International Trade, Import-Export and Customs in India
How foreign traders plug into India's DGFT and customs machine - IEC, FTP 2023, RoDTEP, EPCG, MOOWR bonded manufacturing, SVB valuation, CAROTAR and AEO.
The India-side DGFT and customs layer - how a foreign trader gets permission, pays the least duty legally available, and clears the fastest.
A foreign company does not "trade with India." It plugs into a permissioning-and-remission machine run by two agencies that rarely talk to each other in the way an entrant expects. The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce, controls permission and money back - your importer-exporter code, the Foreign Trade Policy, the export-incentive scrips, and the export-control list. The Central Board of Indirect Taxes and Customs (CBIC), under the Ministry of Finance, controls what you actually pay and how fast you clear - valuation, duty, bonded warehousing, origin enforcement and the clearance gateway. The whole game is reducing your landed cost and your time-to-clear without tripping a compliance wire.
Here is the part most entrants get wrong. Every rupee of duty in India has an escape hatch, and every hatch has a string attached. Duty Drawback refunds duty after you export. RoDTEP hands you a remission scrip. Advance Authorisation lets in duty-free inputs against an export obligation. EPCG lets in duty-free capital goods against an export obligation. MOOWR lets you defer duty indefinitely and pay only if and when you sell into the domestic market. These are not interchangeable. Choosing the wrong hatch - locking into an export obligation you cannot meet, or paying full duty when a deferral scheme was available - is the single most expensive structuring error a foreign trader makes in India, and it is usually made before the first container ships.
Which entrant you are decides which hatch fits: a brand importing finished goods through an Indian arm; an MNC importing components from its own parent; a manufacturer serving both the Indian market and exports; an established exporter scaling capacity; an importer sourcing under a free-trade agreement; or a smaller first mover clearing through a broker.
At a glance
- Two regulators, two jobs. DGFT gives permission and money back (IEC, FTP 2023, RoDTEP/RoSCTL/Advance Authorisation/EPCG, SCOMET). CBIC/Customs decides what you pay and how fast (valuation including SVB, MOOWR, CAROTAR, AEO, ICEGATE).
- An Importer-Exporter Code (IEC) from DGFT is mandatory to import or export - a 10-digit, PAN-linked, permanent code, confirmed annually.
- If you import from your own group, expect the Special Valuation Branch (SVB). Customs presumes your relationship may have depressed the price and can add royalties and fees to the customs value - inflating duty on every future consignment.
- MOOWR 2019 bonded manufacturing defers import duty with no export obligation - often the right answer for a dual-market manufacturer, but verify the current IGST-deferral treatment, which is contested.
- The remission/deferral menu - RoDTEP, Duty Drawback, RoSCTL, Advance Authorisation, EPCG, MOOWR - is a "which hatch when" decision, not a checklist; the wrong choice is costly and often irreversible.
- Importing under a free-trade agreement triggers CAROTAR 2020 origin due-diligence on the importer, with five-year record-keeping. Corridor and CEPA tariff detail sit on the India-UAE CEPA page (trade india uae cepa).
- FDI for wholesale / cash-and-carry trading is 100% automatic; retail is FDI-conditioned by format - see the Consumer & Retail page (consumer retail ecommerce). This page is the import and customs layer.
Why India for import-export - the count that is the opportunity
India books roughly US$1.7 trillion of two-way trade, yet remarkably few firms actually do it. In FY24-25, exports reached US$820.93bn (up 5.50%) and imports US$915.19bn (up 6.85%), with the UAE among the fastest-growing import sources, up 32.06% (PIB, Ministry of Commerce, 16 April 2025). FY25-26 exports were US$860.09bn (up 4.22%) on provisional figures.
The number that matters for an entrant is smaller and rarely cited. Against roughly 2.78 lakh registered EXIM entities, only about 72,775 distinct exporters and 68,905 importers actually traded in FY22-23 (DGCIS). Trusted-trader accreditation is rarer still: 5,947 AEO-accredited entities as of 31 October 2024 (PIB/CBIC). A US$1.7-trillion trade book carried by fewer than 73,000 exporting firms is not a crowded field. The binding constraint is not demand - it is operational competence: correct classification, defensible valuation, the right scheme, and clean clearance. That competence is the advisory product, and it is where landed cost is won or lost.
Treat any "X crore IEC holders" claim with suspicion. DGFT does not publish a clean active-IEC headline; cumulative codes ever issued run to millions and say nothing about who is actually trading. The DGCIS distinct-trader counts are the honest figure.
Which route are you taking?
Before the structure, identify the trade you are actually doing. The first fork is whether you are importing for the Indian market, importing from your own group, manufacturing for both markets, exporting, sourcing under an FTA, or selling to consumers - because each pulls a different scheme and a different legal exposure.
Most foreign entrants sit in the first three rows. The expensive mistakes also cluster there: importing from the parent without preparing for SVB, or committing to an export obligation when a no-obligation deferral would have served better.
| Route | Typical operator | Key legal issue |
|---|---|---|
| Direct import for B2B distribution | UAE trading house or brand setting up an Indian arm | IEC mandatory; wholesale / cash-and-carry FDI 100% automatic; SVB valuation applies the moment you import from your own group |
| Captive import from parent or group | MNC manufacturing or assembly subsidiary | SVB related-party valuation; royalties and management fees can be added to customs value - the #1 MNC duty exposure |
| Bonded manufacturing (MOOWR) | Manufacturer wanting flexibility, no fixed export obligation | MOOWR 2019 - the plant becomes a private bonded warehouse; no export obligation; verify the current IGST-deferral treatment |
| Export production vs duty-free inputs / capital goods | Established exporter scaling capacity | EPCG (export obligation of 6x duty saved over 6 years) or Advance Authorisation (duty-free inputs against SION); shortfall means duty plus interest recovery |
| Preferential / FTA-route sourcing (e.g. CEPA) | Importer sourcing from an FTA partner such as the UAE | CAROTAR 2020 importer due-diligence on the Proof of Origin; five-year records; corridor specifics on the CEPA page |
| Customs-broker-led clearance | Smaller traders, first movers, e-commerce exporters | Broker holds a CBLR 2018 licence; liability for mis-declaration stays with the importer/exporter of record |
| Retail / consumer-facing | Brand selling to end-consumers | FDI-conditioned by format (single-brand 100% automatic with sourcing conditions; multi-brand 51%, government route) - Consumer/Retail page; here, only the import/customs layer |
The SVB trap - captive imports valued against you by default
If you import from your own parent or group, customs does not take your invoice price at face value. Related-party transactions - parent-subsidiary, common-director, or a cross-holding of 5% or more - are referred to the Special Valuation Branch (SVB), which examines whether the relationship depressed the declared price. The importer self-declares the relationship in Annexure-A at the first Bill of Entry (CBIC Circular 05/2016-Customs, 9 February 2016). Goods clear provisionally in the meantime, and the review commonly runs six to eighteen months.
The exposure is not just the invoice price. A range of related-party payments can be added to the customs value - royalties and licence fees, the value of assists and tooling, design or engineering fees, post-import payments, and management fees - and once a loading is fixed, it applies prospectively to every future consignment, inflating duty on the whole import stream. This is the largest single customs exposure an MNC carries in India, and it is structural, not incidental. Because a loading is sticky and prospective, the inter-company pricing, the royalty arrangement and the Annexure-A narrative should be structured before the first import, not defended after one. We help you prepare for SVB; we do not promise an outcome - valuation is determined by the regulator.
MOOWR - defer the duty, with no export obligation
The Manufacture and Other Operations in Warehouse Regulations (MOOWR 2019, Notification 69/2019-Customs N.T., 1 October 2019) let a manufacturer run its factory as a private bonded warehouse. Imported inputs and capital goods enter with Basic Customs Duty deferred until the goods leave the warehouse. If the finished goods are exported, the deferred duty is remitted in full - effectively zero. If they are sold into the domestic market, the duty falls due then, with no interest. Crucially, MOOWR carries no export obligation, no net-foreign-exchange test and no time limit - unlike EPCG, Advance Authorisation or an SEZ unit.
For a manufacturer serving both Indian and export demand, that combination usually beats the obligation-bound schemes: you keep the duty deferral without betting on an export volume you may not hit. One live caveat: the IGST-deferral element of MOOWR is under policy review and litigation. Treat the Basic Customs Duty deferral as the settled core of the scheme, and verify the current IGST treatment before you model it - do not assume the position is fixed.
The compliance wires - CAROTAR, AEO, SCOMET, IEC, brokers and ICEGATE
Beyond duty, a handful of regimes can stop a consignment or change how it clears. Treat these as the wires you must not trip.
- IEC - the Importer-Exporter Code from DGFT. Mandatory, 10-digit, PAN-linked and permanent, but it must be confirmed (and updated if details change) annually, or it can be deactivated.
- CAROTAR 2020 - the Customs (Administration of Rules of Origin under Trade Agreements) Rules. When you claim a preferential duty under an FTA, the due-diligence burden sits on you, the importer: you must hold a valid Proof of Origin (the term that replaced "Certificate of Origin" from 18 March 2025), be able to substantiate the origin criteria on request, and keep records for five years. The corridor-specific origin rules for the India-UAE route sit on the CEPA page (trade india uae cepa); the enforcement obligation is what lives here.
- AEO - Authorised Economic Operator, India's trusted-trader programme (tiers T1, T2, T3). Accreditation brings faster clearance, deferred duty and fewer physical inspections. It is rarely the first-shipment answer; it earns its place at volume, on repeat shipments, once the compliance posture is mature - and approval is granted by CBIC on its own criteria, not on application volume. Only 5,947 entities were accredited as of 31 October 2024, so it remains a genuine operational edge.
- SCOMET - the Special Chemicals, Organisms, Materials, Equipment and Technologies list, India's export-control regime for dual-use and strategic items. If your product is listed, you need an export authorisation and an end-user certificate. The list expands: a new Category 7 (covering quantum, advanced semiconductors and additive manufacturing) was notified on 23 September 2025 and in force from 23 October 2025. Check the current list before you export.
- Customs brokers (CBLR 2018) - a licensed broker can clear on your behalf, but liability for any mis-declaration remains with the importer or exporter of record. The broker's licence does not transfer your responsibility.
- ICEGATE - CBIC's electronic gateway and the single-window front-end for filings and assessment. It is the channel; AEO status is what makes that channel fast.
- BIS / QCO - a Quality Control Order can make a product non-importable unless it is BIS-certified, regardless of duty position. This is a real, product-specific gate for many goods, but the machinery-QCO detail belongs on the Industrial Machinery page (industrial machinery) - certify before you ship.
Before the first shipment: the landed-cost and clearance diagnostic
The cheapest place to get the trade structure right is before the first container ships. Run this diagnostic:
- Classify the goods and confirm the HS code before you price the India opportunity - the duty, the schemes and the standards all hang off it.
- Model the landed cost: basic customs duty, IGST, any cess, and any exemption or preferential-duty route (CEPA or another FTA origin), set against the customs valuation.
- Check whether the shipment is related-party, and whether SVB or customs-valuation additions (royalties, assists, tooling, design fees, post-import payments) may apply.
- Choose the scheme deliberately: Drawback / RoDTEP / RoSCTL, Advance Authorisation, EPCG, MOOWR or Project Imports - the "which hatch" decision, made once and hard to unwind.
- Confirm the wires before shipment: BIS/QCO certification, SCOMET licensing, any import licence and product standards.
- Set the broker instructions and document control - the customs broker files, but the importer of record carries the liability and the penalty if a declaration is wrong.
How a foreign company enters
The synthesis is straightforward once the route is named. You incorporate or already hold an Indian entity (the vehicle is covered on India business setup, india business setup), obtain an IEC, then choose your duty posture deliberately. A wholesale or cash-and-carry importer takes 100% automatic FDI and lives mainly in the valuation world - which, for group imports, means SVB. A dual-market manufacturer typically structures around MOOWR. A committed exporter weighs EPCG or Advance Authorisation against MOOWR, accepting an export obligation only where the duty-free inputs or capital goods justify the risk. An FTA-sourcing importer builds a CAROTAR origin file from day one, and high-volume traders pursue AEO for the clearance advantage. The decision sequence - vehicle, code, valuation posture, scheme - is the work; the filings follow it.
Legal workstreams for an import-export / customs setup
A clean trade setup runs along a predictable set of workstreams. The order matters, because valuation and scheme choices are far cheaper to set before the first shipment than to unwind after.
- Confirm the FDI route for the activity (wholesale/cash-and-carry automatic; retail format-conditioned) and the entity to hold the IEC.
- Obtain the IEC and align it with the PAN and the entity's permitted activities.
- For group imports, build the SVB / Annexure-A position - inter-company pricing, royalty and management-fee treatment - before the first Bill of Entry.
- Select the duty posture: MOOWR deferral, EPCG/Advance Authorisation against an export obligation, or straight duty with post-export RoDTEP/Drawback/RoSCTL - and record the rationale.
- Stand up CAROTAR origin due-diligence and five-year record-keeping where you claim preferential duty.
- Screen products against the SCOMET list and the applicable BIS/QCO requirements before shipping.
- Appoint a CBLR-licensed customs broker while keeping mis-declaration liability and document control with the entity.
- Where worthwhile, pursue AEO accreditation for clearance and deferred-duty benefits.
- Coordinate FEMA / forex for trade payments with the treasury and banking side (mechanics on cross-border trade risk, /trade-cross-border-trade-risk/, and FEMA advisory, fema advisory).
The India-UAE corridor
For UAE-based traders and brands, the import/customs layer on this page sits beneath the corridor itself. The CEPA tariff lines, the preferential-duty schedule and the rules of origin that make a UAE-sourced consignment eligible for concessional duty are corridor mechanics - they live on the India-UAE CEPA page (trade india uae cepa). What this page adds is the India-side execution: the IEC, the CAROTAR origin file you must hold to actually claim the CEPA rate, the valuation treatment if you are importing from your own UAE group, and the scheme choice for whatever you manufacture or re-export.
Where this goes wrong
- Importing from the parent without preparing for SVB. The first related-party Bill of Entry opens a valuation review; royalties and fees get loaded onto customs value; and because the loading is prospective, the cost compounds across every later consignment.
- Locking into an export obligation you cannot meet. EPCG and Advance Authorisation look attractive until volumes fall short - then customs recovers duty plus interest. A dual-market manufacturer often should have taken MOOWR instead, and an acquirer should diligence inherited obligations before they crystallise.
- Hard-coding a RoDTEP rate. Rates moved three times in a single recent six-week window. A model built on a stale rate, or a contract priced off one, is wrong by the next notification - check by HS code and shipment date.
- Claiming a preferential duty without a CAROTAR file. Under an FTA, the origin burden is on the importer; a missing or weak Proof-of-Origin trail turns a concessional clearance into a demand with penalties.
- Assuming the MOOWR IGST position is settled. The Basic Customs Duty deferral is the reliable core; the IGST-deferral element is contested - model it only on a verified current reading.
- Shipping into a QCO without BIS certification. A standards order can hold goods at the port irrespective of duty; certification is a pre-shipment task, not a clearance afterthought.
- Treating the broker's licence as your indemnity. A CBLR broker clears for you, but mis-declaration liability stays with the importer/exporter of record.
How ATB Corporate helps
ATB Corporate advises foreign traders, brands and manufacturers on the India-side trade and customs layer end to end: the FDI route and the entity to hold the IEC; the IEC itself; the SVB and Annexure-A valuation position for group imports; the choice between MOOWR, EPCG, Advance Authorisation and the RoDTEP/Drawback/RoSCTL remission route; CAROTAR origin due-diligence; SCOMET and BIS/QCO screening; customs-broker appointment with liability kept where it belongs; and AEO accreditation where it pays. Because valuation outcomes, scheme eligibility, FDI conditions and AEO accreditation are determined by the regulators, we structure the position, evidence it and run the process - we do not promise the result.
Trade, Import-Export & Customs — Answered
Yes. The Importer-Exporter Code is a mandatory 10-digit code issued by DGFT, linked to your PAN. It is permanent once issued, but you must confirm and, if anything has changed, update it annually, or it can be deactivated.
For wholesale and cash-and-carry trading, yes - 100% FDI under the automatic route. Retail is conditioned by format (single-brand 100% automatic with sourcing conditions; multi-brand 51% via the government route), and the detail sits on the Consumer & Retail page. This page covers only the import and customs layer.
Because related-party imports go to the Special Valuation Branch, which checks whether the relationship depressed the price and whether royalties, assists, design fees or management fees should be added to the customs value. Plan the inter-company pricing and the Annexure-A narrative before your first shipment, as any loading applies prospectively.
The cheapest route when export volumes are uncertain is usually MOOWR 2019 bonded manufacturing. It defers Basic Customs Duty until the goods leave the warehouse, carries no export obligation, and charges no interest if you later sell domestically. Verify the current IGST-deferral treatment, which is under review.
Duty Drawback refunds customs/excise on inputs after export; RoDTEP remits embedded taxes via a transferable scrip and is the default for most exporters; RoSCTL is confined to apparel and made-ups. You cannot claim Drawback and RoDTEP on the same element.
Normally customs recovers the duty plus interest. Deadlines are periodically relaxed - obligations expiring March-May 2026 were auto-extended to 31 August 2026 - so check the current public notice; and on an acquisition, diligence any inherited obligation before it crystallises.
Under CAROTAR 2020 the due-diligence sits on the importer: hold a valid Proof of Origin, be able to substantiate the origin criteria on request, and keep records for five years. The corridor-specific CEPA rules are on the CEPA page.
Possibly. If it is on the SCOMET list - dual-use or strategic items - you need an export authorisation and an end-user certificate. The list grows: a new Category 7 covering quantum, advanced semiconductors and additive manufacturing was notified on 23 September 2025 and in force from 23 October 2025.
Most likely a BIS Quality Control Order, which makes a product non-importable unless it is BIS-certified, regardless of duty. Certify before shipping; for machinery specifically, see the Industrial Machinery page.
AEO is India's trusted-trader status (tiers T1-T3), bringing faster clearance, deferred duty and fewer inspections. It is rarely the first-shipment answer - it earns its place at volume, on repeat shipments, once compliance is mature. With only 5,947 accredited entities as of 31 October 2024, it is a real competitive edge for a serious importer or exporter.
In India, every duty has an escape hatch with a string attached; the RoDTEP, Drawback, MOOWR and EPCG choice, and the SVB position on related-party value, decide the landed cost long before the first container ships.
Licensing, approvals and any tax treatment are decided by the authorities on the facts. Talk to our team when you are ready.
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