Globalization and the internet revolution have opened enormous export opportunities for India. With the ease of doing business and the world evolving as a global village, all entrepreneur or businessman dreams of exporting their products & services. But there are certain rules & regulations of export and import which must be followed. To export from India, exporters require several kinds of permits. The three permits, Business Identification Number[1] and Import-Export Code (IEC), that are granted by the Director General of Foreign Trade (DGFT) and the AD (Authorized Dealer) Code are required to be obtained. Without that, businessmen cannot complete customs clearance of products. AD code is a seven-digit number granted by the bank for foreign currency transactions. In this write-up, our main focus is on the Benefits of Obtaining AD Code Certificate in India.
What is the Authorized Dealer Code (AD Code)?
The Authorized Dealer Code (AD Code) is a 14-digit numerical code exporter obtains from the bank with an exporter with a current account to run the export/import business. The AD Code comes printed on a document with the banks’ letterhead in a format prescribed through the DGFT. A bank needs to deal in or be an authorized dealer of foreign currency to be able to issue an AD Code. This is in line with the objective of an AD Code, which is to ensure that foreign (overseas) currency transactions in an exporter’s current account are from legal trade. Exporters must register their AD Code with the airport or seaport from where they intend to ship their products abroad. In case the shipments are dispatched from an ICD (Inland Container Depot), AD Code Registration is required for that facility and the port attached to it. An AD Code Certificate registration has lifetime validity. However, if exporter ships from more than one port, whether in the same or a different state, they must register the AD Code for all of these ports. In such a case, the AD Codes for these ports will differ.
Why is an AD Code Certificate Required?
There are various reasons why having an AD Code is needed for businesses that want to export products from India. Some essential reasons have been mentioned below:
- Compulsory Documents for Export;
- Submission of Shipping bill for custom house clearance;
- Importers’ requirement for releasing payment;
- Transfer of Credit to the trader account directly;
- Important for claiming refunds and incentives;
- Port registration for export can be done by AD Code IceGate online platform.
Benefits of Obtaining AD Code Certificate in India
The following are some major benefits of obtaining AD Code Certificate in India:
- Generating Shipping Bill on the ICEGATE portal: A Shipping bill is one of the three compulsory documents for exporting products abroad. Indian Customs EDI system won’t allow exporters to generate shipping bills on the ICEGATE portal without an AD Code registration.
- Online Procedure: Earlier, the AD Code registration certificate was done at the ports, which took time, effort, and money. The entire bank AD Code registration procedure is online on the ICEGATE portal.
- Legalizes Export-Import Business: Exporters can avail of various advantages from the DGFT, Exports Promotion Council & other government schemes. In addition, the AD Code allows multiple other advantages, such as duty rebates, subsidies, and tax returns.
- Lifetime Validity: The AD Code Registration Certificate on a port is valid for a lifetime. Exporters only require to pay a one-time fee, and the Certificate will be valid for a lifetime of that port.
- Minimizing the Smuggling of products: The AD Code tracks any illegal source of foreign transactions and helps reduce the Smuggling of prohibited products that contribute to the nation’s long-term growth of the nation’s economy.
Documents Required to Obtain AD Code Certificate in India
Once the bank has granted an AD Code, it has to be registered with the customs on the IceGate portal. Following are vital documents that need to be ensured before making an application form:
- AD Code letter on banker’s letterhead;
- Cancelled Cheque;
- Company’s PAN;
- Aadhaar/ PAN/ Voter ID/ Passport copy of Director or Proprietor or Partner;
- GST Registration Certificate;
- Import Export Code (IEC) Certificate;
- Board Resolution (for a company only);
- Export House Certificate (optional).
Procedure to Obtain AD Code Certificate
One has to request their bank for the grant of details on the AD Code of the bank. Once the bank obtains the letter of request, it provides the details in writing. Such a letter must contain details about the applicant’s organization or business and the export transaction. The complete process for obtaining the AD Code Certificate is as follows:
- The applicant needs to have a current account in a bank that deals in foreign exchange.
- An application to the bank’s Branch Manager where the applicant has the current bank account is made by the applicant in the prescribed format.
- Bank issues a 14-digit AD Code on its letterhead as per the prescribed standard by the Directorate General of Foreign Trade (DGFT).
- After obtaining the AD Code from the bank, the applicant registers it with the port from where the goods are to be exported/imported. Nowadays, it is also done through Indian Custom Electronic Gateway, ICEGATE.
- An ID is created at the ICEGATE portal using organizational-based class 3 DSC.
- All required documents are collected, and an application is filed at the custom house.
- Once all the necessary documents are submitted, including information related to exporter and shipping of consignment, the Registration of AD Code is done.
Conclusion
An Authorized Dealer (AD) Code is essential for the exporter. It is not only essential for getting shipping bills. The exporter can directly claim government benefits, such as a refund of GTS, duty drawback, rebates, import duty, etc., to his current account. It helps the government keep checking the sources of foreign exchange.
