In this article, we shall discuss the importance of an import-export code and its benefits
Introduction
The trade market in India has flourished to a great extent since centuries. With the progress of globalisation, goods from other countries are being brought to the country. Lets see the benefits of importer exporter code
The Indian export and import market has gained traction and the demand for the same is on the rise. So, here we have come up with how important it is to get the Importer Exporter Code.
India being a country of wealthy supplies of many basic minerals and metals, the world market has a great demand for its goods.
The Indian trade market has flourished since the time people found out the concept of trading goods. Slowly as globalization started bringing in goods from other countries into India, the import-export market started to gain momentum and the demand for imported and exported goods started to increase.
Among the majority population, many new traders started to take part in foreign trade practice. So the government made it necessary for the traders to register themselves to avoid frauds and malpractices.
What Is Import Export Code?
The Importer-exporter code number is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industries, Government of India.
The registration once done has a lifetime validity without which no person or company can practice the import or export business from India.
Every business that involves International trades, irrespective of the size and nature, requires the IEC Registration as the goods involved will be cleared from customs using the code without which no seller can import or export the goods from India. The registration of trade businesses surely allows the business entity to unlock the wider global market for their product or service.
Advantages Of IEC Registration:
Scope in the International Market
The IEC registration paves a way for the traders to introduce their products into the world market and expand their area of trade.
Online Registrations
The registration process is completely online which makes it hassle-free for the traders to register. A common portal is used for this purpose. The registration form has an attached document that has a list of documents required for registration in a simplified manner.
Lesser Document Requirement
For the registration process to get complete, one needs just four documents namely, (a)PAN card (b) copy of any ID proof © passport size photograph (d) cancelled cheque.
Lesser compliances
Once the importer or exporter has registered themselves, they do not have any specific need to file annual or monthly returns. The code possesses an extra incentive of not having to undergo the pain of compliances after registration which makes things a lot easier for the registered company or individual. Annual maintenance costs also do not need to be paid.
Reduces the risk of illegal transportation: Since the registered entities are administered by a single central authority, the chances of illegal export or import can be reduced by appropriate supervision. Whenever there is an illegal transaction, it can be apportioned by the officials with the records gathered by registration.
Permanent Registration
Once an entity registers as an exporter or an importer, the registration is valid for a lifetime and there is no requirement of renewal for sustaining the registration.
Apart from this, the government has provided the registered traders with certain schemes that exempt them from liabilities an unregistered trader would have to undergo causing extra losses.
Benefits Of Importer Exporter Code
Under the Service Exports from India scheme, all exporters who outsource services are provided with an incentive in a range of up to 3% to 5%, computed on the net foreign exchange earned.
The foreign trade policy 2015-20 has given two schemes for exports of merchandise and services, namely; Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), with the objective to give a better opportunity to offset infrastructural inefficiencies and other related costs for the good/services that have a high potential of bringing in profits in the global market, but couldn’t due to the externalities.
When registered exporters file a LUT under GST, they are exempted from the taxes and can further export their goods and services without paying taxes.
In case the exports are done under prepayment of taxes, they are free to claim it back.
By registration, the importers and exporters are given various subsidies to encourage more traders to register and obtain the IEC number.
The main reason for which is the overall income and returns the international trade provides the Indian economy, in general, to sustain in the international market.
The benefits gained by the import as well as export being registered in manifold is as follows:
IMPORT: While importing basic necessities like car spare parts, smartphones, etc., the costs of production reduce, causing the sale price of the product to reduce. Lower prices increase the demand for the product and hence expands the products’ market in the imported country rather than in the host country, generating more revenue.
EXPORT: Exporters who practise international trade emphasise on improving the sales potential of the product and expand their markets in the target countries.
This flourishes the Indian trade market in the international market and gives it a landmark of its own. Hence, the IEC can be considered as a licence for making international trade as every importer or exporter trading goods from within the Indian territory requires to register for clearing the goods through customs.
So, the registration of a trade individual or an entity is mandatory in nature and cannot be neglected at any costs whatsoever, so as to avail better incentives and legal recognition from the government.
Top performing Import and Export Industries in India
Imports:
- Mineral fuels including oils
- Gems and precious metals
- Electrical machinery and equipment
- Medicines
- Plastics
- Inorganic chemicals
Exports:
- Gems and precious metals
- Machinery and computers
- Organic chemicals
- Electrical machinery and equipment
- Iron and steel
- Cotton
- Clothing and accessories
Conclusion
Everyday, the markets are becoming more fluid in the global melting pot. Free trade deals and treaties are ensuring that the movement of trade across borders becomes easier and hassle free. At one point in time there were companies that focused either on domestic markets or on global markets.
But with the ease of doing global business becoming more real, many companies are choosing to operate both domestically and internationally, grabbing a larger slice of the pie.
And all of this through the simple process of obtaining an Import Export code. If you have any other queries or require any assistance with regulatory or legal matters, get in touch with us and we will ensure that you receive the best professional help for your requirements.
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