DGFT and India's Foreign Trade Policy, Explained

If you ship, source, or even just buy Indian handicrafts across a border, the Directorate General of Foreign Trade (DGFT) and India’s Foreign Trade Policy (FTP) quietly shape almost every step — from getting your IEC code, to what you can export, to which incentives you can claim. This guide explains who the DGFT is, what the FTP covers, and the specific schemes and licences that matter for handicraft exporters and importers.

What is the DGFT and what does the FTP do?

The DGFT (Directorate General of Foreign Trade) is the arm of the Ministry of Commerce & Industry that frames India’s trade policy. It operates under the Foreign Trade (Development & Regulation) Act and publishes the Foreign Trade Policy (FTP), which is revised every few years with periodic updates and notifications.

The FTP sets the rules of the road for cross-border trade in goods. It covers:

• Who can export and import (IEC, registration requirements)
• What is freely tradable, restricted, or prohibited
• Export-import (EXIM) procedures and documentation
• Incentives, remission schemes, and export promotion benefits
• Special economic zones, EOU, and other unit-based schemes
• Trade facilitation and digital trade processes

For handicrafts, the FTP matters because it determines how easily a craft cluster in Moradabad, Jaipur, or Thrissur can ship brassware, textiles, or woodcraft to a buyer in Frankfurt or New York — and how easily an Indian importer can bring in complementary craft goods from abroad.

Why the FTP matters specifically for handicraft exporters

Handicraft exports are a fragmented, MSME-heavy sector where small producers, traders, and aggregators all participate. The FTP directly affects them in five practical ways:

• IEC (Import Export Code): A 10-digit code issued by DGFT. Anyone engaged in import or export of goods and services in India is generally required to obtain one. It is a one-time, PAN-linked registration.
• Product classification: Every product, including a brass figurine or a hand-block printed cotton, sits under an ITC-HS code. Correct classification drives customs duty, RoDTEP eligibility, and any restriction checks.
• Restrictions on certain crafts: Some categories of antiques, wildlife-derived items, and specific woods are restricted or prohibited for export. The FTP and related Customs/PTA notifications are where you check.
• Export incentives: Schemes like RoDTEP (Remission of Duties and Taxes on Exported Products) and the earlier MEIS framework (now evolved) help offset embedded taxes, which is meaningful for labour-intensive crafts.
• Special handicraft provisions: The FTP has historically included specific provisions for handicraft exporters — including an EPCG variant for the sector — to help them upgrade machinery and tools.

Key DGFT schemes and licences a handicraft trader should know

You don’t need to memorise every scheme, but these are the ones that come up most often in a handicraft export-import desk:

• IEC (Import Export Code): The basic licence to be in the export-import business. Issued online through the DGFT portal.
• Advance Authorisation: Allows duty-free import of inputs that are physically incorporated into an export product. Useful if you import a component, finish the craft, and re-export it.
• EPCG (Export Promotion Capital Goods) Scheme: Permits import of capital goods at reduced or zero customs duty, subject to an export obligation. A weaver or woodworker importing a loom or CNC router can benefit.
• EOU / SEZ units: Unit-based schemes under the FTP for exporters operating out of a bonded premise, including special handicraft units.
• RoDTEP and RoSCTL: Rebate schemes for embedded taxes/levies on exports. Textile and apparel handicrafts (including handloom and handicraft items notified under RoSCTL) and other handicrafts may be eligible under RoDTEP.
• Status Holder recognition: Benefits accrue to firms with a track record of export performance; useful once you scale.

For sectoral support, exporters can also engage with the Export Promotion Council for Handicrafts (EPCH), which is the recognised EPC for the sector and helps with market access, buyer-seller meets, and MAI/MDA schemes.

A practical checklist before you ship your first consignment

Use this as a sanity check the first time you move a handicraft shipment out of India (or into it):

• IEC is active on the DGFT portal and linked to your PAN and bank account.
• Product is classified under the correct ITC-HS code for handicraft goods.
• No export restriction applies to your craft (check DGFT/ITC-HS policy, CITES for wood/ivory, antiques rules for older items).
• You understand applicable RoDTEP benefit and the scroll/claim process.
• Customs procedures are filed through ICEGATE and duties (if any) are paid through CBIC channels.
• GST compliance is in place (LUT for export of goods, refund of IGST or input tax as applicable).
• If relevant, BIS standards are met for the destination market.
• Buyer documentation in place: commercial invoice, packing list, certificate of origin, GI tag (if claiming one), fumigation/cites certificates as needed.

How the FTP connects to the wider import-export desk

The FTP doesn’t operate in isolation. For an Indian handicraft exporter, the daily workflow typically runs: DGFT (policy + IEC) → CBIC / ICEGATE (customs filing and duty) → GST portal (tax compliance) → bank (foreign remittance) → EPCH (sectoral support and dispute help). For an overseas buyer, what they ultimately feel is whether the Indian side can quote clean terms, ship on time, and provide the right certificates — all of which depend on the trader’s compliance with FTP and customs rules.

If you’re scaling beyond your first few buyers, this is where a trade desk like GreenFlip India (greenflip.in) plugs in — handling the documentation, classification, and scheme eligibility side, and routing demand into the wider GreenFlip network (greenflip.org) for cross-border craft trade.

Where to verify the current rules

The FTP is updated regularly via notifications, and incentive schemes are revised. Before you rely on anything in this guide for a live transaction, always check the current position at the official DGFT portal: https://www.dgft.gov.in. For customs procedures, duty, and the actual filing, use the CBIC and ICEGATE portals; for GST, the GST portal; for sectoral handicraft export support, EPCH; for product standards, BIS.

Bottom line

The DGFT and the Foreign Trade Policy are the rulebook for India’s cross-border craft trade — they decide who can trade, what can be traded, and which incentives reduce your cost of doing business. Get your IEC right, classify your products correctly, and check current DGFT notifications before each big move. If you’d rather focus on the craft and the buyers, GreenFlip India’s handicraft import-export desk handles the policy layer for you and connects into the broader GreenFlip network worldwide.

Note: This guide is general information for planning, not legal, tax, or customs advice. Indian trade rules change — always confirm current requirements on the official portal (DGFT, ICEGATE/CBIC, the GST portal, or BIS) or with a licensed customs broker before you ship.