Renewal Requirement of IEC Certificate in India

The Importer Exporter Code (IEC) is among the most significant registrations that every business involved in international trade must obtain. An IEC certificate issued by the Directorate General of Foreign Trade (DGFT) is mandatory, whether you are importing into India or exporting products to other countries. As opposed to the previous regulations where the registration was one-time with no renewal, the DGFT has recently made IEC renewal or updating in the form of annual mandatory. Failure to renew your IEC may result in the deactivation of your IEC number, ultimately interrupting import and export operations.

This blog elaborates on the renewal of the IEC certificate, the rationale of its being mandatory, what will happen in case of not renewing on time and how to go about it painlessly.

What is an IEC Certificate?

Importer-Exporter code is a 10-digit identification number that is mandatory for individuals or business entities to carry out import or export-related activities in India. It is a universal registration for all import-export transactions and is associated with PAN. The IEC acts as a key authentication body to the banks, customs authorities and export promotion councils.

Who Needs an IEC?

Exporters, importers, manufacturers involved in exporting goods, e-commerce sellers who are selling goods abroad, and companies receiving benefits under other schemes under export promotions are all under the requirement of IEC.

Why it has become mandatory to renew the IEC?

According to the DGFT notification, an IEC holder should renew or update their IEC annually, regardless of whether any changes in the IEC details have occurred. Although your business may not change, you have to ensure that you confirm the same with annual updating.

The renewal requirement was introduced to create accurate, up-to-date trade records. Previously, most IECs remained active even when businesses closed down or changed their particulars. Annual renewal assists DGFT in keeping the database on the right track and minimizing the abuse of obsolete IECs.

Most states have rigid documentation requirements for import-export. Recurrent renewal makes the Indian traders compliant with the international standards of compliance, improving their global credibility.

What will happen if you do not renew your IEC?

1. Deactivation of IEC: DGFT may disable an IEC if it is not updated within the specified time frame. An IEC that is deactivated cannot participate in any import or export business until it is reactivated.
2. Shipment Delays at the Customs Office: The customs authorities depend on an active IEC when handling import or export shipments. An inactive IEC may cause delays in operations, goods detention and heightened compliance.
3. Loss of Export Benefits: Export incentives such as duty drawback, RoDTEP, SEIS, MEIS, and EPC incentives will not be claimed in cases where the IEC is inactive. Renewal provides uninterrupted access to schemes by the government.
4. Extra Compliance Burden: In case the IEC is turned off, a business has to pass through the reactivation procedure, where it has to update information on the DGFT portal. This adds more workload and can slow trade activities.

Annual Timeline of IEC Renewal

The DGFT specifies that the IEC has to be revised each year in the months of April to June. Renewal is necessary even in cases where business details remain the same.

Is Renewal Necessary Even without any change?

Yes. Businesses should also log in to the DGFT portal and verify that there are no updates that would make the IEC inactive. This mere affirmation will pass off as your renewal of the year.

Documents needed to renew IEC

• Basic Documents: The required documents are usually the same as those that were used in the initial IEC application. These are the applicant’s identity document, a genuine PAN, the business location’s address document, and bank information.
• Additional Requirements: In the event of any alterations to the business structure, directors, partners, bank account, or address, appropriate supporting documents are required. In the case of companies and LLPs, it might need updated incorporation information, board resolutions and authorization letters.

How to Renew Your IEC Online?

Step 1: Visit the DGFT Portal

Visit the official DGFT website and use your IEC user credentials to log in.

Step 2: Choose IEC Profile Update

Select the IEC Profile Management section and select the option to update IEC.

Step 3: Confirm Business Information

Review the information on business name, address, bank, PAN, partners, directors or proprietors. Update if necessary.

Step 4: Submit and Confirm

Send the application and verification of OTP. Even without any changes, the confirmation of no changes is still to be submitted.

Step 5: Receive Updated IEC

After it has been submitted, the renewed IEC certification can be downloaded. The DGFT system marks IEC as active in the particular financial year automatically.

Advantages of renewal of IEC on an annual basis

• Avoids Deactivation: The greatest benefit is the prevention of unreasonable deactivation, which may cause time wastage and financial defeat.
• Accuracy of Trade Data: The constant renewal of your business ensures that the information about your business remains current and provides government agencies with accurate trade data.
• Better International Credibility: Active IEC businesses seem more organised and obey foreign businesses.
• Smooth Trade Operations: An active IEC will ensure that imports and exports proceed without further questions from the customs authority or banks.

Common Issues during IEC Renewal

• Incorrect PAN Linking – Failure to connect IEC to PAN properly may result in failure to reflect updates. It is necessary to ensure proper PAN.
• Mismatch in Bank Details – There should be a perfect match of bank account information. Minor errors are likely to slow down renewal.
• DGFT Portal Technical Problems – In some cases, the DGFT site crashes as a result of high traffic. It is better to make a renewal during the non-peak hours to prevent delays.

Conclusion

Annually, renewal of the IEC certificate is now mandatory for all businesses that engage in international trade. Regardless of the changes to your business information, the DGFT expects all the IEC holders to verify or renew their information annually during April-June. Otherwise, the IEC may be deactivated, the import-export business will be disrupted, and the government benefits will be lost.

Constant renewal will provide the ease of business, record updates, adherence to international standards, and a good business image. By knowing the renewal requirements and following the right process, companies can avoid penalties, stay active in the IEC, and avoid interruptions to trading.