The Link Between IEC, RCMC, and AD Code: How They All Work Together

The international operations are covered with complex and multi-layered government rules. Meanwhile, the whole global trade from India is governed by a specific body, which is further divided into sub-authorities. Since the digital revolution took place, web regulations such as codes and certificates have brought a lot of transparency. Although navigating these fundamental requirements is core to dealing freely in international markets. The core of export is separated into three regulatory frameworks. The major identifiers are Import-Export Code (IEC), RCMC Certificate, and AD code. All are mandatory and serve unique roles. In easy terms, each certificate depends on the others. In this comprehensive guide, we will seek to know how these elements work together to access foreign trade. Read more in the next section.

The Foundation: The Import Export Code (IEC)

For the complex international trade markets, the IEC (Import Export Code) number is the basis. Among the compliance trade, it is known as the identifier of exporters. Meanwhile, it comes with 10-digit unique numbers, which are granted by the DGFT (Directorate General of Foreign Trade). Overall, navigating the IEC registration means meeting the international primary trade compliance.

Having the Import-Export code means you are officially registered for the foreign trade intention. Even without it, the businesses cannot apply for an AD code bank account registration and an RCMC certificate. 

The Intention of the Import-Export Code (IEC) 

The IEC number is the primary supporter for businesses that serves as the identification number. The key roles are:

• Controls Outflow/Inflow: IEC is the prerequisite as its core part; numbers are essential to track the goods and services in and out of India. It helps businesses to align with international trade policies and regulations.
• Facilitating Trade: The reputable businesses that are involved in import-export can only get the customs clearance at ports with an IEC number. In broad terms, it allows goods to pass through national ports, manages international transactions, and helps to claim various export incentives.  
• Promotes Economic Growth: The IEC code is a beneficial tool for new export houses to simplify the complex export-import process. Participating in international trade promotes economic growth. 

Gateway to Benefits: Registration-cum-Membership Certificate (RCMC)

The journey of export-import begins with the help of an IEC number, then moves to RCMC. Meaning, IEC is the primary phase to obtain the RCMC certificate. The license of RCMC is an important certificate that links to IEC. If a business wants to grow in international markets with government schemes, link their RCMC certificate with the IEC. On the other side, the holder of IEC can legally trade and, with RCMC, can utilize incentives that are designed to make exportation profitable. 

What are the Key Aspects for RCMC Registration?

RCMC certification is the strategic move to avail the government-supported schemes and benefits. In detail:

• Issuing Authority: Under the Indian government review, Export Promotion Councils (EPCs), Commodity Boards, or Development Authorities are the primary. These bodies are categorized for specific product management.
• Eligibility Criteria: To be eligible for export schemes and incentives, the businesses must hold an IEC number with specified documents and also be active with export dealings.
• Certificate Validity: The exporters can use the certificate only for five years. It is valid from 1st April of the first year to 31st March of the fifth year. 
• Digital Platform: For the registration of RCMC, the common online window is DGFT. 

How does the IEC number interlink with the RCMC certificate? 

In the international market, the import-export code provides the legal identity. Before building or starting exportation, you are required to navigate the requirements of the IEC number. In essence, the businesses cannot apply for the RCMC certificate until they hold a valid IEC. In the logical structure, you must first create a legal identity as a trader before getting membership from EPCs or commodity boards. 

The Financial Bridge: The Authorized Dealer (AD) Code

It is another important code that establishes the export bridge. The AD code letter, which comes with a 14-digit code, is issued by RBI’s authorized dealer banks. The code is basically used to manage the foreign exchange transactions. When the business gets an AD code, it links the account with import-export operations. It helps to ensure that the business receives money from trusted and authorized banking channels. At the ports, exporters required customs department approval. But, before it, they are required to generate the ‘shipping bill’ on ICEGATE. Before granting export from ports, the customs department verifies bank account details where exporters receive foreign currencies. 

AD Code Registration for Foreign Transactions

The major characteristics of the authorized dealer code are:

• Unique identifier: An AD code letter is issued on the letterhead by banks with a 14-digit unique number. The codes are identifiers to identify exporters for global trade.
• Issuing Authority: All banks under the RBI provisions deal with foreign exchange transactions that grant a code to export businesses. 
• Purpose: Applying for the AD code bank account registration is a prerequisite to connecting businesses’ current accounts with foreign exchanges. 14-digit codes are the source of transparency and compliance.

How are AD Code’s Functions Contingent on the IEC Number?

Like the RCMC certificate, the existence of the Authorized Dealer Code (AD) depends on the Import-Export Code. RBI’s authorized banks will not issue the 14-digit unique code until businesses do not have a valid IEC. It determines that the AD code process is interlinked with the IEC’s registration process. Basically, the authorized dealer code is registered at the ports from where businesses intend to export. After registration at ports, the customs authorities easily verify the business’s bank details to prevent fraud. 

IEC, AD Code, and RCMC Make a Cohesive Ecosystem

To enter the universe of export, the business first requires navigating the IEC code requirements. It is the primary export journey, which is crucial to building the legal identification as an international trader. Businesses’ next step can be registration for RCMC, the base to grow operations. Registering with specific EPCs or commodity boards provides membership to claim benefits and schemes. Simultaneously, registration for the AD code is also vital for the management of foreign exchange transactions. 

Winding Up | Export Registration Certificate with Membership 

In essence, IEC, AD code, and RCMC are the vital components of a well-structured framework that are designed for foreign trade in India. Trio sets the legal foundation to access export promotion benefits for foreign exchange management. Each document is important, based on its legitimacy. The combination of each document is a strategic move for businesses that operate legally. Still have doubts? Get a free consultation at LegalRaasta to establish a strong export business.

Frequently Asked Questions 

1. Are the AD Code and the IEC number the same?

Ans. No, they are not the same, but they are used for international trade. IEC, which comes with a 10-digit number, provides legal identity to exporters in global trade. Meanwhile, the AD code is a 14-digit number that is important to facilitate foreign currency transactions. 

2. How to link the AD code with the IEC?

Ans. To add an authorized dealer code with an Import-Export Code, navigate the ICEGATE portal. During the process, mentioning bank and account details is crucial.

3. Can I link my IEC number with DGFT?

Ans. Yes, you can add the IEC number by logging in to the DFGT website, where you will find the option of “Link IEC.” 

4. How many AD codes can be registered in ICEGATE?

Ans. The businesses are allowed to register only one AD code per IEC number for a specific port. But you can link multiple banks with a single Import-Export Code.

5. Is DSC mandatory to obtain an IEC code?

Ans. No, DSC is an option, and you can use e-Aadhaar for authentication. However, DSC is widely used for security purposes.