DGFT info

Is a DGFT Licence Compulsory for Scrap Metal Exports to India?

When UK and European scrap exporters ship metal to India, one of the most common questions is whether a DGFT licence is compulsory. The answer depends on understanding what DGFT actually regulates and how Pre-Shipment Inspection Certificates work in practice. For most exporters, the confusion stems from mixing up licensing requirements with inspection requirements, and not understanding how the exemption system actually works.

The Directorate General of Foreign Trade (DGFT) is the Indian government body responsible for regulating imports and exports into India. For scrap metal, DGFT has implemented strict controls through a system of pre-shipment inspection, not through direct licensing of overseas exporters. The overseas exporter does not normally need a DGFT licence themselves. That requirement falls on the Indian importer, who must hold the appropriate import authorisation or registration in India under DGFT rules.

However, what the overseas exporter does need to arrange, in most cases, is a Pre-Shipment Inspection Certificate, commonly known as a PSIC. This certificate must be issued by a DGFT-authorised inspection agency before the cargo leaves the port of loading. Without a valid PSIC that matches the container and cargo details, Indian Customs can detain, delay, or reject the entire shipment on arrival. This is not a theoretical risk. Exporters who skip the inspection or use non-authorised inspectors regularly face cargo holds, heavy demurrage charges at Indian ports, and in some cases forced re-export of the material at their own cost. The financial and operational consequences can be severe.

Understanding the PSIC Exemption Rules in Detail

The DGFT inspection requirement is not applied equally to all shipments. There are exemptions, but they are specific, conditional, and strictly enforced. The key exemption relates to what DGFT officially designates as "safe countries" or "safe regions" and specific Indian ports that have been approved for PSIC exemption.

According to DGFT Public Notice Number 43 of 2023 dated 14 February 2024, which amended Para 2.51 of the Handbook of Procedures 2023, metallic waste and scrap (both shredded and unshredded) imported from safe countries or regions does not require a PSIC if the consignment is cleared through one of the designated PSIC-exempt ports in India consulteaseknnindia.

The safe countries and regions officially recognised by DGFT are the United States of America, the United Kingdom, Canada, New Zealand, Australia, and the European Union member states consultease. If scrap metal is shipped from any of these countries or regions and enters India through one of the approved PSIC-exempt ports, then in principle no pre-shipment inspection certificate is required for that particular shipment.

However, this exemption comes with strict conditions that exporters must understand. The consignment must be accompanied by a certificate from the supplier or scrap yard authority confirming that the material does not contain any radioactive materials or explosives consultease. This is a mandatory document requirement even under the exemption. Even with this certificate in place, the cargo will still be subject to radiation and explosive checks using portal monitors and container scanners at the Indian port of entry consultease. These checks are not optional and happen regardless of whether the shipment is from a safe country.

Trans-shipments through non-safe countries or intermediate ports void the exemption entirely consultease, meaning a PSIC becomes compulsory regardless of the country of origin. This is a critical point that catches many exporters out. If your cargo from the UK is routed through Dubai or Singapore or any other intermediate port that is not on the safe country list, the exemption is lost and you must have a valid PSIC.

The Complete List of Indian Ports: 19 Designated, 11 PSIC-Exempt

India now has 19 designated ports through which scrap metal import is permitted. The complete list of 19 designated Indian ports for scrap import under Para 2.51 of the Handbook of Procedures 2023 is: Chennai, Cochin, Ennore, JNPT, Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin, Vishakhapatnam, Pipava, Mundra, Kolkata, Krishnapatnam, Kattupalli, Hazira, Kamarajar, and Adani Gangavaram Port dgft. Scrap cannot be imported through any other Indian port. No exceptions are allowed, even for Export Oriented Units or Special Economic Zones.

Of these 19 designated ports, only 11 benefit from the PSIC exemption for shipments from safe countries. The 11 PSIC-exempt ports are Chennai, Tuticorin, Kandla, JNPT, Mumbai, Krishnapatnam, Mundra, Kattupalli, Hazira, Kamarajar, and Adani Gangavaram Port dgft. This means if your UK scrap is consigned to one of the other 8 designated ports such as Cochin, Ennore, Mormugao, New Mangalore, Paradip, Vishakhapatnam, Pipava, or Kolkata, a PSIC is mandatory even though the cargo is from a safe country.

The exemption was expanded in stages. Initially there were only 6 exempt ports, then 8, then 10, and following the February 2024 amendment the number increased from 10 to 11 with the addition of Adani Gangavaram Port. The list of exempt ports can change, so exporters should always verify the current DGFT rules before shipping.

When PSIC is Always Compulsory

Even for shipments from safe countries, the exemption does not apply in all circumstances. PSIC remains mandatory in the following situations:

The scrap is shipped to an Indian port outside the 11 PSIC-exempt ports. The cargo has been trans-shipped through a non-safe country or an intermediate port. The exporter cannot provide the required supplier certificate confirming absence of radioactive materials and explosives. The scrap originates from a country not on the safe country list.

For shipments from countries outside the safe list, such as the UAE, Turkey, Pakistan, Bangladesh, or other Middle Eastern and Asian exporters, PSIC is always required regardless of which Indian port is used and regardless of whether the scrap is shredded or unshredded. The exemption only applies to the six safe countries and regions listed in the DGFT regulations.

Why DGFT Requires Pre-Shipment Inspection

The DGFT inspection system exists to control specific safety and contamination risks before cargo ever leaves the exporting country. This is not bureaucracy for its own sake. Indian authorities are particularly concerned about radioactive contamination in scrap metal, sealed gas cylinders hidden in baled or mixed scrap, batteries and hazardous waste, pressurised containers, explosive materials, and general contamination with oil, dirt, grease, or insulation dgft.

Unshredded scrap, HMS Heavy Melting Scrap, mixed scrap, and automotive scrap are all considered higher risk because they can conceal dangerous materials inside sealed containers, vehicle fuel tanks, air conditioning systems, or pressurised hydraulic systems. Clean, homogenous, shredded scrap produced by recognised industrial shredding facilities is viewed as lower risk, but even this material is not automatically exempt unless it meets all the conditions for the safe country exemption as set out in the DGFT rules.

The requirement for radiation portal monitors and container scanners at all designated ports handling unshredded scrap reflects the seriousness with which Indian authorities treat contamination risk. Ports that fail to install and maintain this equipment can be derecognised for scrap import, which has happened in the past.

Practical Implications for UK and European Exporters

For a UK exporter shipping ferrous or non-ferrous scrap to India, the practical position is straightforward once you understand the rules. The exporter does not need a DGFT licence. The cargo does usually need a DGFT-authorised pre-shipment inspection and PSIC, unless the shipment qualifies for exemption under the safe country rules. The Indian importer is responsible for holding any required DGFT import licences or registrations in India.

If the UK exporter is shipping to one of the 11 PSIC-exempt Indian ports and can provide the required supplier certificate confirming no radioactive materials or explosives, then technically no PSIC is needed. However, many experienced exporters still choose to arrange DGFT-authorised inspection even when technically exempt, because it provides additional assurance, protects against disputes if documentation is challenged by Indian Customs, and gives both the exporter and the Indian buyer confidence that the cargo will clear Customs without unexpected delays or inspections.

Given that even exempt shipments are still subject to radiation and explosive checks at the Indian port, and given that any problem discovered during those checks can lead to cargo holds and penalties, having a professional third-party PSIC in place before shipment provides a significant layer of protection. It also demonstrates that the exporter has taken reasonable steps to comply with Indian regulations, which can be important if disputes arise.

Why Using a DGFT-Authorised Inspection Agency Matters

DGFT maintains an approved list of Pre-Shipment Inspection Agencies that are authorised to carry out inspections and issue PSICs for cargo destined for India. Only certificates issued by these authorised agencies are recognised by Indian Customs. Using a non-authorised inspector, or attempting to self-certify, will result in the cargo being rejected on arrival regardless of the actual condition of the scrap.

A DGFT-authorised inspection agency carries out physical inspection of the material to verify composition and quality, checks the scrap for contamination including oil, grease, dirt, batteries, sealed containers, and other prohibited items, inspects containers for cleanliness, structural integrity, proper sealing, and suitability for the cargo, supervises loading operations to ensure proper stowage and prevent damage during transit, and provides detailed photographic records and comprehensive documentation to support the PSIC.

This is not just a paperwork exercise or a formality. The inspection protects both the exporter and the importer from regulatory risk, delays, and financial loss. A properly conducted pre-shipment inspection identifies problems before the cargo is loaded, when they can still be corrected at relatively low cost. Once the cargo arrives in India and problems are discovered by Indian Customs, the costs and complications multiply significantly.

For UK and European exporters, working with a DGFT-authorised agency based locally means inspections can be scheduled quickly, inspectors understand both UK and Indian requirements, paperwork is handled correctly from the start, and any issues are identified and resolved before the cargo leaves the UK rather than after it arrives in India thousands of miles away.

The 8 Non-Exempt Designated Ports

It is important to note which of the 19 designated Indian ports do NOT benefit from the PSIC exemption. The 8 non-exempt ports where PSIC is mandatory regardless of country of origin are Cochin, Ennore, Mormugao, New Mangalore, Paradip, Vishakhapatnam, Pipava, and Kolkata. If your Indian buyer wants the cargo delivered to any of these ports, you must arrange PSIC even if you are shipping from the UK or another safe country. The safe country exemption does not apply at these 8 ports.

This can sometimes come as a surprise to exporters who assume that because they are in the UK, they automatically get exemption at all Indian ports. That is not how the system works. The exemption applies only to specific combinations of safe country origin and approved exempt port destination. Change either variable and the exemption is lost.

What Happens When PSIC is Missing or Invalid

The consequences of shipping without a valid PSIC when one is required are serious and immediate. Indian Customs will not release the cargo. The container will be held at the port pending investigation. Demurrage and storage charges will accumulate daily, often at rates of hundreds of dollars per day per container. The importer may refuse to pay for the cargo or may claim damages from the exporter. In some cases, Indian Customs may order the cargo to be re-exported at the exporter's cost, or may impose fines and penalties.

These are not hypothetical scenarios. They happen regularly to exporters who misunderstand the rules, who assume their cargo is exempt when it is not, or who try to cut costs by skipping the inspection process. The financial impact of a rejected shipment typically far exceeds the cost of a proper pre-shipment inspection.

Changes to the Rules Over Time

It is important to understand that DGFT rules for scrap import have changed significantly over the years and continue to evolve. The list of designated ports has expanded from 14 to 15 to 18 to the current 19. The number of PSIC-exempt ports has grown from an initial 6 to 8 to 10 and now 11. The specific ports included in each list have changed as ports have been added or, in some cases, removed for failure to maintain required safety equipment.

The safe country list has remained relatively stable at 6 countries or regions, but the conditions and documentation requirements have been tightened over time. Trans-shipment restrictions were added to prevent circumvention of the rules. Radiation and explosive screening requirements have been made more stringent.

This means that exporters cannot rely on outdated information or assumptions based on how things worked several years ago. The current rules as of February 2024 under the Handbook of Procedures 2023 are what matter, and these rules supersede all previous versions. Future changes are always possible, particularly if safety issues arise or if Indian authorities identify gaps in the current system.

Conclusion and Practical Recommendations

A DGFT licence is not compulsory for UK or EU exporters, but compliance with DGFT inspection requirements is effectively mandatory for most scrap shipments to India. The exemption for safe countries shipping through designated ports is real and legally enforceable, but it is conditional, specific to certain port combinations, and strictly policed by Indian Customs.

For UK exporters, the safest approach is to verify the specific requirements for each shipment based on the type of scrap, the origin port in the UK, the destination port in India, and the routing of the cargo. If the shipment qualifies for exemption, ensure that all conditions are met including the supplier certificate and direct routing without trans-shipment. If there is any doubt about whether exemption applies, or if the additional assurance is worth the cost, arrange for DGFT-authorised pre-shipment inspection to eliminate risk.

Understanding whether your specific shipment requires PSIC depends on multiple factors including the country of origin, the Indian port of discharge, whether the cargo is trans-shipped, the type and condition of the scrap being shipped, and whether all documentation requirements including supplier certificates are properly completed. When in doubt, the cost of arranging a professional DGFT-authorised pre-shipment inspection is always lower than the cost of a rejected shipment, and always more certain than gambling on an exemption that might not apply.

For detailed guidance specific to your shipments and to arrange DGFT-authorised inspections, contact Ruswal Global at ruswal@ruswal.org or visit ruswalglobal.com.