What is IEC Code? Full Form, Meaning, and Importance in Exports & Imports

The world of international trade is a busy place and each nation is bound by its own rules to maintain a flow of products and services in and out of the nation. To businesses in India that have plans to explore the foreign markets or are already involved in directing and receiving foreign goods, there is one all important identification number that serves them as their passport to international business: the IEC Code.

Whether you are an aspiring business professional contemplating the joys of cross-border trade, or even the worrying language about the basic necessities of imports and exports, it is imperative to know what is IEC Code, what is its full form or even its philosophical significance. This guide by EximPe will demystify IEC Code, why it is mandatory, and how to get IEC Code.

What is IEC Code? Decoding the Full Form and Meaning

Let's start with the basics:

IEC full form is Importer-Exporter Code.

In essence, an IEC Code is a 10-digit alphanumeric identification number issued by the Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, Government of India. It is a mandatory requirement for any individual or entity in India wishing to engage in import or export activities.

Think of the IEC Code as a unique license or registration number that authenticates your business as a participant in India's international trade ecosystem. Without it, you cannot legally perform most export or import transactions.

Who Needs an IEC Code?

Any person or entity engaged in importing or exporting goods or services from India generally needs an IEC Code. This includes:

• Individuals: If you plan to import or export goods for commercial purposes.
• Sole Proprietorships: Even small businesses operating as sole proprietors.
• Partnership Firms: Registered partnerships.
• Limited Liability Partnerships (LLPs):
• Private Limited Companies:
• Public Limited Companies:
• Trusts, HUFs (Hindu Undivided Families), Societies: If involved in commercial import/export.

Why is IEC Code Crucial? Importance in Exports and Imports

The IEC Code is not just a formality; it's a foundational requirement that holds immense importance for several reasons:

1. Mandatory for International Trade Transactions

This is the primary reason. Whether you are importing raw materials for your manufacturing unit or exporting finished goods to an international buyer, customs authorities at ports, airports, or land customs stations will require a valid IEC Code for clearance.

• Customs Clearance: Without an IEC Code, your goods cannot clear customs for either import into India or export out of India.
• Shipping & Logistics: Shipping lines, freight forwarders, and logistics providers will ask for your IEC Code to process your international shipments.

2. Enables Availing Export/Import Benefits & Incentives

The Government of India offers various schemes and incentives to promote exports and support importers. These benefits are directly linked to having a valid IEC Code.

• DGFT Schemes: You need an IEC Code to apply for benefits under schemes administered by the DGFT, such as the Export Promotion Capital Goods (EPCG) Scheme, Advance Authorisation Scheme, Remission of Duties and Taxes on Exported Products (RoDTEP), and previously, MEIS/SEIS.
• GST Refunds: Exporters can claim refunds of Input Tax Credit (ITC) or export without paying IGST. The IEC Code is necessary for processing these GST-related benefits for exports.
• Subsidies & Rebates: Access to various subsidies, rebates, and financial assistance programs related to export promotion is contingent upon having an IEC.

3. Facilitates Foreign Exchange Transactions for Trade

Banks handling foreign exchange for import and export transactions will require your IEC Code.

• Foreign Currency Inflow/Outflow: When you receive foreign currency payments for your exports or need to make payments in foreign currency for your imports, your bank will link these transactions to your IEC Code.
• FEMA Compliance: It helps banks and regulatory bodies ensure compliance with the Foreign Exchange Management Act (FEMA) by monitoring trade-related foreign exchange movements.

4. Lifelong Validity and Ease of Compliance

One of the significant advantages of the IEC Code is its simplicity in terms of maintenance.

• No Renewal: Once issued, an IEC Code has lifelong validity. There is no requirement for periodic renewal, reducing compliance burden. However, it's mandatory to update/confirm your IEC details annually between April and June, even if there are no changes, to keep it active.
• Single Code for All Businesses: Whether you are a sole proprietor, a partnership firm, a company, or an LLP, you only need one IEC Code for all your export and import activities.

5. Enhances Business Credibility

Possessing an IEC Code signals to potential international partners, suppliers, and financial institutions that your business is legitimate and authorized to engage in cross-border trade, enhancing your overall credibility.

Exemptions from IEC Code

While generally mandatory, there are a few specific exemptions:

• Imports/Exports for Personal Use: If goods are imported or exported for personal use, not for commercial purposes, an IEC Code is not required.
• Government Departments & Ministries: Government ministries and departments do not require an IEC Code.
• Nepal & Bhutan Trade (Limited): Imports/exports from/to Nepal and Bhutan for non-commercial purposes, if the value is specified.
• Specific Notified Cases: RBI or DGFT may specify other limited exemptions from time to time.

How to Get IEC Code: The Online Application Process

The process of obtaining an IEC Code has been streamlined and is now entirely online, making it relatively straightforward. Here's a step-by-step guide on how to get IEC Code:

1. Visit the DGFT Website: Navigate to the official website of the Directorate General of Foreign Trade (DGFT) - www.dgft.gov.in 
2. Access the IEC Services: Look for the "Services" or "Online Application" section and find the link for "Apply for IEC."
3. Register as a New User: If you're a first-time applicant, you'll need to register on the portal using your PAN (Permanent Account Number).
4. Fill the Application Form: Complete the online application form (ANF 2A). You will need to provide various details about your business:
   • PAN of the applicant entity.
   • Name and address of the applicant.
   • Bank account details (name of bank, branch, account number).
   • Nature of business (manufacturer, merchant, service provider).
   • Mode of payment for the application fee.
5. Upload Required Documents: Prepare and upload scanned copies of the necessary documents. The common documents include:
   • PAN of the applicant entity/individual.
   • Proof of establishment/incorporation/registration: (e.g., Certificate of Incorporation for companies, Partnership Deed for firms, Aadhar Card for individuals/proprietorships).
   • Proof of address of the business premises: (e.g., Sale Deed, Rent Agreement, Lease Deed, Electricity Bill, Mobile/Landline Bill, Aadhaar Card for proprietorship/individual).
   • Bank Certificate / Pre-printed Cancelled Cheque: Showing your name and account number.
6. Pay the Application Fee: A nominal fee (currently ₹500, but check the latest DGFT guidelines) needs to be paid online through net banking or credit/debit card.
7. Submit and Await Approval: Once the form is filled, documents uploaded, and fee paid, submit the application. The DGFT system will process your application.
8. IEC Generation: Upon successful verification, your IEC Code will be generated and issued electronically. You will receive an email notification, and you can download the e-IEC certificate from the DGFT portal.

Timelines:

The IEC Code is typically issued within 3-7 working days after submitting a complete and accurate application, though it can sometimes be almost instantaneous if all details are correct.

Post-Issuance Compliance: Annual Updation

Although the IEC Code is in effect forever and there is no need to renew it, an important compliance measure added by DGFT implies that you will have to update or verify your IEC information online annually between April and June. This is even regardless of no changes being made on your details. Otherwise, you will create problems like de-activation of your IEC and thereby you will be not allowed to conduct any import/export business. It becomes renewed, once the necessary update is completed.

Conclusion

The IEC Code is more than just a registration number; it is the foundational prerequisite for any individual or entity in India looking to participate in the lucrative world of international trade. Understanding what is IEC Code, its meaning, its importance for compliance and incentives, and the straightforward process of how to get IEC Code is the first critical step towards expanding your business horizons globally. Ensure your IEC is active and up-to-date to unlock seamless import and export opportunities.

FAQs: IEC Code for Exports and Imports

1. What is IEC code?

IEC stands for Importer Exporter Code, a mandatory registration number for export-import businesses in India.

2. How to get IEC code?

Apply online through DGFT portal, submit PAN, address proof, and pay the fee. The certificate is issued within 1-2 days.

3. Is IEC required for services exports?

In most cases, IEC is required if the service provider wants to claim benefits under DGFT or RBI schemes.

4. What is the cost of getting IEC?

Currently, ₹500 application fee is charged by DGFT.

5. Does IEC expire?

No. Once issued, it is valid for lifetime unless cancelled or surrendered.

6. Is PAN mandatory for IEC?

Yes, PAN is used as the identity number for IEC registration.

7. Can IEC be modified?

Yes, you can update details like address, bank, contact info through DGFT portal anytime.

8. Is GST mandatory for IEC?

No, but if you are registered under GST, it is advisable to link GSTIN with IEC.

9. Can an individual apply for IEC?

Yes, individuals acting as proprietors or freelancers can apply using their personal PAN.

10. What is e-IEC?

IEC issued electronically by DGFT is known as e-IEC, and it serves as your valid IEC certificate.