Import and Export Procedures in India
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, the imports and exports are regulated by the Foreign Trade (Development and Regulation) Act, 1992, which empowers the federal government to make provisions for 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.
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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 of 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 permission 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 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, renewable, and 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 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 in 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 certificate of origin, certificate of inspection, bill of exchange, 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 order’ that allows the imported goods to be replaced from the 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 are 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, 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 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).
The RCMC helps exporters and importers avail benefit or concession under the Foreign Trade Policy 2015-20, which has been extended up to September 30, 2021 to provide a stable regime during the COVID-19 pandemic.
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, regulatory compliances requirements like license, certificates, etc., for imports as well as exports. This includes import and export through posts and courier, import of samples, reimport and reexport of goods, self-sealing facility for exporters and project imports.
Another important feature of the CIP is a pan India map showing all the Customs seaports, airports, and land customs stations etc. It also contains addresses of the regulatory agencies and their websites.
Various measures taken by India for promotion of exports
- Extension of the Foreign Trade Policy 2015-20 to September 30, 2021.
- Schemes, such as the Advance Authorization Scheme and the Export Promotion Capital Goods (EPCG) Scheme (see PDF link here), to enable duty free import of raw materials and capital goods for export oriented production. To apply for Advance Authorization Scheme, see the relevant DGFT page here.
- The Interest Equalization Scheme, which provides pre and post shipment Rupee export credit, and has been extended up to September 30, 2021.
- Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, operationalized for exports with effect from January 1, 2021.
- Extension of the Rebate of State and Central Levies and Taxes (RoSCTL) Scheme for apparel and made-up exports till March 2024.
- Transport and Marketing Assistance (TMA) scheme for specified agriculture products, which provides assistance for the international component of freight and marketing of agricultural produce and to promote brand recognition for Indian agricultural products in specified overseas markets. To apply for TMA Scheme, see the relevant DGFT page here.
- A Common Digital Platform for Issuance of Certificates of Origin (CoO) has been launched to increase Free Trade Agreement (FTA) utilization by exporters ⟶ https://coo.dgft.gov.in
- Districts across India are being promoted as Exports Hubs by identifying products and services with export potential in each district (One District One Product / ODOP initiative), addressing bottlenecks for exporting these products/services and supporting such local exporters/manufacturers through institutional and strategic interventions. District specific export action plans for 478 districts have been prepared. To see the One District One Product Digital GIS Map on the Ministry of Food Processing Industries website, click here. The Department of Commerce is focusing on agriculture crops via a cluster approach for support for exports under the Agriculture Export Policy. This complements the cluster approach for the development of specific agriproducts in districts having a comparative advantage by the Ministry of Agriculture.
- Market Access Initiative (MAI) Scheme is an Export Promotion Scheme that provides financial assistance to eligible agencies like Export Promotion Organizations/Trade Promotion Organizations/National Level Institutions/ Research Institutions/Universities/Laboratories, Exporters etc. The scheme is formulated on focus product-focus country approach to evolve specific market and specific product through market studies/survey.
- A working group on infrastructure upgradation has been constituted under National Committee on Trade Facilitation (NCTF) and a National Trade Facilitation Action Plan (NTFAP) has been formulated. This includes measures for improving road and rail connectivity to ports and smart gates at sea ports. The government wants to cut down export-import related red tape by 2022 and make cross-border trade easier for businesses. As per reporting on Livemint, “one key target is to reduce cargo release time to 12 hours for outbound air cargo and 24 hours for outbound sea cargo. The target is 48 hours for inbound sea cargo and 24 hours for inbound air cargo.”
This article was originally published on August 2019. It has been updated on August 6, 2021.
India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write email@example.com for more support on doing business in India.