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Legislations and Regulations relating to Foreign trade in India

By Bhavneet Vohra July 29, 2016

Every businessman seeks to run the business for more profit, growth and expansion. Moving from the domestic market and reaching to the international market for sale and supply of the product contributes to the expansion of the business in a great way. But the procedure and laws related to the Import and Export may be very complicated and expensive to be understandable by a single entrepreneur. Moreover, International trade has its own technicalities and legal procedures which add to the complexity of the trade. So this article is an initiative to help the traders understand the procedures and laws of Import-Export in a better way to avoid any confusions and complexities.

What are the various legislations which regulate the Foreign Trade in India?

  1. Foreign trade in India is governed by the Foreign Trade (Development and regulation), 1992 which is the principal law related to this. This law has been amended significantly in the year 2010 by the Parliament of our country. A Foreign Trade Policy which is regulated every 5 years by the Central Government contains more detailed explanations and provisions regarding foreign trade. The current Foreign Trade Policy is [1st April, 2015 – 31st March, 2020].

The terms “Import and Export” are defined in the Section 2(e) of the FTDR Act, 1992 which means “respectively bringing into, or taking out of, India any goods by land, sea or air;”

  1. Custom duty is governed by the Customs Act, 1962 and Customs Tariff Act, 1975 which defines various kinds of customs that can be imposed.
  2. The payment and receipt of foreign currency are controlled by the Foreign Exchange Regulations.
  3. Besides the FTDRA there are some product specific laws also which govern the exports of certain products such as tea, coffee, tobacco etc. Examples are Tea Act, 1953, Coffee Act, 1942, Tobacco Board Act, 1975 and Rubber Act, 1947.

What are the requirements that need to be fulfilled before starting the Import-Export Business?

Director General of Foreign Trade (DGFT) of the Foreign Trade Policy of 2015-2020 confers power under Paragraph 1.03 to notify Handbook of Procedure and Appendices which lays down the procedures for the Import-Export trade.

A businessman needs to undergo various requirements and various procedures which can be defined as follows:

Step 1: Obtain IEC (Importer- Exporter Code) defined as the Code number granted under Section 7

An IEC needs to be obtained from the Director General of Foreign Trade which is necessary for foreign trade business. To obtain the IEC an Application must be made in the Aayat Niryaat Form 2A format to the regional authority of the Director General of Foreign Trade (DGFT) as defined under Section 6.

For more details on obtaining the IEC Code refer to the following link:

Step 2: Membership of Export Promotion Council (EPC) or Commodity board (CB) should be obtained by Exporters

As per the Foreign Trade Policy, exporters need to obtain Registration- cum –Membership Certificate from the EPC of the concerned sector, be it software, plastic, sports etc. Exporters of 14 specified in the Handbook of Procedures must register themselves with the EPC.

Step 3: Points of entry and exits for India for Imported and Exported goods

These are also called as the Custom Stations. They can be divided into three as follows:

 Custom port (Goods that arrive or depart by ship)

 Customs Airport (Goods that arrive or depart by air transport)

 Land custom station

Locations where custom authorities can keep imported/exported goods before issuing clearance are known as “custom areas” which also include custom stations.

Step 4: Custom Intermediaries handle last mile deliveries and shipments in the Import-Export process.

Custom Brokers who are known as the custom intermediaries may be appointed to handle deliveries and receive shipments. Customer Broker are regulated under the Customer Brokers Licensing Regulations 2013.

Step 5: Import through post and courier

In some cases import/export of certain goods can also be carried out through courier.

There are some restrictions also on the goods which can be imported/ exported by courier which are as follows:

  • Goods which weigh more than 70 kg
  • Perishable commodities, maps and precious and semi-precious stones, gold and silver
  • Goods which require to comply with the special provisions of the special act

Only certain courier companies who are given the status of Authorized Couriers are given permission to undertake international courier business for importer and exporter.

The above article duly covers the preliminary registrations and legislations that one needs to comply with to enter into the Foreign Trade with a view to expand its business.


From the above article we can clearly infer that entering into Foreign Trade is not an easy task because of the various legal formalities that are linked with the same. But to ensure that no restricted or prohibited goods enter into the boundaries of the country we need to comply with the same.

Author- Bhavneet Singh Vohra

Vivekananda Institute of Professional Studies

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Tags: foreign trade , import , export , laws for foreign trade , foreign trade policy

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By Bhavneet Vohra July 29, 2016