DGFT License

The Directorate General of Foreign Trade (DGFT) works under Ministry of Commerce and Industry. It controls and manage India’s foreign trade, by making and proposing rules, guidelines, and authorizations, so that the manufacturing & trade works legally and stay compliant. Earlier, DGFT was known as the Chief Controller of Imports and Exports.

The main responsibilities of DGFT include:

• Managing and updating India’s import-export policy.
• Issuing DGFT certificates and authorizations for restricted trade.
• Maintaining DGFT import export data for government monitoring and trade & manufacturing analytics.
• Monitoring restricted, prohibited, and free items under the ITC(HS) classification.
• Facilitating ad code registration on DGFT for new traders and manufacturers.

Through proper DGFT registration, businesses can legally work in international trade and ensure compliance with all import and export regulations.

What Is A DGFT Licence?

DGFT License is an official document allowing permission to companies or any person to conduct international trade and manufacturing goods from the Government of India. This license will be administered by the Directorate General of Foreign Trade (DGFT) and will therefore be a highly valuable consideration for a company dealing with the import and export of goods. 

Some products can be transported across borders very freely but some products require a special permit because there are not just one but several reasons behind them and these reasons are not just for safety but also environmental, economic and strategic reasons. 

Getting a DGFT license for restricted goods means that the import and export of the products and goods is completely compliant with the government rules and legal way. Any individual or business can import or export the restricted product but they must have a DGFT license for import or DGFT license for export.

The license helps businesses operate without the risk of penalties or legal issues while supporting national security and regulatory oversight. Applications for a DGFT License can be submitted online through the official portal, which simplifies the process and reduces delays. By maintaining proper records and approvals, companies can conduct international trade and manufacturing goods efficiently and responsibly.

India classifies all goods into different categories. Each category determines whether a DGFT license is needed.

Free Items

• These goods can be imported or exported freely and no DGFT license is required.
• Examples include clothing, toys, stationery, and general household items.

Restricted Items

• These items require DGFT license for restricted items before manufacturing or trading.
• Examples include chemicals, medical equipment, electronic devices, machinery, and tyres.

Prohibited Items

• These goods are not allowed for import or export under any circumstances.
• Examples include narcotic drugs, banned chemicals, and items restricted for national security reasons.

Note: Some items may require DGFT license along with approvals from BIS, Drug Controller, or MoEFCC.

When Do You Need a DGFT License for Restricted Import and Export?

A DGFT license is mandatory in the following cases:

• Import of Restricted Goods: Goods like machinery, medical devices, chemicals, electronics, and tyres often fall under restricted categories. A DGFT license for import ensures smooth customs clearance and legal trade. Having this license means that the business or individual follow government rules.
• Export of Restricted Goods: Certain agricultural products, defense equipment, and hazardous items cannot be exported without DGFT restricted items export license. 
• Re-import or Re-export: Goods that are coming back to India or going to the country they came from also need a DGFT license for legal handlings.

• 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.

Before applying for a DGFT License India, the following documents must be prepared:

• Import Export Code (IEC)
• Detailed application form
• Justification letter for import/export
• Purchase order or contract
• Technical specifications/drawings of goods
• End-use certificate
• NOC from concerned ministries (if applicable)

Some goods or products may require additional approvals for import or export. Having these documents in advance will make sure faster processing of DGFT License online applications.

Process of applying for DGFT license for restricted import and export in India includes:

• Register on Portal

The first step is to create an account on the portal. Businesses must complete DGFT registration using their IEC. Without IEC, it is not possible to apply for DGFT License for import or DGFT License for export.

• Identify HS Code of Product

The HS Code under the ITC (HS) classification determines the category of goods: free, restricted, or prohibited. Checking the HS Code prevents delays at customs and ensures compliance.

• Prepare Required Documents

Collect all necessary documents including DGFT certificate, justification letter, purchase order, end-use certificate, and technical specifications. Some products may also need approvals from BIS, Drug Controller, or MoEFCC.

• Apply Online

Once documents are ready, log into the portal and complete the online application. Select the correct form for DGFT license for import or DGFT restricted items export license.

• Pay Government Fees

Submit the DGFT registration fees online. The DGFT license cost depends on the nature of the goods and type of application.

• Application Review

DGFT officers and other ministries review the application. Missing or incorrect information may delay approval.

• Grant of License

Once approved, the license is issued with specific conditions and a validity period. This license legally permits the import or export of restricted goods under DGFT License India.

The government fee for a DGFT License depends on the value of goods, category of items, and the turnover of the company. The fee for obtaining a DGFT License for import or DGFT License for export ranges from ₹500 to ₹1,00,000. Applicants must pay the DGFT registration fees online through the DGFT portal while submitting their application. Higher turnover or regulated goods may require fees at the upper end of this range to complete the licensing process.

A DGFT license is valid for a specific period (generally it is 1 year) from the issuing date.

• The license covers only the approved quantity and value of goods.
• Trade and manufacturing beyond these conditions is not allowed.
• Renewal can be requested through DGFT iec renewal or a fresh application.

Maintaining a valid license ensures smooth customs clearance and uninterrupted trade and manufacturing operations.

Non-Compliance of DGFT License

Non-compliance or failure to follow the rules of DGFT license in India can lead to severe actions:

• Penalties and Fines: Heavy amount as fine or penalty will be applied if seen violating any rule or regulation.
• Termination or Cancellation of the License: A DGFT license can be cancelled or revoked.
• Blacklisting of IEC: IEC code of the individual or business will be banned or blocked for future trading.
• Confiscation of Products or goods: Custom authorities can stop the shipment and seize the products at the port.

Corpseed is one of the top consulting firms, offering comprehensive assistance in the import and export business, guiding businesses through the necessary processes. We help businesses obtain a DGFT License smoothly, easily and efficiently. Our team ensures that all actions and procedure for DGFT License registration, whether for import or export, are completed immediately. We provide proper and detailed guidance on filling forms, submitting documents, and meeting all regulatory requirements set by the Directorate General of Foreign Trade (DGFT). Our services include:

• Document Assistance: We review and prepare all documents needed for DGFT License approval, ensuring accuracy and compliance.
• Application Support: We guide businesses in filling the DGFT online application correctly to avoid errors or rejections.
• Regulatory Compliance: We ensure that all trade and manufacturing activities comply with DGFT rules, export-import policies, and government regulations.
• License Renewal & Updates: We help in renewing the DGFT License on time and keeping businesses updated about policy changes.
• Advisory Services: We provide expert advice on restricted and prohibited goods, licensing categories, and trade regulations to help businesses plan their import and export strategies.
• End-to-End Services: We manage the complete DGFT License process from start to finish, allowing businesses to focus on their core trade and manufacturing operations without worrying about regulatory hurdles.