Does Your SaaS or Freelance Export Business Actually Need an IEC?
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Search this question and you'll get two confident, opposite answers. One set of pages says every exporter needs an Import Export Code, full stop. Another says SaaS and freelance service exports are exempt, also full stop. Neither is wrong exactly. They're each describing half the picture.
Under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, a plain SaaS or freelance service-export business does not need an IEC. The section's proviso exempts services and technology exports unless you're claiming a Foreign Trade Policy benefit, such as SEIS, or dealing in a restricted category of specified services or technologies. In practice, get one anyway before your first international wire. Banks and payment gateways routinely ask for an IEC as a KYC convention; the law itself doesn't require it. A ₹500 one-time application with 1-3 day turnaround is cheap insurance against a stalled first payment.
What Section 7 of the FTDR Act actually says
The core rule reads: "No person shall make any import or export except under an Importer-exporter Code Number granted by the Director General." On its own, that sounds absolute. It isn't. The same section carries a proviso that exempts services and technology exports from the requirement, unless the provider is taking benefits under the Foreign Trade Policy or dealing with specified services or specified technologies.
A SaaS company invoicing overseas clients, skipping any FTP scheme and steering clear of a restricted technology category, sits squarely inside that exemption. The statute doesn't require it to hold an IEC.
The Bombay High Court ruling that goes further
In Smarte Solutions Pvt Ltd, the Bombay High Court struck down a DGFT condition that tied Service Exports from India Scheme (SEIS) benefits to holding an IEC at the exact time the service was rendered. The court held that condition went beyond what the parent Act's own proviso allowed. Even where the FTP-benefit trigger applies, the timing of when you got your IEC isn't the strict cutoff some DGFT guidance implied.
That's a narrower point than the headline exemption. It matters mainly if you're already claiming an FTP benefit and someone questions your eligibility over paperwork timing. For most SaaS founders reading this, the bigger takeaway is the Section 7 proviso itself.
Where this collides with reality: your bank will still ask
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