Introduction

Every exporter and importer of goods in India is mandated to obtain an Authorized Dealer (AD) code, as it is essential for customs clearance. This 14-digit code, assigned by the authorized bank where the importer or exporter holds a business current account, must be registered at each port where goods will be cleared by customs. The process begins after the exporter has registered with the Director General of Foreign Trade (DGFT) for an Import Export Code (IEC). Printed on the bank’s letterhead, the AD code is valid for a lifetime and is crucial for generating shipping bills. Additionally, registering the AD code offers significant benefits, such as direct credit of exemptions to the current account, streamlining international trade operations.

What is an AD Code?

The Authorized Dealer (AD) Code, a crucial 14-digit numeric identifier, plays a vital role in the landscape of international trade for businesses in India. Issued by banks that are authorized dealers in foreign exchange, the AD Code is essential for any entity engaged in import and export activities. Its significance lies in its direct connection to the business’s bank account, which is used to facilitate and monitor overseas transactions. The AD Code serves as a bridge between financial institutions and customs authorities, ensuring a transparent and streamlined process for the movement of goods and funds across borders.

The issuance of the AD Code is governed by the Reserve Bank of India (RBI), which authorizes specific banks to provide this code. It is important to note that the AD Code is not universal; it can differ not only from one bank to another but also from one branch to another within the same bank. This variability underscores the need for businesses to carefully select their banking partners when engaging in international trade. The process of obtaining an AD Code begins with the successful registration of the business for an Import Export Code (IEC) through the Director General of Foreign Trade (DGFT). Once the IEC is in place, the business can approach its bank to request the AD Code, which the bank will issue on its official letterhead in a format specified by the DGFT.

Format of AD Code

The format of an Authorized Dealer (AD) Code is a 14-digit numeric sequence issued by banks authorized by the Reserve Bank of India (RBI). Here’s how the AD Code is typically structured:

– First 3 digits: Represent the bank code, identifying the specific bank authorized to deal in foreign exchange.

– Next 4 digits: Represent the branch code, identifying the particular branch of the bank that issued the AD Code.

– Last 7 digits: A unique identifier assigned by the bank to the specific account holder (the business or individual engaged in international trade).

Example of an AD Code Format:

123 4567 8901234

– 123: Bank code

– 4567: Branch code

– 8901234: Unique identifier for the account holder

This format ensures that the AD Code is specific to both the issuing bank and the branch, making it a unique identifier for each business or individual engaged in import-export activities.

Why is AD Code important?

The AD Code’s function is indispensable in the customs clearance process. Every shipment that a business imports or exports must be accompanied by this code to ensure that the transaction complies with the country’s foreign exchange regulations. By linking the AD Code to the bank account of the exporting or importing entity, customs authorities can efficiently track and monitor all foreign exchange transactions related to the trade. This mechanism ensures that the earnings from exports are correctly repatriated to the country and credited to the exporter’s account, adhering to the nation’s stringent foreign exchange management policies.

For businesses venturing into the global market, understanding the importance of the AD Code is paramount. It is not merely a bureaucratic requirement but a critical tool that enables businesses to engage in export and import operations legally and efficiently. The AD Code also facilitates access to various benefits provided under customs and trade policies, including tax exemptions, incentives, and subsidies designed to promote international trade. Without an AD Code, a business cannot complete customs clearance, making it impossible to export or import goods. Therefore, securing an AD Code is one of the first steps a business must take when planning to enter the international market.

The Authorized Dealer (AD) Code is a critical component in the framework of international trade for businesses engaged in export and import activities. Its significance extends beyond being a mere regulatory requirement, serving as a vital tool that streamlines various aspects of cross-border trade. Here’s a comprehensive look at the importance of the AD Code and the benefits it provides.

Significance of the AD Code

1. Essential for Exporters and Importers:

   For businesses and individuals involved in international trade, the AD Code is indispensable. Exporters need this code to receive payments for their goods sold overseas, ensuring that all foreign exchange transactions are properly documented and authorized. For importers, the AD Code is equally important as it is required when making payments for goods and services purchased from abroad. This code ensures that these transactions are monitored and recorded, contributing to the overall transparency of international trade.

2. Integral to Trade Documentation:

   The AD Code is often a mandatory inclusion in several key trade documents, such as the Bill of Lading, Shipping Bill, or Letter of Credit. This requirement underscores its role in tracking and recording foreign exchange transactions associated with global trade, providing a standardized method for financial institutions and customs authorities to monitor these activities.

3. Facilitates the Export Process:

   A shipping bill, necessary for customs clearance of exported goods, cannot be generated without an AD Code. This is particularly crucial as, since August 3, 2018, commercial shipments up to INR 5,00,000 are allowed through courier mode using the CSB-V (Courier Shipping Bill-V), which also requires an AD Code. Moreover, the AD Code enables businesses to access various government benefits such as GST refunds, duty rebates, and exemptions, which are credited directly to the business’s bank account.

4. Monitoring Foreign Currency Trade:

   The AD Code plays a pivotal role in the government’s ability to monitor foreign currency transactions related to international trade. By requiring businesses to register an AD Code, the government can keep tabs on the flow of money across borders, promoting economic stability and transparency. This oversight helps regulators ensure that foreign exchange dealings align with national economic policies, contributing to the overall health of the economy.

5. Necessary for Customs Clearance:

   The AD Code is a unique identifier that links a business’s financial details to customs authorities, facilitating the customs clearance process. Without this code, businesses may face significant delays or even the inability to clear goods through customs, making it an essential element of the import-export process.

6. Direct Access to Government Benefits:

   Registering an AD Code allows businesses to receive government incentives, subsidies, and other financial benefits directly into their bank accounts. This direct payment method reduces the need for extensive paperwork and bureaucratic processes, ensuring that businesses receive the support they are entitled to promptly.

7. Easing the Import-Export Process:

   For startups and established businesses alike, the AD Code simplifies the import-export process by providing a standardized identification system for engaging in foreign trade. This code not only eases operational procedures but also helps the government maintain accurate records of all entities involved in international trade, enhancing regulatory oversight and effectiveness.

Documents required for AD Code registration

To register for an AD Code, the following documents are necessary:

• AD code letter
• Bank Certificate according to Customs Public Notice No. 93/2020 dated 29.07.2020 (format attached)
• Copy of Company PAN Card (with seal and signature)
• Copy of GST Certificate (with seal and signature)
• Copy of IEC Certificate (with Seal and signature)
• The company-cancelled cheque
• Class 3 Digital Signature Certificate (DSC)
• Director or Proprietor or Partner information (Copy of PAN Card, Voter ID, Aadhaar card, Passport)    
• Export House Certificate (this is optional)\

How to obtain an AD Code?

Obtaining an Authorized Dealer (AD) Code is a crucial step for businesses engaged in export activities. The AD Code links your business’s bank account to customs authorities, facilitating the smooth clearance of shipments and compliance with foreign exchange regulations. Here’s a step-by-step guide on how to apply for an AD Code:

1. Visit Your Business Bank

Start the process by visiting the bank where your business maintains its current account. This is the bank authorized to issue your AD Code.

2. Formal Application

Speak with the branch manager or the designated officer and formally apply for an AD Code. You will need to provide all necessary details and supporting documents as required by the bank. These documents typically include proof of your Import Export Code (IEC), company registration details, and identification documents of the business owners or directors.

3. Processing and Approval

Once you submit the application, the bank will process it. Upon approval, the bank will issue an official AD Code letter. This letter must be printed on the bank’s letterhead and follow the format specified by the Directorate General of Foreign Trade (DGFT). It serves as proof of your AD Code registration.

4. Register the AD Code with Ports

With the AD Code letter in hand, you must then register the AD Code with the customs authorities at each airport or port from which you plan to export your goods. If you export from multiple ports, you must register the AD Code at each one, regardless of whether they are in the same state or different states.

5. Submission to Customs Authorities

Present the AD Code letter to the customs authorities at the respective ports to complete the registration process. This step is crucial for enabling the generation of shipping bills and ensuring that your shipments can pass through customs without delays.

Important Note:

There is currently no facility to apply for an AD Code online. The entire process requires you to visit your business bank in person to obtain the AD Code letter, followed by in-person visits to the customs offices at each exporting port for registration.

Registering your Authorized Dealer (AD) Code on the ICEGATE portal is an essential step for ensuring that your financial details are properly linked with customs authorities for seamless processing of import and export transactions. Below is a detailed guide to registering your AD Code on the ICEGATE portal:

Step-by-Step Guide to Register AD Code on ICEGATE

1. Access the ICEGATE Portal

• Visit the official ICEGATE website.

2. Login to Your Account

• Use your credentials (User ID and Password) to log in.
• If you do not have an account, you will need to register by clicking on “New Registration” and providing the required information to create an account.

3. Navigate to Filing Services

• Once logged in, go to the “Filing Services” section.
• Select “e-SANCHIT” (Electronic Storage and Computerized Handling of Indirect Tax documents).

4. Upload Supporting Documents

• Upload the necessary documents required for AD Code registration. These typically include:
  • Bank Certificate as per Customs Public Notice No. 93/2020 dated 29.07.2020.
  • Company PAN Card with Seal and Signature.
  • IEC (Import Export Code) Certificate with Seal and Signature.
  • GST Certificate with Seal and Signature.
  • Company Canceled Cheque.
  • Class 3 Digital Signature Certificate (DSC).
• Ensure all documents are correctly uploaded and authenticated with the Class 3 DSC.

5. Generate DRN and IRN Numbers

• After uploading the documents, the system will generate a Document Reference Number (DRN) and an Invoice Reference Number (IRN).
• Make sure to note these numbers for future reference, as they are crucial for tracking your registration.

6. Navigate to Financial Services

• Return to the main page of the portal and go to the “Financial Services” section.
• Select “Bank Account Management” to proceed with AD Code registration.

7. AD Code Registration

• In the Bank Account Management section, select the option for “AD Code Registration.”
• You will be presented with a registration form where you need to fill in various details, such as:
  • Company details (Name, Address, etc.)
  • Contact information
  • PAN Card details
  • IEC Certificate details
  • GST Certificate details
  • Bank Account Number
• Enter the AD Code correctly as it is essential for linking your business’s financial transactions with customs.

8. Submit the Registration Form

• Carefully review all the details you have entered in the registration form.
• Once verified, submit the registration form.
• The system will process your registration request.

9. Confirmation and Tracking

• After submission, you may receive a confirmation or acknowledgment of your registration via email or directly on the portal.
• It is advisable to monitor your registration status and follow up with the relevant authorities if necessary to ensure successful registration.

By following these steps, you can effectively register your AD Code on the ICEGATE portal, ensuring that your import-export transactions are processed smoothly and in compliance with customs regulations.

Benefits of AD Code Registration

1. Streamlined Customs Clearance:
   • Registering an AD Code is essential for the customs clearance process. It allows for the generation of shipping bills, which are required for exporting goods. This streamlining helps reduce delays at customs, ensuring your shipments move efficiently.
2. Access to Export Incentives:
   • With a registered AD Code, businesses can avail themselves of various export incentives offered by the government, such as duty drawbacks, tax rebates, and subsidies. These benefits are directly linked to the AD Code, making it a crucial element in maximizing financial gains from export activities.
3. Improved Financial Management:
   • The AD Code links your financial transactions with your bank and customs authorities, ensuring that all payments related to exports and imports are properly documented and processed. This improves financial transparency and aids in better financial management.
4. Enhanced Compliance:
   • Registering an AD Code ensures that your business complies with foreign exchange regulations and customs requirements. This compliance is vital for avoiding legal complications and penalties.
5. Direct Access to Government Benefits:
   • The AD Code facilitates direct payment of government incentives, refunds, and other benefits to your business bank account. This direct access speeds up the receipt of financial support and reduces bureaucratic delays.
6. Boosts Business Credibility:
   • Having an AD Code registration enhances your business’s credibility with customs authorities, banks, and international trade partners. It signals that your business operates within the legal framework and follows best practices in international trade.
7. Transparency and Monitoring:
   • The AD Code system allows for effective monitoring of foreign exchange transactions by regulatory bodies, promoting transparency in international trade. This helps maintain the integrity of cross-border financial dealings.

Drawbacks of AD Code Registration

1. Time-Consuming Process:
   • Registering an AD Code requires visiting your bank and the customs offices at each port you intend to use. The process can be time-consuming, especially if you operate in multiple locations, as each port requires separate registration.
2. Lack of Online Application:
   • Currently, there is no online facility for obtaining an AD Code, meaning the process involves physical visits and paperwork, which can be cumbersome for businesses, particularly those located far from their bank branches or customs offices.
3. Complex Documentation Requirements:
   • The AD Code registration process involves submitting multiple documents, such as bank certificates, PAN cards, and GST certificates, all of which must be properly authenticated. This can be a complex and tedious process, especially for small businesses.
4. Potential for Delays:
   • Any errors in documentation or the registration process can lead to delays, which may impact your ability to clear goods through customs or receive payments from foreign clients.
5. Maintenance and Renewal:
   • Depending on the policies of customs authorities or changes in regulations, businesses may need to update or renew their AD Code registration periodically, adding to the administrative burden.
6. Dependence on Bank Efficiency:
   • The efficiency of the AD Code issuance is heavily dependent on the bank’s processing speed and accuracy. Delays or errors on the bank’s part can affect the overall registration process.
7. Port-Specific Registration:
   • For businesses exporting from multiple ports, the need to register an AD Code separately for each port adds complexity and administrative overhead, especially if these ports are in different states.

Conclusion

In conclusion, registering an Authorized Dealer (AD) Code is a critical step for businesses involved in import and export activities. The AD Code serves as a vital link between your financial transactions and customs authorities, enabling smoother customs clearance, access to government incentives, and enhanced financial management. While the process of obtaining and registering an AD Code can be time-consuming and requires careful attention to documentation, the benefits far outweigh the drawbacks. By ensuring compliance with regulatory requirements and facilitating efficient international trade operations, the AD Code not only boosts your business’s credibility but also paves the way for sustained growth in the global market. For any business looking to expand its reach beyond borders, securing an AD Code is an investment in both operational efficiency and long-term success.

1. What is an AD Code, and why is it necessary for importers and exporters?

The AD Code (Authorized Dealer Code) is a 14-digit numeric identifier issued by authorized banks to businesses involved in international trade. It is required for customs clearance and ensures that foreign exchange transactions are properly monitored.

2. How do I obtain an AD Code?

To obtain an AD Code, you need to approach the bank where your business holds a current account. After registering for an Import Export Code (IEC) with DGFT, you can apply for an AD Code at your bank, which will issue it on their official letterhead.

3. What documents are required for AD Code registration?

Required documents include:

• AD Code letter from the bank
• Bank Certificate as per Customs Public Notice
• Company PAN card
• GST Certificate
• IEC Certificate
• Canceled cheque
• Class 3 Digital Signature Certificate (DSC)
• Proof of identity for directors or proprietors

4. Can I apply for an AD Code online?

Currently, there is no provision for applying for an AD Code online. You must visit your business bank in person to obtain the AD Code letter.

5. Is it necessary to register the AD Code at multiple ports?

Yes, if you plan to export goods from multiple ports, you must register the AD Code with each port or airport where goods will be cleared, even if they are in different states.

6. What are the benefits of registering an AD Code?

Benefits include streamlined customs clearance, access to export incentives (such as duty drawbacks and tax rebates), improved financial management, and enhanced compliance with foreign exchange regulations.

7. What happens if I do not have an AD Code?

Without an AD Code, you cannot complete customs clearance for your goods, making it impossible to export or import goods legally.

8. Can the AD Code be transferred to another bank or branch?

The AD Code is specific to the bank and branch that issued it. If you change your bank or branch, you will need to obtain a new AD Code from the new bank.

9. Is the AD Code valid for a lifetime?

Yes, once issued, the AD Code is valid for the lifetime of the business. However, it must be registered with each relevant customs office for smooth operations.

10. How do I register my AD Code on the ICEGATE portal?

To register your AD Code on the ICEGATE portal, you need to log in, upload the necessary documents, and fill out the AD Code registration form in the “Financial Services” section. After submitting the details, you will receive an acknowledgment for tracking your registration.