Identifying Products For Export in India: A Legal and Regulatory Framework

Introduction

Export trade has emerged as a critical component of India’s economic growth strategy, contributing significantly to the nation’s foreign exchange reserves and industrial development. The process of identifying products for export requires exporters to navigate through a complex web of legal frameworks, regulatory classifications, and compliance requirements. This systematic approach ensures that Indian exports maintain international standards while adhering to domestic trade policies. Understanding the legal architecture governing export product identification has become essential for businesses seeking to participate in global value chains and capitalize on international trade opportunities.

The identification of export products in India operates within a structured regulatory framework designed to facilitate legitimate trade while preventing misuse of export privileges. This framework encompasses multiple layers of classification systems, licensing requirements, and compliance mechanisms that work together to create a transparent and efficient export ecosystem.

The Legislative Foundation: Foreign Trade Development and Regulation Act, 1992

The cornerstone of India’s export regulation system rests upon the Foreign Trade (Development and Regulation) Act, 1992, which replaced the restrictive Imports and Exports (Control) Act, 1947 [1]. Enacted on August 7, 1992, this legislation marked a paradigm shift from a control-oriented approach to one focused on development and facilitation of foreign trade. The Act provides the Central Government with comprehensive powers to formulate and implement foreign trade policies through orders published in the Official Gazette.

Under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government is empowered to make provisions for the development and regulation of foreign trade by facilitating imports and increasing exports [1]. This provision enables the government to prohibit, restrict, or otherwise regulate the import or export of goods in specified classes of cases. The legislative framework establishes that all goods subject to orders under this section are deemed to be goods whose import or export has been prohibited under Section 11 of the Customs Act, 1962, thereby integrating customs and trade regulations.

The Act introduced the concept of the Importer-Exporter Code Number under Section 7, which mandates that no person shall make any import or export except under such a code number granted by the Director General of Foreign Trade or authorized officers [1]. This requirement serves as the first step in product identification for export, creating a database of legitimate exporters and establishing accountability in the export process. The Director General of Foreign Trade, appointed under Section 6 of the Act, holds the responsibility for advising the Central Government on export policy formulation and ensuring its implementation across the trade ecosystem.

Customs Act, 1962: The Foundation of Product Classification

The Customs Act, 1962, provides the statutory framework for product classification and valuation in export transactions. Section 2 of the Customs Act defines critical terms including “export” as taking out of India any goods by land, sea, or air [2]. The Act establishes the assessment mechanism under which customs authorities determine the dutiability of goods and applicable rates based on tariff classification, valuation, and eligibility for exemptions or concessions.

Product classification under the Customs Act follows the Harmonized Commodity Description and Coding System, which provides a standardized method for identifying goods in international trade. The assessment process, as defined in the Act, requires determination of tariff classification in accordance with the Customs Tariff Act, 1975, and valuation of goods based on transaction value or other prescribed methods. For exports, Section 16 of the Customs Act specifies that the rate of duty and tariff valuation applicable to export goods shall be determined as per the provisions in force at the time of export.

Section 50 of the Customs Act mandates that exporters must make entry of goods for exportation by presenting a shipping bill for goods exported by vessel or aircraft, or a bill of export for goods exported by land [2]. This requirement ensures proper documentation and classification of export products before they leave Indian territory. The shipping bill or bill of export must contain accurate information about the nature, quantity, and value of goods, forming the basis for product identification in the export process.

Indian Trade Classification (Harmonized System) Code Structure

The Indian Trade Classification based on Harmonized System, commonly known as ITC-HS code, represents India’s primary method for classifying items in trade and import-export operations [3]. The Directorate General of Foreign Trade issues these codes, which consist of an eight-digit alphanumeric system representing specific classes or categories of goods. This classification system enables exporters to identify applicable regulations, duty rates, and policy restrictions for their products.

The ITC-HS code structure builds upon the international six-digit Harmonized System maintained by the World Customs Organization, with India adding two additional digits to meet national trade requirements [4]. The first two digits represent the chapter covering a broad category of goods, the next two digits indicate the heading within that chapter, followed by two digits for the sub-heading, and finally two digits developed under India’s national classification system for specific items. This hierarchical structure allows for precise product identification while maintaining alignment with global classification standards.

Schedule 1 of the ITC-HS classification lays down the import policy regime, while Schedule 2 details the export policy regime [5]. These schedules categorize goods into different classifications including free items, restricted items, prohibited items, and items exportable only through State Trading Enterprises. The classification determines whether an exporter needs special licenses or authorizations to export particular products. On January 13, 2025, the Directorate General of Foreign Trade updated the export policy under Schedule II, aligning it with the Finance Act 2024, to cover all ITC-HS codes with item-specific conditions using the globally accepted eight-digit system [3].

Foreign Trade Policy 2023: The Current Export Framework

The Foreign Trade Policy 2023, which came into effect on April 1, 2023, establishes the current operational framework for export product identification and promotion [6]. This policy document builds upon four foundational pillars: incentive to remission, export promotion through collaboration, ease of doing business, and emerging areas including e-commerce and districts as export hubs. The policy emphasizes process re-engineering and automation to facilitate ease of doing business for exporters while maintaining robust controls on sensitive and dual-use items.

The Foreign Trade Policy 2023 introduces several mechanisms to assist exporters in product identification and classification. The policy streamlines the Advance Authorization and Export Promotion Capital Goods schemes, enabling duty-free import of inputs and capital goods for export-oriented production [6]. These schemes require accurate product identification to ensure that imported materials correspond to the intended export products. The policy also extends recognition to new Towns of Export Excellence, including Faridabad, Mirzapur, Moradabad, and Varanasi, focusing on specific product categories like handlooms, handicrafts, and carpets.

A significant feature of the Foreign Trade Policy 2023 involves the promotion of e-commerce exports by bringing such exporters under the ambit of various export promotion schemes [7]. This development requires exporters to properly classify digital and physical products sold through e-commerce channels, ensuring compliance with both traditional export regulations and emerging digital trade requirements. The policy increases the value limit for exports through couriers to one million rupees per consignment, necessitating accurate product declaration and classification for customs clearance.

Product Classification and Compliance Requirements

Exporters must determine whether their products fall under free, restricted, or prohibited categories before initiating export transactions. Free items can be exported without restrictions under the Open General License provisions, while restricted items require specific licenses or authorizations from the Directorate General of Foreign Trade. Prohibited items cannot be exported except in extraordinary circumstances approved by competent authorities. The classification of products into these categories depends on various factors including national security considerations, environmental protection requirements, and international treaty obligations.

Special Chemicals, Organisms, Materials, Equipment, and Technologies, commonly known as SCOMET items, constitute a distinct category requiring careful identification and special export authorizations [8]. These dual-use items have potential applications in both civil and military sectors, including weapons of mass destruction. The SCOMET list organizes items under eight categories, and their export requires authorization from the Directorate General of Foreign Trade, Department of Atomic Energy, or Department of Defense Production depending on the specific item and end-use. On September 2, 2024, the Directorate General of Foreign Trade issued an updated SCOMET list with changes effective from October 2, 2024, providing transition time for businesses to comply with new requirements [8].

Exporters must also consider quality certification requirements when identifying products for export. The Bureau of Indian Standards establishes quality standards for imported and exported goods, operating product certification schemes under an Act of Parliament [9]. Certain products require mandatory compliance with specified Indian quality standards and Bureau of Indian Standards certification before export. These requirements ensure that Indian exports meet international quality benchmarks and maintain the country’s reputation in global markets.

Documentation and Procedural Requirements

Accurate product identification forms the foundation for preparing essential export documentation. The commercial invoice must contain detailed information about the goods sold, including descriptions, quantities, and values. The packing list provides information about packaging dimensions and weights, while the certificate of origin proves the geographical origin of goods, enabling exporters to claim benefits under various trade agreements. The shipping bill or bill of export serves as the primary declaration document to customs authorities, incorporating the ITC-HS code classification and detailed product specifications [2].

Exporters must also prepare inspection certificates where required, ensuring that products meet quality standards and specifications demanded by importing countries. The bill of lading or airway bill serves as evidence of dispatch and establishes the contract with the carrier for goods transportation. All these documents rely on accurate product identification and classification to ensure customs clearance and compliance with applicable regulations.

The goods and services tax framework adds another layer to export documentation requirements. While exports are zero-rated under the GST structure, meaning no tax applies to exported products, exporters can claim refunds on input tax credit for GST paid during the manufacturing process [7]. This refund mechanism requires proper product classification and documentation to establish the connection between inputs consumed and export products manufactured.

Remission and Exemption Schemes for Export Products

The Remission of Duties and Taxes on Exported Products scheme, operational since January 1, 2021, provides refunds for taxes and duties that are not otherwise exempted or refunded under existing schemes [7]. Product identification plays a crucial role in determining eligibility under this scheme, as specific rates apply to different product categories based on their ITC-HS classification. With effect from December 15, 2022, previously uncovered sectors including pharmaceuticals, organic and inorganic chemicals, and articles of iron and steel were brought under the scheme, expanding the scope of products eligible for duty remission.

The Advance Authorization Scheme permits duty-free import of inputs required for manufacturing export products, with quantities determined based on Standard Input-Output Norms for specific export products [9]. Accurate product identification enables the Directorate General of Foreign Trade to establish these norms, considering the materials physically incorporated in export products and the fuel, oil, and catalysts consumed during production. The scheme operates on both pre-export and post-export bases, providing flexibility to different categories of exporters.

The Export Promotion Capital Goods scheme enables duty-free import or indigenous sourcing of capital goods for technology upgrading, subject to fulfillment of export obligations [6]. Products classified under this scheme must be clearly identified and linked to specific export commitments. The Foreign Trade Policy 2023 reduces application fees under this scheme to benefit micro, small, and medium-sized enterprises, which constitute approximately fifty-five to sixty percent of exporters.

Regulatory Authorities and Their Roles

The Directorate General of Foreign Trade functions as the principal regulatory authority for export product identification and policy implementation. Established under the Foreign Trade (Development and Regulation) Act, 1992, the Directorate General advises the Central Government on export policy formulation and carries responsibility for implementing trade policies [1]. The organization maintains regional offices across India and processes applications for Importer-Exporter Code numbers, export licenses, and authorizations under various schemes.

The Central Board of Indirect Taxes and Customs, operating under the Ministry of Finance, handles customs clearance and classification verification for export products. Customs officers assess export declarations, verify product classifications, and ensure compliance with applicable laws and regulations [2]. The Board also implements risk management systems to identify potential violations while facilitating legitimate trade through automated clearance mechanisms.

The Bureau of Indian Standards plays a specialized role in quality certification and standards compliance for export products. The organization develops and implements standards for various product categories and operates certification schemes to verify compliance with these standards [9]. For products under compulsory certification requirements, exporters must obtain Bureau of Indian Standards approval before initiating export transactions.

Emerging Trends in Export Product Identification

Digital transformation initiatives under the Foreign Trade Policy 2023 are revolutionizing product identification and classification processes. The implementation of automated information technology systems with risk management capabilities enables faster processing of applications and approvals under various export schemes [6]. The Directorate General of Foreign Trade has introduced rule-based automatic approval systems using business analytics tools, initially implemented on a pilot basis for Advance Authorization extension and revalidation applications.

The Common Digital Platform for Certificate of Origin represents another technological advancement facilitating product identification in the context of Free Trade Agreement utilization [7]. This platform enables self-certification of certificates of origin and automatic approval where feasible, reducing processing times and compliance burdens for exporters. The initiative also contemplates electronic exchange of certificate of origin data with partner countries, enhancing transparency and reducing documentation requirements.

The Districts as Export Hubs initiative focuses on identifying products with export potential at the district level, creating tailored strategies for promoting specific products and services [7]. This approach requires detailed product mapping and identification of local manufacturing capabilities, addressing infrastructure and logistics bottlenecks that impede exports. District Export Action Plans outline specific strategies to promote identified products, converging with existing schemes to support export-oriented ecosystems.

Conclusion

Identifying products for export in India requires navigation through a sophisticated legal and regulatory framework encompassing multiple statutes, classification systems, and compliance requirements. The Foreign Trade (Development and Regulation) Act, 1992, establishes the legislative foundation, while the Customs Act, 1962, provides the classification and assessment framework. The ITC-HS code system offers the technical mechanism for product identification, and the Foreign Trade Policy 2023 sets current operational guidelines.

Successful export product identification depends on understanding the interplay between these legal instruments and regulatory mechanisms. Exporters must accurately classify their products using the eight-digit ITC-HS code system, determine applicable restrictions or prohibitions, obtain necessary licenses and certifications, and prepare comprehensive documentation supporting their export declarations. The digital transformation of trade processes and emphasis on ease of doing business are making product identification more accessible to exporters, particularly micro, small, and medium-sized enterprises.

The regulatory framework continues evolving to address emerging challenges in international trade, including e-commerce exports, dual-use technology items, and environmental considerations. Exporters must remain vigilant about policy updates and classification changes to ensure ongoing compliance and optimize benefits available under various export promotion schemes. With India targeting significant export growth in coming years, robust product identification systems will remain essential to achieving trade objectives while maintaining regulatory integrity and international commitments.

References

[1] The Foreign Trade (Development and Regulation) Act, 1992. Ministry of Commerce and Industry, Government of India. Available at: https://www.commerce.gov.in/wp-content/uploads/2021/06/Foreign_Trade_Development__Regulation_Act_1992.pdf 

[2] The Customs Act, 1962. India Code. Available at: https://www.indiacode.nic.in/handle/123456789/2475 

[3] India Briefing. (2025). Import and Export Procedures in India. Available at: https://www.india-briefing.com/news/import-export-procedures-india-19125.html/ 

[4] Wise. ITC HS Code List India. Available at: https://wise.com/in/import-duty/itchs-code 

[5] GST India. Indian Trade Classification (Harmonised System) of Exports and Imports. Available at: https://www.gstindia.biz/ftp-content-short-title.php?id=czoyOiI3MSI7 

[6] ClearTax. (2025). Foreign Trade Policy of India 2023: Objectives, Highlights and Impact. Available at: https://cleartax.in/s/foreign-trade-policy-2023 

[7] Press Information Bureau, Government of India. (2023). Government takes various export promotion initiatives like New Foreign Trade Policy. Available at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1988823 

[8] ELP Law. (2024). SCOMET Update 2024: Amendment in Appendix 3. Available at: https://elplaw.in/wp-content/uploads/2024/09/SCOMET-Update-2024-SCOMET-Updates-2024-Amendment-in-Appendix-3-SCOMET-items-to-Schedule-2-of-ITC-HS-Classification-of-Export-and-Import-Items-2018.pdf 

[9] U.S. Trade.gov. India – Import Requirements and Documentation. Available at: https://www.trade.gov/country-commercial-guides/india-import-requirements-and-documentation 

Authorized and Published by Aaditya Bhatt