There's no doubt that India is one of the fastest-growing countries, especially in regard to export trade. According to the Ministry of Commerce and Industry, India’s export trade for April-February 2020-21 is USD 439 Billion (3,292,500 crores INR)1. As one of the top countries with export relationships with many countries, it is important to have an agency to build a bridge between Indian exporters and foriegn buyers. This is where the Directorate General of foreign Trade (DGFT) comes into the picture.
To make exporting easy for businesses, DGFT was formed as an agency of the Ministry of Commerce and Industry of the Government of India. Headquartered in New Delhi, it is responsible for formulating and implementing the Foreign Trade Policy of the country. As a government body, DGFT strives to maintain and develop exports and trade relationships with different countries, thus, assisting sellers in easy exports. It also issues export licenses and introduces trade incentives2.
Making it more accessible for sellers to start export business, DGFT has four zonal offices in New Delhi, Mumbai, Kolkata and Chennai headed by Zonal Joint Director General of Foreign Trade. There are 35 Regional Authorities all over the country.
Whether you’re an existing seller within India with a vision to start export business or you have a new idea, understanding the role of DGFT in export trade will form the foundation to expanding globally. Here are some of the functions of DGFT that we’ll explain before we tell you how to export from India:
How does DGFT regulate exports from India?
1. Foreign trade procedures
One of the key functions of DGFT is to plan and announce foreign trade procedures for exporters. Simple and user-friendly procedures are created to help exporters execute the foreign trade seamlessly in the country.
2. IEC to exporters and importers
Application for Importer-Exporter Code (IEC) has become hassle-free for aspiring exporters. Sellers can now apply for the 10-digit unique registration code issued on the DGFT website from the comfort of their homes anytime. The IEC is issued to assist in tracking and managing shipments of exporters and importers.
3. EXIM Policy/Foreign Trade Policy
To maintain trade relations and seamless export and imports from a country, a set of guidelines is mandatory. The EXIM policy or Foreign Trade Policy provides that set of instructions to supervise export businesses. Developed by the DGFT, these guidelines are announced by the Government of India for a period of 5 years under Section 5 of the Foreign Trade Act 1992.
4. ITC (Indian Trade Clarification) HS Codes
To facilitate the growth of foreign trade, India adopted the ITC HS codes (the international Harmonized System of Coding). These codes allow exporters to choose a product category and ensure commodity description are right. In India, the ITC HS Codes are divided into two schedules - Schedule 1 is for imports, while Schedule 2 is for exports. The DGFT has the power to add and make changes in description of commodities and adding new codes within India.
With growing international trade, the HS code was introduced globally to standardize and classify names and numbers of traded products. The HS is administrated by the World Customs Organization (WCO) and is updated every 5 years.
5. Export Licenses
DGFT issues licenses for several products that can be exported from India. Most of the top product categories including textiles, home accessories, handicrafts, leather goods and more can be easily exporter. For an exporter to sell items that are classified as ‘restricted
’ by the Government of India such as horses and a few petroleum oils, an export license from the DGFT is required. These licenses can be applied online on the DGFT website2
6. Trade Promotion
Another important function of DGFT is to launch export promotion schemes under Foreign Trade Policy. Schemes such as Advance Authorization Scheme, Duty Free Import Authorization Scheme, and Deemed Exports have been implemented by the body to assist sellers. It also undertakes implementing “Ease of Doing Business” for exporters by simplifying and digitizing export-import procedures to promote foreign trade. DGFT also issues notifications, public notices and circulars.
7. Quality Complaints and Trade Issues
To resolve concerns of exporters, DGFT addresses feedback, suggestions and any trade-related issue. It handles both complaints received from foreign buyers for Indian exporters and complaints of Indian importers against foreign suppliers through this platform. This way, it strives to maintain smooth export trade.
Exporting from India is no more a tough nut to crack. The export business game is not restricted to offline trade alone. With the growing internet penetration and increasing eshoppers across the world, a seller can become an exporter and manage his/her business from any part of India. Sounds like a dream come true?
With Amazon Global Selling, it indeed is! Launched in 2015, Amazon Global Selling
is an e-Commerce exports program that helps businesses from India start exporting and reach global markets. More than 70,000 Indian sellers from nook and corner of the country have successfully expanded their businesses to international marketplaces with Amazon. Here's why you should do it too: