Exemptions & Importance of the Import and Export Code (IEC) in India

Introduction

The IEC is a basic necessity for any person involved in import or exporting activities in India. It is issued under the Ministry of Commerce and Industry by the Director General of Foreign Trade. The IEC is also a ten-digit code, mandatory for all cross-border trade operations, ensuring hassle-free customs clearance and availing of trade benefits. However, there are categories that do not require IEC registration. In this blow we will discuss IEC exemptions in detail.

Importance of IEC

The IEC number is an essential identifier for businesses and individuals involved in trading activities. The issue of IEC is lifetime in tenure and linked with the PAN of the applicant. With the IEC, entities become eligible to undertake business on the global level, and such candidates gain incentives for trading and other legal work concerning imports and exports.

Who is Exempt from Having an IEC?

Most importers and exporters need an IEC. However, India has some exceptions to make things easier for certain people and organisations. Here are the main groups that do not need an IEC to trade across borders:

• Government Ministries and Departments
• Central and state government bodies
• Buying and selling products for personal needs
• Trade with Nepal and Myanmar
• Exemptions under the 1993 Foreign Trade Order

Permanent IEC Numbers for Exempt Entities

In order to accommodate exempt, yet often active in international trade, entities, the DGFT has issued what are colloquially known as “permanent IEC numbers.” Permanent numbers allow exempt organisations to perform transactions without a standard IEC.

Examples include:

• Ministries of the Government and UN Officials 
• Charities and NGOs
• Border Traders of Nepal and Myanmar

Why Obtain an IEC?

For those businesses and individuals who do not qualify for an exemption, an IEC provides a wide range of benefits. Let’s see why:

• Global Access: An IEC enables companies to tap into foreign markets. Therefore, it becomes relatively easier for a firm to tap into the international market and acquire potential new customers.

• Simple online registration process: The online registration process that is available at IEC is quite simple, and the applicant would need only the most basic documents.

• Trade Incentives and Benefits: An IEC carries various export promotion benefits, subsidies, and tax exemptions offered by customs and trade councils.

• Lifetime Validity: Once an IEC is granted, it remains valid for the lifetime of a business. However IEC is required to be updated on a yearly basis.

Conclusion

Having an IEC is indispensable for those who wish to expand their horizons in the Indian international trading arena.The knowledge of IEC exemptions and the benefits emanating from its registration will make businesses and individuals informed as they venture into India’s import-export world.