What is a DGFT license? – Meaning & Importance

Export goods not under the free Movable category by DGFT must obtain a permit. To get this permit you must understand what a DGFT license is and how it works to export foreign goods.

To understand this let’s take a scroll down.

Now India is playing a very impressive role in Global trade. As per the reports of the Ministry of Commerce and Industry India’s export trade for April-February 2020-21 reached an impressive $439 billion.

To boost the growth and ensure the smooth transaction of Indian exporters and foreign buyers, DGFT (Directorate General of Foreign Trade) was established in India.

Overview Of DGFT (Directorate General of Foreign Trade)

The DGFT (Directorate General of Foreign Trade) is a main body under the Ministry Of Commerce and Industry, government of India. The DGFT headquarters is located in Delhi. The goal of the department is to design and execute the foreign trade policy of the country. 

The policy framework is very necessary because it sets the guidelines and rules for India’s international trade. They work to boost and enhance foreign trade relationships with other countries by facilitating flawless exports.

DGFT issues the import-export code, and export license and works on the promotion of trade incentives to promote export trade.

What Is a DGFT License?

Most of the goods that are exported from India are freely movable. But as per the rule and regulation executed in the year 2007 under the EXIM policy of India, few restrictions are imposed on the export of certain categories of products. 

So, those who want to Export restricted goods need to obtain an export license from the DGFT, this license is also known as the DGFT License.

Why DGFT License is Required?

DGFT through its power under the FTDR act applied various restriction and quota on various products for the import of goods in India. So to tackle all these restriction and make your product easy to regulate in the market DGFT license is required. This shows that the product is approved prior to the given import.

Importance Of DGFT License

If you are thinking about why the DGFT license is required then let’s explore its various reasons:-

• During the time of exports, exporters can show this DGFT license to the customs departments for shipment clearance.
• The license is required in the circumstances when an exporter happens to receive money in foreign currency.
• The license is mandatory to have to transfer money into their account directly.
• Respective banks would need it to facilitate transactions involved in the import-export process

Schemes Under DGFT

Export Promotion Schemes worked under the foreign trade policy. The scheme provides a promotional measure to boost Indian exports. This will offset infrastructural inefficiencies and associated costs involved in providing exporters a level playing field. Other schemes launched by the DGFT are:-

SEIS (Service Exporters For Eligible Service)

Under the SEIS scheme, service exporters in certain eligible service categories receive benefits in the form of transferable duty credit scripts. These scripts are provided as a percentage of the Net Foreign Exchange (NFE) earned from exporting eligible services within a financial year. They can be utilized to pay for basic customs duty and other taxes.

RoSCTL

The scheme is used to provide rebates for all embedded state and Central taxes involved in export os for garments and apparel. This scheme provides duty credit transferable and sellable scripts on the FOB (Free on Board) value of export.

List of Documents That Are Required To Obtain a DGFT License In India

Here is the list of documents that are required to obtain the DGFT license in India as follows:-

• ANF – 1 Form and Application form for the export license.
• Copy of purchase order from purchaser.
• Online application fee payment
• PAN
• Identity & address proof
• Cancelled Cheque

How To Obtain DGFT or Export License?

To obtain a DGFT License Or Export License you must go with the mentioned process:-

• Visit the DGFT Website
• Navigate to the home page
• Click on the services
• Choose “Online ECOM application” from the drop-down menu.
• Select “Restricted Item Import License/Restricted Export Item”.
• Fill out the application and send an application copy of the same to export-dgft@nic.in.

List of Products that required DGFT License

Explore the list of products that require DGFT License in India:-

Handmade woollen carpets and other floor coverings

• Handicraft items
• Dairy produce, honey, edible products of animal origin
• Edible fruits and nuts and peels of fruits
• Cereals
• Products of the milling industry like malt, starch, wheat gluten
• Oil seeds and fruits, straw and fodder
• Gums, resins, vegetable saps and extracts
• Prepared edible fats and vegetable and animal fats
• Sugar and sugar confectionaries
• Residues and wastes from the food industry and prepared animal fodder
• Salt, sulphur, earth and stones, plastering materials, lime, and cement
• Organic chemicals
• Pharmaceutical products
• Fertilizers
• Tanning and dying agents and their derivatives
• Essential oils, perfumes, cosmetics and toiletry preparations
• Wood, wood pulp, and wooden products
• Cotton, jute, and their derivates

What Is The Validity Of DGFT License?

The DGFT License is valid for 24 months for the capital goods. On the other side, it is valid for 18 months for the material components. After the mentioned period you can renew this license simply.

What is the cost of a DGFT license?

The DGFT license costs ₹500 and the professional fee is approximately ₹999/-.

Conclusion

The DGFT license is a necessary document applied to the restricted products from Export. Without this license approval, you are not allowed to export goods. This will improve global trade and make your foreign trade more convenient. You only have to go through the process once and you will get approval for the export license in a short period.

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