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Economic, Commercial and Intellectual Property Laws · Foreign Trade Policy and Procedure

Director General of Foreign Trade: Functions and Powers

Updated 11 October 2026 · Fact-checked

The Director General of Foreign Trade (DGFT) is appointed by the Central Government under section 6 of the FTDR Act, 1992. The DGFT advises the Government on formulating the foreign trade policy and is responsible for carrying it out. The Government may delegate most of its powers to the DGFT or subordinate officers, but not those under sections 3, 5, 15, 16 and 19.

Understand Director General of Foreign Trade and Administration

The Foreign Trade (Development and Regulation) Act, 1992 gives the Central Government the power to regulate and promote foreign trade. The Government cannot run this day to day. It needs an officer who handles policy advice, licences, codes and enforcement. That officer is the Director General of Foreign Trade.

Under section 6(1), the Central Government may appoint any person as the Director General of Foreign Trade. Section 2(d) defines the term by pointing to this appointment. So the DGFT is a statutory post created by the Act, not just an administrative title.

Section 6(2) gives two functions. First, the DGFT advises the Central Government in formulating the foreign trade policy. Second, the DGFT is responsible for carrying out that policy. Note the split. The Government formulates and announces the policy by notification under section 5. The DGFT advises on it and implements it.

Section 6(3) deals with delegation. The Central Government may, by an Order published in the Official Gazette, direct that any power it has under the Act may also be exercised by the DGFT or by an officer subordinate to the DGFT. The Order must specify the cases and the conditions. There is one big exception: the powers under sections 3, 5, 15, 16 and 19 cannot be delegated this way. Section 5 is policy-making itself, so the Government keeps it.

Beyond section 6, the Act gives the DGFT working powers. The DGFT (or an authorised officer) can suspend or cancel an Importer-exporter Code Number after notice and a hearing under section 8. The DGFT can also recover penalties under section 11(5), for example by asking customs officers to deduct or recover the amount.

Key rules to remember

Appointment
Central Government may appoint any person as DGFT (section 6(1))
Appointing authority is the Central Government. The Act does not prescribe any qualification.
Functions of DGFT
Advise on formulating foreign trade policy + be responsible for carrying it out (section 6(2))
Policy is formulated and announced by the Central Government under section 5, by notification in the Official Gazette.
Delegation of powers
Central Government Order in the Official Gazette → powers exercisable also by DGFT or a subordinate officer (section 6(3))
Applies to powers under the Act except sections 3, 5, 15, 16 and 19. The Order specifies the cases and conditions.
Suspension or cancellation of IEC
Notice in writing + reasonable opportunity of representation (and hearing if desired) → suspend or cancel (section 8(1))
The DGFT or an officer authorised by the DGFT acts. After suspension or cancellation, the person can import or export only under a special licence granted by the DGFT (section 8(2)).
Recovery of penalty
Section 11(5): deduction by DGFT or officers, customs recovery, then Collector of the District or detention and sale of property
Under section 11(7), the Adjudicating Authority may suspend the IEC of a person who fails to pay a penalty until it is paid or recovered.

How to solve Director General of Foreign Trade and Administration questions

Questions on the DGFT are usually short-note or problem questions on who can do what. Use this method to stay inside the statute.

  1. 1Identify the power or function in the question: appointment, policy advice, implementation, delegation, IEC action or penalty recovery.
  2. 2State the provision first. Name the Act and the section, for example section 6(1) for appointment.
  3. 3Separate the roles. The Central Government formulates and announces policy under section 5. The DGFT advises and carries it out under section 6(2).
  4. 4If delegation is involved, check two things: a Gazette Order exists, and the power is not one under sections 3, 5, 15, 16 or 19.
  5. 5If the question is about an IEC, check the grounds in section 8(1), then confirm that written notice and an opportunity to be heard were given.
  6. 6Apply the rule to the facts given, in one or two lines per point.
  7. 7End with a clear conclusion that answers the exact question asked.

Quickest way: Who does what: three-line check

When to use it: Use when you have limited time and the question asks whether the DGFT or the Government can do something.

  1. Ask: is it policy-making, appointment or the appellate or adjudication function? If it falls under sections 3, 5, 15, 16 or 19, the Central Government keeps it and cannot delegate it under section 6(3).
  2. Ask: is it implementation, such as licences, IEC action or recovery? Then the DGFT or an authorised officer acts.
  3. Write: section, rule, application, conclusion. Four lines are enough for a short note.

Common mistakes in Director General of Foreign Trade and Administration

  • Saying the DGFT formulates the foreign trade policy.

    Students link the DGFT with the policy document because the DGFT's office publishes and administers it.

    Fix: Remember section 5 gives the formulation and announcement power to the Central Government. Under section 6(2) the DGFT advises and carries out the policy.

  • Saying all powers of the Government can be delegated to the DGFT.

    Students remember that delegation exists but forget the exclusion.

    Fix: Learn the excluded sections: 3, 5, 15, 16 and 19. Section 6(3) allows delegation of every other power under the Act.

  • Saying delegation can happen by any informal instruction.

    Students ignore the form required.

    Fix: Delegation needs an Order published in the Official Gazette, specifying the cases and conditions.

  • Cancelling an IEC without notice in a written answer.

    Students focus on the grounds and skip procedure.

    Fix: Always mention the written notice stating the grounds and the reasonable opportunity to make a representation and be heard under section 8(1).

  • Saying a person whose IEC is cancelled can never trade.

    Students read cancellation as a total ban.

    Fix: Under section 8(2), such a person cannot import or export except under a special licence granted by the DGFT.

Worked examples

Example 1

The Central Government wants the Director General of Foreign Trade to exercise its power to amend the foreign trade policy. Can it do so by a Gazette Order under section 6(3)? Explain.

Show the solution
  1. Provision: section 6(3) allows the Central Government, by Order in the Official Gazette, to direct that its powers under the Act may also be exercised by the DGFT or a subordinate officer. The powers under sections 3, 5, 15, 16 and 19 are excluded.
  2. Analysis: the power to formulate, announce and amend the foreign trade policy is given to the Central Government by section 5.
  3. Section 5 is one of the excluded sections, so it cannot be delegated under section 6(3).
  4. The DGFT's role on policy remains that stated in section 6(2): to advise on formulation and to carry out the policy.

Answer: No. The power to amend the policy is under section 5, which is excluded from delegation under section 6(3). The Central Government must exercise it itself by notification in the Official Gazette. The DGFT only advises and implements.

Example 2

Sunrise Exports Pvt. Ltd., Surat, is alleged to have exported goods in a manner prejudicial to India's trade relations with a foreign country. The DGFT proposes to cancel its Importer-exporter Code Number straight away. Advise the company.

Show the solution
  1. Provision: under section 8(1)(b), if the DGFT or an authorised officer has reason to believe a person made an export or import in a manner prejudicial to India's trade relations with a foreign country, the IEC can be suspended or cancelled.
  2. Procedure: before acting, the DGFT or officer must give a written notice stating the grounds, and a reasonable opportunity to make a written representation within the time specified, and to be heard if the person wishes.
  3. Analysis: the proposal to cancel straight away skips the notice and the hearing, so it does not follow section 8(1).
  4. Consequence of valid action: under section 8(2), the company could not import or export except under a special licence granted by the DGFT.

Answer: The grounds exist under section 8(1)(b), but the DGFT cannot cancel the IEC immediately. A written notice and a reasonable opportunity to represent and be heard are required first. The company should insist on this and file a written representation. If the IEC is finally suspended or cancelled, it can trade only under a special licence from the DGFT.

Exam tips

  • Write the section number with every point: section 6(1) for appointment, 6(2) for functions, 6(3) for delegation.
  • Memorise the excluded sections 3, 5, 15, 16 and 19 as a set. Examiners like questions on what cannot be delegated.
  • In IEC questions, always mention notice and hearing before the conclusion.
  • Keep policy-making (Central Government, section 5) and implementation (DGFT, section 6) clearly apart in every answer.
  • Use the ICSI answer pattern: provision, application to the facts, conclusion.

Practice questions from Foreign Trade Policy and Procedure

Director General of Foreign Trade and Administration: frequently asked questions

Who appoints the Director General of Foreign Trade?

The Central Government appoints the DGFT under section 6(1) of the FTDR Act, 1992. The Act says it may appoint any person for the purposes of the Act.

What are the main functions of the DGFT under the FTDR Act?

Under section 6(2), the DGFT advises the Central Government in formulating the foreign trade policy and is responsible for carrying it out. The DGFT also acts on IEC suspension or cancellation under section 8 and on penalty recovery under section 11(5).

Can the Central Government delegate its powers to the DGFT?

Yes, by an Order published in the Official Gazette under section 6(3). The Order can allow the DGFT or a subordinate officer to exercise the power in specified cases and on specified conditions. Powers under sections 3, 5, 15, 16 and 19 cannot be delegated this way.

Can the DGFT cancel an Importer-exporter Code Number?

Yes, on the grounds in section 8(1), but only after a written notice and a reasonable opportunity to make a representation and be heard. The DGFT may suspend the IEC for a period or cancel it.