Paragraphs 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Paragraphs 2.00 to 2.02 open Chapter 2 of the Policy. They set the general rule for imports and exports, name the three ways in which an item can be regulated, and explain that item-wise policy is found in the ITC(HS) Schedules, not in the Policy itself. The matching Handbook paragraphs 2.00 to 2.02 say what Chapter 2 of the Handbook covers and that trade may take place with any country unless provided otherwise.
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. The procedure is taken from Chapter 2 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Notifications, Public Notices and Trade Notices should be checked before you act. This article states no item-wise policy of any Schedule: for the position of a particular item, check its entry in ITC(HS), or take advice through our restricted items import and export licence service.
The Policy's general rule is that exports and imports are permitted without an authorisation except when regulated by prohibition, restriction or exclusive trading through State Trading Enterprises as laid down in ITC(HS) (paragraph 2.01(a)). Some items that need no authorisation are still subject to conditions in other laws (paragraph 2.01(b)). Schedule 1 of ITC(HS) is the import policy and Schedule II the export policy (paragraph 2.02(c)), and Schedule 1 is for new goods only, unless clearly specified.
What the Policy says
Paragraph 2.00: objective
The general provisions governing import and export of goods and services are dealt with in Chapter 2. It is short: the chapter is the place for rules that apply across the board, before the scheme chapters take up Advance Authorisation, EPCG and the rest.
Paragraph 2.01(a): the general rule
The Policy uses a different one-word label for items that need no authorisation; this article calls them items permitted without an authorisation. Paragraph 2.01(a) says exports and imports are permitted without an authorisation except when they are regulated in one of three ways, as laid down in the ITC(HS) of Exports and Imports:
- Prohibition.
- Restriction.
- Exclusive trading through State Trading Enterprises (STEs).
The paragraph says the lists of prohibited, restricted and STE items can be viewed under "Regulatory Updates" on the DGFT website. Paragraph 2.08 on restricted goods and the STE paragraphs of Chapter 2 are explained in separate articles. Our article on the power behind this, sections 3 and 4 of the Foreign Trade (Development and Regulation) Act, 1992, sets out how the Central Government can prohibit, restrict or regulate imports and exports by order; Customs has its own power on prohibitions in section 11 of the Customs Act, 1962.
Paragraph 2.01(b): conditions in other laws
Some items are permitted without an authorisation under the Policy but are "subject to conditions stipulated in other Acts or in law for the time being in force". Permission under the Policy is therefore not the end of the check. A product that needs, say, a quality mark or a licence under another law still needs it. The Policy does not list those laws.
Paragraph 2.02: what ITC(HS) is
- Clause (a): ITC(HS) is a compilation of codes for all merchandise for export and import. Goods are classified by group or sub-group at 2, 4, 6 or 8 digits.
- Clause (b): ITC(HS) is aligned at the 6-digit level with the international Harmonized System maintained by the World Customs Organization. India maintains a national Harmonized System at the 8-digit level, notified under the First Schedule of the Customs Tariff Act, 1975, which may be viewed under "Regulatory Updates" on the DGFT website and on the CBIC website.
- Clause (c): the import and export policies for all goods are indicated against each item as per its ITC(HS). Schedule 1 of ITC(HS) lays down the import policy regime and Schedule II the export policy regime.
- Clause (d): except where clearly specified, Schedule 1 is for new goods and not for second-hand goods. For second-hand goods, the import policy regime is under paragraph 2.31 of the Policy, explained in a separate article.
For classification of exports, see also our guide on ITC(HS) code classification for exports.
What the Handbook requires
| Handbook paragraph | What it says |
|---|---|
| 2.00 Policy | Policy on general provisions about exports and imports is in Chapter 2 of the Policy |
| 2.01 Coverage | The chapter covers procedure for various applications including their complete documentation: applications for authorisations, licences, permissions and certificates for import or export, and for benefits under the Policy |
| 2.02 Countries of imports and exports | Unless otherwise specifically provided, international trade can take place from or to any country; country-specific prohibitions or limitations, if any, are specified in the Policy or the ITC(HS) |
Paragraph 2.02 of the Handbook is the counterpart of the country-specific prohibitions in Chapter 2 of the Policy; they are explained in our articles on paragraphs 2.16 to 2.20 and 2.22. The Handbook procedure is notified under paragraph 1.03 of the Policy; see section 6 of the Act, and the Policy itself rests on section 5 of the Act.
A practical example
Maple Row Traders, an invented importer, plans to bring in a new machine part and a used machine. For the new part it looks up the item's code and entry in Schedule 1 of ITC(HS), which gives the import policy regime under paragraph 2.02(c). If the entry says no authorisation is needed, paragraph 2.01(b) still reminds it to check other laws, for example on standards. For the used machine, Schedule 1 does not apply "except where it is clearly specified"; paragraph 2.02(d) sends it to paragraph 2.31 of the Policy. If the entry for the new part shows restriction, the import is regulated and the restricted-goods paragraphs apply. And for exports, the firm checks Schedule II for the item in the same way.
Need help with an import or export policy question?
Whether an item is prohibited, restricted or permitted is decided by its entry in the Schedule on the date of import or export, and the Notifications that amend it. If you need that read for your product or want an authorisation applied for, our team can help with a restricted items import and export licence.
Key takeaways
- The general rule: imports and exports are permitted without an authorisation unless regulated by prohibition, restriction or STE trading (paragraph 2.01(a)).
- Items permitted without an authorisation may still be subject to other laws (paragraph 2.01(b)).
- ITC(HS) is aligned to the World Customs Organization at the 6-digit level, with India's own 8-digit level (paragraph 2.02(b)).
- Schedule 1 is the import policy, Schedule II the export policy; Schedule 1 is for new goods unless clearly specified (paragraph 2.02(c), (d)).
- This article gives no item-wise policy; check the item's entry in ITC(HS).
Read next
- Paragraph 2.03 and 2.03A: domestic laws and quality control orders on imports
- Paragraph 2.31: import policy for second-hand goods
- ITC(HS) code classification for exports
- Section 11 of the Customs Act, 1962: power to prohibit import or export of goods
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.