Trade Compliance-India FAQs

1. What is the Import Export Code and who needs one?

The Import Export Code is a 10-digit number issued by DGFT and is mandatory for any business or individual importing or exporting goods in India. It is required for customs clearance, banking repatriation of export proceeds, and access to export promotion schemes. Most businesses now use their PAN as their IEC under the current system. There is no need to renew the IEC once obtained.

2. What is the Foreign Trade Policy and what obligations does it create?

India’s Foreign Trade Policy is issued by DGFT for a five-year period and sets out the regulatory framework for imports and exports–covering prohibited and restricted items, export promotion schemes, export obligation requirements, and the status holder programme. Businesses operating under DGFT authorisations carry ongoing compliance obligations, including export performance requirements and documentation submission deadlines, that must be managed actively.

3. What is Advance Authorisation and how does it work?

Advance Authorisation is a DGFT licence allowing duty-free import of inputs physically incorporated into an export product. The authorisation specifies permissible inputs, quantities, and the export obligation–the value or quantity of finished goods that must be exported within the prescribed period. Failure to fulfil the export obligation results in duty recovery with interest and penalty.

4. What documentation is required for an international trade transaction?

Core export documentation includes the commercial invoice, packing list, shipping bill or airway bill, and a Certificate of Origin where required for FTA preferential treatment. Import documentation includes the bill of entry, commercial invoice, packing list, and any applicable licence or permit. Additional documents–phytosanitary certificates, BIS registration, drug licences–are required for regulated goods. Errors or inconsistencies are a primary trigger for customs examination and duty reassessment.

5. What happens during a customs post-clearance audit?

CBIC officers may audit an importer or exporter’s records post-clearance to verify classification, valuation, and origin claims across prior transactions. Audits can result in duty demands, interest, and penalties where shortfalls or errors are identified. Pre-audit compliance reviews and learned representation through the audit and adjudication processes can strengthen your position.

6. What are the consequences of non-compliance with DGFT and CBIC requirements?

DGFT non-compliance consequences include IEC suspension, denial of authorisations, and recovery of duty benefits. CBIC non-compliance consequences include duty demands with interest, penalties under the Customs Act 1962, seizure of goods, and prosecution. Commercial disruption–held shipments, denied clearances–typically exceeds the direct financial penalty for businesses operating at scale.