IEC (Import Export Code) for Foreign-Owned Companies: Registration & Compliance

What Is the IEC and Why Foreign Companies in India Need It

An Import Export Code (IEC) is a 10-digit identification number issued by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry. It is the mandatory license for any business entity in India — whether Indian-owned or foreign-owned — to engage in import or export of goods or services.

For foreign-owned companies operating in India, the IEC is required in the following scenarios:

• Foreign subsidiaries (wholly-owned or joint venture) importing raw materials, components, capital goods, or technology for Indian operations
• Foreign subsidiaries exporting finished goods, IT services, or BPO services from India
• Branch offices of foreign companies engaged in import/export activities (with RBI approval)
• GCCs importing IT hardware, equipment, or software licenses for captive operations
• Manufacturing units with FDI importing machinery under EPCG or advance authorization schemes

Without a valid IEC, Indian Customs will not clear any import consignment, and the company cannot claim export incentives, duty drawback, or benefits under DGFT's Foreign Trade Policy. The IEC is also required for opening Letters of Credit (LC) and making cross-border trade-related payments through the banking channel.

Eligibility and Entity-Specific Requirements

The IEC can be obtained by any business entity registered in India. However, foreign-owned companies face additional documentation and approval requirements depending on their legal structure.

Foreign Subsidiary (Private Limited Company)

A wholly-owned subsidiary or joint venture company registered under the Companies Act, 2013 can apply for an IEC like any domestic company, provided:

• The company is validly incorporated with a Certificate of Incorporation
• FC-GPR has been filed with the RBI for the foreign investment received
• The company has a valid PAN and an active bank account in India
• A Digital Signature Certificate (DSC) of an authorized signatory is available (required for companies and LLPs; no longer required for individuals/sole proprietors as of March 2025)

Branch Office of a Foreign Company

A branch office of a foreign company can obtain an IEC, but with a critical prerequisite: the branch office must have been established with RBI approval under FEMA Notification No. FEMA 22/2000-RB, and the RBI approval letter must specifically permit import/export activities. If the original RBI approval limited the branch to activities such as liaison, representation, or research, the branch cannot obtain an IEC without first amending its RBI approval to include trading/import-export activities.

Liaison Office

A liaison office cannot obtain an IEC. By definition, liaison offices are restricted to communication and liaison activities and cannot engage in any commercial or trading activity in India, including import or export. If import/export capability is needed, the foreign company must establish either a branch office (with RBI approval for trading) or incorporate a subsidiary.

LLP with Foreign Investment

A Limited Liability Partnership (LLP) with foreign investment can obtain an IEC, provided the foreign investment complies with FEMA regulations (FDI in LLPs is permitted only under the automatic route in sectors where 100% FDI is allowed).

Step-by-Step IEC Registration Process on the DGFT Portal

As of 2025, the IEC registration process is 100% digital, completed entirely on the DGFT portal (www.dgft.gov.in). No physical documents need to be submitted.

Step 1: Create a DGFT Portal Account

Visit dgft.gov.in and click "Register." Enter the company's PAN, email address, and mobile number. Set a password and verify via OTP sent to the registered email and mobile number. Use the credentials to log in and access the IEC services dashboard.

Step 2: Navigate to IEC Application

From the dashboard, select "Services" > "IEC" > "Apply for IEC." The system will pre-populate certain fields from the PAN database.

Step 3: Fill the Application Form (ANF-2A)

Complete the IEC application form with the following details:

• Entity details: Company name, type (private limited, branch office, LLP), CIN/LLPIN, date of incorporation
• Address: Registered office address with supporting proof
• Bank details: Active current account in the company's name (bank certificate or cancelled cheque required)
• Authorized signatory: Name, designation, PAN, and Aadhaar of the director/partner signing the application
• Nature of business: Import, export, or both
• Sectors/products: HS code categories for intended import/export items

Step 4: Upload Documents

Required documents for foreign-owned companies:

Step 5: Pay the Government Fee

The IEC registration fee is a flat INR 500, payable online through the DGFT portal via net banking, debit card, or credit card. No additional government fees apply.

Step 6: Sign and Submit

The application must be digitally signed using the authorized signatory's DSC (for companies and LLPs). The system verifies the DSC against the MCA database to confirm the signatory is an active director or designated partner.

Step 7: Receive the IEC Certificate

Upon successful verification, the IEC is typically issued within 1-2 working days. The IEC certificate is emailed to the registered email address and is also available for download from the DGFT portal dashboard.

IEC for Specific Trade Activities

The scope of the IEC varies depending on the type of trade activity the foreign-owned company intends to undertake.

Importing Capital Goods and Machinery

Foreign-owned manufacturing units importing plant and machinery can use the IEC to claim benefits under:

• EPCG Scheme: Import capital goods at zero customs duty against an export obligation of 6x the duty saved, to be fulfilled within 6 years
• Advance Authorization: Duty-free import of inputs for export production
• Project Imports: Concessional 7.5% customs duty on capital goods imported for initial setup of industrial plants

Exporting IT and ITeS Services

GCCs and IT subsidiaries exporting services need the IEC to:

• File Shipping Bills for services export (through the ICEGATE portal)
• Claim zero-rated GST treatment on export of services
• Apply for duty-free import of hardware under the Software Technology Park (STP) scheme
• File for duty drawback on re-exported goods

Imports Under Special Economic Zone (SEZ) Units

If the foreign-owned company operates from an SEZ, separate IEC requirements may apply. SEZ units can import goods duty-free for use within the SEZ, but the IEC remains mandatory for customs clearance documentation.

Annual IEC Update: A Mandatory Compliance Requirement

Since 2022, DGFT has mandated that every IEC holder must update their IEC details annually on the DGFT portal. This is not a renewal — the IEC has lifetime validity — but a mandatory annual confirmation of company details.

Annual Update Details

• Update window: April 1 to June 30 each year
• What to update: Company name, address, directors/partners, bank account details, authorized signatories, nature of business
• Process: Log in to DGFT portal > Services > IEC > "Update IEC" > Confirm or modify details > Submit
• Fee: No fee for the annual update
• Consequence of non-update: The IEC is deactivated after June 30 if not updated. A deactivated IEC cannot be used for customs clearance until reactivated.

For foreign-owned companies, the annual update also provides an opportunity to reflect any changes in the foreign shareholding pattern, addition or removal of foreign directors, or changes in the nature of import/export activities.

IEC Reactivation After Deactivation

If the IEC is deactivated due to non-update, it can be reactivated by completing the annual update process after June 30. However, during the deactivation period, the company cannot import or export, and any pending customs clearances will be held up — potentially causing significant operational disruption and demurrage charges at ports.

FEMA Considerations for IEC-Holding Foreign Companies

Foreign-owned companies with IECs must navigate additional FEMA compliance requirements that domestic importers/exporters do not face.

Foreign Exchange for Import Payments

All import payments must be routed through the company's Authorized Dealer (AD) bank in compliance with FEMA's Current Account Transaction Rules. Key requirements:

• Import payment must be made within 6 months from the date of shipment (extendable by the AD bank up to 12 months)
• Advance remittance for imports is permitted up to USD 200,000 without bank guarantee, and above USD 200,000 with a bank guarantee from the overseas supplier
• All imports above INR 5 lakh must be evidenced by a Bill of Entry filed with Customs

Export Proceeds Realization

For foreign-owned companies exporting from India:

• Export proceeds must be realized within 9 months from the date of export (RBI-prescribed timeline)
• All export proceeds must be surrendered to the AD bank unless held in an EEFC (Exchange Earners' Foreign Currency) account
• Write-off of export receivables requires AD bank approval (up to 5% of total export proceeds) or RBI approval (above 5%)

Transfer Pricing Implications

Imports from the foreign parent company or its affiliates are related-party transactions subject to transfer pricing scrutiny. The import price must be at arm's length, and the company must maintain transfer pricing documentation demonstrating that comparable uncontrolled prices were used. The annual transfer pricing audit (Form 3CEB) must specifically disclose all import and export transactions with associated enterprises.

Common IEC-Related Mistakes by Foreign Companies

Based on our experience assisting foreign companies with IEC registration, these are the most frequent pitfalls:

1. Branch offices applying for IEC without RBI trading approval: The IEC application for a branch office will be rejected if the RBI approval letter does not explicitly permit import/export activities. The branch must first apply to the RBI via its AD bank for modification of permitted activities — a process that takes 4-8 weeks.
2. Not linking the IEC to GST registration: The IEC must be linked to the company's GSTIN for seamless customs clearance. Without this linkage, the importer cannot claim Input Tax Credit on customs duty (IGST) paid at the time of import, and the GST return will not reflect import transactions correctly.
3. Missing the annual IEC update window: The April-June update window is frequently missed by foreign-owned companies because the parent company's compliance calendar runs on a different fiscal year. Setting a calendar reminder for April 1 is the simplest prevention.
4. Using the wrong HS codes: Incorrect HS code classification at the time of IEC application (and subsequently on Bills of Entry) can trigger customs scrutiny, wrong duty rates, and potential penalty for mis-declaration. Foreign companies importing specialized equipment should engage a licensed customs broker for HS code classification.
5. Not obtaining AD Code registration: Beyond the IEC, every importer/exporter must register their AD Code (bank's code) with the Customs station from where they will import/export. Without AD Code registration at the specific port or airport, customs clearance will be blocked.

IEC Surrender and Cancellation

A foreign-owned company can voluntarily surrender its IEC if it no longer engages in import/export activities. The surrender process is handled through the DGFT portal. The DGFT may also cancel an IEC in the following circumstances:

• The IEC was obtained by misrepresentation or fraud
• The company has been struck off by the Registrar of Companies
• The company has been placed on the DGFT's Denied Entity List (DEL) for trade policy violations
• Non-filing of annual update for two consecutive years

For foreign companies winding down Indian operations, IEC surrender should be coordinated with the broader company winding-up process to ensure all outstanding customs obligations and export incentive claims are settled before the IEC is cancelled.

Key Takeaways

• IEC is mandatory for all import/export: Any foreign-owned company in India importing goods, components, or capital equipment — or exporting products or services — must hold a valid IEC from the DGFT. Registration costs just INR 500 and is processed within 1-2 working days.
• Branch offices need RBI trading approval first: A branch office cannot obtain an IEC unless its RBI establishment approval explicitly permits import/export activities. Liaison offices cannot obtain an IEC at all.
• Annual IEC update is mandatory: Every IEC holder must update their details on the DGFT portal between April 1 and June 30 each year. Non-update results in automatic IEC deactivation, blocking all import/export operations.
• FEMA adds a compliance layer: Foreign-owned importers must comply with FEMA payment timelines (6 months for import payments, 9 months for export realization) and transfer pricing documentation requirements for related-party imports.
• HS code accuracy is critical: Incorrect classification triggers customs scrutiny, wrong duty rates, and potential penalties. Engage a licensed customs broker for proper classification of specialized imports.