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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.

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.

What are the documents required to obtain DGFT or export license?

Some of the documents required are:
• ANF-1 Form and the application form for export license of restricted items mentioned in ANF-2N form
• Copy of the purchase order from the purchaser
• Proof of the online payment of application fee
• PAN
• Identify and address proof
• Cancelled cheque

How to obtain DGFT or export license?

1. Visit the website of DGFT.
2. On the home page, click on services and choose 'Online ECOM application' from the drop-down menu.
3. Select 'Restricted Item Import License/Restricted Export Item'.
4. Fill the application and send a PDF copy of the same to export-dgft@nic.in.

Visit Export Compliance Dashboard to meet your documentation requirements

What are the products that require DGFT license?

Some of the products that require this export license are:

• Handmade woollen carpets and other floor coverings
• Handicraft items
• Dairy produce, honey, edible products of animal origin
• Edible fruits and nuts and peels of fruits
• Cereals
• Products of the milling industry like malt, starch, wheat gluten
• Oil seeds and fruits, straw and fodder
• Gums, resins, vegetable saps and extracts
• Prepared edible fats and vegetable and animal fats
• Sugar and sugar confectionaries
• Residues and wastes from the food industry and prepared animal fodder
• Salt, sulphur, earth and stones, plastering materials, lime, and cement
• Organic chemicals
• Pharmaceutical products
• Fertilizers
• Tanning and dying agents and their derivatives
• Essential oils, perfumes, cosmetics and toiletry preparations
• Wood, wood pulp, and wooden products
• Cotton, jute, and their derivates

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.

Easy e-commerce exports with Amazon Global Selling

As an e-commerce exports program, Amazon Global Selling enables Indian sellers and MSMEs to take their products from India to international marketplaces across 200+ countries and territories. From simple registration to attractive listing and hassle-free shipping, Amazon Global Selling offers international tools and solutions, enabling sellers to reach over 300 million customers.

Guide to export with Amazon

More blogs on DGFT

1. What is the role of DGFT in India’s export trade?

2. Directorate General of Foreign Trade (DGFT): Everything you need to know

3. How to download IEC certificate online from the DGFT website?

4. How to link Importer Exporter Code (IEC) with DGFT?

5. What is Digital Signature Certificate (DSC) and how to register DSC on DGFT?

6. What is an e-BRC and why do exporters need it?

7. How to modify IEC on DGFT: Step-by-step procedure

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.

Which items are restricted from exporting under DGFT?

Some of the categories of products that are restricted from exporting under DGFT are livestock, bees and other insects, pure-line stock, meat of bovine animals, cactus, vegetables like potatoes, beans, peas, chilled seed, legumes, marble and sandstones, electrical energy, thorium and uranium derivatives, industrial explosives, safety matches, sandalwood, newsprint, bank, bonds, and cheque paper, currency note paper, two wheelers, buses, lorries, and other earth moving equipment, passenger automobiles, worn clothing, woollen and cotton rags, warships, cartridges, drugs and medicines, etc. The complete list of the products can be found on the DGFT website⁷.

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
6. https://content.dgft.gov.in/Website/dgftprod/64c14faa-53ac-4387-bcf3-d355fee40bc8/Schedule%202%20-%20Export%20Policy%20New.pdf
7. https://content.dgft.gov.in/Website/Restricted.pdf

What is an Importer of Record (IOR)?

How to download IEC certificate online from the DGFT website?