Directorate General of Foreign Trade (DGFT): Meaning, Functions, and Role in Import Export

The DGFT plays a crucial role in streamlining the process for businesses to engage in international trade, ensuring compliance with trade regulations, and fostering India's global trade growth. This aligns with the broader objectives of entrepreneurship, where policies and frameworks provided by the DGFT create an enabling environment for entrepreneurs to explore and expand in international markets.

What is the Directorate General of Foreign Trade (DGFT)?

1. Regulatory body: DGFT is the Indian government agency responsible for regulating and promoting international trade. It helps businesses understand the business environment in India and expand their reach globally.
2. Export business: Facilitates policies and guidelines to help businesses start an export business.
3. Import business: Oversees regulations and procedures for starting an import business.
4. Trade policies: Formulates and implements trade policies, including the Foreign Trade Policy.
5. Licenses and permits: Issues Importer Exporter Code (IEC) necessary for importing and exporting.
6. Promotional measures: Provides incentives and schemes to promote exports.
7. Trade data: Maintains and disseminates trade statistics.
8. Dispute resolution: Resolves trade-related disputes and issues.

Role of DGFT in import export?

1. Regulation: Oversees and regulates India's import and export activities.
2. Import Export Code (IEC): Issues the mandatory Import Export Code (IEC) for businesses to conduct international trade.
3. Policy formulation: Develops and implements the Foreign Trade Policy.
4. Licenses and permits: Grants necessary licenses and permits for importing and exporting goods.
5. Incentives: Provides export incentives and schemes to boost trade.
6. Compliance: Ensures compliance with international trade regulations and standards.
7. Trade facilitation: Streamlines procedures and reduces barriers for smooth trade operations.
8. Trade Data: Collects and disseminates trade data for policy-making and analysis.

The DGFT plays a pivotal role in facilitating and regulating India's international trade, ensuring businesses have the necessary tools and compliance frameworks to thrive globally.

Objectives of DGFT

• Promote trade: Enhance India's exports and imports through effective policies.
• Simplify procedures: Streamline trade processes and reduce bureaucratic hurdles.
• Increase competitiveness: Improve the global competitiveness of Indian goods and services.
• Diversify markets: Expand export markets and reduce dependency on limited countries.
• Ensure compliance: Adhere to international trade regulations and standards.
• Support MSMEs: Provide support and incentives to Micro, Small, and Medium Enterprises (MSMEs).
• Sustainable growth: Encourage environmentally sustainable trade practices.
• Economic growth: Contribute to the overall economic development of India.

Functions of DGFT

The functions of the DGFT are as follows:

1. Implementing the government’s foreign trade or EXIM policy.
2. Maintaining a comprehensive database of all exporters and importers in India.
3. Issuing the Exporter Importer Code (EIC) Number, a ten-digit number required for exporting and/or importing.
4. Exercising authority to prohibit, restrict, and regulate the activities of importers and exporters.
5. Regulating and authorising the transit of goods from India to neighbouring countries based on bilateral trade agreements.
6. Promoting trade relations between India and its neighbouring countries.
7. Approving free export permissions where applicable.
8. Playing a key role in controlling DEPB (Duty Entitlement Pass Book) rates. The DEPB scheme is a government export incentive programme.
9. Addressing quality complaints from foreign buyers of Indian export products.
10. Developing and updating ITC-HS (Indian Trade Clarification based on the Harmonized System of Coding) codes, which classify export/import products.

Services offered by the Directorate General of Foreign Trade (DGFT) for exporters

• Import export code (IEC): Issuance of mandatory IEC for export activities.
• Licensing: Provision of various export licenses and permits.
• Export Incentives: Administration of incentive schemes like the Merchandise Exports from India Scheme (MEIS).
• Policy guidance: Providing guidance on export policies and regulations.
• Trade facilitation: Streamlining export procedures to reduce barriers.
• Training programs: Conducting workshops and training for exporters.
• Market access: Assistance in accessing new international markets.
• Trade data: Supplying essential trade statistics and market information.
• Dispute resolution: Resolving export-related disputes and issues.
• Support services: Offering advisory and consultancy services for exporters.

7 ways how DGFT regulates export from India

1. Import export code (IEC): Issuing mandatory IEC for export activities.
2. Export licensing: Granting necessary export licenses and permits.
3. Foreign trade policy: Formulating and implementing policies to govern exports.
4. Compliance monitoring: Ensuring adherence to international trade regulations and standards.
5. Export documentation: Streamlining and verifying export documentation and procedures.
6. Incentive schemes: Administering export incentive schemes to boost exports.
7. Trade data analysis: Collecting and analysing trade data to inform policy decisions and monitor export performance.

Recent updates on DGFT

1. RoDTEP scheme extension: The DGFT has extended the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme until September 30, 2024, benefiting Advance Authorisation (AA) holders, Export Oriented Units (EOUs), and SEZ units​​.
2. Quality Control Orders exemption: New provisions have been introduced to exempt imported inputs by AA holders and EOUs from mandatory Quality Control Orders (QCOs), facilitating smoother import processes​​.
3. Export policy amendments: Recent amendments have been made to the export policy of onions and human biological samples, impacting the regulations for these goods​​.

These updates reflect the DGFT's efforts to streamline trade processes and support exporters by providing regulatory relief and extending beneficial schemes.

Conclusion

The Directorate General of Foreign Trade (DGFT) is a key regulatory body under the Ministry of Commerce and Industry in India, responsible for the formulation and implementation of the country's Foreign Trade Policy. It plays a crucial role in promoting and regulating exports and imports, ensuring compliance with international trade regulations. The DGFT issues Import Export Codes (IEC), provides export incentives, streamlines trade procedures, and facilitates access to global markets. By simplifying trade processes and offering guidance, the DGFT supports businesses in navigating international trade complexities. Access to these resources can also aid businesses in securing a business loan for trade expansion and operations. Here are some benefits of a Bajaj Finserv Business Loan:

• High loan amount: Businesses can borrow funds up to Rs. 80 lakh, depending on their needs and qualification.
• No collateral required: You do not have to pledge any collateral to get our business loan, which is beneficial for small businesses without substantial assets.
• Competitive interest rates: The interest rates for our business loans range from 14% to 30% per annum.

These features and benefits of business loans make them a highly accessible and practical financial tool for businesses looking to maintain or accelerate their growth.

It's also important to understand concepts like working capital and the working capital cycle to keep your business financially healthy.