India’s customs authorities have launched the Indian Customs Compliance Information Portal detailing customs procedures and regulatory compliances for import-export trade. This article briefly highlights relevant import-export procedures in India as well as various promotional schemes and initiatives being implemented to benefit exporters.
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.
In India, imports and exports are regulated by the Foreign Trade (Development and Regulation) Act of 1992, which empowers the federal government to make provisions for the development and regulation of foreign trade. The current provisions relating to exports and imports in India are available under the Foreign Trade Policy, 2015-20.
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 goods.
1. Obtain IEC
Prior to importing from India, every business must first obtain an Import Export Code (IEC) number from the regional joint DGFT. The IEC is a pan-based registration of traders with lifetime validity and is required for clearing customs, sending shipments, as well as for sending or receiving money in foreign currency.
The process to obtain the IEC registration takes about 10-15 days.
2. Ensure legal compliance under different trade laws
Once an IEC is allotted, businesses may import goods that are compliant with Section 11 of the Customs Act (1962), Foreign Trade (Development & Regulation) Act (1992), and the Foreign Trade Policy, 2015-20.
However, certain items – restricted, canalized, or prohibited, as declared and notified by the government – require additional permits and licenses from the DGFT and the federal government.
3. Procure import licenses
To determine whether a license is needed to import a particular commercial product or service, an importer must first classify the item by identifying its Indian Trading Clarification based on a Harmonized System of Coding or ITC (HS) classification. ITC (HS) is India’s chief method of classifying items for trade and import-export operations.
The ITC-HS code, issued by the DGFT, is an 8-digit alphanumeric code representing a certain class or category of goods, which allows the importer to follow regulations concerned with those goods. An import license may be either a general license or a specific license. Under a general license, goods can be imported from any country, whereas a specific or individual license authorizes import only from specific countries. Import licenses are used in import clearance, are renewable, and 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 other documents to complete customs clearing formalities
After obtaining import licenses, importers are required to furnish import declaration in the prescribed Bill of Entry along with a permanent account number (PAN) based Business Identification Number (BIN), as per Section 46 of the Customs Act (1962). A Bill of Entry gives information on the exact nature, precise quantity, and value of goods that have landed or entered inwards into the country.
If the goods are cleared through the Electronic Data Interchange (EDI) system, no formal Bill of Entry is filed as it is generated in the computer system. However, the importer must file a cargo declaration after prescribing particulars required for processing of the entry for customs clearance. If the Bill of Entry is filed without using the EDI system, the importer is required to submit supporting documents that include a certificate of origin, certificate of inspection, bill of
exchange, and commercial invoice cum packing list, among others. Once the goods are shipped, the customs officials examine and assess the information furnished in the bill of entry and match it with the imported items. If there are no
irregularities, the officials issue a ‘pass out the order’ that allows the imported goods to be replaced by customs.
5. Determine import duty rate for clearance of goods
India levies basic customs duty on imported goods, as specified in the first schedule of the Customs tariff Act, 1975, along with goods-specific duties such as anti-dumping duty, safeguard duty, and social welfare surcharge.
In addition to these, the government levies an integrated goods and services tax (IGST) under the new GST system. The IGST rates depend on the classification of imported goods as specified in Schedules notified under Section 5 of the IGST Act (2017).
Just as for imports, a company planning to engage in export activities is required to obtain an IEC number from the regional joint DGFT. After obtaining the IEC, the exporter needs to ensure that all the legal compliances are met under different trade laws. Further, the exporter must check if an export license is required, and accordingly apply for
the license to the DGFT. An exporter is also required to register with the Indian Chamber of Commerce (ICC), which issues the Non-Preferential Certificates of Origin certifying that the exported goods originated in India.
Import and export documents
Businesses are required to submit a set of documents for carrying out export and import activities in India.
These include commercial documents – the ones exchanged between the buyer and seller, and regulatory documents that deal with various regulatory authorities such as the customs, excise, and licensing authorities, as well as the export promotion bodies that help avail export import benefits.
The Foreign Trade Policy, 2015-2020 mandates the following commercial documents for carrying out importing and exporting activities:
- Bill of lading or airway bill.
- Commercial invoice cum packing list.
- Shipping bill or bill of export, or bill of entry (for imports).
- Additional documents like a certificate of origin and inspection certificate may be required as per the case.
The important regulatory documents include:
- GST return forms (GSTR 1 and GSTR 2);
- GSTR refund form.
- Exchange Control Declaration.
- Bank Realization Certificate; and
- Registration cum Membership Certificate (RCMC).
Launch of the Indian Customs Compliance Information Portal
The Central Board for Indirect Taxes and Customs (CBIC) launched the Indian Customs Compliance Information Portal (CIP) in 2021 at https://cip.icegate.gov.in/CIP/#/home to provide free access to information on all Customs procedures and regulatory compliance for nearly 12,000 Customs Tariff Items.
The CIP is a facilitation tool that allows interested persons to stay up to date with information on the legal and procedural requirements of India’s customs authorities and regulatory government agencies (FSSAI, AQIS, PQIS, Drug Controller, etc.) for carrying out imports and exports. The portal will provide complete knowledge of all import and export-related requirements for all items covered under the Customs Tariff thereby improving the ease of doing cross-border trade.
When using the CIP portal, one can simply enter either the Customs Tariff Heading (CTH) or the description of the goods in question to get information on step-by-step procedures, and regulatory compliance requirements like licenses, certificates, etc., for imports as well as exports. This includes import and export through posts and couriers, import of samples,
reimport and reexport of goods, self-sealing facility for exporters, and project imports.
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