As India strives to increase trade flows in both the India-Nepal and the India-Bhutan trade corridors, we discuss the trade procedures, including updates on the Foreign Trade Policy 2023. The government has set a target of trade facilitation for smoothing the trade compliance and customs procedures. The long-term vision of India@2047 is to increase the country’s global trade share to 10 percent, a part of which is included in the blueprint of the above-said blueprint.
Businesses planning to set up a trading company, or start importing or exporting from India, must understand the stages and stakeholders involved in the process, as well as the regulatory framework and documentation required. Here’s a general overview:
Import Procedures
- Obtaining Importer Exporter Code (IEC): There is one IEC (Importer Exporter Code) which is issued by the Directorate General of Foreign Trade (DGFT) that anyone who intends to import goods into India has to get.
- Registering with Customs: Imports registration is mandatory for importers. They just need to complete an application form to Customs authorities and get a unique importer code (IC) assigned to them. This is different from IEC but can be obtained with the consent of the local customs office.
- Determining Import Eligibility: Goods that may be limited, prohibited, or need permits or licenses for the exclusive purpose may be the target. Importers must check whether the goods designated for import can be imported into India.
- Arranging for Customs Clearance: Importers should prepare all trade documents such as commercial invoices, packing lists, bill of lading/airway bills, import licenses (if applicable), and other papers required. Such papers shall be handed over to a customs representative to clear the goods.
- Payment of Duties and Taxes: Importers would be liable to pay the customs duties, GST, and other taxes or fees as per the Indian customs tariff.
- Customs Clearance: After all papers have been submitted and customs duties/taxes have been paid, they will finally clear for import into India.
- Taking Delivery of Goods: Those are the importers who will finally get their imported goods from the port or airport after fulfilling all the formalities.
Export Procedures
- Obtaining Importer Exporter Code (IEC): Similarly to importers, exporters have to apply for an Importer Exporter Code (IEC) with the Directorate General of Foreign Trade (DGFT).
- Registering with Customs: Exporters should be registered with the Customs department and be given a unique exporter code number. This is opposed to IEC (which is acquired from the customs office) and it is the expenditure incurred for the operation of the factory.
- Preparing Export Documents: Exporters must prepare various sets of documents such as commercial invoices, packing lists, bills of lading/airway bills, certificates of origin, and any other documents specifically required by the importing country.
- Determining Export Eligibility: Some goods may be subject to export restrictions, or prohibitions, or they would need special permission or licenses to be exported. The exporters must confirm that the goods intended for exportation conform with all the applicable regulations, in which case the goods are acceptable for export.
- Customs Clearance: Exporting firms have the obligation of presenting all the necessary documents to the customs authorities for clearance purposes. Customs officials will be authorized to preview the documents and check whether the goods are clear for exporting.
- Payment of Export Duties (if applicable): A few products can fall under export duty. Importers will have to pay these duties in line with the tariff schedules given in the Indian Customs Tariff.
- Shipping the Goods: After customs clearance has been obtained, exporters may move on to ship the merchandise to the destination country via the most appropriate mode of transportation.
- Post-Shipment Formalities: Exporters are also required by the government to undertake the post-shipment formalities which involve the submission of export declarations, submission of shipping documents for negotiation/payment to banks, and other specific requirements of the destination country.
Conclusion
It is vital to take into account that the process of importing and exporting is quite complex and dependent on many variables. The processes can be affected by some of the factors such as the type of product being imported or exported, the country of origin or destination, and any specific regulations or agreements that may be in place. The entire import-export industry in India is regulated by the Directorate General of Foreign Trade (DGFT). The process is hence not straightforward and it is of vital importance that importers and exporters solicit help from customs authorities or hire a professional who will assist them to ensure that they are fully compliant with the applicable legal frameworks and regulations.