Discover infinity
Posted on Jul 18, 2025
Subscribe to our newsletter
Get the latest updates, insights, and tips delivered straight to your inbox.
Are you confused between an IEC code and an export licence? If you’ve started exploring exports from India, whether as a freelancer, a small business owner, or a D2C brand, you’ve probably come across these two terms used interchangeably.
Every exporter from India needs an IEC code. But only exporters of restricted goods or to embargoed destinations need an export licence.
Think of IEC as your passport for global trade. On the contrary, an export licence is a special visa for specific destinations or goods. Let’s compare IEC code vs export licence in detail.
What Is an IEC and Why Do You Need It?
Importer Exporter Code (IEC) is a 10-digit number assigned by the Directorate General of Foreign Trade (DGFT). It’s basically your international business identity number in India.
Key features of IEC:
Mandatory for all export or import transactions from India, whether you’re a big D2C brand or a solo freelancer selling digital art abroad.
It’s a one-time registration. So there’s no hassle of renewals and there’s no expiry. Your IEC stays active unless cancelled.
IEC is also directly linked to your PAN card, which means it identifies your business (or even you, as an individual exporter) on a global scale.
Why do you need IEC?
Banking compliance: Banks ask for IEC details when you receive international payments.
Customs clearance: You also need IEC to get custom clearance for your exports.
Online platforms: Marketplaces like Amazon Global, Etsy, or even payment gateways like PayPal often require IEC for smooth cross-border transactions. Even digital exporters, like SaaS founders, freelance designers, or consultants, need an IEC code.
What Is an Export Licence?
An export licence is special, item-specific permission to export restricted or regulated goods to certain countries. It is usually issued by DGFT, but sometimes by other ministries (like Defence, Agriculture, or Pharmaceuticals).
You need an export licence only when your goods fall under restricted or regulated categories.
When do you need an export licence?
You need an export licence for special export businesses:
Exporting to embargoed or sanctioned countries (like North Korea, Syria).
Sending restricted items: tech, defense, chemicals, pharma, agriculture.
Unlike an IEC code, an export licence isn’t a one-time registration. It’s specific to the item and transaction, approved on a case-by-case basis.
In short, if your product appears on the restricted list, you’ll need this extra clearance before you can send it overseas.
Categories of restrictions
Here are the restricted categories of goods that require an export licence:
Strategic goods like missiles, defense components.
Dual-use items like tech, raw materials.
Agricultural or quota-controlled exports.
Key Differences: IEC Code vs Export Licence
Feature | IEC Code | Export Licence |
What is it? | Unique 10-digit registration for global trade | Case-by-case permission for restricted exports |
Who needs it? | Every Indian exporter (including freelancers, SaaS providers, D2C brands) | Exporters of goods on DGFT’s restricted lists |
Mandatory? | Yes, always, for all outward transactions | Only if exporting restricted/regulated items. |
Issuing Authority | DGFT (Directorate General of Foreign Trade) | DGFT or relevant ministries (e.g., Defence) |
Validity | Lifetime, but must be updated/confirmed annually | Limited (per shipment, time period, or quantity) |
Applies to | All export/import transactions | Specific goods/countries under regulation |
Application Process | Fast, online, paperless | Lengthy, detailed, often with in-person scrutiny |
Documentation | PAN, Aadhaar, bank proof, digital signature | Product specs, safety data, end-use certificates |
Recent Compliance/ Penalty Risks | Non-renewal deactivates all trade privileges. | Major fines, shipment seizure for missing licence. |
Statutory Backing | Foreign Trade Policy, 2023 and amendments. | Export Control Orders, DGFT Schedules, Finance Act 2024. |
Example | Freelancer selling design services globally. | Drone manufacturer shipping to UAE or SCOMET goods. |
Regulatory changes as of 2025
1. Annual IEC update is now mandatory
Starting this year, IEC holders must update or confirm their code details every year between April 1 and June 30. Miss it, and your IEC goes inactive and customs shipments will be blocked until you update.
2. New export policy classifications
All goods are now classified with globally recognised 8-digit ITC-HS codes. Exports are streamlined into “Free,” “Restricted,” “Prohibited,” or “STE (State Trading Enterprise)” categories. This brings major clarity and only “restricted” items actually need an export licence.
3. Export licence rules tighten
After several high-profile compliance cases, export documentation and approval for controlled exports are more stringent. Timelines, transparency, and digital processes have improved, but scrutiny is higher, especially for tech, defense, and dual-use items.
When Do You Only Need IEC?
“I’m just a freelancer. Do I really need an export licence?” This is one of the most common questions international freelancers ask. You don’t need an export licence for freelancing.
Let’s understand in which cases you need an IEC but not an export licence.
1. Freelancers & SaaS providers
As a freelance writer, graphic designer, or SaaS provider, you need an IEC to receive payments from abroad and to comply with bank and tax requirements.
2. D2C brands with regular merchandise
Any D2C brand selling handmade jewelry, organic skincare, or T-shirts can also export goods with just an IEC. As long as your products aren’t on the restricted list, an IEC is all you need to ship worldwide.
3. E-commerce exporters
Businesses selling through Amazon Global, Etsy, Shopify, or eBay also don’t require an export licence. Even for digital exports (like software, apps, online courses), you need IEC for receiving international payments.
When Do You Need Both IEC and Export Licence?
If your goods are on the DGFT’s restricted list or you are exporting to a sanctioned country, both an IEC and export licence are mandatory. For example:
Machinery or technology flagged as “dual-use” (meaning civilian and military, like advanced sensors).
Pharmaceutical exports to countries under quotas.
Fertilizer, drones, or chemicals listed as strategic or restricted items.
Shipping any product to a country under trade sanctions.
Read More: How to Start an Export Business in India
Receive international payments with Infinity
Understanding the difference between an IEC code and an export licence is crucial for any business going global. Most Indian freelancers, SaaS startups, and small goods exporters only require IEC. Export licences are only necessary for restricted items or countries.
Always check the latest DGFT trade notices before shipping, since rules and restricted item lists are updated regularly.
If you are a freelancer or an exporter and want to receive international payments at low cost, sign up for Infinity!
FAQs
1. Do I need an IEC to export digital services?
Yes, IEC is mandatory for anyone selling digital services or receiving payments from overseas clients. Even digital exports like software, design, or consulting require IEC for smooth payments, RBI compliance, and legal transactions.
2. Is IEC the same as an export licence?
No. IEC is your global trade identity. Export licences are extra permissions for restricted items only.
3. Can individuals apply for IEC?
Yes. Individuals, freelancers, sole proprietors, and big companies, all can apply for an IEC online. It’s open to everyone involved in cross-border trade.
4. What if I export without a required export licence?
You risk shipment seizure, fines, and even legal action. Customs officials check paperwork closely. So, don’t skip this step for restricted goods. Visit DGFT’s site for real-time lists of restricted exports and the simplest digital IEC application portal in 2025.
