Indian Trade policy: IEC

Introduction

With over $34.8B of export business and over $58.2B of import trading has been a very important part of India’s GDP. The trading business has boomed a lot in India and every day new entrepreneurs are being introduced in this sector. Exports are accountable for 18.09% of the GDP and imports stand at 18.39%. With such vast coverage trading business in India plays a very big role in the country’s growth. As the trading business is so big in India we need a policy to guide all of the operations and with that purpose Indian Trade Policy has been formed and any new rule when introduced affects the working of a lot of organizations as they have to comply with the new rules and modify the working modules.

If you are into any trading business and you don’t know about the Indian Trade Policy and the Import-Export code policy please read this article carefully so that you don’t miss out on any important updates which may be very necessary for your trading business. We are going to understand what role IEC plays in the Indian trading policy, implications of IEC on businesses and the impact of IEC on businesses.

What is IEC? 

IEC is a part of Indian Trade Policy and IEC (Import-Exporter code) is a 10-digit identification number that is issued by DGFT (Director General of Foreign Trade) which is used whenever you have any import or export operations. This code is used every time you perform an operation related to your trading business.

IEC is just a code which is used for tracking all your operations related to your trading business. This is a universal code for both imports and exports, so once you get an IEC generated you can perform both import and export.

When is IEC required?

IEC is required in the below-stated cases:

• When an importer wants to get his goods cleared from customs he will need an IEC.
• When an importer sends money abroad through banks he needs an IEC to complete the transaction.
• When an exporter wants to send his goods he needs an IEC to get cleared through customs.
• When an exporter receives money in foreign currency in his bank account he will need an IEC to complete the transaction.

Why IEC was introduced?

IEC was introduced because DGFT wanted a single unified code which could be used for tracking all the trading business operations happening in India. As a single code is used everywhere for all import and export operations, tracking has become very easy.

IEC was also introduced so that the illegal import-export businesses could be controlled as no transactions are allowed without having an IEC code so the illegal businesses could be shut down easily.

Functions of IEC

1. Tracking import operations: IEC is issued when your organization is registered with DGFT and when you get registered with DGFT then you give DGFT the authority to track all of your operations. So whenever a trading organization imports something from foreign countries it is tracked by DGFT using IEC.

2. Tracking export operations: As the organization is registered with DGFT for IEC. Whenever a trading organization exports something to foreign countries it is tracked by DGFT using the IEC code of that organization.

3. Identifying Illegal operations: As no trading business is allowed to carry out their operations without getting registered with DGFT so if any illegal operations are being carried out they can be easily tracked and stopped.

What is the impact of IEC on businesses?

IEC impacts any import-export business in a good way as it helps the organization to create a smooth workflow. Since no organization can carry out trading operations without getting registered with DGFT and obtaining an IEC certificate from them, DGFT works in a very systematic manner so it helps the organization to mark their operations very well as reports are prepared for every operation.  Overall IEC helps any trading business to grow better by working properly.

What are the Implications of IEC on businesses?

There are various implications of IEC on businesses like:

1. Tracking import operations

2. Tracking export operations

3. Tracking bank statements

4. Tracking foreign payments

Conclusion

IEC plays a very big role in Indian trading policy as it helps DGFT to track all the trading operations being carried out by different organizations. IEC have a positive impact on businesses and helps them to grow better and help in their smooth functioning.

So IEC is the foundation of Indian trading policy as no trading operations are carried out without getting an IEC certificate.