Directorate General of Foreign Trade - History, Organizational Set-up, Objectives, Functions And More

DGFT stands for The Directorate General of Foreign Trade. It is a government agency. It regulates imports and exports in India. It formulates the country's foreign trade policy and promotes export and import trade. It boosts exports by providing trade-related information and promoting special economic zones. 

This article will help you understand the significance and structure of the Directorate General of Foreign Trade. Study major topics of the Indian Economy from the perspective of UPSC Exams.

Recent updates on DGFT

• The Directorate General of International Trade has urged its regional agencies to register contracts for wheat exporters with irreversible letters of credit.
• The DGFT recently relaxed the export embargo after adequate capacity was constructed and since the country’s case fatality rate was low, which meant fewer people needed to be on ventilators.
• This outcome comes after the government was forced to halt exports of critical equipment such as ventilators earlier this year when it was discovered that there was insufficient domestic capacity for these items to allow the sector to satisfy overseas obligations.
• With the country’s interests in mind, the transition was from restriction and control of imports/exports to promotion and facilitation of exports/imports.

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What is the Directorate General of Foreign Trade (DGFT)?

The Directorate General of Foreign Trade (DGFT) is an attached office of the Ministry of Commerce and Industry, led by the Director General of Foreign Trade. Historically, it focused on regulating and promoting foreign trade until the government's economic policies were liberalized in 1991. In alignment with liberalization, globalization, and the goal of boosting exports, DGFT's role shifted from import/export regulation to facilitation. It now emphasizes promoting and facilitating imports and exports while safeguarding the nation's interests.

Study in detail Foreign Trade Policy Here!

Organizational Set-up

The organizational setup of the Directorate General of Foreign Trade is as follows:

• The DGFT headquarters is in New Delhi. The Director General of Foreign Trade heads the department.
• The main role of DGFT is to implement the foreign trade policy and promote India's exports.
• DGFT issues licenses to exporters. It monitors their obligations through a network of offices.
• There are 25 regional offices of DGFT located in major Indian cities. These include cities like Ahmedabad, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, and Chandigarh.
• The regional offices provide information and facilitation to exporters regarding:
  • International trade developments like WTO agreements, 
  • rules of origin, 
  • Anti-dumping issues, etc. 

This helps exporters in their import and export decisions.

• All regional offices work under the supervision of DGFT headquarters in New Delhi.
• Director general of foreign trade New Delhi implement the foreign trade policy framed by DGFT at the central level.

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Objectives of DGFT

Some of the major objectives of DGFT include the following:

• DGFT works to promote exports of Indian goods and services by providing information and guidance to exporters.
• DGFT works to ease imports by issuing import licenses and permits. It also monitors import flows and provides information and guidance to importers.
• DGFT regulates foreign trade in India by enforcing laws and regulations related to imports and exports.
• DGFT works to protect the interests of Indian exporters and importers. It provides them with information and guidance and enforces laws that protect their rights.
• DGFT provides information and guidance on foreign trade matters to exporters and importers.
• DGFT handles the Foreign Trade Policy of India. This policy sets out the government's goals for foreign trade.

Functions of Directorate General Foreign Trade (DGFT)

Directorate General of Foreign Trade (DGFT) Functions include:

• Implementing the foreign trade policy of the government. It implements the export-import policy of India.
• Provides a database of all exporters and importers in India.
• Grants Exporter Importer Code (EIC) number needed to export and import goods.
• Regulates, prohibits, and restricts importers and exporters.
• Permits transit of goods from India to adjacent countries as per trade agreements.
• Promotes trade with neighboring countries.
• Grants permission for free exports where needed.
• Controls duty entitlement passbook (DEPB) rates. DEPB is an export incentive given by GOI.
• Handles quality complaints of foreign buyers of Indian export products.
• Formulates new codes in ITC-HS codes (Indian trade classification based on a harmonized system of coding). This code is given to export/import products.
• Regional offices help exporters with developments in international trade, like WTO agreements, rules of origin, anti-dumping issues, etc.

What is DGFT known for?

DGFT is known for implementing the foreign trade policy of the government. It promotes the export-import policy of India.

Background of Directorate General Foreign Trade (DGFT)

Overview

• The Directorate General of Foreign Trade is also known as the Facilitator.
• It maintains close contact with 24 regional offices and gives export authorization.
• Ahmedabad, Bengaluru, Chennai, Coimbatore, Delhi, Ernakulam (Kochi), Guwahati, Hyderabad, Indore, Jaipur, Jammu, Kanpur, Kolkata, Ludhiana, Mumbai, Nagpur, Panipat, Pune, Rajkot, Srinagar, Surat, Vadodara, Varanasi, and Visakhapatnam are the regional offices.
• There are zonal offices in New Delhi, Chennai, Mumbai, and Kolkata. Its headquarters are in New Delhi.

Foreign trade Development and regulations Act 1992

• Foreign Trade Development and Regulations Act 1992 empowers the government to develop and declare export and import policies, as well as to alter them on a regular basis.
• The government has also been granted broad authority to prohibit, limit, and control general and specific situations of international commerce.
• The primary goal of the FTDR 1992 is to establish a framework for the growth and control of international trade by enabling imports into the country and implementing efforts to enhance exports from India, among other things.

Check the details on the Economy Notes Here.

Body of Directorate General Of Foreign Trade

• There are two types of offices in the Directorate General of Foreign Trade: Regional Authority (RA) offices and Zonal Offices.
• There are zonal offices for the DGFT in Kolkata, Delhi, Chennai, and Mumbai. The Additional Director General of Foreign Trade oversees the zonal offices. At the same time, the Regional Offices are led by the Joint Director General, Deputy Director-General, and Assistant Director-General. The Director-General is situated in Udyog Bhawan in New Delhi.
• The Directorate General of Foreign Trade (DGFT) assists in the development of trade links with foreign countries.
• It continually seeks to improve economic growth and provides the required force in the trade business. The DGFT’s only duty is to encourage exports and imports.

Questions to Ace Your Exams

Q1. Who is the Directorate General of Foreign Trade? 
The Director General of Foreign Trade helms the Directorate General of Foreign Trade. A member of the Indian Administrative Services with over 30 years of service is usually assigned to this post. The duties of the Director General of Foreign Trade are to map out the country’s Foreign Trade Policy. He or she also will draw up the Hand Book of Procedures of Foreign Trade Policy and ITC (HS) Classifications of Import and Export Items.
Currently, Shri Santosh Kumar Sarangi serves as the Director General of Foreign Trade.

Q2. What are DGFT services?
The Directorate General of Foreign Trade provides services that help exporters. The DGFT has the responsibility to issue various licences and/ or certificates for conducting import and export business in the country.  Some of the services by DGFT under this include the issue of a new Import Export Code (IEC), application for scrips/ authorization and import and export licenses, Duty-Free Import Authorization, Export Promotion Capital Goods Scheme (EPCG), Import-Export management systems, amongst others.
It also has the responsibility for carrying out various Export Benefit schemes in India.  

Q3. What are DGFT and IEC?
DGFT is the Directorate General of Foreign Trade, an agency working under the Ministry of Commerce, India. Its main role is to promote and regulate India’s foreign trade. The DGFT offers several services to exporters and importers.  
The Import Export Code (Importer Exporter Code), also known as IEC, is a 10-digit identification number. No foreign business, import or export, can be carried out without this. The DGFT issues the IEC. To obtain the IEC, the importer or exporter will have to fulfil certain processes and conditions laid down by the DGFT. The IEC can be obtained from any of the DGFT regional offices in India.

Q4. What is a DGFT certificate?
The Director General of Foreign Trade issues various certificates. The exporter or importer can apply for any of these certificates as appropriate and manage them. 
An important certificate is the DGFT Digital Signature Certificate (DSC). This digital certificate is a necessity for online transactions and business registration.  This certificate is a specialized digital signature issued only by the DGFT. It authenticates and verifies all the online activities on the DGFT website, like filing returns and applying for licenses.  The DSC is of vital importance in verifying the authenticity of all digital documents submitted by the exporter/ importer for getting licences.

 

In this article, we analyzed the structure and features of the Directorate General of Foreign Trade (DGFT). To study more topics from the Indian Economy for UPSC, download the Testbook App now!