Know 5 Benefits of IEC Code for the International Trade
The Import Export Code for International Traders that is commonly referred to as the IEC registration, is the first & foremost legal requirement for all the business units who wish to step into the vast global markets for importing or exporting their goods, services or both from India.
The apex body designated for issuing the IEC is the Directorate General of Foreign Trade (DGFT). IEC is like a passport for the exporter to import or export his merchandise. Today, we will discuss the benefits of IEC for International Traders. But before that, we must know when is the IEC code required by the exporter.
Requirements of the Import Export Code
The Import Export Code in India (IEC) is the 10-digit unique business PAN Number used as an identification number of the exporter. This is mandatory for conducting Exports or Imports of the goods.
- No exporter is allowed to do any import or export of goods without an IEC Number, which is issued to the exporter by the DGFT.
- However, there’s an exception where there’s no mandatory requirement of an import-export code. In case the exporter is involved in import or export of certain specific services or any specific form of technology, the IEC number shall only be asked when the exporter of that service or technology has availed benefits of trade under the Foreign Trade Policy of the government.
- However, this relaxation of optional IEC is available to the exporter only if he is providing some specified services or technologies by DGFT.
Now, it’s important to know how one can apply for the unique Import Export Code registration.
How to apply for the Import Export Code registration?
One has to follow a systematic procedure to apply for the unique Import Export Code registration number.
In order to obtain the unique Import Export Code International registration, the exporter has to file an application for the grant of the IEC number from his the Registered or Head Office. The application has to be filed to the nearest Regional Authority of DGFT, in the ‘Aayaat Niryaat Form,- abbreviated as Form ANF-2A’.
This form must be accompanied by the complete documents required that are prescribed therein.
Note: The applicant must file from his Registered office in case his export unit is a company and Head office in case he is having any other business form.
Issuing department in exceptional cases
In case the exporter is having an Electronics Hardware Technology Park (EHTP), Software Technology Park (STP) Scheme or Bio-Technology Park (BTP) units, the body responsible for issuing the Import Export Code shall be the Regional Office of the DGFT.
- Here, the DGFT regional office must be that which has jurisdiction over the exact district where the Registered or Head Office of the export unit is situated.
- This DGFT regional office shall be responsible for the IEC modification.
We shall now learn about the key advantages of an IEC Code for the exporter.
Benefits of IEC Code for the exporter
Here are the 5 key benefits of Import Export Code for International Traders for an exporter:
IEC Number helps you “Unlock” the Global market
As we have discussed above, the IEC registration is like a mandatory passport required to do import and export business; it is factually true that the IEC serves as a key for the business entities to “unlock” the gates of global trade, and have their sway over the international market.
IEC registration gives a competitive edge over the local players
As a matter of fact, conducting international trade itself gives an exporter a competitive edge over his fellow market players scattered in his local market. This is only possible if the businessman possesses a unique IEC number. The repute of having overseas trade helps you fetch some additional business in the name of your brand and gradually expand your international presence as well.
The IEC Number comes with Lifetime validity!
One of the noteworthy aspects of the Import Export Code for International Traders is its lifetime validity. The Import Export Code is valid for a lifetime i.e., you don’t need to renew your IEC registration throughout the life of the business. Hence, a business entity may enjoy the benefits of global trade till the time infinite.
IEC Registration helps you avail the Export incentives
The Government of India in collaboration with the Export Promotion Council (EPC) aims for export promotion by rewarding various kind of incentives to the export businesses, such as:
- The duty drawbacks
- Merchandise Exports from India Scheme (MEIS)
- Service Exports from India Scheme (SEIS)
- Refund of IGST paid in India while doing the manufacturing of the goods to be exported.
Such export-oriented incentives shall only be granted based on the furnishing of the IEC code of the exporter.
IEC Registration is an automated process
The DGFT authorities have now automated and accelerated the IEC registration process with a view to enhancing the ease of doing business. The IEC registration is now a system generated process.
- Apart from that, the applicant can now take the hard copy (print-out) of his unique Import Export Code instantly.
- PAN Verification process has been smartly integrated with the portal of DGFT and the Central Board of Direct Taxes (CBDT).
- Hence, now there is no need of a separate PAN card copy for filing IEC application.
- Now, only 2 documents are required for the online import-export code registration, (w.e.f. 9th August 2018):
- Business Address proof.
- Cancelled cheque or a valid bank certificate.
From above we conclude that the IEC registration is the first & foremost requirement for the exporter to conduct export from India. There are endless business-oriented benefits of IEC for International Traders. Moreover, the process to obtain IEC registration is seamless and smooth.
However, it is important to note that only one IEC number can be issued against a single business PAN number. An exporter can possess only one IEC. If he is having more than one IEC allotted, he has to immediately surrender his second IEC to the DGFT Regional Office and file for IEC cancellation.
The type of business firm for which IEC has to be issued may be any one of these- Sole Proprietorship, Partnership Firm, an LLP, Public or Private Limited Company, NGO or Trust, HUF and Co-operative Society. After the introduction of the GST regime, IEC number issued to the exporter is the same as the Business PAN of the Export unit. However, this IEC is separately issued by the DGFT.
Read our article:All you need to know about Import Export Code Exemptions in India?