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1 Purchasing from
International Markets
2 Flow of session
∗ Procedure For Importing Goods in India
∗ Types of Price Quotation
∗ Import License Requirements.
∗
3 Procedure For Importing Goods in India
Step 1. Obtaining import license and quota
∗ In all countries there are many government regulations to be followed. Sanction of
the government is necessary. Importer has to apply to the controller of imports for
getting necessary permission.
∗ The importer also has to obtain an import quota certificate from the concerned
authority. It mentions the maximum quantity of goods which can be imported
∗
∗
4 Procedure For Importing Goods in India - contd…
∗ Importer has to attach the following documents to his application form
1. Receipt which shows that import license fee has been paid.
2. Certificate from a Chartered Accountant showing the total value of goods to be
imported.
3. Verification Certificate for income tax.
∗ An import license may be general or specific. A general license allows imports from
any country. But a specific license allows imports from a specific country only.
∗
5 Procedure For Importing Goods in India - contd…
Step 2. Obtaining foreign exchange
∗ Before placing any order, the importer must apply to the Exchange Control
Department (ECD) of RBI (India’s Central Bank) for the release of requisite foreign
exchange.
∗ The importer should forward the application through his bank.
∗ The ECD verifies the application of the importer, and if found valid, sanctions the
foreign exchange for the particular transaction.
∗
6 Procedure For Importing Goods in India - contd…
Step 3. Placing an order
∗ The importer may either place the order directly or through the indent house (Agent).
∗ In case of canalized items, he obtains the imports through the canalizing agency.
(Canalisation means channelization of goods through a government agency like
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MMTC).
∗ The importer cannot directly import such canalized items. They have to place an
order with the canalizing agency who shall import and supply the same.
7 Procedure For Importing Goods in India - contd…
Step 4. Dispatching letter of credit
∗ After getting the confirmation from the supplier regarding the supply of goods, the
importer requests his bank to issue a Letter of credit in favour of the supplier.
∗ It can be defined as “an undertaking by the importer’s bank stating that payment will
be made to the exporter if the required documents are presented to the bank”.
8 Procedure For Importing Goods in India - contd…
Step 5. Appointing clearing and forwarding agents
∗ The importer makes arrangements to appoint clearing and forwarding agents to clear
the goods from the customs.
∗ Since clearing of goods is a specialized job, it is better to appoint C & F agents
9 Procedure For Importing Goods in India - contd…
Step 6. Receipt of shipment device
∗ The importer receives the shipment advice from the exporter.
∗ The shipment advice states the date on which the goods are loaded on the ship.
∗ The shipment advice helps the importer to make arrangements for clearance of goods
10 Procedure For Importing Goods in India - contd…
Step 7. Receipts of documents
∗ The importer’s bank receives the documents from the exporter’s bank.
∗ The documents include :
1. bill of exchange,
2. a copy of bill of lading,
3. certificate of origin,
4. commercial invoice,
5. consular invoice,
6. packing list, and other relevant documents.
∗ The importer makes payment to the bank (if not paid earlier) and collects the
documents.
11 Procedure For Importing Goods in India - contd…
Step 8. Bill of entry
∗ This is a document required in case of import of goods. It is like a shipping bill in case
of exports.
∗ A Bill of Entry is the document testifying the fact that goods of the stated value and
description in specified quantity are entering into the country from abroad.
∗ The customs office supplies this form which is prepared in triplicate. Three different
colours are used to prepare the bill of entry.
∗ One copy is retained by the customs department, another is retained by port trust
and the third is kept by the importer.
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12 Procedure For Importing Goods in India - contd…
Step 9. Delivery order
∗ The clearing agents obtain the delivery order from the office of the shipping company.
∗ The shipping company gives the delivery order only after payment of freight, if any.
13 Procedure For Importing Goods in India - contd…
Step 10. Clearing of goods
∗ The clearing agent pays the necessary dock or port trust dues and obtains the port
Trust Receipt in two copies.
∗ He then approaches the Customs House and presents one copy of Port Trust Receipt,
and two copies of Bill of. Entry to the customs authorities.
∗ The customs officer endorses the Bill of Entry Forms and one copy of Bill of Entry is
handed back to the importer.
∗ The importer then pays the customs duty and clears the goods.
∗ In case, the customs duty is not paid, then the goods are stored in the bonded
warehouses. As and when the duty is paid, the goods are cleared from the docks.
14 Procedure For Importing Goods in India - contd…
Step 11. Payment to clearing and forwarding agent
∗ The importer then makes the necessary payment to the clearing agent for his various
expenses and fees.
∗
Step 12. Payment to exporter
∗ The importer has to make payment to the exporter. Usually, the exporter draws a bill
of exchange.
∗ The importer has to accept the bill and make payment.
∗
∗
15 Procedure For Importing Goods in India - contd…
Step 13. Follow up
∗ The importer then informs the exporter about the receipt of goods.
∗ If there are any discrepancies or damages to the goods, he should inform the
exporter.
16 New Session
17 Types of Price Quotation
∗ There are 11 Types of Price Quotation Used in International Marketing(Imports or
Exports )
∗ Export or Imports price quotations and incoterms play a vital role in International
marketing.
∗ Buyer in trade inquires from the number of foreign companies regarding product or
goods ask for price quotations.
∗ Foreign companies, who are interested in export, provide full details of the desired
product along with price quotation.
∗
18 Types of Price Quotation – Contd…
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∗ Purchasing decision of buyer in marketing is significantly affected by the types of
price quotation because every price quotation is having its own specific meaning and
interpretation.
∗ The role of price quotations is very important in mitigating misunderstanding and
disputes between importer and exporter.
19 Types of Price Quotation- Contd…
1. Ex Works or Ex Factory (EXF)
∗ This price quotation refers to floor cost of the seller. This creates a minimum
obligation to the seller.
∗ The exporter’s responsibility to deliver the goods under this price quotation is over
when he places the goods at his own warehouse.
∗ All the remaining expenditures are to be paid by the importer.
∗
20 Types of Price Quotation- Contd…
2. Free carrier (FCA)
∗ Under this price quotations, the exporter’s obligation to deliver the goods is over
when he delivers it to the carrier nominated by the importer at the place specified by
him.
3. Free Alongside Ship ( FAS)
∗ Under this price quotations, the exporter delivers the goods by placing it alongside
the ship at the specified port for the purpose of shipment.
∗ Remaining all expenditures are to be paid by the importer.
∗
21 Types of Price Quotation- Contd…
4. Free on Board (FOB)
∗ If the loading expenditures are added into FAS, the new price quotations will be FOB,
∗ Therefore all other expenditures after loading the goods on the ship will be paid by
the importer. this is a widely used price quotation in international marketing.
22 Types of Price Quotation- Contd…
5. Cost and Freight (C&F)
∗ This price quotation refers that exporter has added the amount of freight from his
country’s port to the port of importer.
∗ Therefore, if we add the amount of freight in FOB, the new will be C&F.
∗
23 Types of Price Quotation- Contd…
6. Cost, Insurance and Freight (CIF)
∗ If the amount of insurance premium is added in the C&F, the new quotation will be
CIF.
∗ The exporters obtain insurance only for minimum cover. If the importer wants full
insurance cover, he should either expressly intimate it to the exporter.
∗ The difference in the amount of full insurance cover and minimum insurance cover
would be paid by the importer.
∗ All other remaining expenditures, after the arrival of goods at the importer's port, are
to be paid by Importer.
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∗
to be paid by Importer.
24 Types of Price Quotation- Contd…
7. Delivered Ex Ship (DES)
∗ This price quotation indicates that the exporter will deliver the goods by placing them
at the disposal’s port.
∗ The exporter bears all the risk and costs involved in bringing the goods at the
specified port of Importer.
25 Types of Price Quotation- Contd…
8. Delivered at Frontier (DAF)
∗ Under this price quotation the exporter delivers the goods by placing it at the disposal
of the importer on the arriving means of transport not unloaded, cleared for import at
the specified destination at the frontier, but before the custom post of the importing
country.
∗ If the importer wants to make exporter responsible for the unloading of goods to bear
the risk, requires explicit wording to this effect in the contract, signed by both the
parties.
26 Types of Price Quotation- Contd…
9. Delivered Ex Quay (DEQ)
∗ In this price quotation, the importer clears the goods for import and he has to pay all
the taxes, duties and for other formalities, imposed by the government of his country.
∗ This price quotation can be used only when the goods are to be delivered by sea,
inland waterway or multimodal transport on discharging from a ship on the quay at
the port of destination.
∗
27 Types of Price Quotation- Contd…
10. Delivered Duty Unpaid (DDU)
∗ Under this price quotation, the exporter delivers the goods to the importer, which is
cleared for import but not unloaded from any arriving mode of transport at the
specified destination as duty is unpaid.
∗ The exporter bears the risks and costs of transportations of goods, excluding the
import duty imposed by the government of importer’s country.
∗ Therefore, in this price quotation, the import duty will be paid by the importer.
28 Types of Price Quotation- Contd…
11. Delivered Duty Paid (DDP)
∗ In this price quotation, the exporter delivers the goods to the importer cleared for
import but is to be loaded from any arriving mode of transport at the specified
destination.
∗ Under this price quotation, the obligations of exporters become greater and importer’s
obligations become minimum.
∗ Under this price quotation, the exporter has to seek import clearance and is bound to
pay import duty.
29 Import License
∗ Need for Import License
∗ Import License Issuing Authority
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∗
∗ Validity of Import License
∗ Sample of Import License
∗ Categories of Import
∗ Category of Importer
∗ Custom Inspection
30 Need for Import License
As per existing Exim Policy ,majority of the goods are freely importable and covered
under Open General License ( OGL)
∗ India prohibits import of certain categories of products as well as conditional import
of certain items.
∗ In such a situation it becomes important for the importer to have an import license
issued by the issuing authorities of the Government of India.
31 Import License Issuing Authority
∗ In India, Import License is issued by the Director General of Foreign Trade. DGFT
Delhi office is situated in Udyog Bhawan, New Delhi 110011
32 Validity of Import License
∗ Import Licenses are valid for 24 months for capital goods and 18 months for raw
materials components, consumable and spares, with the license term renewable
33 Sample of Import License
∗ A typical sample of import license consists of two copies-
∗ Foreign Exchange Control Copy: To be utilised for effecting remittance to foreign seller
or for opening letter of credit
∗ Customs Copy: To be utilised for presenting to Customs authority enabling them to
clear the goods.
∗ In the absence of customs copy, import will be declared as an unauthorised import,
liable for confiscation and or penalty.
34 Categories of Import-1
∗ All types of imported goods come under the following four categories:
∗ Freely importable items: Most capital goods fall into this category. Any product
declared as Freely Importable Item does not require import licenses.
∗ Licensed Imports: There are number of goods, which can only be imported under an
import license. This category includes several broad product groups that are classified
as consumer goods; precious and semi-precious stones; products related to safety
and security; seeds, plants and animals; some insecticides, pharmaceuticals and
chemicals; some electronic items; several items reserved for production by the small-
scale sector; and 17 miscellaneous or special-category items.
35 Categories of Import-2
∗ Canalised Items: There are certain canalised items that can only be importer in India
through specified channels or government agencies. These include petroleum
products (to be imported only by the Indian Oil Corporation); nitrogenous phosphatic,
potassic and complex chemical fertilizers (by the Minerals and Metals Trading
Corporation) vitamin- A drugs (by the State Trading Corporation); oils and seeds (by
the State Trading Corporation and Hindustan Vegetable Oils); and cereals (by the
Food Corporation of India).
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Food Corporation of India).
∗ Prohibited items: Only four items-tallow fat, animal rennet, wild animals and
unprocessed ivory-are completely banned from importation
36 Category of Importer
∗ On the basis of product to be imported and its target buyer, importers categories are
divided into three groups for the purpose of obtaining import licensing:
1. Actual Users- An actual user applies for and receives a license to import of any
item for personal use rather than for business or trade purpose.
2. Registered exporters; defined as those who have a valid registration certificate
issued by an export promotion council, commodity board or other registered authority
designated by the Government for purposes of export-promotion.
3. Others.
∗
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∗ The two types of actual user license are:
1. General Licenses : This license can be used for the imports of goods from all
countries, except those countries from which imports are prohibited;
2.
2. Specific Licenses: This license can only be used for imports from a specific country.
∗
38 Custom Inspection
∗ Any violation in the import license is usually scanned by the custom officials of the
custom department.
∗ Customs inspector and other custom officials have authority to inspect and evaluate
the goods to be imported. It’s a part of their job to determine whether imports
conform to the description in the import License or not. Custom official even have
right to charge fines and penalties if any violation in the import license is found to be
done by the importer.
39 Thank You