Section 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.
Until 2010 the Act dealt only with goods. The Amendment Act of that year extended "import" and "export" to services and technology and added four definitions: services, service supplier, specified goods or services or technology, and technology. This article explains those provisions as they now stand, as per the Act as enacted in 1992 read with the 2010 Amendment Act.
Inward and outward supply of services or technology is "import" or "export" if it happens in one of four listed ways in each direction. A service supplier is a person who supplies a service and intends to take benefit under the foreign trade policy. Specified goods or services or technology are those whose export, import, transfer, re-transfer, transit and trans-shipment is prohibited or restricted on security, foreign policy or treaty grounds. These definitions drive sections 3, 7, 8 and 10 and Chapter IVA.
Where these definitions sit
Clause (e) of section 2 was substituted by section 2(a) of the 2010 Act. Clauses (j) to (m) were inserted after clause (i) by section 2(b) of the same Act. The goods limb of clause (e) is covered in our article on section 2(a) to (i). The 2010 Act was brought into force by notification; the date is not in the sources consulted.
Whether a particular item is restricted is a question for the Policy and the ITC(HS) lists, not for this section. A restricted items import-export licence check is the practical way to find out before you commit to a contract.
Clause (e)(II): import and export of services or technology
For services or technology, "import" and "export" mean "supplying, services or technology" in the ways below (the comma after "supplying" is as printed).
| Direction | Way of supply | Wording in short |
|---|---|---|
| Inward (import) (i)(A) | Cross-border | From the territory of another country into the territory of India |
| Inward (i)(B) | Abroad | In the territory of another country to an Indian service consumer |
| Inward (i)(C) | Commercial presence | By a service supplier of another country, through commercial presence in India |
| Inward (i)(D) | Natural persons | By a service supplier of another country, through presence of their natural persons in India |
| Outward (export) (ii)(A) | Cross-border | From India into the territory of any other country |
| Outward (ii)(B) | Within India | In India to the service consumer of any other country |
| Outward (ii)(C) | Commercial presence | By a service supplier of India, through commercial presence in the territory of any other country |
| Outward (ii)(D) | Natural persons | By a service supplier of India, through presence of Indian natural persons in the territory of any other country |
The proviso to clause (e) also sends Special Economic Zone transactions to the Special Economic Zones Act, 2005; check the current law under that Act.
Example
Kavya Software Pvt Ltd in Pune supports a German client over the internet from its Pune office. That is a supply from India into the territory of another country: outward, clause (e)(II)(ii)(A). When its engineers fly to the client's premises for the same work, the supply is through presence of Indian natural persons in another country: clause (e)(II)(ii)(D). Whether Kavya needs an Importer-exporter Code is a separate question under section 7: its proviso says the Code is necessary for services or technology only when the provider is taking benefits under the foreign trade policy or is dealing with specified services or specified technologies. See section 7.
Clause (j): "services"
"Services" means "service of any description which is made available to potential users and includes all the tradable services specified under the General Agreement on Trade in Services entered into amongst India and other countries who are party to the said Agreement". The proviso adds that "this definition shall not apply to the domain of taxation". For tax questions on services, see our income-tax and GST guides.
Clause (k): "service supplier"
A service supplier is "any person who supplies a service and who intends to take benefit under the foreign trade policy". The test is intention to take a benefit under the policy, not merely the act of supplying. A software firm that wants no policy benefit is therefore outside this clause, though it could still be dealing with specified services.
Clause (l): "specified goods or services or technology"
These are goods, services or technology "the export, import, transfer, re-transfer, transit and trans-shipment of which is prohibited or restricted because of imposition of conditions" on grounds of their being pertinent or relevant to:
- India as a Nuclear Weapon State;
- the national security of India;
- the furtherance of its foreign policy; or
- its international obligations under any bilateral, multilateral or international treaty, covenant, convention or arrangement relating to weapons of mass destruction or their means of delivery to which India is a party, or its agreement with a foreign country, under the foreign trade policy formulated and notified under section 5.
The gazette prints "convenant" for "covenant" in this clause. The words "specified goods or services or technology" are the hook for the export controls in Chapter IVA; see sections 14A and 14B and our guide to SCOMET export controls and the catch-all provision.
Clause (m): "technology"
Technology means "any information (including information embodied in software), other than information in the public domain, that is capable of being used in":
- the development, production or use of any goods or software; or
- the development of, or the carrying out of, an industrial or commercial activity or the provision of service of any kind.
The Explanation adds two points. First, when technology is described wholly or partly by reference to the uses to which it (or the goods to which it relates) may be put, it includes services provided or used, or capable of being used, in the development, production or use of that technology or those goods. Second, "public domain" has the meaning given in clause (i) of section 4 of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005, as printed. That Act is not explained here, and the reader should check its current text.
How the definitions are used
| Where | Use |
|---|---|
| Section 3(2) proviso | Orders apply to services or technology only when the provider is availing policy benefits or is dealing with specified services or technologies |
| Section 7 proviso | Importer-exporter Code needed only on the same two conditions |
| Section 8(1)(c) | Suspension or cancellation of the Code for contravention in respect of specified goods or services or technology |
| Section 10(1)(b) | Search of premises where services or technology are provided, on the same two conditions |
| Chapter IVA (ss.14A to 14E) | Controls on specified goods, services and technology |
Need help with controlled or restricted items?
If you export software, designs, data or equipment that may be restricted or specified, our restricted items import-export licence service can help you check the position before a shipment or a service contract. Later amendments to the Act and the Foreign Trade Policy should also be checked.
Key takeaways
- Services and technology became part of "import" and "export" in 2010.
- Clause (e)(II) lists four ways of inward supply and four ways of outward supply.
- A service supplier is one who supplies a service and intends to take benefit under the foreign trade policy.
- "Specified" goods, services and technology are those restricted on nuclear, security, foreign policy or treaty grounds.
- Technology excludes information in the public domain.
Read next
- Section 2: definitions of import, export, licence and Importer-exporter Code
- Sections 14A and 14B: controls on export of specified goods, services and technology
- SCOMET export controls and the catch-all provision
- WTO agreements that shape Indian export compliance
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.