Export License: Meaning| How To Apply| Documents Needed | Types

Sanidhya Negi / January 8, 2025

An export license is a key document that not only ensures compliance with legal regulations but also opens doors to global markets. It provides businesses with opportunities for growth and expansion.

Having the right export license ensures smooth operations and compliance with India’s trade policies. In this blog, we’ll guide you through what an export license means, the requirements for obtaining one, the process involved, and why it’s essential for businesses looking to succeed in international trade.

What Does Export License Mean?

An export license is an official document that permits a person or business to export specific goods from their country. Unlike an import license, which allows goods into a country, an export license regulates what leaves the country.

Governments issue these licenses to monitor the quantity, destination, and parties involved in exports, ensuring international trade stays within regulations.

In India, exportable goods are categorized as:

1. Freely Exportable: Products that require no special permission.
2. Restricted: Products that require an export license.
3. Prohibited: Products that cannot be exported.

India uses the Indian Trade Clarification (ITC), based on HSN codes, to classify goods. Restricted items need a license, issued after reviewing transaction details. Prohibited items cannot be exported.

Obtaining an export license ensures compliance with government policies and facilitates international trade legally.

Basics of Export License in India

An export license is an essential document for businesses planning to ship goods internationally. It is a legal document that grants permission to export specific items from India. For products categorized as “restricted” under the Indian Trade Classification (ITC), obtaining an export license becomes mandatory.

In India, the Directorate General of Foreign Trade (DGFT) is the authority responsible for issuing export licenses. This ensures that trade activities comply with government regulations and safeguard national interests.

The purpose of an export license goes beyond monitoring. It allows the government to manage exports for reasons such as protecting resources, ensuring national security, and regulating the flow of restricted goods.

However, an export license in India is not just about following rules, it offers significant benefits for businesses. Exporters with the required license can access export promotion programs, enjoy duty refunds, and enhance their competitiveness in the global market.

Why is an Export License Needed?

An export license is a powerful tool for any business looking to grow beyond borders while benefiting from government support and tax advantages. Let’s explore why an export license is essential for businesses aiming to thrive in the global market.

Enjoy Tax and Duty Benefits: Exporting goods often qualifies businesses for tax relief and duty refunds, known as drawbacks. These benefits reduce your financial burden and free up capital that can be reinvested into growing your operations.

Reach a Global Audience: An export license allows your products, like handcrafted jewelry or textiles, to reach customers worldwide. It eliminates geographical boundaries and gives you access to a broader market.

Build Global Brand Recognition: Selling internationally helps establish your brand as a trusted name. Customers worldwide recognize your products, adding value and credibility to your business. This global trust enhances your brand’s image and paves the way for further expansion.

Avail Government Assistance: The Indian government actively supports exporters through various initiatives. These include financial aid for participating in international trade fairs, subsidies to reduce shipping costs, and expert advice to help businesses establish a foothold in new markets.

Documents Needed To Get An Export License

To obtain an export license a set of, you require some documents. The list of these documents are mentioned below:

1. ANF-1 Form (Profile of Importer & Exporter)
2. ANF-2 Form (Application form for export license of restricted items)
3. Copies of purchase orders or import orders from the buyer, or a contract agreement between the exporter and buyer
4. Fee Receipt of Application
5. PAN Card Copy
6. Identity Proof Copy
7. Address Proof Copy
8. Bank Certificate/ Cancelled Cheque
9. NOC (In case of rental property) 

Pre-requisite Needed When Applying For An Export License

If you want to obtain an export license in India, you need careful planning with right set of documents. The documents have already been mentioned above. To further ensure a smooth application process, you need to meet specific prerequisites and have your paperwork in order. Here are the key requirements for obtaining an export licence:

Official Business Registration: Your business must be legally registered in India. Whether you’re a sole proprietor, part of a partnership firm, or running an incorporated company, having formal registration under Indian law is a fundamental requirement.

Import Export Code (IEC): The Import Export Code (IEC) is a mandatory identifier for any business involved in international trade. Without a valid IEC, you cannot apply for an export license. 

PAN Card: A Permanent Account Number (PAN) is crucial for tax compliance and financial transactions. 

Current Bank Account: A current bank account is necessary to handle domestic and international payments smoothly. 

Process To Obtain an Export License in India

Getting an export license in India involves several steps, but with proper guidance, it becomes a straightforward process. Here’s a simple step-by-step guide to help you through it.

Go To the DGFT website: Visit the official website of the Directorate General of Foreign Trade (DGFT). Then navigate to the “Online ECOM Application” section under the services tab.

Choose the Application Type: Now select the option for “Restricted Item Import License or Restricted Export Item”. 

Fill Out the Online Application: Complete the application form by entering all the required details accurately. Also ensure that you have all the mandatory documents ready to upload.

Submit the Application: Save the application in PDF format and email it to export-dgft@nic.in along with the required documents.

Application Screening: The Export Cell reviews your application and provides feedback within three working days. If any documents or information are missing, a deficiency letter will be issued. 

EFC Review: The EXIM Facilitation Committee (EFC) evaluates the completed application and, if approved, issues an authorization letter.

Visit the Regional Authority: Take the copy of authorization letter, your application, and supporting documents to the jurisdictional Regional Authority (RA) of the DGFT.

Receive the Export License: The RA reviews the documents and issues the export license upon successful verification.

Different Types of Export Licenses

When engaging in international trade, different types of export licenses are required based on the nature of goods and their intended use. Here’s an overview of the most common types of export licenses. 

Individual Dual-Use Licenses: This type of license is necessary for exporting goods that have both civilian and military applications. These licenses are often linked to sensitive areas such as National security, Foreign policy, Nuclear non-proliferation, Missile technology, and Chemical & biological weapons control.

Open General Export License (OGEL): The Open General Export License, introduced by Defense Ministry, simplifies the export of specific defense-related components to certain eligible countries. This license streamlines defense exports by allowing exports of pre-approved items and limiting eligible countries to those that align with India’s defense and foreign policy interests. 

Brokering Activities Licenses: This license is required for individuals or businesses involved in brokering activities. Brokering refers to the negotiation or arrangement of transactions that may involve the transfer of military equipment, defense-related software, and technology linked to defense. 

Post-Application Process

Once you submit your export license application, the DGFT reviews it, and the process usually takes 30-45 days. If needed, they may ask for additional details, especially for restricted items and responding quickly can help avoid delays.

When your application is approved, you’ll get an email with instructions to access your license, often available online. In some cases, you might need to visit the DGFT office. You can track your application’s status on the DGFT website for updates.

Conclusion

In conclusion, obtaining an export license is crucial for businesses aiming to expand globally. It ensures compliance with India’s trade regulations and facilitates smoother international transactions. Whether you’re exporting freely permitted or restricted goods, a proper export license helps you navigate legal requirements effectively.

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FAQs

Ques: Which items need an Export License?

Ans: The list of items that need export license in India are:

1. Seeds of all forestry species
2. Vintage Motorcycles, parts and components 
3. Artworks, antiques and culturally significant goods
4. Rice bran
5. Cashew seeds and plants

Ques: Who Issues an Export-Import License?

Ans: Directorate General of Foreign Trade (DGFT) issues the export-import license.

Ques: What is the cost of obtaining an export license in India?

Ans: To get an export license in India, you need an IEC (Import Export Code), which costs INR 500. If you hire an agency to help, their fees are usually around INR 1000. The total cost of obtaining an export license in India is typically INR 500 to INR 1500.