Import Licensing & Restrictions: Items That Need DGFT Permission

How India Regulates Imports: The Four-Category Classification System

Every item that can be imported into India is classified under the Foreign Trade Policy (FTP) through the ITC(HS) Schedule I — Import Policy. The Directorate General of Foreign Trade (DGFT), operating under the Ministry of Commerce and Industry, assigns each item one of four import policy classifications:

• Free: No import license or authorization required. The item can be imported freely, subject only to customs duties, GST, and applicable product-specific regulations (BIS certification, FSSAI license, etc.)
• Restricted: Import is permitted only with a valid import authorization (license) issued by the DGFT. The importer must apply through the ANF-2M form and receive approval before placing the import order.
• Prohibited: Import is completely banned. No license or authorization can be obtained. Attempting to import prohibited items results in seizure, confiscation, and criminal prosecution.
• State Trading Enterprise (STE): Import is channeled exclusively through designated government agencies. Private importers — including foreign-owned companies — cannot import these items directly.

For foreign-owned companies operating in India — whether as a wholly-owned subsidiary, joint venture, or branch office — understanding this classification is the first step before importing any goods. Getting it wrong means shipments stuck at port, demurrage charges accumulating at INR 5,000-15,000 per container per day, and potential penalties of up to five times the value of the goods under the Customs Act.

Restricted Items: What Needs DGFT Import Authorization

Restricted items form the largest and most practically relevant category for foreign companies. These are items that India permits for import but only after the importer obtains specific authorization from the DGFT. The restriction may exist for reasons of national security, environmental protection, public health, or domestic industry protection.

Major Categories of Restricted Imports (2025-2026)

IT Hardware Import Restrictions (2026)

One of the most significant recent restrictions affects IT hardware imports. The DGFT issued Policy Circular No. 08/2025-26 on December 17, 2025, mandating that imports of laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers under HSN 8471 require import authorization under the Import Management System (IMS) for calendar year 2026.

This restriction directly impacts GCCs and IT subsidiaries importing hardware for their Indian operations. Key details:

• Covered items: Laptops, tablets, all-in-one PCs, ultra-small form factor computers, and servers under HSN 8471
• Authorization required: Import authorization from DGFT must be obtained before customs clearance
• Application process: Through the DGFT portal under the Import Management System module
• Validity: Authorization is typically granted for the calendar year with specified quantity limits
• BIS requirement: In addition to DGFT authorization, imported IT hardware must have valid BIS certification under applicable Quality Control Orders

Second-Hand Capital Goods Import Rules

Foreign manufacturing companies frequently need to import used machinery from the parent company's facilities abroad. India's policy on second-hand capital goods import is nuanced:

• Goods up to 5 years old: Generally considered favorably by the DGFT licensing committee
• Goods 5-10 years old: Considered on a case-by-case basis — the importer must demonstrate comparative advantages
• Goods over 10 years old: Normally not permitted, except for heavy equipment in infrastructure and core sector industries
• Refurbished spares: Must be certified as having at least 80% residual life of the original spare
• Environmental compliance: All second-hand capital goods must conform to applicable Indian environmental and safety standards

Applications are processed by the Inter-Ministerial Restricted Items Licensing Committee at DGFT headquarters in New Delhi, with typical processing times of 30-45 days.

Prohibited Items: What Cannot Be Imported Into India

Prohibited items are absolutely banned from import into India. No license, authorization, or special permission can override this prohibition. The key categories are:

• Counterfeit currency and coinage: Any imitation of Indian or foreign currency
• Narcotic drugs and psychotropic substances: Without lawful authority under the NDPS Act
• Wildlife products: Ivory, musk, ambergris, meat/skins/bones of wild animals listed under CITES and the Wildlife Protection Act, 1972
• Obscene and seditious material: Printed, digital, or physical
• Pirated and infringing goods: Products violating Indian intellectual property laws (copyright, trademark, patent)
• Tallow, fat, and oils of animal origin: Certain specified animal-derived products (specific HS codes apply)
• Goods produced by prison labor: As per India's international obligations

For foreign companies, the most practically relevant prohibition relates to intellectual property — importing goods that infringe Indian-registered trademarks or patents (including gray market or parallel imports in certain categories) can result in seizure at customs, confiscation, and penalties under the Customs Act and the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.

State Trading Enterprise Items

Certain commodities can only be imported through designated State Trading Enterprises (STEs). Historically, agencies like MMTC, STC (State Trading Corporation), and PEC (Projects & Equipment Corporation) served as canalizing agents for strategic imports.

In a significant policy shift, the Ministry of Commerce denotified MMTC, STC, PEC, and STCL Ltd. as canalizing agencies, concluding that a centralized canalizing agency was no longer needed for most commodities. However, some items remain under the STE classification:

• Certain rice varieties: Parboiled rice, Basmati rice, and GI-recognized rice varieties have STE restrictions for import
• Petroleum products: Import of certain petroleum products continues through designated agencies
• Precious metals: Gold and silver import for domestic consumption is channeled through nominated agencies (banks and designated importers authorized by the RBI and DGFT)

Foreign companies should note that even if an item is listed under STE, it may be possible to import it under specific schemes — such as the Advance Authorization scheme for export-oriented manufacturing — by obtaining a specific DGFT authorization. Consult the current ITC(HS) Schedule I for the latest STE classifications.

SCOMET List: Strategic and Dual-Use Items

The Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list under Appendix 3 of Schedule II of ITC(HS) 2022 controls the export (and in some cases import) of strategic and dual-use items. The DGFT revised the SCOMET list via Notification No. 31/2025-26 dated September 23, 2025, with changes effective from October 23, 2025.

The SCOMET list is organized into eight categories:

1. Category 0: Nuclear materials, equipment, and technology
2. Category 1: Toxic chemicals and precursors (Chemical Weapons Convention)
3. Category 2: Micro-organisms and toxins
4. Category 3: Materials, equipment, and technology (Missile Technology Control Regime)
5. Category 4: Nuclear-related dual-use equipment and technology (Nuclear Suppliers Group)
6. Category 5: Aerospace and propulsion systems
7. Category 6: Munitions list items
8. Category 7: Emerging technologies (added in the 2025 revision — covers items beyond the Wassenaar Agreement controlled list)

For foreign companies — particularly those in defence, aerospace, pharmaceuticals, or advanced manufacturing — SCOMET compliance is critical. The SCOMET Cell at DGFT, in consultation with Technical Authorities under the Inter-Ministerial Working Group (IMWG), makes the final determination on whether a specific item falls under SCOMET control. Violations carry severe penalties including imprisonment and trade sanctions.

How to Apply for DGFT Import Authorization: The ANF-2M Process

When a foreign-owned company needs to import a restricted item, it must apply for import authorization through the DGFT portal using the ANF-2M application form. Since March 2021, the process has been fully digitized.

Step-by-Step Application Process

1. Verify the ITC(HS) classification: Confirm the item's HS code and its import policy status (Free/Restricted/Prohibited/STE) on the DGFT portal at dgft.gov.in under Import Policy > ITC(HS) Classification
2. Ensure valid IEC: The applicant company must hold a valid and active Import Export Code (IEC). If the IEC is deactivated due to missed annual update, it must be reactivated first. For the full IEC registration guide, see our detailed article.
3. Obtain NOC from concerned ministry: Many restricted items require a No Objection Certificate from the relevant regulatory body before DGFT will process the authorization. For example: CDSCO for pharmaceuticals, FSSAI for food products, CPCB for e-waste, AERB for radioactive materials, Plant Quarantine for seeds and plants.
4. Prepare the ANF-2M form: Log in to the DGFT portal and navigate to Services > Import Authorization > Apply for Restricted Import Authorization. Complete the form with: company details (CIN, IEC, PAN), item description with correct ITC(HS) code, quantity and CIF value, justification for import (end-use details), and supplier details.
5. Upload supporting documents: Required documents include IEC certificate, company PAN, CIN/certificate of incorporation, NOC from the relevant ministry (if applicable), proforma invoice from the supplier, end-use certificate or declaration, and board resolution authorizing the import.
6. Pay the application fee: The fee is INR 1 per thousand of the CIF value of the proposed import, subject to a minimum of INR 500 and a maximum of INR 1 lakh. Payment is made online through the DGFT portal.
7. Submit and track: After digital signing (using the authorized signatory's DSC), submit the application. Track status on the DGFT Dashboard under Submitted Applications > Type: Restricted Imports.

Processing Timeline and Committee Review

The application is reviewed by the EXIM Facilitation Committee (EFC) at DGFT. Processing timelines depend on the complexity:

The authorization, once granted, specifies the item description, HS code, quantity, CIF value, validity period (typically 18-24 months), and the port of import. The authorization must be presented to Customs at the time of clearance along with the Bill of Entry.

BIS Certification and Quality Control Orders: The Hidden Import Restriction

Beyond the DGFT's Free/Restricted/Prohibited classification, India's Bureau of Indian Standards (BIS) operates a parallel import control mechanism through Quality Control Orders (QCOs). Under these QCOs, certain products cannot be imported unless they carry valid BIS certification — even if the DGFT classification shows them as "Free."

Products Requiring Mandatory BIS Certification for Import

• Electronics: Mobile phones, laptops, LED lights, power banks, adapters, chargers, monitors, speakers
• Steel products: Hot-rolled steel, cold-rolled steel, stainless steel, galvanized steel
• Chemicals: Certain industrial chemicals and hazardous substances
• Cement and building materials: Portland cement, white cement, wall putty
• Household appliances: Microwaves, washing machines, air conditioners (star rating + BIS)
• Toys: All toys imported into India require BIS certification since January 2021
• Solar panels: Mandatory BIS certification for solar photovoltaic modules under the ALMM list

BIS is tightening its standards in 2026, with expanded mandatory certifications under new QCOs. The full switchover deadline for several product categories — including laptops, phones, speakers, and monitors — to the new safety standards is November 1, 2028.

Consequences of Importing Without BIS Certification

Importing products under mandatory BIS registration without valid certification results in:

• Customs seizure at the port of import
• Detention of the consignment pending verification
• Requirement to either obtain retrospective certification (rarely granted) or re-export/destroy the goods
• Financial penalties under the BIS Act, 2016 — up to INR 5 lakh for the first offence and up to INR 10 lakh for subsequent offences
• Potential blacklisting of the importer for repeat violations

Foreign companies frequently encounter this issue when importing components or finished products from their parent company — the product may be freely importable under the DGFT classification but blocked at customs because it lacks BIS certification. The BIS registration process for foreign manufacturers takes 60-120 days and requires factory inspection.

Penalties for Importing Without Authorization

The consequences of importing restricted items without valid DGFT authorization — or importing prohibited items — are severe under Indian law.

Under the Customs Act, 1962

• Confiscation of goods: Customs can confiscate the imported goods (Section 111)
• Penalty: Fine of up to five times the value of the goods (Section 112)
• Prosecution: Criminal proceedings with imprisonment of up to seven years for smuggling or willful mis-declaration (Section 132)
• Demurrage and detention: While the goods are held by Customs, the importer continues to incur container detention (INR 5,000-15,000/day) and port storage charges

Under the Foreign Trade (Development & Regulation) Act, 1992

• IEC suspension: The DGFT can suspend the company's IEC, blocking all future import and export operations
• Penalty: Fine of up to five times the value of the goods or INR 10,000, whichever is higher (Section 11)
• Denial of future authorizations: The licensing authority may refuse to grant import authorizations to an applicant who has unpaid penalties

Under FEMA

For foreign-owned companies, importing without authorization also creates FEMA implications — the foreign exchange payment for an unauthorized import is a contravention of the Foreign Exchange Management (Current Account Transactions) Rules. Penalties can be up to three times the sum involved in the contravention. Given the multi-layered consequences, foreign companies should always verify import policy classification before initiating any procurement.

Practical Compliance Framework for Foreign Companies

Foreign-owned companies importing goods into India should implement a structured compliance process to avoid authorization issues.

Pre-Import Compliance Checklist

1. HS code verification: Engage a licensed customs broker to correctly classify the product under the ITC(HS) system. Mis-classification is the most common cause of import compliance failures.
2. Import policy check: Verify the product's import policy status (Free/Restricted/Prohibited/STE) on the DGFT portal for the specific HS code
3. BIS/QCO check: Verify whether the product falls under any Quality Control Order requiring mandatory BIS certification — this is separate from the DGFT classification
4. Product-specific regulations: Check for sector-specific regulatory approvals — FSSAI (food), CDSCO (drugs/devices), CPCB (e-waste), WPC (wireless equipment), PESO (explosives/petroleum)
5. FEMA compliance: Ensure the import payment terms comply with FEMA Current Account Transaction Rules — import payment must be made within 6 months of shipment through an authorized dealer bank
6. Transfer pricing: If importing from the foreign parent or its affiliates, ensure transfer pricing documentation supports arm's-length pricing. See our guide on customs duty for manufacturing equipment for related cost considerations.

Annual Compliance Obligations for Importers

For comprehensive import-export compliance management, consider our import-export compliance services which cover IEC maintenance, DGFT authorization applications, customs advisory, and BIS coordination.

Common Mistakes Foreign Companies Make with Import Licensing

Based on our experience assisting foreign companies with trade compliance in India, these are the most frequent errors:

1. Assuming "Free" means no restrictions at all: Even items classified as "Free" under DGFT may require BIS certification, FSSAI approval, WPC license, or other product-specific regulatory clearances. "Free" only means no DGFT authorization is needed — it does not exempt the importer from other regulatory requirements.
2. Not checking for recent policy changes: India frequently reclassifies items. An item that was "Free" last year may be "Restricted" this year. The IT hardware restriction (laptops and tablets under IMS) caught many foreign companies off guard in 2024-2025 when the policy shifted. Always verify the current classification before each import.
3. Incorrect HS code classification: Using the wrong HS code is the single most common cause of import complications. The difference between one 8-digit HS code and another can mean the difference between Free and Restricted, or between 10% customs duty and 30%. Engage a licensed customs broker for classification of any non-standard import.
4. Importing restricted items first, seeking authorization later: There is no "post-facto" authorization process for restricted items. If goods arrive at an Indian port without valid DGFT authorization, Customs will not clear them — and the importer faces confiscation risk while demurrage charges accumulate daily.
5. Ignoring transfer pricing on parent-company imports: When a foreign subsidiary imports goods from its parent company, the import price is a related-party transaction. If the transfer pricing is not at arm's-length, the company faces adjustment during the annual TP audit (Form 3CEB), with penalties of 2% of the transaction value for documentation failures and potential reassessment of customs duty based on the adjusted value.

Key Takeaways

• Every import item is classified as Free, Restricted, Prohibited, or STE: Foreign companies must verify the current ITC(HS) classification for every product before importing. The DGFT portal at dgft.gov.in provides searchable access to the complete classification database.
• Restricted items require DGFT authorization via ANF-2M: The application fee is INR 1 per thousand of CIF value (min INR 500, max INR 1 lakh). Processing takes 15-90 working days depending on the item category. Authorization must be obtained before goods arrive at an Indian port.
• BIS certification is a parallel import gate: Even DGFT-Free items may be blocked at customs if they fall under a mandatory BIS Quality Control Order. Electronics, steel, toys, and solar panels are the most commonly affected categories. BIS registration for foreign manufacturers takes 60-120 days.
• IT hardware imports require IMS authorization in 2026: Laptops, tablets, PCs, and servers under HSN 8471 are restricted under the Import Management System. GCCs and IT subsidiaries must plan procurement well in advance to avoid operational disruption.
• Penalties are severe: Importing without authorization can result in goods confiscation, fines of up to five times the goods' value, IEC suspension, and criminal prosecution. Always verify, then import — never the other way around.