Import procedure:

In order to conduct import trade one needs to follow procedure framed by the Government of India. It is discussed below.

1. Obtaining import license:

Open General License (OGL):
If an importer wants to import those items/services which are listed in government list, he needs to obtain Open General License (OGL) which is quite easy.

License from trade director:

• If an importer wants to import items that are not mentioned in the government list then he needs to apply for the license to comptroller of import trade.
• The importer needs to provide various details in the application like his name, address, complete detail of goods to be imported, financial records of the importer, name of the exporter and exporting country, etc.
• If and only if the assessing officers are thoroughly satisfied with all the details, they will provide the import license to the importer.
• If the government has set some quota for importing only a specific quantity of goods than the importer is given a quota certificate. As per the quota certificate, the importer can import only upto the maximum quantity mentioned in the certificate.

2. Obtaining foreign exchange:

• When goods are imported from a foreign country the payment has to be made in the currency from which he is importing. For this the importer needs to raise necessary foreign currency or say foreign exchange.
• The Reserve Bank of India (RBI) controls the foreign exchange in India.
• The importer has to submit an application in the prescribed form along with import license to any bank that deals with foreign exchange. The bank than forwards the application to RBI. RBI scrutinizes the application and then sanctions the release of foreign exchange.
• The importer can then obtain the sanctioned foreign exchange from the bank. The applicant needs to mention the amount he needs in American Dollar as per the prevailing currency rate.

3. Placing the indent or order:

• The order that the importer places for importing the goods is called ‘indent’. He places the indent to the exporter.
• The importer first collects information of different manufacturers and exporters of the exporting country. He collects information regarding the details of goods, price and other conditions and then gives the indent to the exporter he selects. -> Indent contains details regarding quantity of goods, price, packaging, insurance, name of transporter, etc.

4. Dispatching Letter of Credit (L/C):

Generally, foreign traders are not acquainted to each other and so before the exporter exports the goods he wants to make sure he will receive his payment. For this, the importer obtains a Letter of Credit (L/C) from his bank and sends it to the exporter to assure his credit worthiness.

5. Receipts of documents:

• Once the exporter receives L/C, he prepares various shipping documents like bill of lading, invoice, the insurance policy of goods, etc., and sends it to the importer via. a foreign exchange bank. All these documents together are called ‘Documentary bill. There are two types of documentary bills. They are:
  1. D/A (i.e. Documents against acceptance) bills
  2. D/A (i.e. Documents against payment) bills
• The exporter may send the type of bill as per terms decided with importer.

6. Obtaining bill of lading:

• A bill of lading is a legal document between the shipper (i.e. exporter) of the goods and the carrier i.e. the transporter. It contains details like quantity of goods, destination, etc.
• It is issued by the carrier to the exporter.
• The shipping company makes three copies of bill of lading. It keeps one copy and gives the other two to the exporter.
• The exporter then makes a mark on one copy i.e. endorses it and sends it to the importer as a part of documentary bill. The importer can obtain the goods from the carrier only if he shows the bill of lading.

7. Paying import duty or say excise:

• Goods are not allowed to bring out of port unless duty is paid on them.
• If the importer is exempted from import duty he can collect the goods without paying it.
• If the importer is exempted from import duty he need to present consular invoice and the certificate of origin of goods (from the exporter) and obtain a certificate of exemption of import duty from the excise department.
• If the importer is liable to pay full import duty then he needs to pay it to possess the goods.
• If at all the importer has to pay only partial duty i.e. lesser than actual then he needs to fill a form called ‘bill of entry form’. The form contains the details of name of the ship, name of the port of the country from where goods were loaded, name of exporter, name and address of importer and complete details of the goods.
• Based on this form the excise department decides the amount of duty to be paid by the importer. Once the importer pays the duty, the excise officer endorses the ‘bill of entry’ and hands it to the importer.

8. Payment of dock charges:

A place where the goods are kept once they arrive is called a dock. Since goods of importer are unloaded from the ship and handled and stored by dock employees the importer needs to pay dock charge for theses dock services he received. Dock charges also include charges on equipment and facilities that were used for the goods in the dock.

• Dock charge is to be paid irrespective of the mode of arrival of goods i.e. airway, waterway, roadway or railway.
• After paying the dock charges the importer gets a dock receipt.

9. Obtain possession of goods:

• After completing all the formalities the importer can then obtain possession of the goods.
• The importer needs to take the goods from the bonded warehouse where they are stored by the customs department within the specified time. If the importer does not collect the goods on time, he will have to pay demurrage along with the additional rent.