Rules 1 and 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.
Rule 1 gives the Rules their name and says they came into force on publication. Rule 2 defines the terms the other rules use: "Act", "charitable purpose", "importer" or "exporter", "licensing authority", "Policy", "section", "special licence", "value" and a residuary clause. The Foreign Trade (Regulation) Amendment Rules, 2015 left rule 1 unchanged, substituted clauses (c), (d) and (e) of rule 2, deleted the clause on "schedule" and re-lettered the rest, so that rule 2 now has clauses (a) to (i). This article explains both rules as per the Rules as notified in 1993 read with the 2015 Amendment Rules.
The Rules were made under section 19 of the Foreign Trade (Development and Regulation) Act, 1992 and came into force on the date of their publication in the Official Gazette. After 2015, an "importer" or "exporter" is a person who imports or exports goods or services or technology and holds a valid Importer-exporter Code Number. The licensing authority is an authority authorised under section 9(2). The Rules' "Policy" is the foreign trade policy announced under section 5.
Rule 1: short title and commencement
Rule 1(1) says: "These rules may be called the Foreign Trade (Regulation) Rules, 1993." Rule 1(2) says: "They shall come into force on the date of their publication in the Official Gazette." The Rules were notified as G.S.R. 791(E) on 30 December 1993 by the Ministry of Commerce (Directorate General of Foreign Trade), "in exercise of the powers conferred by section 19" of the Act. See our article on section 19. Many of the Rules apply only to a person who holds an Importer-exporter Code.
The Amendment Rules of 2015 (G.S.R. 300(E), 17 April 2015) did not change rule 1. They have their own commencement clause, which says they came into force on the date of their publication in the Official Gazette, and they amended rules 2 and 4 to 18 and deleted the Schedule. Rule 3 was also left alone.
Rule 2: the definitions
Rule 2 opens: "In these rules unless the context otherwise requires,—". Each clause is below as it stands after 2015, with the 1993 position where it changed.
| Clause | Term | Meaning, in short | What 2015 changed |
|---|---|---|---|
| (a) | "Act" | The Foreign Trade (Development and Regulation) Act, 1992 | Nothing |
| (b) | "charitable purpose" | Includes relief of the poor, education, medical relief and the advancement of any other object of general public utility | Nothing |
| (c) | "importer" or "exporter" | A person who imports or exports goods or services or technology and holds a valid Importer-exporter Code Number granted under section 7 | Added "or services or technology" |
| (d) | "licensing authority" | An authority authorised under section 9(2) to grant or renew a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits under these rules | Widened the list of things granted; the 1993 words "by the Director General" were left out |
| (e) | "Policy" | The foreign trade policy formulated and announced by the Central Government under section 5 | 1993 read "export and import Policy" |
| (f) | "section" | A section of the Act | Re-lettered from (g) |
| (g) | "special licence" | A licence granted under section 8(2) | Re-lettered from (h) |
| (h) | "value" | The meaning given in clause (41) of section 2 of the Customs Act, 1962 | Re-lettered from (i) |
| (i) | residuary clause | Words and expressions used in the Rules and defined in the Act have the meanings given in the Act | Re-lettered from (j) |
Printing slip: clause (a) as printed in 1993 reads "(22 of 1922)" where the Act is Act 22 of 1992. The slip is flagged here and not corrected in the Rules' text.
The 2015 notification also deleted the old clause (f), "schedule", which meant a Schedule appended to the rules. It went because the Schedule of fees was itself deleted in 2015.
Reading the main definitions
"Importer" or "exporter" (clause (c))
A person is an "importer" or "exporter" for the Rules only if two things are true. The person imports or exports goods or services or technology, and the person "holds a valid Importer-exporter Code Number granted under section 7". On the words printed, a person who does not hold a valid Code is not within the definition. Rule 12, which requires the Code to be stated on a Bill of Entry or Shipping Bill, is addressed to "the importer or exporter" in this sense. See our articles on section 7 and on rules 11 and 12.
Before 2015 the clause spoke only of goods. After the 2010 Amendment Act brought services and technology into the Act's definitions of import and export, the 2015 Rules followed. For the Act's own definitions see our articles on section 2 and on services, technology and specified goods.
If you are about to start importing or exporting, a valid Code is the first requirement.
Note that the Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 takes certain imports and exports outside the Rules. See our article on the Exemption Order.
"Licensing authority" (clause (d))
The clause says the licensing authority is "an authority authorised under sub-section (2) of section 9 to grant or renew a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits under these rules". Section 9(2) lets the Director General "or an officer authorised by him" grant, renew or refuse. So the licensing authority is whoever has been so authorised. The 1993 clause said "authorised by the Director General"; the 2015 clause just says "authorised". The sources consulted do not list who has been authorised. See our article on section 9.
"Policy" (clause (e))
The Policy is "the foreign trade policy formulated and announced by the Central Government under section 5". The Rules often refer the reader to the Policy for matters such as transfer of licences, conditions and, after 2015, the fee. See our article on section 5.
"Special licence" (clause (g))
A special licence is a licence granted under section 8(2). It comes into play where the Importer-exporter Code has been suspended or cancelled; see our articles on rules 3 and 4 and on section 8.
"Value" (clause (h))
"Value" has the meaning assigned in clause (41) of section 2 of the Customs Act, 1962 (52 of 1962). That is another law. Its definition is not set out in the Rules and is not explained here; the reader should check the current Customs Act.
The residuary clause (clause (i))
A word used in the Rules and not defined there takes the meaning given in the Act. So terms such as "Adjudicating Authority", "Director General", "licence" and "prescribed" are read from section 2 of the Act. The Act's definition of "licence" includes a customs clearance permit and any other permission issued or granted under the Act.
Why the definitions matter in practice
- A person without a valid Code cannot be an importer or exporter under the Rules.
- Rules that speak of "licence" now read "licence, certificate, scrip or any instrument bestowing financial or fiscal benefits" in many places, because the 2015 Rules replaced the single word. The definition of licensing authority carries that wider phrase.
- A rule that refers to "the Policy" means the foreign trade policy, not a ministry circular. The Policy is announced under section 5 and can change.
Example: Oakmont Traders (an invented firm) plans to import machinery. Under clause (c) it must hold a valid Code to be an "importer" for the Rules. Under clause (d) its application goes to the authority authorised under section 9(2). Under clause (e) the conditions it must meet are in the foreign trade policy.
Need help with an Importer-exporter Code?
Many of the Rules apply only to a person who holds a valid Code. Our IEC registration service can help you register, or check that your Code is valid before you apply for a licence or an authorisation. Later amendments to the Act, the Rules and the Policy should be checked.
Key takeaways
- The Rules are made under section 19 of the Act and came into force on publication in the Official Gazette (rule 1).
- Rule 2 now has clauses (a) to (i); the 2015 Rules substituted (c), (d) and (e), deleted "schedule" and re-lettered the rest.
- An "importer" or "exporter" must hold a valid Importer-exporter Code Number and import or export goods or services or technology.
- The "licensing authority" is an authority authorised under section 9(2); the "Policy" is the foreign trade policy under section 5.
- "Value" is read from clause (41) of section 2 of the Customs Act, 1962; check the current law.
- Rule 2(a) prints the Act's year as "1922" in 1993; the Act is Act 22 of 1992.
Read next
- Rules 3 and 4: special licence and application for licence
- Section 19: power to make rules
- Section 7: Importer-exporter Code Number
- IEC registration guide
Disclaimer: Based on the Foreign Trade (Development and Regulation) Act, 1992 as enacted read with the Amendment Act of 2010, and on the Foreign Trade (Regulation) Rules, 1993 as notified read with the Amendment Rules of 2015, as consulted on 2 October 2026. Later amendments, the current Foreign Trade Policy and the Handbook of Procedures should be checked. This article is general information, not legal advice; check the official text before acting.