What is an import licence under DGFT and when is one required?

A DGFT import licence is a formal government authorisation issued by a DGFT Regional Authority that permits the import of a specific restricted good into India. It specifies the goods, quantity, value, supplier country, and validity period, and it must be obtained before the goods are shipped. There is no mechanism to retrospectively licence a restricted goods shipment that has already arrived at an Indian port. The goods are liable to confiscation from the moment they arrive without the required authorisation.

What is an import licence under DGFT?

An import licence under DGFT is an authorisation issued by a Regional Authority of the Directorate General of Foreign Trade, under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy 2023 to 2028, permitting the import of a good that is classified as Restricted in Schedule I of the ITC (HS). The licence is a legally binding document that specifies the exact ITC (HS) code of the goods, their description, the maximum quantity permitted, the maximum CIF value permitted, the country of supply, the port of import, and the period of validity. No element of the licence can be exceeded or altered without a formal amendment from the issuing Regional Authority.

The import licence regime is the mechanism through which India's government controls the volume and source of goods considered sensitive, whether for economic, environmental, security, or public health reasons. Categories requiring import licences include certain live organisms and biological materials, specific hazardous chemicals listed under the Stockholm and Rotterdam Conventions, certain dual-use goods and technologies, specific agricultural products such as some seeds and plant materials, certain electronic equipment and a range of goods where domestic producers have sought protection through licencing as a trade defence measure.

Import licences issued by DGFT are distinct from other government permissions that may also be required for restricted goods. A DGFT import licence does not substitute for a BIS licence under the Bureau of Indian Standards Act, 2016, a drug import licence under the Drugs and Cosmetics Act, 1940, or a phytosanitary certificate required by the Plant Quarantine (Regulation of Import into India) Order, 2003. In many cases, restricted goods require both a DGFT import licence and at least one sectoral regulatory permission, and all must be in place before Customs will clear the goods.

Implications for businesses operating in India

For foreign exporters and manufacturers, the DGFT import licence requirement means that certain sales to India cannot be completed until the Indian buyer has cleared a government approval process that takes weeks and may take months. A foreign manufacturer who ships goods to India without confirming their Indian buyer holds a valid import licence for the specific goods and quantity is shipping into a situation where the goods cannot legally be cleared from the port. For high-value capital goods or industrial equipment in restricted categories, verifying licence status before shipment is a commercial necessity.

For Indian importers and traders, the import licence represents the compliance bottleneck in any restricted goods supply chain. The time required to obtain a licence, typically 30 working days for a standard application and longer for categories requiring inter-ministerial input, must be built into the supply chain calendar before a purchase order is placed. The licence cannot be transferred to another importer. It is issued in the name of the specific importing entity identified in the application. If an importer sells their business or restructures, existing licences must be re-issued or cancelled, which requires a formal application to the Regional Authority.

For Customs House Agents and freight forwarders, the import licence is the document that determines whether a Bill of Entry for restricted goods can be filed at all. A CHA who accepts instructions to file a Bill of Entry for restricted goods without a valid DGFT import licence has no legal basis to proceed. Freight forwarders who receive instructions to move goods in restricted categories without confirmed licence status should require written confirmation of the licence number and validity before accepting the booking.

How import licence compliance works

The application for a DGFT import licence is filed electronically through the DGFT portal at dgft.gov.in. The applicant must hold a valid, active Importer Exporter Code as a prerequisite. Under the Handbook of Procedures 2023, import licence applications for most restricted goods are filed using Form ANF 2M. The form requires the applicant to identify the goods by ITC(HS) code, state the quantity and CIF value of the proposed import, identify the country of supply and the foreign supplier, and provide a declaration of end use specifying how the goods will be used after import.

Supporting documents submitted with the application include the entity's IEC and GST registration certificate, a proforma invoice or purchase order from the foreign supplier, technical specifications of the goods, and an end-use declaration on the importer's letterhead signed by an authorised signatory. For certain categories, particularly chemicals, dual-use goods, and biological materials, the application must also include a No Objection Certificate from the relevant technical ministry. Obtaining such NOCs adds three to eight weeks to the overall licence application timeline.

Processing times officially target 30 working days from the date of receipt of a complete application. Applications that are incomplete at submission are issued an objection letter and the 30-day clock does not start until all deficiencies are addressed. The two most common deficiencies that trigger objection letters are a mismatch between the goods description in the proforma invoice and the technical specification document, and an IEC profile that has not been updated in the current annual compliance window.

Once issued, the licence carries a validity of 24 months from the date of issue under FTP 2023 to 2028. The licence must be presented to Customs at every import against the licence. The CHA includes the licence number in the Bill of Entry and Customs endorses the quantity cleared against the licence face value. If the full licensed quantity is not utilised within the validity period, the importer must apply to the Regional Authority for an extension, which is granted on a showing of cause.

Legality and risks

Importing restricted goods without a valid DGFT import licence violates Section 3 of the FT(DR) Act, 1992. The penalty framework under Section 9A provides for a financial penalty of up to five times the CIF value of the unlicenced goods. The Section 11 adjudicating authority additionally has the power to order confiscation of the goods. Both the penalty and confiscation can be ordered simultaneously, meaning the importer pays a financial penalty and loses the goods.

At the Customs level, importing restricted goods without a DGFT licence constitutes importation of prohibited goods for the purposes of Section 111(d) of the Customs Act, 1962. Customs can detain the goods from the moment they arrive and refuse clearance until either a valid licence is produced or the goods are re-exported. Re-export is permitted in principle but requires Customs consent and the practical ability to arrange a vessel, and demurrage costs run from day one of detention.

Word of counsel

Importers are advised that import licences specify the country of supply. If an importer holds a valid import licence for a restricted good sourced from a specific country and then decides to source the same good from a different country, the existing licence does not cover the new supply. An amendment to the country of supply must be obtained from the issuing Regional Authority before the new supplier ships, and this requires a formal amendment application and processing time. Importers are advised to read every field of the licence and verify it against the intended shipment before the goods are dispatched.

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