Import Export process in India

Businesses looking to establish a trading firm or begin importing or exporting from India must understand the phases and stakeholders involved, as well as the regulatory environment and documentation required.

The Foreign Commerce (Development and Regulation) Act, 1992, which authorises the federal government to establish measures for the development and regulation of foreign trade, governs imports and exports in India. The Foreign Trade Policy, 2015-20, contains the current provisions governing exports and imports in India.

Procedures for Import

Typically, the procedure for import and export activities entails ensuring licence and compliance before shipping products, arranging for transport and warehousing after items are unloaded, and obtaining customs clearance as well as paying taxes prior to sending goods.

The stages involved in importing items are outlined below.

1. Obtain the IEC

Every business must first get an Import Export Code (IEC) number from the regional joint DGFT before importing from India. The IEC is a global trade registration with lifetime validity that is essential for clearing customs, sending cargo, and sending or receiving money in foreign currencies.

The IEC registration procedure takes roughly 10-15 days.

2. Ensure legal compliance with various trade laws

Businesses having an IEC may import items that comply with Section 11 of the Customs Act (1962), the Foreign Trade (Development & Regulation) Act (1992), and the Foreign Trade Policy, 2015-20.

Certain things, however, require further authorization and permits from the DGFT and the federal government since they are restricted, canalized, or prohibited as stated and notified by the government.

3. Obtain import licences

An importer must first classify the item by identifying its Indian Trading Clarification based on a Harmonized System of Coding or ITC (HS) classification to determine whether a license is required to import certain commercial goods or services.

ITC (HS) is India's primary classification system for trade and import-export transactions. The DGFT's ITC-HS code is an 8-digit alphanumeric identifier that represents a certain class or category of products and allows the importer to follow regulations pertaining to those commodities.

A general licence or a specific licence may be used to import goods. A general licence allows items to be imported from any country, but a specific or personalised licence only allows imports from specified countries.

Import licences are used in import clearance and are normally renewable and valid for 24 months for capital items and 18 months for raw materials components, consumables, and spare parts.

4. Submit a Bill of Entry and other documents to complete customs clearance procedures.

Importers must provide an import declaration in the stipulated Bill of Entry together with a permanent account number (PAN)-based Business Identification Number (BIN) after acquiring import licences, according to Section 46 of the Customs Act (1962).

A Bill of Entry provides information on the specific kind, amount, and value of items that have landed or entered the country.

If the items are cleared via the Electronic Data Interchange (EDI) system, there is no need to file a formal Bill of Entry because it is generated in the computer system. However, after prescribing the particulars required for processing the entry for customs clearance, the importer must file a cargo declaration.

If the Bill of Entry is not filed utilising the EDI system, the importer must submit supporting papers such as a certificate of origin, a certificate of inspection, a bill of exchange, a commercial invoice, and a packing list, among other things.

Customs officials review and assess the information provided in the bill of entry and match it with the imported products once the goods have been dispatched. If there are no anomalies, officials issue a 'pass out order,' allowing the imported products to be replaced at customs.

5. Determine the import duty rate for goods clearance.

The Customs Tariff Act of 1975 imposes a baseline customs duty on imported products, as stipulated in the first schedule, as well as goods-specific duties such as anti-dumping duty, safeguard duty, and social welfare surcharge.

In addition, under the new GST system, the government charges an integrated goods and services tax (IGST). 

The IGST rates are determined by the classification of imported goods as described in Schedules made public under Section 5 of the IGST Act (2017).

Procedures for export

A company wishing to engage in export activities, like imports, must get an IEC number from the regional joint DGFT. After receiving the IEC, the exporter must guarantee that all legal compliances under various trade regulations are met.

Furthermore, the exporter must determine whether an export licence is required and apply for one with the DGFT.

An exporter must additionally register with the Indian Chamber of Commerce (ICC), which produces Non-Preferential Certificates of Origin verifying that the items shipped were manufactured in India.

Document import and export

Businesses must submit a series of paperwork in order to conduct export and import activities in India.

These comprise commercial documents, which are exchanged between the buyer and seller, as well as regulatory documents, which deal with various regulatory authorities such as customs, excise, licencing authorities, and export promotion bodies, which assist in obtaining export import benefits.

The Foreign Trade Policy, 2015-2020, requires the following commercial documentation for importing and exporting:

Bill of lading or airway bill; Commercial invoice with packing list; Shipping bill, bill of export, or bill of entrance (for imports).

Depending on the circumstances, additional documentation such as a certificate of origin and an inspection certificate may be necessary.

Among the main regulatory documents are:

• GST return forms (GSTR 1 and GSTR 2); 
• GST return forms (GSTR 1 and GSTR 2), GSTR reimbursement form, Exchange Control Declaration, Bank Realization Certificate, and Registration and Membership Certificate are all available (RCMC).

The RCMC assists exporters and importers in obtaining advantages or concessions under the Foreign Trade Policy 2015-20.

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