which people or organisations negotiate or set up deals that may involve the transfer of technology, software, or military supplies.

Determining Which Goods Require an Export Licence

Understanding whether things require an export licence before exporting them is critical. You won’t need one for most products – roughly 95% are licence-free. But you’ll need to get a licence for the remaining 5%. Check the commodity control list to see if your item is one of these. Hardware, software, and military components are among the items that usually require a licence. Examples of exceptions are gifts, packages, charitable contributions, and personal belongings.

Here are some specific products that need an export licence:

  • Frozen silver pomfrets
  • Cashew seeds and plants
  • Seeds of all forestry species
  • Rice bran
  • Certain chemicals
  • Vintage motorcycles, parts, and components
  • Artworks, antiques, and culturally significant goods

The department or agency in charge of your particular export item must be identified. If your products are classified as restricted, you must obtain the necessary export permission. All goods are exportable without restriction unless they are prohibited by the Foreign Trade Policy (FTP). Obtaining an export licence is necessary to import and export these restricted or forbidden commodities.

Exporting goods from India is easy if you have the export licence and any other documentation required by the destination country and your product category. You may even export through online platforms.

Streamlining E-commerce Exports through ShiprocketX

With complete cross-border solutions from ShiprocketX, expanding your company internationally has now become easier. They provide trustworthy B2B air deliveries from India to over 195 countries, with transparent procedures and no weight restrictions. By lowering investment risks, they let you effectively access a worldwide market.

With several delivery options, including economical 10- to 12-day options and expedited 4-day services, ShiprocketX expedites your shipping process. Their automated processes ensure on-time delivery, while real-time updates via email and WhatsApp keep clients informed. Their analytics dashboard offers data on shipping indicators and buyer behaviour to aid in making strategic decisions.

With an extensive courier network, customisable tracking pages, and shipment security coverage, ShiprocketX enhances customer loyalty and protects your goods. Our dedicated account managers provide expert support, and seamless integrations facilitate order management across global marketplaces. Ship internationally with ShiprocketX affordably and efficiently.

Conclusion

Understanding and obtaining an export licence in India is essential to participating in international trade. From determining if you need a licence to understanding the various factors that influence the process, and ensuring your application is correctly submitted, each step is vital for compliance with trade regulations.

Although the process might seem difficult at first, the benefits are clear. Having the right export licence helps avoid legal problems, improves your business’s reputation, and makes international transactions easier. By learning and following the process, you set your business up for success in the global market. You can turn this challenging task into a smooth and beneficial part of your business with careful preparation.

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