Businesses planning to set up a trading company, or start importing or exporting from India,

must understand the stages and stakeholders involved in the process, as well as the regulatory
framework and documentation required.

In India, the imports and exports are regulated by the Foreign Trade (Development and
Regulation) Act, 1992, which empowers the federal government to make provisions for
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.

Import procedures

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, and getting customs clearance as well as paying taxes before the release of
goods.

Below, we outline the steps involved in importing of goods.

1. Obtain IEC

Prior to importing from India, every business must first obtain an Import Export Code (IEC)
number from the regional joint DGFT. The IEC is a pan-based registration of traders with
lifetime validity and is required for clearing customs, sending shipments, as well as for sending
or receiving money in foreign currency.

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

2. Ensure legal compliance under different trade laws

Once an IEC is allotted, businesses 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 – restricted, canalized, or prohibited, as declared and notified by the
government – require additional permission and licenses from the DGFT and the federal
government.

3. Procure import licenses

To determine whether a license is needed to import a particular commercial product or service,

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, and 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 Bill of Entry along with 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 particulars required for processing of 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, among others.

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

5. Determine import duty rate for 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).
Export procedures

Just as for imports, a company planning to engage in export activities is required to obtain an
IEC number from the regional joint DGFT. After obtaining the IEC, the exporter needs to ensure
that all the legal compliances are met under different trade laws.

Further, the exporter must check if an export license is required, and accordingly apply for the
license to the DGFT.

An exporter is also required to register with the Indian Chamber of Commerce (ICC), which
issues the Non-Preferential Certificates of Origin certifying that the exported goods are
originated in India.

Import and export documents

Businesses are required to submit a set of documents for carrying out export and import activities
in India.

These include commercial documents – the ones exchanged between the buyer and seller, and
regulatory documents that deal with various regulatory authorities such as the customs, excise,
licensing authorities, as well as the export promotion bodies that help avail export import
benefits.

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

 Bill of lading or airway bill;

Additional documents like certificate of origin and inspection certificate may be required as per
the case.

The important regulatory documents include:

 GST return forms (GSTR 1 and GSTR 2);

The RCMC helps exporters and importers avail benefit or concession under the Foreign Trade
Policy 2015-20.