• An Export Licence May Be Mandatory for Your Business. Here's Why

    Export Licence

    The Indian Trade Clarification (ITC), which is based on the Harmonised System (HS) of coding, classifies goods in India for the purpose of import and export. The eight-digit code used by Indian customs is also based on ITC-HS. For the export of any goods classified as 'restricted goods' in this ITC-HS list, an Export Licence is required.

    The Foreign Trade Policy (FTP) considers all goods as freely exportable except those that are restricted or prohibited. In the case of prohibited goods, an Export Licence is not given, while restricted goods can be exported by businesses granted an Export Licence. Some items that typically need an Export Licence are live birds and animals, endangered species of plants and animals, sandalwood, sand and soil, silkworm and silk cocoons, etc.

    Schedule II of the ITC-HS code provides the rules and regulations related to export policies. The 97 chapters of the Export Policy Schedule II of the ITC-HS code provide detailed guidelines related to the export of various products. The Directorate General of Foreign Trade (DGFT) is the governing body that brings about amendments to these guidelines.

    These chapters indicate the Export Policy classification of the products under each of them. For example, chapter 50 of the ITC-HS under Schedule II of the Export Policy is ‘Silk’. It includes items fitting the description – pure races of silkworms, silkworm seeds, and silkworm cocoons. The Export Policy for silk is ‘restricted’ and thus export of silk from India is permitted only under an Export Licence.

    How to apply for an Export Licence

    The DGFT has defined the process of application and documentation for an Export Licence. Any exporter looking to export a restricted item must follow this procedure while applying to the DGFT to be granted export authorization of restricted items.

    The online application process can be made on the DGFT website. On the homepage, the applicant will have to go the ‘Services’ section, where under the ‘Online ECOM Application’ section, they will have to select ‘Restricted Item Import License/Restricted Export Item’.

    The application has to be filed online, and a copy of the application has to be mailed to export-dgft@nic.in (in PDF format). Along with this, the following must also be attached in the mail:

    • ‘Profile of Exporter and Importer’ in ANF-1 form and application form for the Export Licence of restricted items in ANF-2N form.
    • Copy of purchase order/import order from the foreign purchaser, or a contract agreement between the two.
    • Proof of online payment of the application fee.

    All these documents must be duly stamped and signed by the exporter/authorized signatory.

    Once the DGFT receives the application, the standard procedure followed at their end is as follows:

    • The mail, which includes the application and the supporting documents, is processed by the export cell.
    • A pre-screening of the application is made, following which it is forwarded to the concerned ministry/department within three working days if everything checks out fine.
    • If any anomaly is noted in the application, a deficiency letter is sent to the exporter within three working days.
    • The applicant exporter is expected to respond within three days of receipt of the deficiency letter and provide the necessary information/documents.
    • On the other hand, if forwarded to the ministry/department, the concerned officials are expected to provide their NOC/comments/views on the application at the earliest and within 30 days of receipt of the application from the DGFT.
    • Once the DGFT receives the response from the concerned ministry/department, all such applications awaiting approval are presented to the EXIM facilitation committee (EFC), which meets once a month.
    • Upon approval from the EFC, the export cell at the DGFT headquarters prepares an authorization letter and sends it to the exporter. Another copy is shared with the jurisdictional regional authority (RA) of the DGFT instructing them to issue the Export Licence.
    • Once the exporter receives the permission, they have to approach the RA with a copy of the permission letter, application, and the supporting documents.
    • The RA is supposed to issue the Export Licence to the exporter within three working days. The entire process should thus ideally be completed within 30-45 days.

    Parting thoughts

    The administrative ministries and departments can ask for specific documents while processing the application and before giving their NOC/comment/recommendation. These documents vary from item to item and have to be submitted along with the application.

    The Export Licence or permission/certificate/authorization, as it may also be called, is generally valid for a specific period defined by the RA. The licence may also be subject to terms and conditions such as the quantity and description of the items, value addition, minimum export/import price, and export obligation. The export will, therefore, be carried out in accordance with the provisions of the Export Licence issued against it or any DGFT public notice relevant to it.

    Vanita D'souza
    Vanita D'souza
    Communications Manager at Drip Capital
    5 min read