What Is the DGFT and Why Should NRIs Care?

The Directorate General of Foreign Trade (DGFT) sits under the Ministry of Commerce and Industry, Government of India. It frames and administers India's Foreign Trade Policy (FTP), which governs how goods and services move in and out of the country. If you are an NRI thinking about starting an import export business in India, investing in companies that benefit from trade incentives, or simply understanding the regulatory landscape, the DGFT is the authority you need to know.

The DGFT also issues the Importer Exporter Code (IEC), which every entity engaged in foreign trade must obtain. NRIs who want to set up a business entity in India for trading purposes will need this code as a first step.

Structure of India's Foreign Trade Policy

The current Foreign Trade Policy is organized into 11 chapters, each addressing a distinct area of trade regulation. Here is what each chapter covers and why it matters for NRI investors and entrepreneurs.

Chapter 1: Legal Framework and Trade Facilitation

This chapter lays out the legal foundation for India's trade regime, including the Foreign Trade (Development and Regulation) Act and associated rules. It establishes the powers of the DGFT and the framework for trade facilitation measures. NRIs planning any cross border business activity should start here to understand the legal backbone of India's trade system.

Chapter 2: General Provisions Regarding Imports and Exports

This chapter covers the broad rules that apply to all imports and exports, including licensing requirements, prohibited and restricted items, and general conditions for trade. NRIs involved in trading businesses or investing in companies with significant import export exposure should understand these baseline rules.

Chapter 3: Developing Districts as Export Hubs

India's policy actively encourages developing districts across the country as export hubs. This has direct implications for NRI investors interested in manufacturing, agri processing, and other sectors in tier 2 and tier 3 cities. Companies setting up operations in these districts may benefit from additional policy support, which can translate into investment opportunities in emerging industrial clusters.

Chapter 4: Duty Exemption and Remission Schemes

This chapter details schemes like Advance Authorisation and Duty Free Import Authorisation (DFIA) that allow exporters to import raw materials without paying customs duty, provided the finished goods are exported. For NRIs investing in export oriented manufacturing companies, these schemes directly improve margins and competitiveness. Listed companies in sectors like textiles, chemicals, pharmaceuticals, and auto components frequently use these benefits.

Export Obligation Extension (March 2026): The DGFT extended the Export Obligation (EO) period for Advance Authorisations and EPCG Authorisations expiring between March 1, 2026, and May 31, 2026, automatically until August 31, 2026. This extension came through Public Notice No. 51/2025-206 issued on March 6, 2026, in response to geopolitical developments affecting global shipping routes, logistics corridors, and international supply chains (such as Red Sea route disruptions and Gulf conflict impacts).

Here is what makes this extension valuable for NRIs:

Automatic benefit, no extra paperwork: The extension applies automatically without requiring separate applications or composition fee payments. You do not need to file additional forms or pay any charges to benefit from this relief.
Applies to multiple authorization types: The extension covers Advance Authorisation for Annual Requirement, Special Advance Authorisation, and EPCG Authorisations.
Verification at discharge: DGFT's Regional Authorities will verify compliance with the revised EO timelines when issuing the Export Obligation Discharge Certificate (EODC), or at the time of authorisation closure or regularisation. Customs authorities have been instructed to permit exports in accordance with the new August 31, 2026, deadline.
Complements existing provisions: This automatic extension operates in addition to existing Foreign Trade Policy and Handbook of Procedures provisions that already allow exporters to seek EO period extensions by paying prescribed composition fees. If your authorisation falls outside the March to May 2026 expiry window, you can still apply for an extension through the standard process with a composition fee.
Surge in approvals: In March 2026, DGFT saw a 242 percent rise in Advance Authorisation Export Obligation Discharge Certificate (EODC) approvals and a 234 percent increase in EPCG EODC approvals compared to February 2026, indicating that many exporters are accelerating scheme closures and fulfilling obligations before the extended deadline.

NRIs holding these authorisations or managing export businesses through Indian entities benefit immediately from this grace period. If your authorisation falls within the specified window, no action is needed on your part, but you should verify your authorisation details on the DGFT portal. This relief is particularly valuable for NRI investors in textiles, engineering goods, and pharmaceuticals, as it reduces compliance risk and allows more time to fulfill export obligations amid global supply chain challenges.

Chapter 5: Export Promotion Capital Goods (EPCG) Scheme

The EPCG scheme allows importation of capital goods at zero or reduced customs duty, subject to an export obligation. This is particularly relevant for NRIs looking to invest in or set up manufacturing units in India. Companies that leverage EPCG effectively can achieve significant cost savings on machinery and equipment, boosting their return on capital.

Under the current policy, EPCG authorisations typically carry an export obligation spread over eight years, divided into blocks. The March 2026 extension mentioned above also applies to EPCG authorisations, providing automatic relief for those with obligations expiring in the March to May 2026 window.

Chapter 6: Export Oriented Units (EOUs), EHTPs, STPs, and BTPs

This chapter governs special categories of units that enjoy distinct benefits:

Export Oriented Units (EOUs) focus entirely on exports and receive duty free imports and other incentives
Electronics Hardware Technology Parks (EHTPs) support electronics manufacturing
Software Technology Parks (STPs) have historically been a backbone of India's IT services exports
Bio Technology Parks (BTPs) support biotech exports

NRIs investing in Indian IT companies, electronics manufacturers, or biotech firms should note that many of these companies operate under STP or EHTP frameworks. The incentive structures under these schemes directly affect profitability.

Chapter 7: Deemed Exports

Deemed exports refer to transactions where goods do not leave India but the payment is received in foreign exchange, or the goods are supplied to specific categories of projects (like those funded by multilateral agencies). NRIs investing in infrastructure and capital goods companies should understand this provision, as it allows domestic suppliers to claim export benefits on certain qualifying transactions.

Chapter 8: Quality Complaints and Trade Disputes

This chapter establishes the mechanism for handling quality complaints and trade disputes in foreign trade. It provides a structured grievance redressal process, which adds a layer of protection for NRIs engaged in trading activities.

Chapter 9: Promoting Cross Border Trade in Digital Economy

This is a forward looking chapter that addresses e commerce exports and digital trade facilitation. For NRIs interested in India's booming e commerce and digital services sectors, this chapter signals the government's intent to simplify cross border digital trade. Companies in logistics, e commerce platforms, and digital payment services stand to benefit from these provisions.

Chapter 10: SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies)

SCOMET covers India's strategic trade controls on sensitive items that have dual use (civilian and military) applications. NRIs investing in defence, aerospace, chemicals, or advanced technology companies should be aware that exports of certain items require special SCOMET licensing. This is particularly relevant given India's growing defence manufacturing sector and the government's push for self reliance in strategic sectors.

Chapter 11: Definitions

This chapter provides the official definitions of all terms used throughout the Foreign Trade Policy. When in doubt about any terminology, this is the reference point.

Key Services NRIs Should Know About

The DGFT offers several digital services that NRIs or their authorized representatives can access:

IEC Profile Management for obtaining and managing your Importer Exporter Code
Advance Authorisation and DFIA applications for duty free imports
EPCG scheme applications for capital goods imports
Certificate of Origin issuance for preferential trade agreements
RoDTEP (Remission of Duties and Taxes on Exported Products) which replaced the earlier MEIS scheme
e BRC (electronic Bank Realisation Certificate) for tracking export proceeds
e RCMC (electronic Registration Cum Membership Certificate) through export promotion councils

The DGFT helpline numbers are 1800 572 1550 and 1800 111 550 (toll free within India). They also offer an AI assistant called VAHEI for quick queries.

2026 Policy Updates: Precious Metals and Gulf Trade Support

Precious Metals Import Policy (April 2026): The DGFT issued Notification No. 03/2026-27 on April 2, 2026, revising conditions for importing precious metals under ITC HS Chapter 71. These changes strengthen regulatory oversight and affect NRI traders and investors involved in gold, diamonds, and other precious metal imports. If you are considering trading or investing in the gems and jewellery sector, review the updated conditions on the DGFT website.

Gulf Trade and Geopolitical Support: The government has recognized that geopolitical developments, particularly conflicts affecting the Gulf region, have increased freight costs, insurance premiums, and financing charges for Indian exporters. An inter-ministerial group has held 20 meetings to support exporters in sectors like petroleum, chemicals, engineering goods, rice, pharmaceuticals, and gems and jewellery. India's bilateral trade with the Gulf stood at 178 billion dollars in 2024-25, making this support particularly important for NRI investors with exposure to these sectors. The automatic export obligation extension through August 31, 2026, is part of this broader support framework.

How This Affects NRI Investments in Indian Markets

India's Foreign Trade Policy has a direct bearing on several sectors where NRIs actively invest:

Export Oriented Sectors: Companies in IT services, pharmaceuticals, textiles, gems and jewellery, auto components, and chemicals benefit significantly from duty exemption schemes, EPCG, and RoDTEP. When evaluating these stocks or mutual funds focused on these sectors, understanding the trade incentive framework helps you assess sustainability of margins. The recent automatic extension of export obligations through August 31, 2026 (announced March 6, 2026) reduces near term compliance risk for companies using Advance Authorisation and EPCG schemes, potentially supporting stock valuations in these sectors. Companies that would have faced export obligation deadlines in March to May 2026 now have an additional three months without incurring composition fees, which improves their cash flow and operational flexibility. The surge in EODC approvals in March 2026 (242 percent increase for Advance Authorisations and 234 percent for EPCG compared to February) indicates that many exporters are actively using this window to close out schemes and fulfill obligations.

Gems and Jewellery Sector: This sector is a significant user of Advance Authorisation schemes for importing rough diamonds and precious metals. The updated precious metals import policy (Notification No. 03/2026-27, April 2, 2026) introduces new regulatory conditions that NRI traders and investors should monitor. The government's focus on Gulf trade support also benefits this sector, as the Gulf region is a major market for Indian gems and jewellery exports.

Infrastructure and Capital Goods: The deemed exports provisions benefit companies supplying to large infrastructure projects. NRIs investing in infrastructure focused mutual funds, InvITs, or individual infrastructure stocks should factor in these benefits.

Defence and Aerospace: SCOMET regulations and the broader push for defence exports create both opportunities and compliance requirements. Listed defence companies that successfully navigate export licensing can access global markets, but the regulatory process adds complexity.

E Commerce and Digital Services: The dedicated chapter on digital trade signals policy support for cross border e commerce. NRIs invested in e commerce platforms, logistics companies, and fintech firms should watch for specific notifications and public notices under this chapter.

Practical Steps for NRIs

1. If you want to start a trading business in India, your first step is obtaining an IEC from DGFT. You can do this online through the DGFT portal.

2. If you are investing in export oriented companies, review whether they benefit from Advance Authorisation, EPCG, or RoDTEP schemes, as these directly impact cost structures and margins. If you hold Advance Authorisation or EPCG authorisations with export obligations expiring between March 1, 2026, and May 31, 2026, verify that you benefit from the automatic extension to August 31, 2026, announced on March 6, 2026 through Public Notice No. 51/2025-206. No separate application or composition fee is required—the extension applies automatically.

3. If you are trading in precious metals or gems and jewellery, review the updated import conditions under Notification No. 03/2026-27 (April 2, 2026) to ensure your business complies with the latest regulatory requirements.

4. Stay updated on notifications and public notices from DGFT, as trade policy changes can affect restricted items lists, duty rates, and scheme eligibility. The DGFT website publishes all official notifications, and the Press Information Bureau (pib.gov.in) carries official announcements.

5. Monitor geopolitical developments that may trigger further policy support or extensions. The government's inter-ministerial approach to managing supply chain disruptions suggests that additional relief measures may be announced if global conditions worsen.