What is the Significance of the Importer Exporter Code
India has witnessed significant growth and expansion in the trade market. Globalisation has interconnected countries and erased the limitations of borders thus, enabling the smooth flow of goods and services globally.
Whenever any business is involved in export processes, the Importer Exporter Code (IEC) is always taken into consideration. Thereby, it becomes necessary for us to know what IEC is and its prominence in the import-export market.
Exports and Imports in India
India has enormous resources that have a hugely profitable market in the international trade industry.
The country’s import-export sector is flourishing since the day it came into being. Globalisation gave a great push to the industry by opening the doors for importing and exporting goods across borders. This not only increased the range of products in the market but also enhanced the competitiveness thus, encouraging the manufacturers to produce high-quality products with attractive prices.
The Directorate General of Foreign Trade (DGFT), operating under the Ministry of Commerce and Industry also started introducing various schemes and provisions. The aim is to encourage the exporters and importers in India to effectively expand their businesses to the international platform. Along with that, the government took this initiative to protect the traders and prevent any type of fraud or malpractice.
What is Importer Exporter Code
An Importer Exporter Code (IEC) refers to a 10-digit code provided by the DGFT under the Ministry of Commerce and Industry, Government of India.
There is no need for regular renewals because the IEC registration is valid for a lifetime. If any individual or business does not obtain the Importer Exporter Code for their commodities, they cannot process any export or import in India.
Is IEC Registration Important?
Yes! Indeed, having an IEC registration is essential for international trading businesses. Irrespective of the nature and size, every company must have an IEC because the commodities are granted clearance from customs using the Importer Exporter Code.
Thus, registering your firm enables the business entity to spread its network and provide services in the international market.
What are the Advantages of IEC Registration?
There are numerous benefits of the Importer Exporter Code, let us have a look at them.
Reaching the International Market
IEC registration opens the doors for domestic importers and exporters to expand their business on a global level, thus widening their area of carrying out trade.
Traders can easily register online to acquire Importer Exporter Code for their business. There is a common portal used for registrations where you will find the application form and all the required documents. It is quite a hassle-free and simple process.
Minimal Documentation Requirements
You only need the following documents to register for IEC:
- PAN card of the individual or the business.
- Copy of any valid ID proof of the registrant.
- Passport size photograph of the applicant.
- A cancelled cheque
Once registration of the importer or exporter is done, there is no requirement to file any monthly or annual returns. You do not have to go through the pain of compliance after registration is done which is such a relief. Also, you do not have to pay any annual maintenance costs.
Reducing the Risk of Illegal Transportation
The registered entities are regulated by a central authority hence, minimising the probability of illegal imports or exports with strict supervision. If any illegal transaction takes place, the officials can easily trace it through the data collected by IEC registration.
As you read above, the IEC has a lifetime validity thus, you are free from the tension of getting it renewed regularly.
Along with this, the Government of India, through the DGFT has introduced various schemes exempting the registered importers and exporters from the liabilities. On the contrary, those who do not have an Importer Exporter Code have to bear extra losses, which none of us want.
What are the Benefits of Importer Exporter Code
If you are an exporter who outsources their services, then under the Service Exports from India scheme, you will be granted an incentive ranging from 3 to 5 per cent, based on the net foreign exchange turned in.
Through the Foreign Trade Policy (FTP), Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) were introduced. The aim of these schemes is to provide better opportunities to tackle infrastructural inefficiencies and other related costs for commodities or services. These are those goods and services that have the potential to bring enormous profits in the international market but are facing issues because of externalities.
If you are a registered exporter, you can file a LUT under GST. This exempts them from paying taxes on the export of goods and services. And even if you had to pay taxes on exports, you can claim a refund by providing the required documents for evidence.
The Government of India provides several benefits to the traders with Importer and Exporter Codes mainly because of the overall returns and income the global trade brings to the Indian economy.
Benefits Gained from Imports
While importing commodities such as smartphones, spare parts for automobiles and machinery, etc., the cost of production decreases which results in a reduction of the sale price of the products.
With low prices, there is a rise in demand for the commodity which further expands its market in the importing country rather than where the good originated, hence, generating more revenue.
Benefits Gained from Exports
Exporters in the international trade market are keen on enhancing the sales potential of the products they manufacture and expanding their sales network in the target countries.
This makes the import-export market of India prosper in the International sphere, marking its prominence in the industry. Henceforth, the Importer Exporter Code can be recognised as a license for global trade because every importer and exporter needs customs clearance to trade their goods and services across borders.
Thus, IEC is a mandatory and very significant element which grants numerous incentives and legal recognition to importers and exporters.
Importer Exporter code is a significant business identification code for any export and import business. No individual or company can proceed to export or import goods and services without getting IEC issued unless given a specific exemption. However, IEC is not restricted to service exports, unless the service provider benefits from Foreign Trade Policy.
Now that you have come here, you must have analysed the significance of the Importer Exporter Code and how simplified the process to get it issued is.