EXIM Policy India Explained: A Complete Guide for MSME Exporters

By Mithila Mornings Editorial · Published 19 May 2026 · 24 min read

India's EXIM policy is not a single document. It is a layered regulatory system governed by at least four distinct legal frameworks — and understanding which layer governs your specific situation determines whether you pay full duty or zero, whether your shipment clears in hours or weeks, and whether you recover lakhs in scheme benefits or forfeit them through procedural error. This guide covers all four layers, the current FTP 2023 scheme landscape, ITC(HS) classification, SCOMET controls, FEMA compliance, and a step-by-step process for first-time MSME exporters.

The Four Regulatory Layers of India EXIM Policy

Experienced exporters learn early that "EXIM policy" covers four overlapping layers, each administered by a different authority. Confusing them is one of the most common and costly errors.

Layer 1 — Foreign Trade Policy (FTP 2023): Notified by the Ministry of Commerce and Industry on 31 March 2023 under the Foreign Trade (Development and Regulation) Act, 1992. FTP 2023 governs: IEC conditions, RCMC requirements, export promotion schemes (RoDTEP, AA, EPCG, DFIA), Status Holder recognition, Towns of Export Excellence, and e-commerce export facilitation. It has no fixed end date — an explicit departure from previous five-year cycles. DGFT administers FTP through its 87 Regional Authorities.

Layer 2 — DGFT Notifications and Public Notices: DGFT continuously amends FTP through Policy Circulars, Public Notices, and Notifications. These amend specific scheme procedures, revise SION norms, update ITC(HS) export policy conditions, or extend deadlines. The RoDTEP rate schedule, for example, is a DGFT Notification (Notification 19/2015-20 dated 17 August 2021, Appendix 4R) — separate from FTP text itself. Tracking DGFT notifications at dgft.gov.in is mandatory for any serious exporter.

Layer 3 — Customs Notifications (CBIC): The Central Board of Indirect Taxes and Customs (CBIC) issues customs notifications setting Basic Customs Duty (BCD) rates, exemptions, and import conditions. These are entirely separate from FTP. An import may be permitted under FTP but still attract 20% BCD under a CBIC customs notification. Landed cost calculation requires both FTP clearance and CBIC duty computation.

Layer 4 — RBI/FEMA Circulars: The Reserve Bank of India governs the foreign exchange aspects of trade through FEMA (Foreign Exchange Management Act, 1999) and Master Directions on Export of Goods and Services. Key RBI rules: export proceeds realisation timelines (9 months, 15 months for Status Holders), AD Code registration, EDPMS reporting, and caution listing for non-realisation.

Who This Applies To — and Status Holder Recognition

Every person or entity exporting or importing goods from India must obtain an IEC. There are no size thresholds — a sole proprietor shipping one consignment needs an IEC just as a large manufacturer does. RCMC is required to access scheme benefits; it is not mandatory for the act of export itself.

Status Holder Recognition: FTP 2023 Chapter 3 recognises exporters who achieve net foreign exchange earnings thresholds over the previous 3 financial years. Tiers: One Star Export House (USD 3 million), Two Star (USD 25 million), Three Star (USD 100 million), Four Star (USD 500 million), Five Star (USD 2,000 million). Benefits include: self-certification of Certificate of Origin, 15-month FEMA realisation period (vs. 9 months standard), priority Customs clearance, and an additional 2% duty scrip entitlement on eligible exports. Apply at the nearest DGFT RA with audited export turnover data.

Eight Steps to Navigate EXIM Policy as an MSME Exporter

1. Obtain IEC (1–3 working days): Apply at dgft.gov.in using ANF-2A form. Documents: PAN card copy, bank certificate (from scheduled bank on letter head), address proof, digital photograph, digital signature. Fee: INR 500. IEC is PAN-linked, permanent, and portable — no renewal needed. Bihar applicants are served by the DGFT Regional Authority in Patna.
2. Identify ITC(HS) Code (same day): Use the ITC(HS) schedule at dgft.gov.in/CP/?opt=itchs. Find the correct 8-digit code. Check the "Export Policy" column: Free, Restricted, Canalised, or Prohibited. Restricted items require a licence from DGFT. Canalised items can only be exported through designated canalising agencies. Prohibited items cannot be exported.
3. Obtain RCMC from Relevant EPC (7–15 working days): File ANF-3A at your designated EPC's portal. Documents: IEC copy, GSTIN certificate, business registration document, two photographs. RCMC unlocks RoDTEP claims, MDA grants, scheme applications, and EPC services. MSMEs exporting multiple product categories may need RCMC from more than one EPC — for example, a Bihar exporter of both Bhagalpuri silk and Madhubani art needs both Textiles Export Council (AEPC/HEPC) and EPCH RCMC.
4. Register AD Code at Port (5–10 working days): Obtain Authorised Dealer (AD) Code letter from your scheduled bank (typically the bank where your current account is held) and register it at Customs House at your export port or ICD. One-time per port-bank combination. Required before filing the first shipping bill. Bihar exporters typically use ICD Patna (CONCOR), Raxaul ICP, or Jogbani ICP depending on product type and destination.
5. Apply for Scheme Authorisation if Required (10–30 working days): For Advance Authorisation: apply at DGFT with ANF-4B, SION norms, and purchase order. For EPCG: apply with ANF-5A and machinery proforma invoice. RoDTEP requires no prior application — it is claimed at shipping bill stage. Duty Drawback requires no prior registration — it is claimed by CHA on shipping bill.
6. Appoint CHA and Prepare Export Documents: A licensed Customs House Agent (CHA) files the shipping bill on ICEGATE. Prepare: commercial invoice (with IEC, HS code, scheme claim reference, FOB value in USD/EUR), packing list, Certificate of Origin (Form A for GSP benefit, standard CoO from Chamber of Commerce otherwise), and any product-specific certificates (APEDA health certificate for food, CITES permit for controlled species, etc.).
7. Let Export Order (LEO) and Shipment: After Customs examination or assessment, LEO is issued on ICEGATE. LEO date is the statutory export date for FEMA purposes. Your goods move to port/airport and are loaded. Retain shipping bill, LEO details, BL/AWB, and all supporting documents for minimum 5 years for audit purposes.
8. Realise Proceeds and Claim Scheme Benefits: Payment must reach your AD bank account within 9 months of LEO date (15 months for Status Holders). Bank updates EDPMS. For RoDTEP: electronic scrips are auto-credited to your ICEGATE account. For Duty Drawback: file ANF-3C with Customs within one year of export. For EPCG: file redemption letter with DGFT after fulfilling 6x obligation over 6 years.

Required Documents and Form Numbers

• ANF-2A: IEC application form — filed at dgft.gov.in
• ANF-3A: RCMC application form — filed at EPC portals
• ANF-4B: Advance Authorisation application — filed at DGFT RA
• ANF-5A: EPCG application — filed at DGFT RA, includes machinery proforma invoice
• ANF-3C: Duty Drawback claim form — filed with Customs within 1 year of export
• ANF-7A: Deemed exports refund claim form
• Shipping Bill (ICEGATE): Filed by CHA; contains IEC, HS code, scheme declaration, FOB value
• Certificate of Origin — Form A (GSP): For preferential duty under EU GSP, US GSP; issued by EIA or authorised Chamber of Commerce
• Letter of Undertaking (LUT): Filed with GST authority to export without payment of IGST; must be filed annually before first export of each financial year
• AD Code Registration Letter: From your bank; filed once with Customs at each port

Costs and Timelines

All amounts in INR as of 2026-05-19.

Registration / Document	Fee	Timeline
IEC (DGFT)	INR 500	1–3 working days
RCMC (typical EPC)	INR 5,000–10,000 + 18% GST	7–15 working days
Advance Authorisation application	INR 1,000–10,000 (application fee based on CIF value)	10–30 working days
EPCG application	INR 1,000–10,000 (based on CIF value)	10–30 working days
LUT (GST portal)	Free	Same day (online)
Certificate of Origin (Form A)	INR 200–500	1–3 working days
CHA fee per shipment	INR 3,000–8,000 (depending on cargo complexity)	At shipment

Total first-export setup cost for an MSME with no prior registrations — IEC, RCMC, LUT, AD Code registration, and first shipment CHA fee — typically ranges INR 20,000–35,000, with the bulk in RCMC membership fee and CHA charges. RoDTEP benefits in the first year typically recover this outlay within 2–3 shipments for exporters of medium-volume goods.

ITC(HS) Classification: Finding and Using Your Code

The ITC(HS) (Indian Trade Classification Harmonised System) schedule is India's 8-digit product classification system for international trade, based on the WCO Harmonised System. The first 6 digits correspond to the international HS system; the last 2 digits are India-specific subdivisions. Every export and import declaration requires the correct 8-digit ITC(HS) code.

The ITC(HS) schedule has two schedules: Schedule 1 (imports) and Schedule 2 (exports). For exporters, Schedule 2 is the critical document — it contains the "Export Policy" column (Free/Restricted/Canalised/Prohibited) and the "Nature of Restriction" column explaining what conditions apply to restricted items.

Product Example	ITC(HS) Code	Export Policy	RoDTEP Rate (approx.)
Makhana (fox nuts), shelled	0813.40	Free	Approx. 3.0% per Appendix 4R
Basmati rice	1006.30	Restricted (MEP conditions)	Nil (rice subject to separate controls)
Cotton yarn, single, combed	5205.21	Free	Approx. 1.5%
Madhubani paintings (original)	9701.10	Free	Nil (Chapter 97 exclusion)
Pharmaceutical APIs	2941.90 (varies)	Check SCOMET — some restricted	Varies
Engineering goods (steel castings)	7325	Free	Approx. 1.8–2.5%

RoDTEP rates per DGFT Notification 19/2015-20 dated 17 August 2021, Appendix 4R. Rates are subject to periodic revision. Always verify current rates on dgft.gov.in before committing to a pricing model.

FTP 2023 Scheme Deep-Dives

RoDTEP (Remission of Duties and Taxes on Exported Products): Introduced in FTP 2021 (carried forward in FTP 2023) to replace the WTO-incompatible MEIS. RoDTEP refunds embedded indirect taxes — state electricity duty, mandi cess, stamp duty on export documents, fuel costs embedded in supply chains — that are not otherwise refundable. Benefits are credited as electronic transferable scrips to your ICEGATE account. The scrip can be used to pay Basic Customs Duty on imports or transferred to another importer. No application needed: claim is made on the shipping bill by CHA at the time of filing. Annual RoDTEP rate review by a DGFT-appointed committee; current rates in Appendix 4R.

Duty Drawback (DBK): Oldest export incentive scheme in India, predating FTP. Provides refund of Customs and Central Excise duties paid on inputs used in export production. Two types: All Industry Rate (AIR) — standard percentage rates published for broad product categories; and Brand Rate — custom rate applicable when AIR does not cover actual duty incidence. AIR drawback rates are published by CBIC annually. File ANF-3C with Customs within one year of export. DBK and RoDTEP are not mutually exclusive — exporters can claim both on the same shipment where applicable, but double-claiming the same duty component is prohibited.

Advance Authorisation (AA): Duty-free import of inputs incorporated in export products. Governed by Chapter 4 of FTP 2023. Standard Input-Output Norms (SION) define the permitted quantity of each input per unit of export. Where SION does not exist, exporters can apply for self-declared norms. Export obligation: equal to the value of inputs imported at CIF price (in terms of export FOB). Timeline: 18 months from AA issue date. AA is beneficial for manufacturers with predictable export order pipelines — it eliminates working capital locked in customs duty on inputs. Textile, chemical, and engineering goods exporters are the primary users.

EPCG (Export Promotion Capital Goods): Import capital goods at zero customs duty against export obligation. Export obligation: 6x the duty saved over 6 years. MSME waiver: 3x over 6 years available for MSMEs (verify current eligibility in FTP 2023 Chapter 5). Capital goods include machinery, equipment, components, and spares. A Bihar textile manufacturer importing weaving machinery at INR 50 lakh CIF, with a BCD of 7.5% + SWS = INR 4,125 duty saved — obligation would be INR 24.75 lakh in exports (at 6x) or INR 12.375 lakh (at 3x MSME rate). EPCG is particularly powerful for capital-intensive export units making their first machinery investment.

SCOMET Controls and Deemed Exports

SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies) is India's export control list, published as Appendix 3 of the ITC(HS) Schedule. SCOMET items require a SCOMET export licence from DGFT before shipment. Categories include dual-use chemicals, electronics and computers, sensors and lasers, aerospace items, and items with nuclear proliferation potential. Most agricultural commodity, handicraft, and MSME manufactured goods exporters are not affected. However, pharma bulk drug exporters, chemical intermediates manufacturers, and electronics exporters must verify each shipment against the current SCOMET list. Violation is a criminal offence under FTDR Act with penalties including IEC cancellation.

Deemed Exports are domestic transactions that receive export benefits because the goods are ultimately used by entities operating in a foreign-currency environment or under international agreements. Categories in FTP 2023 Chapter 7 include: supplies to Advance Authorisation holders, supplies to EOU/SEZ units, supplies against EPCG, and supplies to UN or World Bank-funded projects. Deemed exporters can claim advance refund of domestic duties and terminal excise duty. File ANF-7A with DGFT for deemed export benefits.

Eight Common EXIM Compliance Failures

• Incorrect ITC(HS) code on shipping bill: Misclassification is the single largest source of customs examination delays and duty disputes. A single digit error can shift a product from "Free" to "Restricted" export policy, or from zero RoDTEP to a significant rate — or vice versa. Verify with a licensed CHA or the DGFT helpdesk before first shipment.
• Filing shipping bill without LUT: If you do not file a Letter of Undertaking with GST authority at the start of the financial year, your export is treated as a taxable supply and IGST becomes payable at time of export. LUT filing is free and online — skipping it is purely a process failure with significant financial consequence.
• EDPMS default due to delayed realisation: If export proceeds are not realised within 9 months (e.g., buyer pays late, LC discrepancy not resolved), EDPMS shows the shipment as unrealised. Banks are required to report to RBI. The exporter is placed on caution list — blocking future LC-backed transactions until the matter is resolved and regularised. Extensions are available from AD bank with valid supporting documentation.
• EPCG obligation shortfall: Exporters who import capital goods under EPCG but fail to achieve the required export obligation by the deadline face duty recovery plus 15% interest per annum on the duty saved. Extensions are available from DGFT but must be applied for before the original deadline.
• AA norms over-utilised: Importing more inputs than permitted under Standard Input-Output Norms without prior amendment of the AA constitutes a violation under the Customs Act. DGFT or Customs audit can trigger duty recovery on the excess import.
• Late Duty Drawback claim: ANF-3C must be filed within one year of export (within 3 years with penalty). Most exporters who miss the drawback window do so because they are unaware of the requirement. If your CHA does not proactively file DBK claims, raise this explicitly.
• Restricted export without DGFT licence: Exporting a restricted-policy ITC(HS) item — for example, certain rice varieties, onion, urea — without a valid DGFT export licence is a criminal offence under FTDR Act. Check the Schedule 2 export policy column for every product before committing to an export order.
• SCOMET export without licence: Shipping a SCOMET-listed item without a SCOMET export licence, even to a friendly country, is a serious violation. Penalties include IEC cancellation, seizure of goods, and criminal prosecution. Screen your product code against Appendix 3 before any export involving chemicals, electronics, or technology.

Case Study: Bihar Textile Exporter Navigating FTP 2023

A Bhagalpur-based Bhagalpuri silk fabric manufacturer with an annual export turnover of approximately USD 1.5 million began systematically using FTP 2023 benefits in 2024–25 after two years of exporting without any scheme participation. The company had an IEC and RCMC (Textiles Export Council) but had not applied for EPCG or claimed RoDTEP benefits, incorrectly assuming the processes were too complex.

Step 1 — RoDTEP activation: The CHA was instructed to declare the RoDTEP claim on all shipping bills going forward. ITC(HS) code 5007.20 (woven fabrics of silk — other). RoDTEP rate approximately 3.0% per Appendix 4R. Estimated annual RoDTEP scrip accumulation: INR 13.5 lakh on USD 1.5 million turnover at approximately INR 83/USD average. Scrips were transferred to a fabric input importer for INR 12 lakh net cash equivalent.

Step 2 — EPCG for new weaving machinery: The company imported an 8-shuttle power loom (capital goods) at CIF INR 45 lakh. BCD 7.5% = INR 3.375 lakh saved under EPCG. Export obligation at 6x: INR 20.25 lakh FOB over 6 years — comfortably within existing export volumes. Net benefit: INR 3.375 lakh in duty saved, with the obligation easily met by regular operations.

Step 3 — Status Holder recognition: At USD 4.5 million cumulative NFE over 3 years, the company qualified for One Star Export House. Benefits immediately realised: self-certification of Certificate of Origin for EU buyers (eliminating Chamber of Commerce fee of INR 400 per shipment — approximately INR 12,000/year on 30 shipments), and extended FEMA realisation period (15 months instead of 9, providing material relief during a slow buyer payment period).

Total annualised FTP benefit in year 1: approximately INR 15–16 lakh, with zero increase in production cost or capital requirement. The critical lesson: most first-generation MSME exporters leave significant FTP scheme value unclaimed not due to ineligibility but due to process unfamiliarity. See also: Exporting from Bihar for IEC and logistics fundamentals, Handicraft Export Bihar for EPCH-specific scheme details, and Agri Export India Guide for APEDA-regulated commodity export procedures.

Frequently Asked Questions

Sources and References

• Ministry of Commerce — Foreign Trade Policy 2023 (notified 31 March 2023) — commerce.gov.in
• DGFT — FTP 2023 full text, ITC(HS) Schedule, DGFT notifications — dgft.gov.in
• DGFT Notification 19/2015-20 dated 17 August 2021 — RoDTEP rates, Appendix 4R — dgft.gov.in
• CBIC — Customs notifications, duty rates — cbic.gov.in
• RBI — Master Direction on Export of Goods and Services, EDPMS — rbi.org.in
• FIEO (Federation of Indian Export Organisations) — fieo.org
• ICEGATE — Shipping bill filing, RoDTEP scrip account — icegate.gov.in

See also: Exporting from Bihar for IEC registration, AD Code, and Bihar logistics, Handicraft Export Bihar for EPCH RCMC and GI protection details, Agri Export India Guide for APEDA-regulated commodity procedures, and Bihar Trade Intelligence for district-level export data. For live policy updates, see Trade Watch. Reach our team at the contact page.

Last updated: 2026-05-19 · Mithila Mornings