Import Process
How To Import Goods In India ? Procedure For Importing Goods
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.
Importer has to attach the following documents to his application form :-
Receipt which shows that import license fee has been paid.
Certificate from a Chartered Accountant showing the total value of goods to be
imported.
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.
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.
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.
Step 3. Placing an order
The importer may either place the order directly or through the
indent house (Agent). In case of canalised items, he obtains the
imports through the canalizing agency. (Canalisation means
channelisation of goods through a government agency like 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.
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”.
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.
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.
Step 7. Receipts of documents
The importer’s bank receives the documents from the exporter’s
bank. The documents include bill of exchange, a copy of bill of lading,
certificate of origin, commercial invoice, consular invoice, packing list,
and other relevant documents. The importer makes payment to the
bank (if not paid earlier) and collects the documents.
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 [Link] copy is
retained by the customs department, another is retained by port trust
and the third is kept by the importer.
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.
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.
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.
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.
Take away
1) Import process is time Consuming.
2) Bank involvement is mandatory with Current and Trading Account.
3) Payment of money to the exporter happens only after the
shipment is loaded and confirmation received at the Importer’s bank.
4)
Nostro / Vostro A/c
Example:
If an Indian bank (Bank A) has an account with a U.S. bank (Bank B)
in U.S. dollars, that account is a Nostro account from Bank A's
perspective. Bank A can use this account to handle transactions in
dollars for its customers.
Advantages