- Each ITC(HS) line is free, restricted, prohibited or state-trading. Restricted items need a DGFT authorisation.
- Imports use Schedule 1, exports Schedule 2. Read the policy condition against the line.
- Free is not approval-free: BIS, FSSAI, quarantine and SCOMET rules sit alongside the policy.
Where the policy lives
India's trade policy is applied by commodity code. Under the Foreign Trade Policy, the ITC(HS) classification has two schedules: Schedule 1 for imports and Schedule 2 for exports. Each 8-digit line states how that item may be traded. Finding the right line starts with the HS classification, and the policy for a code can change by DGFT notification at any time.
The four policy statuses
| Status | What it means | What you need |
|---|---|---|
| Free | Can be imported or exported without a DGFT licence | IEC, plus any other regulator's approval |
| Restricted | Allowed only with an authorisation or licence, or within conditions | An authorisation from DGFT, or compliance with a policy condition |
| Prohibited | Cannot be imported or exported | Nothing: only a specific exemption can allow it |
| State trading (STE) | Trade routed through a notified government agency | Buy from, or sell through, the nominated agency |
Some lines also carry a policy condition in the schedule: a minimum import price, a requirement that the goods meet a standard, or that the import is allowed only through specified ports. Read the note against the line, not just the status column.
"Free" does not mean "no approvals"
A free item still has to satisfy other laws. The policy is only one gate. Common ones sit alongside it:
SCOMET is separate. Dual-use goods, software and technology on the SCOMET list need an export authorisation even when the ITC(HS) line is free. See denied-party and SCOMET screening.
Getting an authorisation
- Read the line and its condition in the current schedule and the Handbook of Procedures.
- Apply on the DGFT portal under the right authorisation type, with the IEC, product details, quantity and value, and supporting documents the condition asks for.
- Track it. The authorisation has a validity, a quantity or value limit and sometimes a port restriction. Customs checks all of them against the Bill of Entry or Shipping Bill.
- Debit it. Record each shipment against the authorisation so you know what is left and can close it on time. A licence ledger avoids over-use.
Common mistakes
Checking policy once. Policy lines change. Check the status of the code at the time of each order, not when the product was first set up.
Importing against an expired or exhausted authorisation. Customs does not extend a lapsed authorisation. Alert at 60 and 30 days before expiry and when 80% of the value is used.
Wrong code, wrong status. Two codes that look alike can have opposite statuses. A classification mistake can turn a free import into an unlicensed restricted one.
How EXIMnx helps: EXIMnx suggests HS codes, shows the policy status and licence requirement when an item is added to an order, and debits imports and exports against the DGFT licence ledger. See DGFT licences.
Frequently asked questions
What does 'restricted' mean for an import?
It is allowed only with a DGFT authorisation or by meeting a stated policy condition.
Where do I find the policy status of my product?
In the ITC(HS) schedules: Schedule 1 for imports and Schedule 2 for exports, by 8-digit code.
Is a 'free' item exempt from other approvals?
No. BIS, FSSAI, quarantine, drug rules and SCOMET can still apply.
- DGFT, ITC(HS) schedules, Foreign Trade Policy and Handbook of Procedures: dgft.gov.in
- Customs, prohibitions and restrictions on import and export: cbic.gov.in
This guide is a practical overview, not legal or tax advice. Rules, rates and procedures change by notification; confirm against the current text before you act.