Introduction
The Indian Customs Compliance Information Portal, recently launched by customs authorities, offers comprehensive details on import-export customs procedures and regulatory compliance in India. This article provides a brief overview of key import-export processes, emphasizing promotional schemes for exporters. Businesses aiming to establish a trading company or engage in import-export activities in India need a clear understanding of the process stages, stakeholders, regulatory framework, and required documentation.
India’s imports and exports are regulated by the Foreign Trade (Development and Regulation) Act of 1992, granting the federal government authority for foreign trade development. Current guidelines for exports and imports are outlined in the Foreign Trade Policy for 2015-20.
Import procedures
Typically, the procedure for import and export activities involves ensuring licensing and compliance before the shipping of goods, arranging for transport and warehousing after the unloading of goods, and getting customs clearance as well as paying taxes before the release of goods.
Below, we outline the steps involved in importing of goods.
1. Obtain IEC (Import Export Code): Before engaging in imports from India, businesses need to acquire an Import Export Code (IEC) from the regional joint Directorate General of Foreign Trade (DGFT). The IEC, a pan-based registration with lifetime validity, is essential for customs clearance, shipping, and foreign currency transactions. The IEC registration process usually takes around 10-15 days.
2. Ensure Legal Compliance: Once the IEC is obtained, businesses must ensure legal compliance under various trade laws, including Section 11 of the Customs Act (1962), the Foreign Trade (Development & Regulation) Act (1992), and the Foreign Trade Policy (2015-20). Some items, categorized as restricted, canalized, or prohibited by the government, may require additional permissions and licenses from the DGFT and federal authorities.
3. Procure Import Licenses: Importers must determine whether a license is needed for specific commercial products or services by classifying items using the Indian Trading Clarification based on the Harmonized System of Coding (ITC-HS). The ITC-HS code, issued by the DGFT, is an 8-digit alphanumeric code that categorizes goods. Import licenses can be general or specific, allowing goods to be imported from any country or only from specific countries. These licenses are typically valid for 24 months for capital goods or 18 months for raw materials, components, consumables, and spare parts.
4. File Bill of Entry and Customs Clearance: After obtaining import licenses, importers need to file a Bill of Entry, complying with Section 46 of the Customs Act (1962). The Bill of Entry provides details about the nature, quantity, and value of the imported goods. If cleared through the Electronic Data Interchange (EDI) system, a formal Bill of Entry may not be filed, but a cargo declaration is required. If filed manually, supporting documents such as certificates of origin, inspection, bill of exchange, and commercial invoice are submitted. Customs officials examine the information, and if no irregularities are found, they issue a ‘pass out order’ allowing the goods to be released.
5. Determine Import Duty Rates: Import duties in India include basic customs duty specified in the Customs Tariff Act (1975) and additional duties such as anti-dumping duty, safeguard duty, and social welfare surcharge. Additionally, the government imposes an Integrated Goods and Services Tax (IGST) under the GST system, with rates depending on the classification of imported goods as specified in schedules under the IGST Act (2017). Importers need to determine and pay these duties for the clearance of goods.
Export procedures
Similarly, for export activities, a company is mandated to obtain an Import Export Code (IEC) number from the regional joint Directorate General of Foreign Trade (DGFT). Once the IEC is secured, the exporter is obligated to ensure compliance with various trade laws and regulations.
In addition to legal compliances, the exporter must ascertain whether an export license is necessary for the specific goods intended for export. If required, the exporter must submit an application to the DGFT for the necessary license.
Another crucial step for exporters is to register with the Indian Chamber of Commerce (ICC). This registration is essential for obtaining Non-Preferential Certificates of Origin. The ICC issues these certificates, affirming that the exported goods originated in India. The certification serves as documentation to establish the origin of goods and is often required by the importing country for customs clearance and tariff purposes.
******
Authored by Arghya Sen, 3rd year BALLB Student at Amity University, Kolkata
Author Bio
