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.
Paragraph 2.21 of the Policy deals with State Trading Enterprises (STEs): who they are, how they must trade and how the DGFT may authorise another entity. Paragraphs 2.22 to 2.24 give the DGFT power to frame instructions or schemes for trade with neighbouring countries, for transit through India, and for trade with Russia under a Debt Repayment Agreement. Handbook paragraph 2.45 covers imports under Government-to-Government agreements and paragraph 2.69 the application to export under the STE regime.
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. No item-wise STE policy is stated. For an authorisation to deal in a notified item, our restricted items import and export licence service can help.
Goods whose import or export is governed through an exclusive or special privilege granted to an STE may be imported or exported by that STE, as per conditions specified in ITC(HS); the list of STEs notified by the DGFT is in Appendix 2J (paragraph 2.21(a)). STEs must buy and sell solely on commercial considerations (paragraph 2.21(b)). The DGFT may grant an authorisation to any other entity to deal in such goods (paragraph 2.21(c)). Paragraphs 2.22 to 2.24 let the DGFT issue instructions or schemes for neighbouring countries, transit and Russia.
What the Policy says
Paragraph 2.21: State Trading Enterprises
(a) Who they are. STEs are governmental and non-governmental enterprises, including marketing boards, which deal with goods for export or import. Any good whose import or export is governed through an exclusive or special privilege granted to an STE may be imported or exported by the concerned STE as per conditions specified in ITC(HS). The list of STEs notified by the DGFT is in Appendix 2J; this article names the Appendix and no enterprise.
(b) How they must trade. STEs make purchases or sales involving imports or exports "solely in accordance with commercial considerations", including price, quality, availability, marketability, transportation and other conditions of purchase or sale, in a non-discriminatory manner. They must afford enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales.
(c) Authorisation to another entity. The DGFT may, however, grant an authorisation to any other entity to import or export any of the goods notified for exclusive trading through STEs. The paragraph prints no conditions for such an authorisation.
The definition of "State Trading Enterprises" in paragraph 11.60 of the Policy refers to "Para 2.20 (a)", which is the paragraph on charcoal from Somalia; the STE paragraph is 2.21(a). The definition is read as referring to 2.21(a). The ground for exclusive trading through STEs is one of the three ways of regulating an item: see our article on paragraphs 2.00 to 2.02.
Paragraph 2.22: trade with neighbouring countries
The DGFT may issue instructions or frame schemes as may be required to promote and regulate trade and strengthen economic ties with neighbouring countries. The paragraph does not name a country or scheme.
Paragraph 2.23: transit facility
Transit of goods through India from or to countries adjacent to India shall be enabled and regulated in accordance with the strategic and economic interests of India and the bilateral treaties between India and those countries. Such arrangements are subject to conditions and restrictions that may be specified by the DGFT "in accordance with International". The sentence breaks off there in the copy and is quoted as printed; it is not completed here. Paragraph 2.20A separately prohibits transit of goods originating in or exported from Pakistan; see our article on paragraphs 2.20A and 2.20B.
Paragraph 2.24: trade with Russia under Debt Repayment Agreement
In the case of trade with Russia under a Debt Repayment Agreement, the DGFT may issue instructions or frame schemes as required, and anything in the Policy, in so far as it is inconsistent with those instructions or schemes, "shall not apply". It is a rule that the instructions or schemes override the Policy for such trade. The paragraph does not describe any instruction.
What the Handbook requires
Paragraph 2.45: imports under Government-to-Government agreements
Import of goods under Government-to-Government agreements may be allowed without an authorisation, on production of necessary evidence to the satisfaction of the Customs authorities. The paragraph prints no document list.
Paragraph 2.69: export of items under the STE regime
An application under ANF 2N for export of items mentioned in ITC(HS) under the STE regime may be made online to DGFT Headquarters, as per paragraph 2.21 of the Policy. The form is named as the paragraph names it, and its fields are not described.
| Paragraph | Subject | Point to note |
|---|---|---|
| Policy 2.21(a) | STEs | Appendix 2J lists them; ITC(HS) gives the conditions |
| Policy 2.21(b) | Conduct | Commercial considerations; non-discriminatory |
| Policy 2.21(c) | Other entities | Authorisation by the DGFT |
| Policy 2.22 | Neighbouring countries | DGFT instructions or schemes |
| Policy 2.23 | Transit | Regulated by interests and bilateral treaties |
| Policy 2.24 | Russia | DGFT instructions or schemes override the Policy |
| Handbook 2.45 | G2G imports | Without authorisation, on evidence to Customs |
| Handbook 2.69 | STE exports | ANF 2N online to DGFT Headquarters |
The Handbook is notified under paragraph 1.03 of the Policy and section 6 of the Foreign Trade (Development and Regulation) Act, 1992. The paragraphs name no section of the Act; the Policy is made under section 5, and the power to regulate imports and exports is in sections 3 and 4 of the Act.
A practical example
Ridge Valley Agro, an invented trader, wants to import a commodity that the ITC(HS) entry lists under the STE regime. Under paragraph 2.21(a) it can look at the entry to see the conditions, and at Appendix 2J to see which STE handles the item. The company cannot import in its own name unless the DGFT grants an authorisation to it as another entity under paragraph 2.21(c). A second item the company wants to export is also under the STE regime; it files ANF 2N online to DGFT Headquarters under Handbook paragraph 2.69. Separately, a project import under a Government-to-Government agreement can be allowed without an authorisation on the necessary evidence given to Customs (Handbook paragraph 2.45).
Need help with a notified item?
If the item you deal in is canalised through an STE or needs an authorisation to another entity, the application and the supporting documents matter. Our team can help with a restricted items import and export licence.
Key takeaways
- STEs deal in goods governed by an exclusive or special privilege; Appendix 2J lists them (paragraph 2.21(a)).
- They must trade solely on commercial considerations and in a non-discriminatory manner (paragraph 2.21(b)).
- The DGFT may authorise another entity (paragraph 2.21(c)); an export application is made in ANF 2N (Handbook paragraph 2.69).
- Paragraphs 2.22 to 2.24 let the DGFT frame instructions or schemes for neighbours, transit and Russia.
- G2G imports may be allowed without an authorisation on evidence to Customs (Handbook paragraph 2.45).
Read next
- Paragraphs 2.20A and 2.20B: imports from Pakistan and goods made with forced labour
- Paragraphs 2.25 to 2.27: import of samples, gifts and passenger baggage
- Paragraphs 2.00 to 2.02: the policy for imports and exports and ITC(HS)
- 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.