Procedure and Steps

Involved in Import &

Export of Goods
 Import Procedure

 Import trade refers to the purchase of goods from a foreign country. The procedure for
import trade differs from country to country depending upon the import policy, statutory
requirements and customs policies of different countries. In almost all countries of the
world import trade is controlled by the government. The objectives of these controls are
proper use of foreign exchange restrictions, protection of indigenous industries etc. The
imports of goods have to follow a procedure. This procedure involves a number of steps
as below :
Steps involved in the Import Procedure

1. Trade Enquiry
2. Procurement of Import License
3. Obtaining Foreign Exchange
4. Placing the Indent or Order
5. Dispatching a Letter of Credit
6. Obtaining Necessary Documents
7. Customs Formalities and Clearing of Goods
8. Making the Payment
9. Closing the Transactions
 Trade Enquiry :An enquiry is a written request from the intending buyer or his agent for
information regarding the price and the terms on which the exporter will be able to
supply goods. in the enquiry all the details such as the goods required, their description,
catalogue number or grade, size, weight and the quantity required. Similarly, the time
and method of delivery, method of packing, terms and conditions in regard to payment
should also be indicated. In reply to this enquiry, the importer will receive a quotation from
the exporter.

 Procurement of Import License : The import trade in India is controlled under the Imports
and Exports (Control) Act, 1947. An import license may be either general license or
specific license. Under a general license goods can be imported from any country,
whereas a specific or individual license authorizes to import only from specific countries.
The Government of India declares its import policy in the Import Trade Control Policy Book
called the Red Book. It describes whether he can import the goods he wants or not, and
how much of a certain class of goods he can import.
 Obtaining Foreign Exchange: After obtaining the license, the importer has to make
arrangement for obtaining necessary foreign exchange since the importer has to make
payment for the imports in the currency of the exporting country.
In India, the Exchange Control Department of the Reserve Bank of India deals with the
foreign exchange. For this the importer has to submit an application in the prescribed
form along-with the import license to any exchange bank as per the provisions of
Exchange Control Act.

 Placing the Indent or Order: Order is known as Indent. An indent is an order placed by an
importer with an exporter for the supply of certain goods. it contains the instructions from
the importer as to the quantity and quality of goods required, method of forwarding
them, nature of packing, mode of settling payment and the price etc. An indent is usually
prepared in duplicate or triplicate. The indent may be of several types like open indent,
closed indent and Confirmatory indent.
 > In open indent, all the necessary particulars of goods, price, etc. are not mentioned in
the indent, the exporter has the discretion to complete the formalities, at his own end.
> On the other hand, if full particulars of goods, the price, the brand, packing, shipping,
insurance etc. are mentioned clearly, it is called a closed indent.
> confirmatory indent is one where an order is placed subject to the confirmation by the
importer’s agent.

 Dispatching a Letter of Credit: A letter of credit, popularly known as ‘L/C or ‘L.C is an

undertaking by its issuer (usually importer’s bank) that the bills of exchange drawn by the
foreign dealer, on the importer will be honored on presentation up to a specified amount.
The exporter wants to be sure that there is no risk of non-payment. Usually, for this purpose
he asks the importers to send a letter of credit to him.
 Obtaining Necessary Documents: On receipt of the letter of credit, the exporter arranges
for the shipment of goods and sends Advice Note to the importer immediately after the
shipment of goods. An Advice Note is a document sent to a purchaser of goods to inform
him that goods have been dispatched.
The shipping documents such as the bill of lading, invoice, insurance policy, certificate of
origin, consumer invoice etc., are also attached to the bill of exchange. Such bill of
exchange with all these attached documents is called Documentary Bill. Documentary
bill of exchange is forwarded to the importer through a foreign exchange bank which has
a branch or an agent in the importer’s country for collecting the payment of the bill.

 Customs Formalities and Clearing of Goods: After receiving the documents of title of the
goods, the importer’s only concern is to take delivery of the goods, when the ship arrives
at the port and to bring them to his own place of business. The importer has to comply
with many formalities for taking delivery of goods. Unless the following mentioned
formalities are complied with, the goods lie in the custody of the Custom House.
 Making the Payment: The mode and time of making payment is determined according to
the terms and conditions as agreed to earlier between the importer and the exporter. the
documents of title of the goods are released to the importer on his acceptance of the
bill. The bill is retained by the banker till the date of maturity. Usually, 30 to 90 days are
allowed to the importer for making the payment of such bills.

 Closing the Transactions: The last step in the import trade procedure is closing the
transaction. If the goods are to the satisfaction of the importer, the transaction is closed.
But if he is not satisfied with the quality of goods or if there is any shortage, he will write to
the exporter and settle the matter. In case the goods have been damaged in transit, he
will claim compensation from the insurance company. The insurance company will pay
him the compensation under an advice to the exporter.