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What is DGFT license: Meaning and its importance in exports

To export goods that are not under ‘freely movable’ by DGFT, export businesses need to obtain a license from DGFT. Here’s a guide to understanding what DGFT license is and the procedure to get it.
DGFT license
Did you know that India surpassed the target of $400 billion in 2021-22 with total merchandise exports at $418 billion1? With growing exports, demand for Indian products and opportunities for exporters have also grown. However, it is important to continue to match the international quality standard when exporting from India.

The Directorate General of Foreign Trade (DGFT) is the main body under the Ministry of Commerce and Industry, Government of India, which plays a major role in assisting the government on policy measures. One of its key responsibilities is to provide export certificates and licenses to exporters. It is responsible for the regulation, restriction and prohibition of export and import. Certain categories of goods have a few restrictions or quota conditions. Such restrictions may require a license or registration prior to exporting from India. Here, DGFT acts as the main body and issues the license to exporters to facilitate the export process.

What is a DGFT license?

Most of the goods exported from India are freely movable. However, under the EXIM Policy 2007 of India, a few restrictions have been imposed on the export of certain categories of products. In such cases, exporters intending to sell these goods need to obtain an export license from DGFT, which is known as the DGFT license. For capital goods, the license is valid for a period of 24 months and for material components, the duration is 18 months. The validity of the license can be renewed2.

What is the importance of a DGFT license?

There are various reasons why a DGFT license is required:
• Exporters have to present this license to the customs department for shipment clearance during export.
• Respective banks would need it to facilitate transactions involved in the import-export process.
• When an exporter happens to receive money in foreign currency, this license is necessary to transfer money into their account directly.

Schemes under DGFT

Export Promotion Schemes under Foreign Trade Policy provide promotional measures to boost India’s exports to offset infrastructural inefficiencies and associated costs involved in providing exporters a level playing field. Some of the schemes launched by DGFT are:

SEIS

Under the SEIS scheme, service exporters for eligible service categories are given benefits in transferable duty credit scripts as a percentage of Net Foreign Exchange (NFE) earned on the export of eligible services in a financial year. These duty credit scripts can be used for payment of basic customs duty and other taxes.

RoSCTL

This is a scheme that has been introduced to provide rebates for all embedded state and central taxes involved in exports of apparel and garments. This scheme gives duty credit transferable and sellable scripts on the FOB (Free on Board) value of export.
While exporting from India requires a set of documents and licenses, the government of India has been working towards making exports simpler with more paperless and online transactions. In line with this vision, the e-commerce exports program Amazon Global Selling enables Indian exporters to sell internationally without having to set up a physical store or warehouse in the destination country.

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Frequently Asked Questions

What is the purpose of DGFT?
Headquartered in New Delhi, DGFT 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 incentives.
What is DGFT advance authorisation licence?
The Advance Authorisation Scheme under DGFT allows duty free import of inputs, which are physically incorporated in an export product.
What is RoSCTL license?
Rebate of State and Central Taxes and Levies (RoSCTL) license provides duly credit transferable along with sellable scripts, which are based on the FOB (Free on Board) value of export.
How do I register on DGFT portal?
On the DGFT website, you can click on login and select to register as an importer or an exporter.
Published on July 11, 2022.

Sources:
1. https://pib.gov.in/PressReleasePage.aspx?PRID=1812990
2. https://www.dgft.gov.in/CP/
3. http://dgftcom.nic.in/ecom_help.html
4. http://dgftcom.nic.in/eComapplications.html
5. http://www.dgft.org/export_import_exim_policy_india.html
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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