Introduction to Role of Directorate General of Foreign Trade (DGFT)

Directorate General of Foreign Trade (DGFT) is a government agency that regulates imports and exports in India.  The DGFT is responsible for formulating a country’s foreign trade policy and promoting export and import trade. By providing trade-related information and promoting special economic zones, DGFT aims to increase exports of the country.

Origin of DGFT:Transforming from Controller to Facilitator in India’s Foreign Trade

• The DGFT came into existence in 1991 after the LGP (liberalization, globalization, privatization) policies of the government were introduced.
• Since then, the DGFT has turned from a ‘controller’, into a facilitator in matters of foreign trade.

Nodal Authority: DGFT’s Role under the Ministry of Commerce and Industry

• The office of Directorate General of Foreign Trade (DGFT) comes under the Ministry of Commerce and Industry.
• It was initially known as the Chief Controller of Imports & Exports (CCI&E).

Organisational Structure of DGFT: Headquarters, Zonal Offices, and Regional Presence

• Headquarters: The headquarters of the Directorate General of Foreign Trade (DGFT) is located in New Delhi and headed by the Director General of Foreign Trade. 
  • The regional offices are led by the Joint Director General, Deputy Director-General, and Assistant Director-General. 
• Zonal Offices: The DGFT zonal offices are located in New Delhi, Mumbai, Chennai and Kolkata.
• Regional Offices: The regional offices of DGFT can be found in cities such as Vadodara, Varanasi, Ahmedabad, Rajkot, Jaipur, Jammu, Kolkata, Ludhiana, Mumbai, Kanpur, Srinagar, Coimbatore, Nagpur, Panipat, Pune, Delhi, Ernakulam (Kochi), Surat, Bengaluru, Chennai, Visakhapatnam, Guwahati, Hyderabad, Indore.

Objectives of Directorate General of Foreign Trade (DGFT):  Promoting, Regulating, and Facilitating India’s International Trade

• Promotion of Exports: To promote exports of Indian goods and services by sharing information and guidance to exporters.
• Regulation of Foreign Trade: To regulate foreign trade in India by implementing laws and regulations related to imports and exports.
• Facilitation of Imports: To ease imports in India by issuing import licenses and permits. It also provides information and guidance to importers along with monitoring import flows and
• Formulation of Foreign Trade Policy: To formulate Foreign Trade Policy of India by keeping in mind the government’s goals for foreign trade.
  • Recently, The Foreign Trade Policy 2023 is being announced to provide the
  • policy continuity and a responsive framework.
• Protection of Interests: To protect the interests of Indian exporters and importers and give them suggestions that protect their rights.

Functions of Directorate General of Foreign Trade (DGFT)

• Implement Foreign Trade Policy: The DGFT is responsible for implementing the foreign trade policy of the government.
• Store Information: The DGFT also maintains a record of importers and exporters of India for policy-making purposes and also monitoring security.
• Provide Exporter Importer Code: The DGFT is responsible for granting Exporter Importer Code (EIC) number needed to export and import goods.
• Transit of Goods: The DGFT is responsible for granting permits for transit of goods from India to adjacent countries as per trade agreements.
• Trade Promotion: The DGFT promotes trade with India’s neighbouring countries.
• Duty Entitlement Passbook: The DGFT controls the duty entitlement passbook (DEPB) rates, which is an export incentive given by GOI.
• Free Export Exemption: The DGFT grants permission for free exports whenever it feels it is necessary.
• Handle Quality Complaints: The complaints from foreign buyers regarding quality of Indian export is handled by the DGFT
• ITC – HS Codes: New codes in ITC-HS codes (Indian trade classification based on a harmonized system of coding) is formulated by the DGFT.
• Latest Changes: The DGFT offices help exporters to get updated on developments in international trade, like WTO agreements, rules of origin, anti-dumping issues, etc.

Schemes related to the Directorate General of Foreign Trade (DGFT): To Enahnce Export Growth & Competitiveness

• Advance Authorisation Scheme: Unlocking Advantages through DGFT’s Advance Authorisation Scheme

• • Duty-Free Import for Export Purposes: It is a scheme under the Foreign Trade Policy that allows duty-free import of inputs for export purposes.
  • User-Friendly Database: Exporters can search their eligibility from a user-friendly and searchable database of Ad-hoc Norms fixed in the previous years. 
  • Benefits for Exporters: Through this process, users can obtain an advance authorisation without approaching the Norms Committee, thereby enabling faster processing and shorter turnaround times for exporters.

• Export Promotion Capital Goods (EPCG) Scheme for Zero Customs Duty Capital Goods Import

• • Facilitation of Capital Goods Import: The scheme seeks to facilitate import of capital goods for producing quality goods and services, thereby boosting India’s manufacturing competitiveness.
  • Zero Customs Duty Import: Under the scheme, beneficiaries can import capital goods for pre-production, production and post-production at zero customs duty.
  • Eligible Beneficiaries: The scheme covers manufacturer exporters with or without supporting manufacturer(s), merchant exporters linked supporting manufacturer(s) and service providers.

• Rebate of State and Central Levies and Taxes (RoSCTL) Scheme: Boosting Textile Exports

• • Cost-Competitive Advantage: The scheme was implemented for the purpose of enhancing export competitiveness of garments and made-ups sectors.
  • Zero-Rated Export Principle: The scheme enables apparel/garments and Made ups products to become cost-competitive and also adopt the principle of zero-rated export. 
  • Compensation for Taxes and Levies: The main objective is to compensate for the State and Central Taxes and Levies on export of apparel/ garments and Made-ups through rebate.

• Duty Free Import Authorization (DFIA) Scheme: Facilitating Exports

  • Exemption of Customs Duties:
    • Under this scheme, basic customs duty, additional customs duty, education cess, anti-dumping duty and safeguard duty are exempted for inputs required for export production.
  • Eligibility Criteria:
    • For exporters to be eligible under the scheme, minimum value addition of 20% is mandatory to be achieved.
  • Validity Period: The duty-free import authorisation will be valid for the period of 12 months from the date of issue.

• Merchandise Exports from India Scheme (MEIS) Scheme

• • Incentivizing Exports: The MEIS scheme was introduced to encourage exports from India by providing exporters with duty credit scrips. These credit scrips are freely transferable.
  • Calculation Basis for Incentives: The calculation of incentives is based on percentage of value exports in free foreign exchange or value of exports as per shipping bills in free foreign exchange.
  • Utilization of Duty Credit Scrips: The scrips earned through the scheme can be used for payment of a number of duties/taxes including the customs / excise duty / service tax. 

• Service Exports from India Scheme (SEIS) Scheme

• • Promotion of Service Exports: The scheme seeks to reward service providers for all eligible exports of services from India. 
  • Incentives for Eligible Exporters: It has the main objective of promoting the export of services from India.
  • Utilization of Credit Scrips: Eligible exporters are provided credit scrips, which can be used for payment of essential customs duty and specific other duties, apart from being freely transferable.

• Interest Equalization Scheme (IES): Employment Generation and Economic Growth

• • Facilitating Export Financing: Introduced in 2015, the scheme seeks to provide pre and post-shipment export credit to identified exporters in rupees.
  • Implementation by RBI and Banks: The scheme is implemented by the RBI through various Public and non-Public Sector banks who are involved in providing shipment credit to the exporters.
  • Employment Generation: By promoting exports from these employment intensive sectors, it would lead to generation of employment in the country.