Import requirements in India

Import in this article means bringing into India from a place outside of India.

In India, the Foreign Trade (Development and Regulation) Act of 1992 regulates imports and exports, 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
• getting customs clearance and paying taxes before the release of goods

The steps involved in importing goods to India:

1. Obtain Import-Export Code (IEC):

   In India, prior to the import, every importer must first obtain an IEC number from the regional joint Directorate General of Foreign Trade (DGFT) by filing an online application. The Import Export Code (IEC) is a permanent account number (PAN) with lifetime validity and is required for clearing customs, sending shipments, and sending or receiving money in foreign currency.

   The process to obtain the IEC registration takes about 10 to 15 days.

2. Ensure the legal compliance under different trade laws:

   Once the IEC is allotted, the importer 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 that are restricted, canalized, or prohibited, as declared, and notified by the government, require additional permission and licenses from the Directorate General of Foreign Trade (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
   • 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 format along with the Bill of Entry and 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 particular requirements for processing 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

   Once the goods are shipped, the customs officials examine and assess the information furnished in the bill of entry and matches it with the imported items. If there are no irregularities, the officials issue a 'pass out order' that allows the imported goods to be moved out from the customs.

5. Determine import duty for the 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).

Import documents

It is required to submit a set of documents to carry out import activities in India. These include commercial invoice and regulatory documents that deal with various regulatory authorities such as the customs, excise, licensing authorities.

The Foreign Trade Policy, 2015-2020 mandates the following commercial documents for carrying out importing activities:

• Bill of lading or airway bill
• Commercial invoice cum packing list
• Bill of entry

Additional documents may be required as per the case such as:

• certificate of origin
• inspection certificate
• insurance certificate
• import licence
• letter of credit
• General Agreement on Tariff and Trade (GATT)/DGFT Declaration
• 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 March 31, 2022 to provide a stable regime during the COVID-19 pandemic.