Directorate General of Foreign Trade (DGFT)

DGFT stands for the Directorate General of Foreign Trade, which is the main entity under the Ministry of Commerce and Industry, Government of India, responsible for facilitating and promoting India's global trade in imports and exports. DGFT plays a significant role in shaping India's economic economy in alignment with the global market for successful perishable exports .

What is DGFT?

The Directorate General of Foreign Trade (DGFT) is the backbone of the Ministry of Commerce and Industry in India. Earlier, in 1991, it was known as the Chief Controller of Imports and Exports (CCI&E). Post-economic liberalization in 1991, the DGFT was established and replaced by CCI&E, changing its role from prohibiting and controlling exports and imports to facilitating, promoting, and regulating them. The DGFT’s aim was to enhance India's exports by executing laws, issuing export licenses, introducing trade incentives, and cultivating trade relations with other nations.

Why is the Directorate General of Foreign Trade crucial to conducting international trade?

The roles of the Directorate General of Foreign Trade are as follows:

Implement the EXIM Policy and Foreign Trade Policy

The Directorate General of Foreign Trade sets guidelines and instructions for importing and exporting perishable goods. As directed by the Government of India, under Section 5 of the Foreign Trade Act 1992, the EXIM Policy is applicable for a tenure of 5 years. The objective of the Foreign Trade Policy is to motivate exporters by increasing exports and maintaining a uniform payment structure. In the present, Foreign Trade Policy 2015–2020 is in effect and will continue until March 31, 2020.

Foreign Trade Policy

The Directorate General of Foreign Trade (DGFT) prepares and announces foreign trade for an exporter or importer to implement provisions of the Foreign Trade Act and Foreign Trade Policy. This process plays a vital role in conducting international trade through EDI-compatible guidelines that are user-friendly and efficient. Aligned with the current Foreign Trade Policy, the Handbook of Foreign Trade Procedure 2015–2020 is currently in effect.

IEC Code Registration for Exporters and Importers

The IEC stands for Import Export Code. The IEC consists of a 10-digit number that is issued by the Directorate General of Foreign Trade (DGFT) to execute any import or export business. The IEC code enables tracking the shipping process. As the IEC Code is now linked to the PAN (Permanent Account Number), only one IEC can be issued against each PAN. Through the DGFT's website, exporters or importers can apply for the IEC Code.

Maintain classifications of ITC HS codes

Based on the International Harmonized System of Coding, ITC HS Codes were validated in India to facilitate global trade. Indian customs employ 8-digit ITC HS Codes for trade activities that are categorized into two schedules: Schedule 1 for imports and Schedule 2 for exports. If any changes or additions are needed in the description of perishable commodities, the removal of disused codes, or the addition of new codes, all such tasks are handled by the DGFT (Directorate General of Foreign Trade).

Update and view eBRC

The banks issue the exporters an eBRC, or bank realization certificate, to claim benefits from several export promotion schemes under the Foreign Trade Policy. DGFT's eBRC module permits banks to directly send foreign exchange earnings from exports to exporters' accounts electronically to promote paperless trade.

The steps an exporter can follow to view their eBRC are:

You can visit the DGFT's website and choose "View and Print Your eBRC."
Enter your IEC code and your bank's IFSC code where your eBRC or forex earnings have been deposited.
After entering these details, click on “show details.”
eBRC lists uploaded by your bank will be displayed.
By clicking on "Print," you can download each eBRC.

Information about goods under Export Policy Schedule 2 that can or cannot be exported without a permit

According to the Export Policy of DGFT, mentioned in the Schedule 2, all goods except those mentioned in the export licensing schedule and its appendices can be freely exported. However, exports may be managed if they fall under categories like "Prohibition," "Restriction," or "STE" (Special Trade Entrepreneurship).

Issue Export Licenses for Restricted Items

Under the Export Policy, items classified as restricted can be exported with a license issued by DGFT. Exporters can apply for these licenses online through the DGFT's website.

Facilitate Trade

The Directorate General of Foreign Trade (DGFT) has launched various export promotion schemes, such as MEIS, SEIS, Advance Authorization, Duty-Free Import Authorization, EPCG , EOU, and Deemed Exports Under Foreign Trade Policy. The schemes have been implemented, and the process to apply for them has been explained in the Foreign Trade Procedure.

Additionally, DGFT motivates exporters and importers by simplifying export-import processes to boost international trade.

Application for MEIS

The DGFT helps exporters claim rewards under MEIS with the help of an online application system . You need to fill out the MEIS application online using a digital signature with the concerned RA in Form ANF 3A. It is a must to link the important shipping bills and e-BRC in the application. If you have made the exports through EDI ports, then there is no need to submit hard copies of these documents to the respective RA.

DEPB Rates

Under the Duty Entitlement Passbook Scheme (DEPB), DEPB Rates is an export incentive scheme that is managed by DGFT. In this scheme, the exporter receives a bonus on the customs duty paid on imported goods, such as raw commodities, which will be exported later. Exporters can apply for a credit amount, which is a fixed percentage of the FOB (free on board), regarding the valuation of the exported goods. The DEPB costs are decided and notified by the Directorate General of Foreign Trade (DGFT).

Identify quality complaints and trade issues

Under Chapter 8 of the Foreign Trade Policy, DGFT has established a significant mechanism to resolve complaints and trade issues related to foreign trade. This method helps to address complaints from foreign buyers against Indian exporters and complaints from Indian importers against foreign suppliers, aiming to enhance perishable exports. If you have any quality complaints or trade disputes, you can file them online through the DGFT website.

The Directorate General of Foreign Trade (DGFT) regulates the transit of goods to and from India as per bilateral treaties with other nations.

The Central Government appoints the Director General of DGFT, who is a senior member of the Indian Administrative Service (IAS) with 30 years of experience in public service. The Director General advises the Central Government to formulate a foreign trade policy, or EXIM policy, and supervise its implementation.

The primary responsibilities include:

Formulating Foreign Trade Policy.
Preparing the Handbook of Procedures for Foreign Trade Policy.
Import and export items are classified under the ITC (HS) classifications.

Conclusion

The Directorate General of Foreign Trade (DGFT) is a pivotal governmental agency in India specializing in fostering and promoting the country's foreign trade. With the rise of globalization, the increase in perishable exports has enhanced the Indian economy. Authorized licenses motivate the exporters to showcase their goods globally.