DGFT (Directorate General of Foreign Trade)

By Priya Sharma | Updated March 2026

What Is DGFT?

The Directorate General of Foreign Trade (DGFT) is the principal government body responsible for regulating and promoting India's foreign trade. Operating as an attached office under the Ministry of Commerce and Industry, Department of Commerce, DGFT formulates and implements the Foreign Trade Policy (FTP), issues Import Export Codes (IECs), grants trade authorizations, and administers export promotion schemes. Headquartered in New Delhi, DGFT was formerly known as the Chief Controller of Imports and Exports (CCI&E) until it was renamed in 1991 as part of India's trade liberalization reforms.

For any foreign company looking to import goods into India or export from India — whether through a branch office, liaison office, subsidiary, or joint venture — DGFT is the first regulatory touchpoint. Without an IEC issued by DGFT, no commercial import or export transaction can be conducted. DGFT's decisions on licensing, authorization, and trade restrictions directly determine what a foreign company can buy from or sell to India.

DGFT derives its authority from the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), which empowers the Central Government to formulate trade policy, regulate imports and exports, and impose restrictions in the interest of national security, public order, or conservation. The DGFT exercises these powers as the delegated authority of the Central Government.

Legal Basis

• Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) — The foundational legislation empowering the Central Government to regulate foreign trade. Section 3 authorizes the government to make provisions for prohibiting, restricting, or otherwise regulating imports and exports.
• Section 5 of the FTDR Act — Empowers the Director General of Foreign Trade to issue licenses, certificates, scrips, and authorizations for imports and exports.
• Section 11 of the FTDR Act — Provides for penalties: a fine of not less than INR 1,000 and up to five times the value of goods or services involved in the contravention, and suspension or cancellation of the IEC.
• Foreign Trade Policy 2023 — The current policy document (effective April 1, 2023, with no fixed expiry) implemented and administered by DGFT. Covers all export promotion schemes, import regulations, and trade facilitation measures.
• Handbook of Procedures (HBP) 2023 — The operational manual issued by DGFT detailing the procedures, forms, and documentation requirements for every trade authorization scheme.

Organizational Structure

DGFT operates through a hierarchical structure spanning from the national headquarters to regional offices across India:

Regional offices handle day-to-day operations: processing IEC applications, issuing Advance Authorizations and EPCG licenses, granting Status Holder certificates, and providing trade facilitation services to exporters and importers in their jurisdictions.

Core Functions of DGFT

1. Foreign Trade Policy Formulation and Implementation

DGFT drafts, notifies, and implements the Foreign Trade Policy on behalf of the Central Government. The current FTP 2023 — effective from April 1, 2023 — is an open-ended policy (no fixed 5-year expiry) targeting USD 2 trillion in exports by 2030. DGFT issues trade notices, public notices, and policy circulars to communicate amendments and operational changes.

2. IEC Issuance and Management

The Import Export Code (IEC) is a mandatory 10-digit identifier linked to the entity's PAN. Key details:

• Application: Filed online at dgft.gov.in with Digital Signature Certificate (Class 3 DSC)
• Fee: INR 500 (government fee)
• Processing time: Typically 1-5 working days
• Validity: Lifetime — no renewal required
• Annual updation: Mandatory online confirmation of IEC details between April-June each year; non-compliance renders the IEC inactive

3. Export Promotion Schemes

DGFT administers the key export incentive and facilitation schemes under FTP 2023:

4. Import Regulation and Licensing

DGFT classifies all goods into three categories under the ITC (HS) Classification:

• Free: No license required — most goods fall here post-liberalization
• Restricted: Requires a specific import license from DGFT (e.g., certain chemicals, arms, second-hand machinery)
• Prohibited: Cannot be imported at all (e.g., tallow fat, animal rennet)

5. SCOMET Licensing

DGFT regulates the export of dual-use items under the SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) list — India's national export control list aligned with multilateral regimes (NSG, MTCR, Wassenaar Arrangement, Australia Group). The SCOMET list has 8 categories:

• Category 0: Nuclear materials and equipment (licensed by Department of Atomic Energy)
• Category 1: Toxic chemical agents and precursors
• Category 2: Micro-organisms and toxins
• Category 3: Munitions (licensed by Department of Defence Production)
• Category 4: Aerospace systems and equipment
• Category 5: Information security systems
• Category 6: Heavy equipment and specialized materials
• Category 7: Emerging technologies (added September 2025 — includes quantum computing, advanced semiconductors, additive manufacturing)
• Category 8: Special materials and related equipment

DGFT issues licenses for Categories 1, 2, 4, 5, 7, and 8. Foreign companies exporting controlled technologies to India, or Indian entities exporting to foreign countries, must obtain SCOMET authorization or face penalties under the FTDR Act and potentially the Weapons of Mass Destruction Act, 2005.

DGFT Online Portal

DGFT's digital platform (dgft.gov.in) operates 24/7 and provides:

• IEC issuance and amendment: Fully paperless application with Aadhaar-based or DSC-based authentication
• Authorization applications: Online filing for Advance Authorization, EPCG, and other schemes
• e-BRC (Bank Realisation Certificate): Electronic confirmation of export proceeds realization — essential for closing export obligations
• eCoO 2.0 (Electronic Certificate of Origin): Mandatory since January 2025 for non-preferential Certificates of Origin; enables self-certification for Status Holders
• Status tracking: Real-time dashboards for all pending applications and obligations
• Niryat Bandhu: Mentoring and handholding programme for new exporters, particularly MSMEs

How DGFT Affects Foreign Companies in India

Every foreign entity with import-export operations in India interfaces with DGFT at multiple touchpoints:

• Setting up trade operations: Before a foreign-invested company can import raw materials or export finished goods, it must obtain an IEC from DGFT. This applies equally to a private limited company with FDI, a branch office, or a project office.
• Duty-free imports: Foreign manufacturers setting up production in India can use Advance Authorization to import inputs duty-free, provided the finished goods are exported. This is particularly valuable for companies in the electronics, pharmaceuticals, and automotive sectors.
• Capital equipment imports: Under the EPCG scheme, a foreign company establishing a manufacturing facility in India can import machinery at 0% customs duty — saving 7.5%-22% in Basic Customs Duty (depending on the HS code). The trade-off is an export obligation of 6x the duty saved over 6 years.
• Technology transfers: Any transfer of dual-use technology, equipment, or materials listed under SCOMET requires prior authorization from DGFT. Foreign technology companies must check the SCOMET list before shipping controlled items to their Indian subsidiaries.
• Penalties for non-compliance: Under Section 11 of the FTDR Act, violations attract penalties from INR 1,000 up to 5 times the value of goods involved, plus IEC suspension or cancellation. For SCOMET violations, criminal prosecution under the Weapons of Mass Destruction Act can result in imprisonment up to 7 years.

Common Mistakes

• Not updating IEC annually and discovering it is deactivated at the port. DGFT mandates annual online confirmation of IEC details between April and June. Foreign companies often delegate this to local counsel and forget. An inactive IEC means customs clearance is blocked — shipments are held at the port until the IEC is reactivated, causing demurrage charges of INR 5,000-50,000 per day.
• Importing restricted goods without a DGFT license, assuming customs duty payment alone is sufficient. Paying customs duty does not substitute for a DGFT import license. Restricted items imported without authorization are liable to confiscation under the Customs Act, regardless of duty payment. The importer must check the ITC (HS) classification for each product before shipping.
• Failing to close export obligations under Advance Authorization or EPCG within the prescribed period. If the export obligation is not fulfilled — e.g., 6x duty saved under EPCG within 6 years — the company must pay back the entire duty saved plus interest at 15% per annum. Many foreign companies underestimate the export volumes needed and end up with significant liabilities.
• Assuming the parent company's export compliance programme covers Indian SCOMET requirements. India's SCOMET list is independent of the US EAR, EU Dual-Use Regulation, or Wassenaar Arrangement national lists. Items that are unrestricted for export from the US or EU may require DGFT authorization for export from India, and vice versa. Each jurisdiction's control list must be checked independently.
• Not applying for Status Holder recognition despite qualifying on export turnover. Many foreign-owned exporters hit the USD 3 million threshold for One-Star Export House status but never apply. Status Holder benefits include self-certification of origin, priority customs clearance, and fixed INR 5,000 application fees for all authorizations — significant operational advantages that go unclaimed.

Practical Example

Meridian Pharma GmbH, a German pharmaceutical company, sets up Meridian Pharma India Pvt Ltd as a wholly owned subsidiary in Hyderabad to manufacture generic APIs (Active Pharmaceutical Ingredients) for export to the EU and US markets.

Step 1 — IEC: Meridian India applies for an IEC on dgft.gov.in, paying INR 500. The IEC is issued in 3 working days, linked to the company's PAN.

Step 2 — EPCG Authorization: Meridian India applies for EPCG authorization to import a chemical reactor and packaging line worth INR 8 crore from Germany at 0% customs duty. The Basic Customs Duty saved is INR 1.76 crore (at 22% BCD). The export obligation is 6x the duty saved = INR 10.56 crore of exports within 6 years (INR 5.28 crore in years 1-4, INR 5.28 crore in years 5-6).

Step 3 — Advance Authorization: For ongoing raw material imports (solvents, intermediates worth INR 2 crore per batch), Meridian India obtains Advance Authorization for duty-free import. Each authorization is valid for 12 months, with an 18-month export obligation period.

Step 4 — SCOMET Check: One of the API intermediates is a precursor chemical listed under SCOMET Category 1. Meridian India applies for and obtains a SCOMET export license before shipping samples to its EU parent for testing.

By year 3, Meridian India's cumulative exports reach INR 15 crore, comfortably exceeding the EPCG obligation. The company applies for Two-Star Export House status (having crossed USD 15 million in exports over 3 years), gaining self-certification privileges and priority processing for future authorizations.

Key Takeaways

• DGFT is India's sole authority for trade regulation — every import/export business needs an IEC (INR 500, lifetime validity) issued by DGFT before commencing cross-border trade
• The FTDR Act, 1992 is the foundational law; penalties for violations range from INR 1,000 to 5x the goods' value, plus IEC cancellation
• Key export promotion schemes — Advance Authorization (duty-free inputs), EPCG (0% duty on capital goods with 6x export obligation), and RoDTEP (embedded tax refund) — are all administered by DGFT
• SCOMET licensing for dual-use items is mandatory; the list was updated in September 2025 to include quantum computing and advanced semiconductors
• Foreign companies must update their IEC annually (April-June) or risk deactivation and port delays
• DGFT's online portal provides 24/7 paperless processing for all trade authorizations, with eCoO 2.0 mandatory since January 2025

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