In India, one important aspect of the import process is the AD Code. The AD Code, also known as Authorized Dealer Code, plays a crucial role in facilitating imports and ensuring compliance with foreign exchange regulations. Import and export in India require two important licenses or registrations.
The first is an Import Export Code (IEC) Registration for your business from the Directorate General of Foreign Trade (DGFT). Second, you must have a current Authorized Dealer (AD) Code Registration in order to cross customs. You must create a customs clearance number and give it to your Customs House Agent together with the other necessary documentation in order to clear export customs at a certain port.
This article aims to provide a comprehensive understanding of the AD Code for import goods in India.
The AD Code is a unique identification code assigned to importers and exporters by authorized banks in India. It serves as a reference for all foreign exchange transactions related to imports. Each authorized bank maintains a list of AD Codes for their customers, enabling seamless foreign exchange transactions for importers.
The airport or port where the export will begin must get the AD Code. Therefore, if the shipment is to be dispatched from an ICD, the AD Code registration is required for both the inland container depot (ICD) and the port connected to the ICD.
An AD Code registration has perpetual validity. However, regardless of whether the ports are situated inside the same state or in another state, an exporter must register the AD Code for each port from which they ship. In this case, each of these ports would have an own AD Code.
The AD Code consists of 14 alphanumeric characters, with each character representing specific information. Let's break down the structure of the AD Code:
First two characters - The first two characters indicate the region code where the authorized bank is located.
Third character - The third character represents the initial letter of the authorized bank's name.
Fourth to eighth characters - These characters denote the Importer Exporter Code (IEC) of the importer.
Ninth character - The ninth character is a control digit generated based on certain algorithms to validate the AD Code.
Tenth to fourteenth characters - These characters represent a unique sequence number assigned by the authorized bank to differentiate between multiple AD Codes issued to the same entity.
Legal Compliance - AD Code Registration ensures importers comply with regulatory requirements, enabling them to engage in import activities as per RBI and other authorities' regulations.
Shipping Bill Generation - An AD Code is necessary for generating shipping bills, essential for customs clearance and the movement of imported goods. Without an AD Code, delays in clearance may occur.
Convenient Fund Deposits- AD Code allows direct deposit of funds into the authorized dealer's bank account, facilitating efficient financial transactions such as advance payments, LC transactions, and bill settlements.
Government Benefits- Importers with AD Code registered with customs receive government benefits directly into their bank accounts. This includes duty rebates, exemptions, GST refunds, and other trade incentives.
Payment Release - An AD Code is required to release payments to suppliers or exporters, ensuring proper payment transactions and compliance with foreign exchange regulations.
Port Registration through ICEGATE - AD Code registration is a prerequisite for port registration through ICEGATE, the Indian Customs Electronic Commerce/Electronic Data Interchange system. This facilitates smooth import operations at designated ports in India.
Understanding the AD Code is essential for importers in India to navigate the import process smoothly and comply with foreign exchange regulations. It serves as a unique identifier for importers, facilitating foreign exchange transactions and ensuring proper reporting to regulatory authorities. By obtaining and utilizing the AD Code correctly, importers can streamline their import operations and ensure a hassle-free import experience in India.
To know more about the process of Authorized Dealer Code Account Registration, click here