You need to apply for an Importer Exporter Code (IEC) if you want to import or export anything to and from India to other countries. Technically speaking, IEC is a 10-digit number granted by the Directorate General of Foreign Trade (DGFT) to any Indian entity seeking to do international trade.

IEC Import Export License application

This code is better known in India simply as an export license, and is easy to apply for and get from the zonal or regional office of DGFT which has jurisdiction over your location of business. You can now also submit an online IEC application at dgft.gov.in with the required documents and fee of Rs. 250.

1. Employment Generation and Income Distribution:

In general, countries adopting outward-looking strategy have done better than those which adopted inward-looking strategy. Moreover, empirical evidence suggests that outward orientation rather than inward orientation may lead to more equal income distribution.

The main reason for this is that, the expansion of labour-intensive exports generates employment opportunities, while import-substitution policies often result in capital-intensive production processes that displace labour.

2. Foreign Exchange Reserve:

Another benefit of outward-looking strategy is that foreign exchange reserve is earned permanently. On the other hand, under inward-looking strategy foreign exchange is lost temporarily because the replacement of imports of final goods by domestic production requires imports of raw materials, capital equipment, and components. The end result may be increased rather than decreased dependence on imports.

Theory and Evidence:

The World Bank’s finding and advocates of the doctrine of comparative advantage led to the recommendation of the LDCs which adopt more outward-looking policies. Indeed, the world economy in the late 1980s and the 1990s saw a strong emergence of support for the market.

During the 1980s and the 1990s emphasis focused on the importance of outward-looking economic policies to foster growth and development in the developing countries. Formal statistical analysis has consistently shown that there is a close link between sustained economic growth and development and the ability to export successfully in the world economy.

For example, it has been found that, in the 1970s and 1980s, developing countries’ with open economies grew at 4.5% per year in contrast with an annual growth rate of 0.7% in closed economies. The growth rates of open industrialised economies were also found to be larger than those of their closed counterparts.

In recent years, no country with an inward-focused policy has proved successful in attaining or sustaining a high internal growth rate of GDP. As an example, during the past two decades (1990-2008) Sub-Saharan Africa has lagged behind other developing countries in growth in both exports and income.

By relying on traditional exports with low income elasticities instead of moving into exports with greater growth potential, African countries have sacrificed many of the potential gains that could have been had from fast proliferating globalisation.

In contrast, GDP grew by 7.6% in six of the major East Asian countries and 3.0% in Latin America as exports expanded at 15.7% and 9.6%, respectively, in the two areas. Consequently, Africa’s share of world trade has fallen from 4% in 1980 to less than 2% today.

The critical factor here is that, successful outward-looking policies have generally proved ineffective in attracting investment necessary to stimulate growth and development in developing countries as a group. It is more than pure investment, however, as the foreign component of this investment traditionally brings with it not only scarce capital but also a transfer of technology, management skills, organisational skills, and entry into highly competitive international markets.

In sum, the evidence is convincing that freer trade does impact positively on growth.

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