Agricultural trade

Registration and Processes of Import Business

Procedure to establish an Import business is similar to establishment of an export business, which is governed by Foreign Trade (Development & Regulation) Act 1992. Procedure for export varies from commodity to commodity. There are many factors regulating the duties and tariff of import of a commodity such as import policies, free trade agreements etc.
Procedure for establishment of a Import business

• Apply for the Exporter Importer Code Number (IEC) with the regional Licensing Authority The details of the procedure are available at http://www.ap.nic.in/jdgft/iec.htm

• Apply for Import license to the Director General of Foreign Trade

• Advance License - granted to merchant exporter or manufacturer exporter for the import of inputs required for the manufacture of goods without payment of basic customs duty. However, such inputs shall be subject to the payment of additional customs duty equal to the excise duty at the time of import.

Import Procedures and regulations based on Import Policy

All the import are to be carried out only on the basis of Import policies. The present import policy and procedures in respect of various commodities/category of importers, are available in Handbook of Import - Export Procedures issued by the Ministry of Commerce

Indias’ import policy has three objectives:

• to make necessary imported goods more easily available, including essential capital goods for modernizing and upgrading technology;

• to simplify and streamline procedures for import licensing;

• to promote efficient import substitution and self-reliance.

There are only 4 prohibited items: tallow fat, animal rennet, wild animals and unprocessed ivory. There is a restricted list, but most of the restrictions are on grounds of security, health and environmental protection or because the goods are reserved for production by small and tiny enterprises, which are home-based or village-based and which require low skills and employ a large number of people. But the policy of restricting import of consumer goods is changing.

The Indian government's clearly laid down policy is to achieve, through a series of progressive steps, the average tariff levels prevalent in the ASEAN region. The basic customs tariff rate now ranges from 0 to 40% plus additional duty of 2%; the average rate is about 30%.

Imports are allowed free of duty for export production under a duty exemption scheme. Input-output norms have been specified for more than 4200 items. These norms specify the amount of duty-free import of inputs allowed for specified products to be exported.

There are no quantitative restrictions on imports of capital goods and intermediates. Import of second-hand capital goods is permitted provided they have a minimum residual life of 5 years. There is an Export Promotion of Capital Goods (EPCG) Scheme under which exporters are allowed to import capital goods (including computer systems) at concessionary customs duty, subject to fulfillment of specified export obligations. Service industries enjoy the facility of zero import duty under the EPCG Scheme. Likewise, hospitals, air cargo, hotels and other tourism-related industries. Software units can use data communication network to export their products.

Categories of Import

All imports now fall into one of the following four categories:

• Freely importable items: Most capital goods fall into this category. Items in this category do not require import licences and may be freely imported by any individual or entity.

• Licensed imports: Certain items can be imported only with licences by actual users. The current "negative list" of items in this category includes several broad product groups that are classified as consumer goods; precious and semi-precious stones; products related to safety and security; seeds, plants and animals; some insecticides, pharmaceuticals and chemicals; some electronical items; several items reserved for production by the small-scale sector; and 17 miscellaneous or special-category items. In April 1993 the government ended licensing requirements for several agricultural items, including prawns, shrimp and poultry feed.

• Canalised items: Items under this category can be imported only by specified public-sector agencies. These include petroleum products (to be imported only by the Indian Oil Corporation); nitrogenous phosphatic, potassic and complex chemical fertilizers (by the Minerals and Metals Trading Corporation) vitamin- A drugs (by the State Trading Corporation); oils and seeds (by the State Trading Corporation and Hindustan Vegetable Oils); and cereals (by the Food Corporation of India).

• Prohibited items: Only four items-tallow fat, animal rennet, wild animals and unprocessed ivory-are completely banned from importation.

Import Restrictions

Licensing, Quotas And Prohibitions

Import approval is based on compliance with procedures whereby specific items may be imported by certain types of importers under certain types of licences. Importers are divided into three categories for the purpose of import licensing:

• Actual users: An actual user applies for and receives a licence to import any item or an allotment of an imported item as required for his own use, not for business or trade in that item.

• Registered exporters: defined as those who have a valid registration certificate issued by an export promotion council, commodity board or other registered authority designated by the Government for purposes of export-promotion.

The two types of actual user licence are:

• General currency area licences which are valid for imports from all countries, except those countries from which imports are prohibited;

• Specific licences which are valid for imports from a specific country or countries.

Aside from the types of licences listed, the Open General Licence is perhaps the most liberalized type of licence available for certain items and certain types of importers. Licences are valid for 24 months for capital goods and 18 months for raw materials components, consumable and spares, with the licence term renewable. Import licences may be obtained from the director general of foreign trade.
For further details visit www.commerce.nic.in

Inspection

Inspection Customs inspectors have considerable authority and discretion in matters of inspection and valuation of imported items. Any imported goods or parts of any shipment may be examined and tested. Customs officials may require the importer to furnish information or produce any contract, broker's note insurance policy, catalogue or other document to help ascertain the rate of duty or tariff valuation.

Customs officials have the authority to determine whether imports conform to the description in the import licence. Fines and penalties can be severe if imports are unauthorized or if imports contravene control regulations.

Packages and goods can be confiscated if they differ significantly from the description given in documents such as the bill of entry, or if contents of a shipment are wrongly described in terms of value, quality, quantity or if other goods are concealed or mixed with those described in the documents.

Packaging and Labelling

Packing and labelling requirements India's ports are mostly located in tropical region, which means special care is needed when packing goods for shipment. Damage may be caused by damp, heat, exposure to sun and rain, insects, fungus and moulds. Therefore,waterproofing of shipments is necessary and use of cases lined with zinc ortin is recommended.

Special attention is needed in packing imported machinery, which may be transported through tropical areas as well as desert areas. Caution is needed when packing to protect against high humidity, dust and sand. There are origin requirements for the labelling of imported merchandise. Labels must indicate the country or place where the goods were produced, or the name and address of the manufacturer.

Labelling should be in English, and words indicating country of origin should be as large and as prominent as any other English wording on the package or label. This requirement applies to every article, label or wrapper that has any words in English. There are standards in effect for marking and labelling related to weights and measures for packaged goods imported into India and intended for retail sale.

Tariff Schedule

• Classification: The Indian classification on tariff items follows the UN Harmonized Commodity Description and Coding System (Harmonized System or HS). India has fully adopted HS through the Customs Tariff Amendment Act, 1985. There has been some modification of HS as appropriate to the Indian environment concerning excise taxes.

• Customs duties: The Customs Act governs the levying of tariffs on imports and exports and frames the rules for customs valuation. The Customs Tariff Act specifies the tariffs rates and provides for the imposition of anti-dumping and countervailing duties. With some exceptions, most tariffs are ad valorem. Tariff rates, excise duties, regulatory duties, countervailing duties and the like are revised in each annual budget. The April 1993 trade policy merged the auxiliary duty with the present duty. Total duties on imports now consist of basic duty (ranging from zero to 65%) plus additional or countervailing duties (equal to excise duties),. On manufactured "luxury" items, total import taxes can amount to 150%.

• As import duties are quite product specific and may be altered in mid-year, companies are advised to verify the relevant rates for their products. Rates are published by the Central Board of Customs and Excise within the Ministry of Finance's Department of Revenue. They may be obtained from the public relations officer.

• Duty Exemption Scheme: Indian import policy includes a duty exemption scheme for registered exporters so that they may import the inputs required for export production at international prices and free from duty in order to make their exports more competitive. Imported items which are exempt from customs duty are raw materials, components and consumables.

• The customs schedule makes multiple provisions for tariff concessions and exemptions. The government has wide discretionary power to declare full or partial duty exemptions "in the public interest" and to specify conditions such as end-use provisions. Almost half of India's total inputs enter under concessional tariffs, though the use of exemptions is falling in tandem with the tariff-reduction programme.

For more about import regulations visit http://www.exportersindia.net/Import%20Procedures.htm

or

http://www.indiandata.com/import_procedures.html

Last Updated on:01-01-2008