Paragraph 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.
Paragraph 2.05 makes the Importer Exporter Code (IEC) mandatory for export and import activity, ties it to the entity's Permanent Account Number, requires an update every year in the April to June period, and provides for de-activation and flagging. Paragraph 2.07 of the Handbook lists who is exempt from the IEC and the permanent codes that stand in for the exempt classes.
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. If you do not yet hold a code, our IEC registration service handles the application.
An IEC is a 10-character alpha-numeric number, the same as the entity's PAN, and is mandatory for any export or import unless specifically exempted (paragraph 2.05(a)). It must be updated electronically every year in the April to June period, even when nothing has changed (paragraph 2.05(d)). An IEC that is not updated is de-activated and may be activated on successful updation (paragraph 2.05(e)). The Handbook exempts four classes and prescribes twelve permanent codes (paragraph 2.07).
What the Policy says
Opening words: what an IEC is
An IEC is a 10-character alpha-numeric number allotted to an entity (firm, company, LLP and so on) and is mandatory for undertaking any export or import activity. The paragraph says that, to maintain the unique identity of an entity after the introduction of GST, the IEC is the same as the Permanent Account Number (PAN) and is separately issued by the DGFT on an online application.
Clause (a): no export or import without it
No export or import of goods may be made by any person without an IEC, unless specifically exempted. For export of services or technology, the IEC is necessary on the date of rendering the services, for availing benefits under the Policy. The Act's own provisions on the code are in section 7 of the Foreign Trade (Development and Regulation) Act, 1992, and the rules on declarations in rules 11 and 12 of the Foreign Trade (Regulation) Rules, 1993.
Clause (b): exempt categories
Exempt categories and the corresponding permanent IECs are in paragraph 2.07 of the Handbook, below.
Clause (c): online process
The application process for an IEC and for updation is completely online, and the IEC can be generated by the applicant as per the procedure in the Handbook. The application and modification are explained in our article on Handbook paragraphs 2.08 to 2.15.
Clause (d): yearly update
An IEC holder has to ensure that the IEC details are updated electronically every year, during the April to June period. Where there are no changes in the IEC details, that too must be confirmed online.
Clause (e): de-activation and re-activation
An IEC is de-activated if it is not updated within the prescribed period. A de-activated IEC may be activated on its successful updation. This is without prejudice to any other action taken for violation of any other provision of the Policy. The Act's provisions on suspension and cancellation of the code are in section 8 of the Act; paragraph 2.05(e) speaks of de-activation, and this article does not equate it with suspension or cancellation.
Clause (f): flagging for scrutiny
An IEC may be flagged for scrutiny. IEC holders must ensure that any risks flagged by the system are timely addressed; failing which, the IEC is de-activated. The paragraph does not say what the risks are or how long "timely" is.
What the Handbook requires
Paragraph 2.07(a): classes exempt from the IEC
IEC is compulsory for import and export. The following are exempt:
| Class | Who is exempt |
|---|---|
| (i) | Importers covered by clause 3(1) (except sub-clauses (e) and (l)) and exporters covered by clause 3(2) (except sub-clauses (i) and (k)) of the Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 |
| (ii) | Ministries and Departments of the Central or State Government |
| (iii) | Persons importing or exporting goods for personal use, not connected with trade, manufacture or agriculture |
| (iv) | Persons importing or exporting goods from or to Nepal, Bhutan, Myanmar (through the Indo-Myanmar border areas) and China (through Gunji, Namgaya Shipkila and Nathula ports), subject to value ceilings on the CIF value of a single consignment |
The ceilings in class (iv) are: Rs. 25,000 for Nepal, Bhutan and Myanmar; for China, Rs.1,00,000 through Gunji and Namgaya Shipkila, and Rs.2,00,000 through Nathula.
There is an exception. The exemption does not apply to export of SCOMET items listed in Appendix 3 to Schedule 2 of ITC(HS), 2022, except in the case of exports by class (ii) above. For the Order of 1993 in class (i), see our article on the Foreign Trade Exemption Order, 1993.
Paragraph 2.07(b): permanent IEC numbers
Twelve permanent IEC numbers are to be used by non-commercial PSUs and by the categories of importers and exporters named against each: Central Government Ministries and Departments and their agencies; State Government Departments and their agencies; diplomatic personnel and officials of the UNO and its agencies; Indians returning from or going abroad who claim baggage-rule benefit; persons, institutions or hospitals importing or exporting for personal use; persons trading with Nepal and with Myanmar for non-commercial purposes; importers of goods for display at fairs or exhibitions under an ATA carnet (also usable for exhibitions per paragraph 2.60 of the Handbook); the Director, National Blood Group; individuals, charitable institutions and registered NGOs importing goods exempted from Customs duty for victims of natural calamity; persons trading permissible goods with China through the three named ports within the value ceilings; and non-commercial imports and exports by entities authorised by the Reserve Bank of India. The code strings are printed in the Handbook and not repeated here.
A practical example
Quill Mountain Crafts, an invented partnership firm, exports handicrafts abroad for the first time. Under paragraph 2.05 it needs an IEC, which will be the same as the firm's PAN. A year on, in April, it logs in and confirms that its details are unchanged, which paragraph 2.05(d) requires even where nothing has changed. If the firm misses the April to June period, the IEC is de-activated and it cannot go on exporting until the code is updated (paragraphs 2.05(a) and (e)). By contrast, a returning traveller who brings goods under baggage-rule benefit uses a permanent IEC from the Handbook's list and need not apply for one of his own.
Need help with your IEC?
Missing the April to June update or a mismatch with the PAN are common reasons for a de-activated code. Our team can help you with an IEC registration or put an existing code right before your next shipment.
Key takeaways
- The IEC is 10 characters long and the same as the entity's PAN; it is separately issued by the DGFT on an online application.
- No export or import of goods without it unless exempted; for services or technology it is needed on the date of rendering the services to claim Policy benefits.
- Update it every year in April to June, even if nothing has changed.
- A non-updated IEC is de-activated; it can be re-activated on successful updation.
- Handbook paragraph 2.07 exempts four classes, with permanent codes for twelve categories.
Read next
- Paragraphs 2.04 and 2.11: procedures, applications and application fee
- Handbook paragraphs 2.08 to 2.15: IEC application, validity, surrender and modification
- What is IEC? Meaning, example and uses
- Section 5 of the Foreign Trade (Development and Regulation) Act, 1992: the foreign trade policy
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.