How To Import Goods From Other Countries?
23 January, 2024
India imports a variety of goods and services every year from different countries. You may be somewhat familiar with various aspects of how to import - customs duty, licenses and quotas, shipping formalities, the involvement of foreign currencies, and so on. Here’s a detailed look at the import procedures in India.
Import-export code (IEC):
An IEC is the most basic of all export/import requirements. This lifetime valid registration issued by the Directorate General of Foreign Trade (DGFT) will be required at every step of the import trade.
Section 11 compliance:
This section of the Customs Act 1962 decides which goods can be imported to India. If a product is restricted, canalised or prohibited, additional permissions and licenses are required from the DGFT or the government. Import procedure for canalised goods goes through a canalising agency only.
Product classification:
The importer must identify the classification of the product as per the Indian Trading Clarification's Harmonised System of Coding (ITC-HS). It is an 8-digit alphanumeric code issued by the DGFT, along with the product-specific regulations.
Licenses:
A general or specific import license is also required to carry out an import trade. Import licenses are generally valid for 24 months for capital goods and 18 months for raw materials, consumables, and spare parts. The license can be renewed. A general license allows you to import from any country, whereas a specific or individual license allows import from specific countries only. An import quota license is also required for import trade. It confirms the maximum quantity of the item that can be imported.
Arranging foreign exchange and Letter of Credit (L/C):
The person willing to import goods must apply to RBI’s Exchange Control Department for the release of the required foreign currency. The release order is then shared with the bank. The importer requests the bank to issue an L/C to the seller, which undertakes to release the sale proceeds on the submission of the required documents.
Shipping and banking:
The importer should appoint a clearing and forwarding agent to handle the customs-related formalities of import trade. The importer also receives shipping advice from the seller. The importer’s bank receives documents like a bill of exchange, bill of lading, certificate of origin, packing list, commercial invoice, consular invoice, etc., from the seller’s bank. The importer pays the bank and collects the documents.
Bill of Entry (BoE):
The BoE captures the import declaration, including quantity, value and other details. The PAN-based Business Identification Number (BIN), as per the Customs Act, is also required. In the case of goods processed through the Electronic Data Interchange system, the importer files a cargo declaration, and the BoE is auto-generated. In other cases, the importer furnishes a certificate of origin, certificate of incorporation, bill of exchange, commercial invoice cum packing list, etc.
Customs clearance:
The C&F agent receives the delivery order from the shipper once the freight is paid. The customs officials match the imported goods with the BoE. If found okay, the goods are given a Pass Out order from customs. The import duty on the goods under the Customs Tariff Act is determined.
Final payments:
The importer has to pay the C&F agent at this point. The importer generally receives a bill of exchange from the seller. The bill is accepted, and payment is made to the seller through the bank.
Banks play an integral part in import trade. HDFC Bank provides specialised assistance from certified specialists to make import trade easier. Importers banking with HDFC Bank enjoy the best forex rates across all leading currencies. If you are starting import trade, start with HDFC Bank.
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