Steps in Import Procedure

What is Import Procedure?

The purchase of goods from a foreign country is referred to as import trade. The Import procedure varies by country, depending on the country’s import and customs policies, as well as other statutory requirements.

Import procedures are the procedures for import and export activities that include ensuring licencing and compliance prior to shipping goods, arranging for transport and warehousing after goods are unloaded, and obtaining customs clearance and paying taxes prior to the release of goods.

Steps involved in Import transactions : 

1. Trade Enquiry: The importing company should first gather information about the countries and companies that export the given product. The importer is able to collect such data from trade directories and/or trade associations as well as organisations. After identifying the countries and firms that export the product, the importing firm contacts the export firms by using a trade enquiry to learn about their export prices and terms of export. 

A trade enquiry is a written request from an importing firm to an exporter for information on the price and various terms and conditions under which the latter is willing to export goods. The importer will receive a quotation from the exporter in response to this inquiry. The quotation includes information about the goods available, such as their quality and price, as well as the terms and conditions of the sale.

2. Procurement of Import Licence: Certain goods can be imported freely, while others require licencing. The importer must consult the current Export-Import (EXIM) policy to determine whether the goods he or she intends to import require import licencing. If goods can only be imported with a licence, the importer must obtain an import licence. Every importer (and exporter) in India must register with the Directorate General Foreign Trade (DGFT) or Regional Import Export Licensing Authority and obtain an Import Export Code (IEC) number. This number is required on the majority of import documents.

The Imports and Exports (Control) Act of 1947 governs the import trade in India. Without a valid import licence, a person or company cannot import goods into India.

The Indian government declares its import policy in the Import Trade Control Policy Book, also known as the Red Book. Every importer must first determine whether or not he can import the goods he desires, as well as how much of a particular class of goods he can import during the time period covered by the relevant Red Book.

3. Obtaining Foreign Exchange: The supplier in an import transaction requests payment in a foreign currency because they are based overseas. Indian currency must be converted into foreign currency in order to make a payment in another currency. The Reserve Bank of India’s Exchange Control Department oversees all foreign exchange transactions in India (RBI).

Every importer is required by the current regulations to obtain the approval of foreign currency. The importer must submit an application to a bank that the RBI has authorised to issue foreign currency in order to receive such a sanction. In accordance with the Exchange Control Act’s guidelines, the application must be submitted in the prescribed format and include an import licence.

The exchange bank endorses and forwards the applications to the Reserve Bank of India’s Exchange Control Department. The Reserve Bank of India sanctions the release of foreign exchange after scrutinising the application on basis of the Government of India’s exchange policy in effect at the time of application. The importer obtains the necessary foreign exchange from the relevant exchange bank. It should be noted that, whereas import licences, which are issued for a specific period of time, the exchange is only released for a specific transaction. Most restrictions have been lifted as the rupee has become convertible on a current account as the economy has liberalised.

4. Placing Order or Indent: The importer places an import order or indents with the exporter for the supply of the specified products after obtaining the import licence. The import order includes details about the cost, size, grade, and quality of the goods ordered, as well as packing, shipping, ports of departure and arrival, delivery schedule, insurance, and payment method instructions. In order to avoid any ambiguity and subsequent conflict between the importer and exporter, the import order should be carefully drafted.

It contains the importer’s instructions regarding the quantity and quality of goods required, the method of forwarding them, nature of packing, mode of payment and price, and so on. Indentations are typically prepared in duplicate or triplicate. Indent types include open indent, closed indent, and confirmatory indent. Because all of the necessary particulars of goods, price, and so on are not mentioned in the indent, the exporter is free to complete the formalities at his own end.  On the other hand, a closed indent is one that clearly states the full particulars of the goods, price, brand, packing, shipping, insurance, and so on. A confirmatory indent is one in which an order is placed subject to the importer’s agent’s confirmation.

5. Obtaining a Letter of Credit: If a letter of credit is the preferred method of payment between the importer and the overseas supplier, the importer must obtain one from its bank and send it to the supplier. A letter of credit, as previously mentioned, is a guarantee made by the bank of the importer that it will honour payment of export bills to the bank of the exporter up to a certain amount.

A letter of credit (L/C) is an undertaking by its issuer (usually the importer’s bank) that bills of exchange drawn by the foreign dealer on the importer will be honoured on presentation up to a specified amount.

6. Arrangement of Finance: Prior to the arrival of the goods at the port, the importer should make arrangements to pay the exporter. To avoid grossly overpaying demurrages (fines) on imported goods that are lying uncleared at the port due to lack of payments, advanced planning for financing imports is required.

7. Advice for Shipment Receipt: The international supplier sends the importer the shipment advice after loading the goods onto the ship. Information regarding the shipment of goods is included in shipment advice. The shipment advice includes information such as the invoice number, bill of lading/airways bill number and date, vessel name with date, port of export, description of goods and quantity, and date of vessel sailing.

8. Retirement of Documents:  After the goods have been shipped, the overseas supplier gathers the required paperwork in accordance with the contract and letter of credit terms and gives it to their banker for negotiation with the importer in the manner indicated in the letter of credit. A bill of exchange, commercial invoice, bill of lading or airline bill, packing list, certificate of origin, marine insurance policy, etc. are generally included in a set of documents. Retirement of import documents refers to the acceptance of a bill of exchange for the purpose of receiving delivery of the documents. When retirement is finished, the bank will give the importer the import documents.

9. Goods Arrival: The international supplier ships the goods in accordance with the agreement. The person in charge of the carrier, whether it be a ship or an airline, notifies the person in charge at the dock or the airport of the arrival of goods in the importing country. The import general manifest document is presented by him. The specific details of the imported goods are listed in an import general manifest document. It is a document that the unloading of cargo is based.

10. Custom Clearance: After they cross Indian borders, all imported goods are required to go through customs clearance. A number of formalities must be completed in the somewhat time-consuming process of customs clearance. It is suggested that importers appoint C&F agents who are familiar with such formalities and play a crucial role in getting the goods cleared through customs.

The importer must first obtain a delivery order also called an endorsement for delivery. The importer normally gets the endorsement on the back of the bill of lading when the ship docks at the port. The relevant shipping company provides this endorsement. In some cases, the shipping company issues a delivery order rather than approving the invoice. The importer has the right to accept delivery of the goods under this order. Of course, before taking possession of the goods, the importer must first pay the freight charges (if the exporter has not already done so).