Import Export Procedure and Documentation

All you need to know about the import and export procedures in India, as well as the documentation required.

1. By Vishwashree Salvi IMPORT EXPORT PROCEDURE AND DOCUMENTATION

2. Imports are the goods and services that are purchased from the rest of the world by a country’s residents, rather than buying domestically produced items. Imports lead to an outflow of funds from the country since import transactions involve payments to sellers residing in another country Exports are goods and services that are produced domestically, but then sold to customers residing in other countries. Exports lead to an inflow of funds to the seller’s country since export transactions involve selling domestic goods and services to foreign buyers . DEFINITION

3. Step 1 . Obtaining import license and quota In all countries there are many government regulations to be followed. Sanction of government is necessary. Importer has to apply to the controller of imports for getting necessary permission. Importer has to attach the following documents to his application form :- - Receipt which shows that import license fee has been paid. - Certificate from a Chartered Accountant showing the total value of goods to be imported. - Verification Certificate for income tax. An import license may be general or specific. A general license allows imports from any country. But specific license allows imports from specific country only. The importer also has to obtain import quota certificate from the concerned authority. It mentions the maximum quantity of goods which can be imported. PROCEDURE OF IMPORT IN INDIA

4. Step 2. Obtaining foreign exchange Before placing any order, the importer must apply to the Exchange Control Department (ECD) of RBI (India's Central Bank) for the release of requisite foreign exchange. The importer should forward the application through his bank. The ECD verifies the application of the importer, and if found valid, sanctions the foreign exchange for the particular transaction. Step 3. Placing an order The importer may either place the order directly or through the indent house (Agent). In case of canalised items, he obtains the imports through the canalizing agency. (Canalisation means channelisation of goods through a government agency like MMTC). The importer cannot directly import such canalized items. They have to place an order with the canalizing agency who shall import and supply the same. Step 4. Despatching letter of credit After getting the confirmation from the supplier regarding the supply of goods, the importer requests his bank to issue a Letter of credit in favour of supplier. It can be defied as "an undertaking by importer's bank stating that payment will be made to the exporter if the required documents are presented to the bank "

5. Step 5. Appointing clearing and forwarding agents The importer makes arrangement to appoint clearing and forwarding agents to clear the goods from the customs. Since clearing of goods is a specialized job, it is better to appoint C & F agents. Step 6. Receipt of shipment device The importer receives the shipment advice from the exporter. The shipment advice states the date on which the goods are loaded on the ship. The shipment advice helps the importer to make arrangement for clearance of goods. Step 7. Receipts of documents The importer's bank receives the documents from the exporter's bank. The documents include bill of exchange, a copy of bill of lading, certificate of origin, commercial invoice, consular invoice, packing list, and other relevant documents. The importer makes payment to the bank (if not paid earlier) and collects the documents .

6. Step 8. Bill of entry A Bill of Entry is the document testifying the fact that goods of the stated value and description in specified quantity are entering into the country from abroad. The customs office supplies this form which is prepared in triplicate. Three different colours are used to prepare bill of entry.One copy is retained by custom department, other is retained by port trust and the third is kept by the importer. Step 9. Delivery order The clearing agents obtains the delivery order from the office of the shipping company. The shipping company gives the delivery order only after payment of freight, if any. Step 10. Clearing of goods The clearing agent pays the necessary dock or port trust dues and obtains the port Trust Receipt in two copies. He then approaches the Customs House and presents one copy of Port Trust Receipt, and two copies of Bill of. Entry to the customs authorities. The customs officer endorses the Bill of Entry Forms and one copy of Bill of Entry is handed back to the importer. The importer then pays the customs duty and clears the goods. In case, the customs duty is not paid, then the goods are stored in the bonded warehouses. As and when the duty is paid, the goods are cleared from the docks .

7. Step 11. Payment to clearing and forwarding agent The importer then makes the necessary payment to the clearing agent for his various expenses and fees. Step 12. Payment to exporter The importer has to make payment to exporter. Usually, the exporter draws a bill of exchange. The importer has to accept the bill and make payment. Step 13. Follow up The importer then informs the exporter about the receipt of goods. If there are any discrepancies or damages to the goods, he should inform the exporter.

8. Step 1. Receipt of an order The exporter has to get himself registered with various authorities like RBI, income tax authorities, etc. In addition, he has to appoint agents or distributors for collection of orders from foreign countries. Exporter receives an order from importer directly or through Indent House. Step 2. Obtaining License and Quota After obtaining order, exporter has to secure export license from the government. For this, he has to apply to the Export Trade Control Authority and obtain the valid license. Quota is the total quantity of goods that is permitted for exports. Step 3. Letter of Credit Exporter demands letter of credit from importer or sometimes importer may send it himself along with the order. PROCEDURE OF EXPORT IN INDIA

9. Step 4. Fixing exchange rate Exchange rate means the rate at which the currency of one country is exchanged for the currency of another country. It fluctuates from time to time. Hence the exporter and importer fix the exchange rate mutually. Step 5. Foreign exchange formalities Here the exporter has to undergo certain foreign exchange formalities as laid down under exchange control regulations. According to FERA (Foreign Exchange Regulation Act of India) every exporter has to furnish a declaration in the form prescribed for this purpose. The declaration states :- - Foreign exchange earned by way of exports will be disposed in the manner and within the period specified by RBI. - Negotiations of shipping documents will be through authorised dealers in foreign exchange. - The payment for goods exported will be collected only through approved method . Step 6. Preparation for executing the order The exporter makes necessary arrangements for executing the order. In this respect he performs the following activities :- - Packing and marking of the goods as per the specifications of the importer .

10. - Arranging the pre-shipment inspection by the Export Inspection Agency and getting the inspection certificate from it. - Securing insurance policy from the Export Credit Guarantee Corporation (ECGC) to get protection against the credit risks. - Obtaining a suitable marine insurance policy, consular invoice and certificate of origin, if required. - Appointing a forwarding agent for handling the customs and forwarding activities . Step 7. Formalities done by forwarding agent The Forwarding Agent completes the following formalities :- - He obtains the Customs' Permit from the Customs Department for exporting goods. - The Forwarding Agent discloses the details of the goods such as their nature, size, quantity, weight, etc. to the shipping company. - The Forwarding Agent prepares a Shipping Bill. - The Forwarding Agent prepares two copies of the dock challans and pays the dock dues. - The Captain of the ship gets the goods loaded on the ship on the basis of the Shipping Order in the presence of customer officers. - When the goods are loaded on the ship, the Mate (Vice Captain or the Captain) issues a receipt, called Mate's or Captain's Receipt .

11. Step 8. Bill of Lading The exporter approaches the shipping company, presents the Mate's Receipt and in exchange receives a document called Bill of Lading. It is an official receipt given by the shipping company as an acknowledgement of the receipt of goods to be transported to the port of destination. It is also a contract for the carriage of goods. It gives full description of goods loaded on the ship, name of the port of destination, etc. Step 9. Shipment advice to importer The exporter sends Shipment Advice to the importer informing him about the dispatch of the goods. He sends a copy of packing list, commercial invoice and a non-negotiable copy of the Bill of Lading, along with the Advice Note. Step 10. Presentation of documents to the bank The exporter confirms that he has secured a complete set of the shipping documents namely, the Bill of Lading, Marine Insurance Policy, Certificate of Origin, the Consular Invoice and the Commercial Invoice. He then draws a Bill of Exchange on the basis of the commercial invoice. The Bill of Exchange accompanied by these documents is called Documentary Bill of Exchange. Such a bill may be a D/P (Documents against payment) bill or D/A (Documents against Acceptance) bill. The exporter hands over the documnetary bill to his bank .

12. Step 11. Realisation of export proceeds For realisation of export proceeds, the exporter has to undergo certain banking formalities. Generally he receives payment in foreign currency by bill of exchange or by bank draft. Step 12. Follow up After the sales, exporter should always have a follow-up, to find out buyer's reactions towards the goods. Such follow up builds goodwill and the exporter can get more and more orders in future.

13. Followings are the necessary documents what every exporter and importer needs to provide or receive if you are importing/exporting. All the following docs are needed for clearing import or export custom. 1 . Proforma invoice (PI) Mandatory  Export import document.This is a document, which will state the value per unit for the goods. And will show the total value of the goods exported. Also, the exporter and importer details are stated. There is no formal format for the proforma invoice, just make sure all the needed data is stated. DOCUMENTATION

14. 2. Sales-purchase contract Belongs to mandatory export-import documentation. This is the proof of purchase-sale between the parties. You need to present this to your country custom together with the proforma invoice. The sales purchase contract needs to be well-crafted and prepared. Entrepreneurs should use the service of professional lawyers. It is not wise to use the contract forms that are available on the internet for free! We have included professional international sales-purchase contract form ( ready for use and modify) in our premium course. 3. Export-import agent commission agreement If you are working as an export-import agent, you are basically a representation of a supplier. You will be doing marketing and sales for the chosen supplier, against the commission fee, from the sales/transactions you have generated for the supplier. In this case, you as an Exim-agent need the solid commission agreement to be signed with the supplier first. In the commission agreement, you should state all the related and important terms about the business relationship you will have with the supplier. Especially pay attention to state clearly the terms related to your commission fee.

15. 4. NDA agreement NDA ( Non-disclosure agreement) document, which protects, you as a supplier or export-import agent. It is a tool, protecting your business interests. It prevents the buyer from going directly to your supplier. We suggest this document to be signed with both, suppliers and buyers, before entering into business transactions with them. NDA sets penalties for the signed parties. If one signee surpasses you as a supplier or agent, then based on the NDA you can take legal actions to get back the profit you lost, because of one side breaking the NDA . 5. Packing list (PL) Mandatory export import procedures and documentation The packing list states the quantity of the goods exported. Also those packing and weights and CBM,s. also, the amount of the packages are stated on the packing list. On the packing list, also the product HS code is marked. HS code is a code, that all the nations understand the same way. This code will determine the import duties and other formalities.

16. 6. Bill of landing/Airway bill/Railway bill Crucial Export import document for importers custom. Afer, the goods had been taken on the shipboard, then shipper will issue the Bill of landing ( B/L).  This document confirms, that goods had been taken on the ship and are ready for shipping.This is the proof for receivers and banks that the goods are ready for shipment.Similarly , if the goods are transported by the airplane, then there is airway bill. If goods are transported by Train, then there is railway bill . 7 . Certificate of Origin (C/O) This is very important doc what is required by countries customs. This doc can lower the import duties in some cases and without this sometimes exporting is impossible. This doc will prove, that the goods are from the country by which the C/O is issued. Also, the C/O contains the producer data. This is an official doc what can be issued only by country export and trading authorities. Usually, to issue the certificate of origin, this will cost some money . 8. CE certificate CE belongs to the export import procedures and documentation if you are exporting to Europe. With all the products, the CE certificate is required, in trading with Europe. The producer must have been certified by third country to have CE certificate. CE confirms, that the product meets the European Union safety standards .

17. 9. Material safety sheet (MSD) sometimes this document is required by importing country custom. This doc can be issued by the exporter and must confirm that product is not harmful to the humans and nature. This doc is usually required for liquids. 10 . Freight insurance certificate this doc is not mandatory in export import documentation. If the goods are precious then usually the buyer requires that exporter signs insurance-policy for the goods. The insurance certificate is issued by companies who provide insurances. Also the international shipping companies like DHL, DSV provide the insurances.

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