How to Import -Introduction

How to Start Import

[As governed by the Foreign Trade (Development & Regulation) Act, 1!"
#ith the globalisation o$ %ndian economy and conse&uent upon com$ortable balance o$ payment
position 'overnment o$ %ndia has liberalised the %mport (olicy and practically all )ontrols on
imports have been li$ted*%mports may be made $reely e+cept to the e+tent they are regulated by
the provisions o$ %mport (olicy or by any other la, $or the time being in $orce*
Pricinpal Law & Import Export Policy
Principal Law
%mports in to %ndia are governed by Foreign Trade (Development & Regulation) Act 1!* -nder
this Act, imports o$ all goods is Free e+cept $or the items regulated by the policy or any other la,
$or the time being in $orce*%n e+ercise o$ the po,ers con$erred by the Foreign Trade
(Development & Regulation) Act 1! the 'overnment has issued the $ollo,ing Rules & .rder/
Foreign Trade(Regulation)Rules, 10, ,hich inter alia, provide $or grant o$ special licence,
application $or grant o$ licence, $ee, conditions $or licences, re$usal o$ licence, amendment o$
licence, suspension o$ a licence, cancellation o$ licence, declaration as to the value and &uality o$
imported goods, declaration as to the %mporter1 2+porter )ode number, utilisation o$ imported
goods, provisions regarding ma3ing, signing o$ any declaration4statement or documents, po,er
to enter the premises and inspect, search and sei5ure o$ goods, documents, things and
conveyance, settlement, con$iscation and redemption and con$iscation o$ conveyance*
Foreign Trade (2+emption $rom Application o$ Rules in )ertain )ases) .rder 10
6oti$ications under Foreign Trade (Development & Regulation) Act 1!*
Import Export Policy
The present import policy and procedures in respect o$ various commodities4category o$
importers, are, inter alia, contained in the $ollo,ing publications issued by the 7inistry o$
)ommerce and revised $rom time to time/
%mport 1 2+port (olicy, 181!99! as modi$ied upto 01*90*1
:andboo3 o$ %mport 1 2+port (rocedures(;olume 1), 181!99! as modi$ied upto 01*90*!999*
:andboo3 o$ %mport 1 2+port (rocedures/ (;olume !) Duty 2+emption <cheme/
%nput 1 .utput and ;alue Addition 6orms, 181!99!*
%T)(:<) )lassi$ication o$ %mport and 2+port %tems*
Notifications and Circulars
The %mport 1 2+port (olicy and (rocedure boo3s issued by the 'overnment are
amended4clari$ied4 e+plained by the 7inistry o$ )ommerce $rom time to time* The types o$
6oti$ications4)lari$ications4%nstructions issued by the 7inistry $or this purpose are/
(ublic 6otices*
6oti$ications
(olicy )irculars
Select the commodity/Product you wish to import
=e a,are o$ the import potential and the commercial viability o$ the commodity4product*
)hec3 ,hether the items o$ your interest $all in the Restricted list o$ %T)(:<) )lassi$ications o$
2+ports & %mports items*
(rohibited items are not permitted to be imported at all* >ist o$ (rohibited items o$ import are
detailed belo,/
Tallo,, Fat or .ils rendered, unrendered or other,ise o$ any animal origin, animal rennet and
,ild animals including their parts and products and ivory any part and products, including ivory*
For import o$ items appearing in Restricted list you need secure import licence* Third category o$
items comes under the )analised list o$ items* %mport o$ items included in )analised list are
permitted to be imported through )analising Agencies*
Thus items not appearing in (rohibited list, Restricted list and or in )analised list can be
imported Freely ,ithout any import licence* A large number o$ )onsumer goods are $reely
importable ,ithout licence*
!e"istration with !e"ional Licencin" #uthority and o$tainin" IEC Code
Registration with Regional Licensing Authority:
Registration ,ith Regional >icensing Authority is a pre1re&uisite $or import o$ goods* The
)ustoms ,ill not allo, clearance o$ goods unless/
The importer has obtained %2 )ode 6umber $rom Regional >icensing Authority* :o,ever, no
such registration is necessary $or persons importing goods $rom4 to 6epal provided ;alue o$ a
single )onsignment does not e+ceed Rs* !?9994@
%$tainin" IEC Code Num$er
An application $or grant o$ %2) )ode 6umber should be made in the prescribed pro$orma given
at Appendi+ 0*%* The application duly signed by the applicant should be supported by the
$ollo,ing documents/
=an3 Receipt (in duplicate)4demand dra$t $or payment o$ the $ee o$ Rs*199941 )erti$icate $rom
the =an3er o$ the applicant $irm as per Anne+ure1 to the $orm* T,o copies o$ passport si5e
photographs o$ the applicant duly attested by the ban3er o$ the applicant*
A copy o$ (ermanent Account 6umber issued by %ncome Ta+ Authorities, i$ (A6 has not been
allotted, a copy o$ the letter o$ legal authority may be $urnished* %$ there is any non1resident
interest in the $irm and 6R% investment is to be made ,ith repatriable bene$its, $ull particulars
thereo$ along ,ith a photocopy o$ R=%As approval* %$ there is 6R% investment ,ithout repatriation
bene$it, a simple declaration indicating ,hether it is held ,ith the general4speci$ic permission o$
the R=% on the letter head o$ the $irm should be $urnished* %n case o$ speci$ic approval, a copy
may also be $urnished*
Declaration by the applicant that the proprietors4partners4directors o$ the applicant
$irm4company, as the case may be, are not associated as proprietor4partners4directors ,ith any
other $irm4company the %2) 6o* is allotted ,ith a condition that be can e+port only ,ith the
prior approval o$ the R=%*
Profile of the exporter/importer in a "i&en format at #ppendix '(II(
The Registered .$$ice or :. or =ranch .$$ice (duly authori5ed by the :. in this behal$) should
apply $or allotment o$ %2) 6o* :o,ever, only one %2) no* is allotted to a company and the same
is valid $or all its branches4o$$ices4units* The applilcation $or grant o$ %2) 6o* should be made to
the Regional >icensing Authority concerned as speci$ied in Appendi+ 0*%%%*
The application $ee shall be deposited by ,ay o$ deposit in an authori5ed branch o$ )entral =an3
o$ %ndia indicating the head o$ Account 1B?0 Foreign Trade and 2+port (romotion 7inor :ead
19!* %mport >icence Application Fee*
The %2) 6o* is li3ely to be granted ,ithin 0 days o$ the receipt o$ the complete application and
re&uisite documents*
How to fill up IEC application
Application $orm should be made in the prescribed $orm in duplicate along ,ith the
above enclosures, mentioned against serial 1 to C o$ above paragraph, also in duplicate*
The $orm should be neatly typed4hand,ritten in bold capital letters only*
2ach copy o$ the application $orm should be signed in in3 by the authorised person*
%tems o$ in$ormation relevant to applicant should only be $illed and remaining items may
be mar3ed not applicable*
7odi$ication o$ particulars o$ the applicant should also be $urnished on this $orm by
$illing the relevant items*
:o,ever, in case an %2 )ode holder no longer ,ishes to operate under the allotted code number,
the matter should be brought under the notice o$ the Regional >icensing Authority to ma3e the
)ode number inoperative*
Import Policy
For items not mentioned as (rohibited, Restricted or )analised >ist $or import in %T)(:<)
)lassi$ication o$ 2+port and %mport itemsD import o$ such items are $reely permitted* There is no
need to obtain any license or permission $or importing such goods* The %T)(:<) )lassi$ication
o$ 2+port and %mport items contains chapters and in each chapter there are column heading
covering 2+im )ode, items description, policy and nature or restriction* The in$ormation related
to import policy $or any item can be obtained $rom our site under )ustoms Duty )alculator
<chedule*
Procedure to $e followed for "rant of import license
An application $or grant o$ an import licence or ))( $or import o$ the items mentioned as
restricted $or import in %T)(:<) )lassi$ication o$ 2+port and %mport items may be made to the
regional licensing authority concerned*
Licence #pplication )ees
Fees for Licence Application:
2very application $or import licence or ))( should be accompanied by ! copies o$ a ban3
receipt $rom the )entral =an3 o$ %ndia or a =an3 Dra$t $rom any =an3 indicating the deposit in
accordance ,ith the prescribed scale o$ $ees*
Rs* !99 ,here the value o$ goods speci$ied does not e+ceed Rs* ?9,999*
Rs* ! per thousand or part thereo$ subEect to a minimum o$ Rs* !99 and a ma+imum o$ Rs*1 la3h
?9 thousand, ,here the value o$ goods e+ceeds Rs* ?9,999*
Rs* !99 ,here Application is $iled be <<% units ,here the )%F value o$ goods speci$ied in the
application does e+ceed Rs* ! la3h*
Rs* !99 ,here application is $ro grant o$ duplicate licence*
*he application fee shall $e deposited either
=y ,ay o$ deposit in an authori5ed branch o$ )entral =an3 o$ %ndia indicating the :ead o$
Accounts 1B?0 Foreign Trade and 2+port (romotion 1 7inor :ead 19!, %mport >icence
Application Fee* The =an3 receipt must sho, the name o$ the department vi5* FDirector 'eneral
o$ Foreign TradeF* The ban3 receipt should be dra,n in $avour o$ (ay & Accounts .$$icer
concerned* <uch $ees can also be deposited ,ith %ndian 7issions abroad*
.r, )rossed DD on a scheduled ban3 $or the re&uisite amount should be made in $avour o$ the
concerned licensing authority*
+alidity of Licence
=esides import licence $or import o$ restricted items there are other variety o$ licences and such
licences have di$$erent period o$ validity*
2+port (romotion )apital 'oods >icence validity !B months
)ustoms )learance (ermit F 1! months
D2(= F 1! months
Advance >icense4<pecial %mprest >icence
For (roEect4Turn3ey (roEect F1C months or co1terminus ,ith the contracted duration o$ the
(roEect
For the cases ,here the license e+pires be$ore the last day o$ the month, the license shall be
deemed to be valid until the last day o$ that month*
!e&alidation of License >icense revalidation can be done on merits but not beyond 1! months
by the concerned licensing authority $or a period o$ si+ months at a time rec3oned $rom the date
o$ e+piry o$ the validity period*
Last date for fillin" applications the last date $or receipt o$ applications $or grant o$ licenses is
!Cth February o$ the licensing year unless other,ise speci$ied*
Conditions of Licence
Licensin" conditionalities *he license for import is ta,en into consideration pro&ided
the goods covered by the license shall not be disposed o$ e+cept in accordance ,ith the
provisions o$ the 2G%7 (olicy, 181!99! or in the manner speci$ied by the licensing
authority in the licenseD
the applicant $or a license shall e+ecute a bond $or complying ,ith the terms and
conditions o$ the license*
It shall $e deemed to $e a condition of e&ery license for import that -
no person shall trans$er or ac&uire by trans$er any license issued by the licensing authority e+cept
in accordance ,ith the provisions o$ the (olicyD
the goods $or the import o$ ,hich a license is granted shall be the property o$ the licensee at the
time o$ import o$ ,hich a license is granted shall be the property o$ the licensee at the time o$
import and up to the time o$ clearance through the )ustomsD
the goods $or the import o$ ,hich a licensee is granted shall be ne, goods, unless other,ise
stated in the licenseD
the goods covered by the license $or import shall not be e+ported ,ithout the ,ritten permission
o$ the D'FTD
-isposal period for import application (rovided the application is complete in all respects
along ,ith prescribed documents, the applicant1importer can e+pect the disposal in/
%2) 6o* 1 0 ,or3ing days
Duty $ree license ,here input1output norms are noti$ied 1 ? ,or3ing days
Duty $ree license ,here input1output norms are noti$ied but cases are to be placed be$ore A>)
11? ,or3ing days
Duty $ree license ,here input1output norms are not noti$ied, 2()' licenses4e+port
licenses4e+port
licenses4speci$ic import licenses 1 1? ,or3ing days
Revalidation o$ license and e+tension o$ e+port obligation period by R>A 1 ? ,or3ing days
Acceptance o$ =an3 'uarantee4>egal underta3ing 1 0 ,or3ing days
Redemption o$ =an3 'uarantee4>egal underta3ing42ndorsement o$ Trans$erability 1 19 ,or3ing
days
%ssuance4rene,al o$ 2+port :ouse4Trading :ouse4<tar Trading :ouse4<uper <tar Trading :ouse
1 1? ,or3ing days
Amendment o$ any category o$ license 1 ? ,or3ing days <%> 1 8 ,or3ing days
Fi+ation o$ <tandard input1output norms 1 B? ,or3ing days
D2(= 1 ? ,or3ing days
All licenses $alling under )hapter C 1 ? ,or3ing days
7iscellaneous 1 1? ,or3ing days
Fi+ation o$ deemed e+ports dra,bac3 rate 1 B? ,or3ing days
6*=* This apart, a F )ounter AssistanceF service is provided in all the o$$ices o$ the D'FT $or
speedy disposal o$ applications* A $oreign trade development o$$icer (FTD.), in charge o$ the
counter in each o$$ice* .n submission o$ the application at the counter the applicant ,ill be
handed over a to3en and advised to return the same day ,hen he ,ill be in$ormed ,hether his
application has been $ound complete and admitted $or $urther processing by the o$$ice or i$ there
are any de$iciency or lacunae* %$ de$iciency is noticed the same is sent bac3 to the applicant*
)ounter Assistance may also be availed o$, $or amendments o$ minor nature4en&uiries*
Applications in such cases ,ill be received in the licensing o$$ices at the counter*
Importer.s own Identity Card An application $or issuance o$ an %dentity )ard may be made in
the prescribed $orm* %n case o$ loss o$ an %dentity )ard, a duplicate card is issued*
Imports under Special Scheme for Exporters
The Govt. of India has framed the certain schemes to promote exports.
Export Promotion Capital /oods Schemes
)apital goods including Eigs, $i+tures, dies and moulds may be imnported at a concessional rate
o$ customs duty as per table given belo,* <ubEect to an e+port obligation to be $ul$illed over a
period o$ time* %n addition spares up to !9 per cent o$ the cost insurance and $reight ()%F) value
o$ the capital goods may also be imported under the scheme*
-nder this scheme )ustoms duty is ?H i$ the e+port obligation is ? times the )%F value o$ the
capital goods or B times the )%F value o$ capital goods on 62F basis* The period o$ $ul$illment
o$ the e+port obligation is C years rec3oned $rom the date o$ issuance o$ licence*
(eriod $rom the date o$ issue o$ licence (roportion o$ total e+port obligation
=loc3 o$ 1st and !nd year nil
=loc3 o$ 0rd and Bth year 1?H
=loc3 o$ ?th and Ith year 0?H
=loc3 o$ 8th and Cth year ?9H
The licence holder under 2()' scheme shall $ul$ill the e+port obligation over the speci$ied
period in the $ollo,ing proportions/
An application $or grant o$ license under this scheme should be made to the licensing authority
concerned in the $orm given in Appendi+ 19 A o$ the :andboo3 o$ (rocedures, 181!99! along
,ith documents prescribed therein* =e$ore clearance o$ goods through customs, the importer has
to e+ecute a bond supported by a ban3 guarantee ,ith the )ustoms Authority in the prescribed
manner* The license holder ,ill also have to submit progress report o$ the e+port4supplies made
and services provided, duly certi$ied by a )harted Accountant4)ost and #or3s Accountant to the
>icensing Authority* The report should be submitted in the prescribed $orm 19) o$ the :andboo3
o$ (rocedures, 181!99!* For )ustoms duty e+emption e+emption in respect o$ imports under
2()' scheme, the 7inistry o$ Finance has issued 6oti$ication 6o* !C481)us* & !481)us*,
both dated 1st April, 18*
-uty Exemption Scheme
According to the 2G%7 (olicy 181!999, duty $ree import o$ inputs is permitted under the
$ollo,ing schemes/
Advance >icense 1 granted to merchant e+porter or manu$acturer e+porter $or the import o$
inputs re&uired $or the manu$acture o$ goods ,ithout payment o$ basic customs duty* :o,ever,
such inputs shall be subEect to the payment o$ additional customs duty e&ual to the e+cise duty at
the time o$ import* Re$erence/ 6oti$ication 6o* 09481)ustoms both dated 1*B*8*
Annual Advance >icense 1 7anu$acturer e+porter ,ith e+port per$ormance o$ Rs* 1 crore in the
preceding year and registered ,ith e+cise authorities, e+cept $or products ,hich are not e+cisable
$or ,hich no such registration is re&uired, shall be entitled $or Annual Advance >icense* 2+port
:ouse, Trading :ouse, <tar Trading :ouses and <uper <tar Trading :ouses :olding the
certi$icate as merchant e+porter ,here they agree to the endorsement o$ the name(s) o$ the
supporting manu$acturer on the relevant annual advance license shall also be entitled $or the
annual advance license*
This license and4or material imported thereunder shall not be trans$erable even a$ter completion
o$ e+port obligation* <uch annual advance license shall be issued ,ith positive value addition
,ithout stipulation o$ minimum value addition* The entitlement under this scheme shall be up to
1!?H o$ the average F.= value o$ e+port in the preceding licensing year* %mports against this is
e+empted $rom payment o$ Additional customs duty, <pecial Additional Duty, Anti Dumping
Duty, <a$eguard duty, i$ any, in addition to =asic customs duty and surcharge thereon*
Advance %ntermediate >icense/ This license is granted to a manu$acturer e+porter $or the import
o$ inputs re&uired in the manu$acture o$ goods to be supplied to the ultimate e+porter holding an
Advance >icense4<pecial %mprest >icense*
<pecial %mprest >icense/ This license is granted $or the duty $ree import o$ inputs re&uired in the
manu$acture o$ goods to be supplied to the ultimate e+porter holding an Advance
>icense4<pecial %mprest >icense* <uch <pecial %mprest >icense is granted $or the Duty Free
import o$ inputs re&uired in the manu$acture o$ goods to be supplied to the 2o-s4units in
2(Js4<T(42:T(, holders o$ license under the 2()' scheme, proEects $inanced by
multilateral4bilateral agencies4$unds as noti$ied by the Dept* o$ 2conomic A$$airs, 7oF, Fertili5er
(lants i$ the supply is made under the procedure o$ %nternational )ompetitive =idding, supply o$
goods to re$ineries and proeEcts4purposes $or ,hich 7pF permits import o$ such goods on 5ero
customs duty*
#d&ance !elease %rder
A duty $ree license holder e+cept Advance %ntermediate >icense :older intending to source the
inputs $rom indigenous sources4canalising agencies42.-s42(J42:T(4<T( units in lieu o$ direct
imports has the option to source them against Advance Release .rder denominated in $oreign
e+change4%ndian rupees* %n such cases, the license is invalidated $or direct import and permission
in the $orm o$ AR. is issued ,hich ,ill entitle the supplier to the bene$its o$ deemed e+ports*
=ac3 to bac3 inland letter o$ credit/ This is an alternative to AR.* For this the duty $ree license
holder intending to avail such $acility may approach a ban3 $or opening an inland >4) in $avour
o$ an indigenous supplier* =e$ore this the ban3 ,ill ensure that necessary ban3 guarantee or
>etter o$ -nderta3ing has been e+ecuted by the license holder and endorsement to this e$$ect has
been made on the >icense* The indigenous supplier may supply the goods on the strength o$ >*)*
opened in his $avour * For the purpose o$ claiming Deemed 2+port bene$its, an indigenous
supplier shall produce the copy o$ the >4) together ,ith a photocopy o$ the Duty Free >icense,
duly endorsed by the ban3 concerned and the said documents shall $or all purposes be deemed to
be an AR.*
Duty 2ntitlement (ass =oo3 scheme/ %t aims at neutralising the incidence o$ customs duty and
surcharge thereon on the import content o$ the e+port product* This neutralisation is provided by
,ay o$ grant o$ duty credit on the deemed import content in the e+port product as per <tandard
input output norms and considering the value addition achieved* This scheme is allo,ed to be
operated on pre and post e+port basis by a manu$acturer e+porter and merchant e+porter* The
scheme allo,s e+porter to claim credit o$ customs duty at a speci$ied percentage o$ the $*o*b*
value o$ the e+ports made in $reely convertible currency* D'FT issues public notice $eaturing
eligible products along ,ith the credit rates under this scheme* Although items outside the
restricted list can be e+ported ,ithout )ustoms duty, D2(= holder may pay additional customs
duty in cash, i$ any* (vide 7oF )ustoms 6oti$ication 6o* 0B48 1 )us* Dated 8*B*18 and
)ircular 6o* 19481)us* Dt*18*B*18)* Third party e+ports are also permissible $or grant o$
credit under this scheme and D2(= is valid $or 1! months $rom the date o$ issue*
<pecial %mport >icense(<%>)/ issued to 2+port4Trading4<tar Trading4<uper <tar Trading housesD
7anu$acturers4processors ,ith the &uality certi$ication $rom %<.,:A))(,#:.1'7( or <<%
)77 level ! and above certi$icationD 2.-s42(Js D Deemed e+portersD e+porters o$ telecom and
electronic e&uipmentsD small scale e+porters(certi$ied)D service providers and other e+porters*
This provision has been ,ithdra,n $rom 01*90*!999* 6o <%> licenses ,ill be issued $or e+ports
made a$ter 01*90*!999*
Diamond, 'em & Ke,ellery 2+port (romotion <cheme/ 2+porters o$ gem and Ee,ellery are
eligible to import their inputs by obtaining Rep* >icense and diamond imprest license $rom the
licensing authority* 2+porters o$ gold4silver4platinum Ee,ellery and articles thereo$ may import
their essential inputs e*g* precious metals and stones in accordance ,ith the procedure speci$ied
in this regard*
199H 2.-42(J4FTJ <cheme 1This means an industrial unit o$$ering its entire production,
e+cluding reEects and items other,ise speci$ically permitted to be supplied to the domestic tari$$
area(DTA), $or e+ports* <uch units may be set up under the 2.-42(J scheme* #hile 2.-s can
be set up any,here in %ndia subEect to certain locational conditions, units in 2(J4FTJ can be set
up in speci$ic areas separated $rom the DTA by physical barriers*
Hints/Su""estion for finalisation of import order/contract
(roper selection o$ the )ommodity ,ill depend up on ;arious )ommercial and legal
)onsiderations including the regulations )ontained in the )urrent %mport 2+port (olicy,
(rocedure, ,hile selecting the product, particularly $or )ommercial purposes one should 3no,
the e+port regulations in the e+porting )ountries*
Selectin" the %&erseas Supplier
%mports can be made $rom any country o$ the ,orld e+cept FiEi and %ra&* The in$ormation
regarding overseas supplier can generally be obtained $rom the $ollo,ing sources/
Trade Directories and Lello, (ages, li3e <ingapore yello, pages, Kapan yello, pages, -<A
yello, pages etc* available $rom leading boo3sellers in %ndia including* )onsulate 'enerals and
Trade Representatives o$ various countries in %ndia and abroad*
Friends and relatives in $oreign countries* %nternational Trade Fairs and 2+hibitions $or ,hich
you may contact/
%nternational Trade (romotion .rganisation(%T(.),
(ragati 7aidan, 6e, Delhi*
)hamber o$ )ommerce*
Directorate o$ %ndustries, etc*
%ndenting Agents o$ Foreign <uppliers*
The advertisement in $oreign papers may also be use$ul*
<imilar in$ormations are also available in our %mport12+port database*
Capa$ility and Creditworthiness of %&erseas Supplier
<uccess$ul completion o$ an import transaction ,ill mainly depend upon the capability o$ the
overseas supplier to $ul$il his contract*The credit ,orthiness o$ the overseas supplier, his capacity
to $ul$il that contract, etc* should, there$ore, be properly veri$ied be$oreentering into a contract
,ith him* )on$idential reports about the supplier may be obtained through the ban3s and %ndian
embassies abroad* Reputed overseas suppliers normally have their %ndenting Agents ,ith o$$ices
in %ndia and contract can also be $inalised through them $or smoother operations* The importer
can also ta3e the assistance o$ )redit %n$ormation Agencies $or speci$ic commercial in$ormation
on overseas suppliers* They may also contact Trade %n$ormation )entres o$ the country
concerned*
)orrect address o$ these agencies can be obtained $rom the overseas countries trade
representatives posted in %ndia*
!ole of %&erseas Suppliers. #"ents in India
<ome overseas suppliers have appointed their agents in %ndia* These agents procure orders $rom
the %ndian parties and arrange $or the supply o$ goods $rom their principal abroad* %t is advisable
to import through such agents as they can be readily contacted in case o$ any di$$iculty ,ith
regard to &uality o$ goods, payment and documentation, etc*
)inalisin" the *erms of Import
This is an important subEect and should be handled ,ith e+treme care and caution* %t is advisable
that be$ore $inalising the terms o$ %mport .rder, you should call $or the samples or catalogue and
other relevant literatures and the speci$ication o$ the items to be imported* %mport o$ samples o$
goods is e+empt $rom import duties under A'enevaA )onvention o$ 8th 6ovember, 1?!* <amples
are subEect to re1e+port and other conditions as speci$ied in the 'eneva )onvention* =esides,
vide )ustoms 6oti$ication 6o* 1?B4B dated 10*98*1B, commercial samples brought into %ndia
as personal baggage by bona $ide commercial travellers and businessmen or imported into %nto
%ndia by post or by air are e+empt $rom the customs duty* <imilarly, vide 6oti$ication 6o* 1?B4B
dated 10*98*1B, prototype o$ engineering goods ,hen imported into %ndia as samples $or
e+ecuting or $or use in connection ,ith1e+port orders are e+empt $rom customs duty* >i3e,ise,
the )entral 'overnment has e+empted bona $ide commercial samples and prototype o$
engineering goods ,hen imported into %ndia by post or by air or by courier service by
manu$acturers o$ e+port goods*
.nce you are satis$ied ,ith the samples and the credit,orthiness o$ the overseas supplier, you
can proceed to $inalise the term o$ the contract to be entered into* For this purpose, the %mport
)ontract should be care$ully and comprehensively dra$ted incorporating therein precise terms, all
relevant conditions o$ the trade deal* There should not be any ambiguity regarding the e+act
speci$ications o$ the goods and terms o$ the purchase including import price, mode o$ payment,
type o$ pac3aging, port o$ shipment, delivery schedule, etc* The di$$erent aspects o$ an import
contract are enumerated as under some o$ ,hich may be relevant and other may not be/
(roduct, <tandards and speci$ications*
Muantity*
%nspection*
Total value o$ the )ontract*
Terms o$ Delivery*
Ta+es, Duties and )harges payable at 2+porting )ountry and payable in %ndia on importation*
(eriod o$ Delivery4<hipment*
(ac3ing, >abelling and 7ar3ing*
Terms o$ (ayment1Amount, 7ode & )urrency*
Discounts and )ommissions*
>icenses and (ermits*
%nsurance*
Documentary Re&uirements*
'uarantee*
Force 7aEeure or 2+cuse $or 6on1per$ormance o$ )ontract*
Remedies*
Arbitration*
0ode of Pricin" and INC% *E!0S
#hile $inalising the terms o$ import contract, the %mporter, should, inter alia, be $ully conversant
,ith the mode o$ pricing and the manner o$ payment $or the imports* As regards mode o$ pricing,
the overseas supplier normally &uote the terms prevailing in international trade*
The importer $or his bene$its should 3no, the meaning o$ the technical terminology* To avoid
ambiguity in interpretation o$ such terms, %nternational )hamber o$ )ommerce, (aris, :as give
detailed de$inition o$ a $e, standard terms popularly 3no,n as A%6). T2R7<A* These terms
have almost universal acceptance and are e+plained belo,/
Ex-wor,
A2+1,or3A means that the sellerAs responsibility is to ma3e the goods available to the buyer at
,or3s or $actory* The $ull cost and ris3 involved in bringing the goods $rom this place to the
desired destination ,ill be borne by the buyer* This terms thus represents the minimum
obligation $or the seller* %t is mostly used $or sale o$ plantation commodities such as tea, co$$ee
and cocoa*
)ree on !ail 1)%!2/)ree on *ruc, 1)%*2
These terms are used ,hen the goods are to be carried by rail, but they are also used $or road
transport* The sellerAs obligations are $ul$illed ,hen the goods are delivered to the carrier*
)ree #lon"side Ship 1)#S2
.nce the goods have been placed alongside the ship, the sellerAs obligations are $ul$illed and the
buyer noti$ied* The buyer has to contract ,ith the sea carrier $or the carriage o$ the goods to the
destination and pay the $reight* The buyer has to bear all costs and ris3s o$ loss or damage to the
goods herea$ter*
)ree on 3oard1)%32
The sellersAs responsibility ends the moment the contracted goods are placed on board the ship,
$ree o$ cost to the buyer at a port o$ shipment named in the sales contract* A.n boardA means that a
Received $or <hipmentA =ill o$ >ading is not su$$icient* <uch =4> i$ issued must be converted
into A<hipped on =oard =4>A by using the stamp A<hiped on =oardA and must bear signature o$ the
carrier or his authorised representative together ,ith date on ,hich the goods ,ere AboardedA*
Cost and )rei"ht 1C & )2
The seller must on his o,n ris3 and not as an agent o$ the buyer, contract $or the carriage o$ the
goods to the port o$ destination named in the sale contract and pay the $reight* This being a
shipment contract, the point o$ delivery is $i+ed to the shipAs rail and the ris3 o$ loss or o$ damage
to the goods is trans$erred $rom the seller to the buyer at that very point* As ,ill be seen though
the seller bears the cost o$ carriage to the named destination, the ris3 is already trans$erred to the
buyer at the port o$ shipment itsel$*
Cost Insurance )rei"ht 1CI)2
The term is basically the same as ) & F but ,ith the addition that the seller has to obtain
insurance at his cost against the ris3s o$ loss or damage to the goods during the carriage*
Payment a"ainst imports
(ayment under better o$ )redit is a universally accepted mode o$ payment* A >etter o$ )redit is a
<igned instrument and an underta3ing by the ban3er o$ the buyer to pay the seller a certain sum
o$ money on presentation o$ documents evidencing <hipment o$ <peci$ied goods subEect to
)ompliance ,ith the stipulated terms and )onditions*
Letter of Credit &s 3an, /aurantee
A letter of credit differs from a bank guarantee. An issuing or confirming bank's obligation is
independent of, and unqualified by, the contract of sale under the transaction. A commercial
credit is neither a performance bond, nor it is a guarantee of the quantity or quality of the
goods shipped.
>etters o$ )redit are <eparate Transactions
A contract $or sale o$ goods bet,een the seller and the buyer incorporates mode o$ settlement*
>etters o$ credit by their nature are separate $rom the sale contract, and ban3s are not concerned
or bound by such sale contracts even i$ the credits bear re$erence to them*
The credits stipulate documents ,hich have to be tendered $or payment and it, there$ore, $ollo,s
that in credits parties deal ,ith documents and not ,ith goods, services or per$ormances to ,hich
the documents relate*
%t is, there$ore, in the interest o$ all the parties concerned that the conditions and terms o$ credit
are complete and precise and bare$it o$ e+cessive details*
(ayment under a letter o$ credit does not depend on the per$ormance obligation on the part o$ the
e+porter e+cept those ,hich the credit imposes* =an3s accept documents under letters o$ credit
$or ,hat those document purport to be on their $ace* )ontract bet,een the buyer and the seller is
obligatory bet,een themselves* The seller(bene$iciary) cannot ta3e advantage o$ any contractual
terms in bet,een the buyer and the opening ban3 and bet,een the opening ban3 and the
advising4con$irming ban3*
4niform Customs and Practice for -ocumentary Credit
%n the course o$ time, a number o$ practices, e+pressions and terms have evolved bet,een ban3s
dealing ,ith documentary credits* To ensure uni$ormity o$ interpretation in international trade,
the %nternational )hambers o$ )ommerce in (aris has ,or3ed out the F-ni$orm )ustoms and
(ractice $or Documentary )reditF* These have been revised and brought up to date several times
in the past* The latest in the line o$ revisions is the -)( ?99 (,*e*$* Kanuary 1, 1B) ,hich
updates and consolidates the previous -)( B99* They are no, applied by the ban3s in nearly all
countries including %ndia*
Parties to a Letter of Credit
Follo,ing persons are generally parties, to a letter o$ )redit/
=eni$iciary / The e+porter o$ goods in ,hose $avour the >4) has been established*
)ustomer4importer / The person ,e intends to import the goods and instructs ban3 to established
>etter o$ )redit*
%ssuing =an3/ The =an3er in the importers )ountry ,ho opened the >4)* )orrespondent =an3 or
Advising =an3/ The ban3er in the e+porters country, ,ho is authorised by the issuing ban3 to
advise the bene$iciary o$ the )redit and to e$$ect such payment or to accept and pay such bills o$
e+change or to negotiate against <tipulated documents and on )ompliance o$ <tipulated terms
and condition speci$ied by the importer on the e+porter*
)on$irming =an3/ The ban3er in the e+porters(bene$iciary) country, ,ho at the desire o$ the
bene$iciary adds con$irmation to the letter o$ )redit so that bene$iciary can get payment ,ithout
recourse $rom the )on$irming ban3* The )on$irming ban3 may be correspondent ban3 itsel$ or
some other ban3*
'enerally $ollo,ing types o$ >etter o$ )redit are in operation*
Revocable or %rrevocable >etters o$ )redit
)on$irmed )redit
Trans$erable )redit
#ith or ,ithout Recourse )redit
Revolving >etter o$ )redit
Transit )redit
=ac3 to =ac3 )redit
The <ight )redit
The )redit available against Time Dra$t (-sance )redit)
The De$erred payment )redit*
Precautions to $e ta,en at the time of esta$lishin" Letter of Credit
>etter o$ credit o$$ers almost complete protection to the seller but the buyer is put to many
disadvantages and has to ma3e payments against documents only* =e$ore agreeing to open a
letter o$ credit in $avour o$ the seller, the opener must be satis$ied ,ith the credit,orthiness and
general reputation o$ the seller* 2ntire success o$ an >4) transaction depends on proper conduct
o$ the seller*
)on$idential report on the seller must be obtained at the time o$ $irst transaction ,ith him*
>etter o$ credit also does not o$$er any protection $or the &uality4&uantity o$ goods supplied under
the >4)* %t ,ould, there$ore be necessary to 3no, the nature o$ goods and speci$y submission o$
&uality reports4inspection reports $rom an independent agency to ensure receipt o$ goods o$
proper &uality* This is particularly important in case o$ import o$ chemicals and such other
goods* The opener has to submit an >4) application to the opening ban3* The instructions
contained in the >4) application is the mandate $or the issuing ban3 and letter o$ credit ,ill be
issued in accordance ,ith this application* %t is, there$ore, necessary that complete and precise
in$ormation must be given in the >4) application $orm speci$ying therein the description, unit
rate and &uantity o$ the goods covered under >4) and details o$ documents re&uired in absolute
clear and unambiguous terms* The re$erence to underlying sale contract must be avoided as $ar as
possible* The >4) application must nevertheless contain all the re&uired4in$ormation based on
,hich >4) could be opened by the ban3*
A$ter the >4) has been issued by the ban3, a copy thereo$ must be obtained immediately* The
>4) must be scrutini5ed to ensure that it has been properly issued and is in con$ormity ,ith >4)
application* Discrepancy, i$ any, must be brought to the notice o$ opening ban3 immediately*
%mport contact may be concluded either in terms o$ %6R or in $oreign currency* #here the
contracts are in %6R, the related documents are also prepared in %6R and no conversion is
involved* :o,ever, ,here the bill is dra,n in $oreign currency, the payment is made in %ndian
rupees e&uivalent to the $oreign currency* The e&uivalent rupee value is arrived at by applying
suitable e+change rate* These rates are applied by ban3s to standardise the $oreign e+change1
rupee conversion process*
#hen the price o$ $oreign currency is &uoted in terms o$ home or local currency it is called direct
&uotation basis* This has been in application since 9!*9C*10* :o,ever, there is a di$$erence
bet,een inter1ban3 e+change rates and merchant rates*
7erchant rates are the e+change rates applied by the ban3ers $or transaction ,ith their customers
$or various purposes, including imports and e+ports* These rates are calculated by the ban3s as
per the guidelines issued by the Foreign 2+change Dealers Association o$ %ndia (F2DA%)* %nter1
ban3 rates are the rate $or transactions amongst the authorised dealers in $oreign e+change and
depend on the mar3et conditions*
<ince e+change rates are volatile, documents delivered by the ban3 at the time o$ a $avourable
e+change rate ,ill enable the %ndian purchaser to pay less o$ %ndian rupees* Fore+ rates are
al,ays &uoted as t,o ,ay price i*e* at a rate at ,hich the ban3 is ,illing to sell $oreign
currency(buying rate) and at a rate at ,hich the ban3 is ,illing to buy $oreign currency(selling
rate)* There is al,ays some di$$erence in buying and selling rates* :o,ever, the ma+imum
spread available to ban3 is restricted in terms o$ celling imposed by R=%* All e+change rates by
authorised dealers are &uoted in terms o$ their capacity as buyer or seller*
** Sellin" !ate
This rate is applied $or all clean remittances outside %ndia* For selling $oreign currency to its
customer by the ban3 such as $or issuance o$ ban3 dra$ts, mail4telegraphic trans$er etc*
** 3uyin" !ate
This rate is applied $or purchase o$ $oreign currency by ban3s ,hen the ban3s in %ndia have
already obtained the cover in %ndia* Thus all $oreign in,ard remittances ,hich are made payable
in %ndia are converted by applying this rate* A mail trans$er issued by a ban3 in Dubai $or -< N
19,999 dra,n on any commercial ban3 having branch at the overseas destination ,ill be
converted into rupees at TT buying rate*
Reading Rates1The rates announced by the ban3s every day morning are card rates*
Reputed importers can al,ays bargain ,ith the ban3 $or improvement in the card rates $or
reducing their rupee liability on conversion o$ $oreign currency into %ndian rupees* Also a
distinction is made bet,een spot rates and $or,ard rates* <pot rates are applicable on the day o$
transaction, ,hereas $or,ard rates are $i+ed in advance $or a transaction that ,ill mature at a
speci$ied date or during a speci$ied period in $uture imports*
Hed"in" a"ainst )orex ris,
2+change ris3 arising on account o$ adverse movement o$ the e+change rates, can be avoided by
the $ollo,ing methods/
=y re&uesting the supplier to invoice the goods in %ndian rupees (possible only ,hen the
seller agrees to it)
=y entering into a $or,ard e+change contract*
This involves boo3ing o$ $or,ard e+change contract ,ith the ban3 o$ the importer*
For boo3ing $or,ard contract the importer should approach his ban3 ,ith ,hich an >4) has been
opened* The ban3 ,ill boo3 a $or,ard contract only against genuine trade transaction* The ban3
,ill veri$y suitable documents to ensure the authenticity and the amount o$ permitted currency o$
the underlying transaction* The amount, date and number o$ the $or,ard contract ,ill be mar3ed
on such documents under the stamp and signature o$ the ban3 to ensure that more than one
$or,ard contract is not boo3ed in respect o$ the same underlying transaction* A transaction may
be covered either in parts or in ,hole* The period and e+tent to ,hich an e+posure is to be
covered is le$t to the choice o$ the customer* .rdinarily, the maturity o$ the $or,ard contract
matches ,ith that o$ the underlying transaction* %$ the documents o$ import are not received
,ithin the agreed period o$ the contract, the contract needs to be cancelled(an $resh contract
boo3ed i$ desired) $or ,hich the ban3 ,ill levycancellation charges as per F2DA% rules* %n case
the documents are received be$ore the stipulated date and the importer ,ants early delivery, the
ban3 ,ill again levy charges $or early delivery, as per F2DA% rules*
The importers should be care$ul in chosing the period o$ $or,ard contract* .ther,ise early
delivery or cancellation o$ $or,ard contract ,ould lead to unnecessary charges* The R=% allo,s
substitution o$ an import order on speci$ic re&uest, provided the ban3 is satis$ied ,ith the
circumstance leading to the non1per$ormance o$ the contract*
#here the documents are under a contract(6on1>4) case), the seller ,ill submit the complete set
o$ documents to his ban3ers ,ith the re&uest to either purchase4discount the documents to his
ban3er ,ith the re&uest to either purchase4discount the documents or same on collection basis to
the importer* %n the $ormer case the sellerAs ban3 $inances the sellers ,hereas in the latter case, no
$inancial $acility is e+tended to the overseas seller* The sellerAs ban3er may advance some money
against documents sent on collection basis ,hile, treating the documents as collateral security*
#hen the documents are under >4), the documents are prepared strictly in con$ormity ,ith the
letter o$ credit*
A$ter preparing the documents the overseas seller ,ill tender the documents to his ban3er $or
negotiation* The ban3, a$ter receiving the documents, ,ill e+amine them to ensure that they are
strictly dra,n as per the terms o$ the credit* Follo,ing this the overseas ban3er ,ill send the
documents to the importerAs ban3er in %ndia* The impoterAs ban3 ,ill advise the importer to
collect the shipping documents either against payment or acceptance as per the terms o$ the
contract*
%n case the documents are dra,n under >4), the issuing ban3er(o$ the overseas supplier) ,ill
e+amine the documents and i$ $ound in order it ,ill hand over the same to the importer a$ter
debiting his account ,ith amount involved or against acceptance as per the terms o$ the credit*
%$ the documents are not in line ,ith the terms o$ the credit, the overseas ban3er can either re$use
to negotiate $urther and as3 the seller to send them on collection basis onlyD or it can contact the
importerAs ban3(in the buyerAs country) $or authorisationD or it can also ma3e payment under the
reserve against sellerAs indemnity*
Import Policy
For items not mentioned as (rohibited, Restricted or )analised >ist $or import in %T)(:<)
)lassi$ication o$ 2+port and %mport itemsD import o$ such items are $reely permitted* There is no
need to obtain any license or permission $or importing such goods* The %T)(:<) )lassi$ication
o$ 2+port and %mport items contains chapters and in each chapter there are column heading
covering 2+im )ode, items description, policy and nature or restriction* The in$ormation related
to import policy $or any item can be obtained $rom our site under )ustoms Duty )alculator
<chedule*
Procedure to $e followed for "rant of import license
An application $or grant o$ an import licence or ))( $or import o$ the items mentioned as
restricted $or import in %T)(:<) )lassi$ication o$ 2+port and %mport items may be made to the
regional licencing authority concerned*
Scrutiny of documents
This is a very important function and this should be done ith great care. After receiving the
document from the overseas supplier's bank the importer's bank ill scrutinise them to
verify the extent of correctness as per the terms of the !"#. $or discrepancies in the
documents folloing principles are adopted%
%$ discrepancies are such ,hich violates any o$ e+change control or import control regulations,
the documents should straighta,ay be reEected*
%$ the discrepancies are o$ trivial nature not a$$ecting the character o$ the transactions the
documents may be accepted on merits*
%$ the documents are reEected, immediate notice to that e$$ect should be given to the ban3 to
sa$eguard the importerAs interests*The documents prescribed by the bene$iciary are care$ully
scrutinised by the issuing ban3er* The importer should also scrutinise the documents to ensure
that/
They ,ere presented ,hen the credit ,as in $orce and had not e+pired*
The amendments and special instructions have been ta3en care o$
The amount o$ bill does not e+ceed the value o$ >4)
All documents re&uired in the >4) have been made available
Documents carry re&uired endorsements
The documents do not contain discrepancies ,hich violate any e+change control4import control
regulations
The invoice is duly signed, tallies ,ith amount o$ dra$t, 2+act &uantities are sho,n and is dra,n
in appropriate currency o$ the origin o$ goods
=ill o$ leading is presented in $ull set o$ negotiable copies and is on board bill o$ lading and duly
signed %n case the goods are imported on cash against documents()AD), documents against
payment(D4() or documents against acceptance(D4A) basis, the importer needs to ta3e delivery
o$ documents $rom the ban3er be$ore completion o$ the customs $ormalities* This process, 3no,n
as retirement o$ documents, needs the importer to apply to authorised dealer4ban3er ,ho is in
possession o$ documents* This can be done by tendering the $unds e&uivalent to the value o$
documents and the ban3 charges e+change control copy o$ import license, ,here applicable,
Form A11 duly completed $or remittance o$ $oreign e+change*
The documents are released to the importers against payment in case o$ D( bills and against
acceptance in case o$ DA bills* The payment in either case is accepted only $rom the ban3
account o$ importer* %$ the ban3 is out o$ $unds the interest is charged to the importerAs account*
For any overdue period a penal interest ,ill be charged*
Chec,list for -ocument 1recei&ed under L/C2 scrutiny
'eneral1chec3 ,hether all documents in $ull sets as per >4) terms have been received
Documents had been presented be$ore the e+piry date
All the documents are dated subse&uent to the date o$ issue o$ the >4)
)ancellation4over,riting in all documents are authenticated
=ills o$ 2+change1chec3 ,hether
Dra,n on the person indicated in the >4) and duly signed up by the bene$iciary o$ the credit
Dra,ing is ,ithin >4) amount and in the same currency as per the >4)
The amounts in ,ords and $igures are the same and identical ,ith the amount stated in the
invoice
<uperscription, regarding dra,ing under >4) has been made and the =ill must have been issued
stamped*
%nvoice1 chec3 ,hether invoice/
%s made out in the name o$ the person ,ho had opened the >4)
Muantity, unit price and value are &uoted as per >4)
#hether unit price and value are &uoted as per >4)
The description o$ the merchandise corresponds to the description in the >4)
The arithmetical calculations are correct
%mport license4.'>4)ontract 6o*4.rder 6o*4%ndent 6o* mentioned as per >4)
6o charge other than stipulated in >4) in included
Additional copy $or 2+change )ontrol purposes is submitted
The date and no* o$ the >icense4.'> indicated
=ill o$ lading is submitted ,ithin !1days $rom the date o$ shipment, i$ no speci$ic time is
bet,een the date o$ issue and e+piry o$ >4)
The date o$ shipment is bet,een the date o$ issue and e+piry o$ >4)
Full &uantity o$ goods is shipped, i$ part shipment is not allo,ed
Full set is submitted
Freight is sho,n as prepaid4payable at destination, as per >4)
=ill o$ lading sho,s Aon board shipmentA
(arties are noti$ied as per >4) terms
)arrying vesselAs name has been mentioned in =ill o$ >ading
The bene$iciaryAs name is sho,n as consignor, unless >4) terms permits third party bill o$ lading
The consigneeAs name is as per >4)
The =4> is manually signed
The description o$ goods is consistent ,ith >4)
The ports o$ loading4destination are mentioned as per >4)
7ar3s, numbers, &uantity and ,eight agree ,ith the invoice
The carrying vessel belongs to any particular line as per >4)
Ade&uately stamped
(roperly endorsed
%$ A#=, ,hether $light number and date o$ departure mentioned
%$ $reight has been added separately in invoice and no separate $reight certi$icate o$ shipping
company is submitted* =4> sho,s $reight amount*
<crutiny $or %nsurance documents1chec3 ,hether the policy is ta3en out in the name o$ the
shipper
)erti$icate4policy is according to >etter o$ )redit terms
Ris3 commences ,*e*$* date o$ =4>
Amount o$ insurance as per >4) terms
#hether dra,n in the same currency as the >4)
Description o$ goods agree ,ith =4>
Ris3s as per >4) are covered
The place ,here claims are payable is as per >4) terms
Ade&uately stamped
Details such as name o$ carrying vessel, ports o$ loading4destination, mar3s, agree ,ith the =4>
)erti$icate o$ analysis, ,eighment,etc*
The certi$icates are issued by the authority stipulated in >4)
6ame o$ the shipper is properly sho,n
The samples dra,n relate to the goods actually shipped
Date o$ sample veri$ication is ,ithin the date o$ shipment
Certificate of ori"in
%t is issued by the authority stipulated in the >4)
The description o$ goods agrees ,ith that in the invoice
Chec,in" other documents
All other documents stipulated in the >4) are veri$ied
They are issued by the authorities speci$ied in the >4)
They contain the details as re&uired by the >4)
For matter relating to Documentary )ollections and )ommercial terms, the importers are li3ely
to be conversant ,ith the brochures issued by the %nternational )hamber o$ )ommerce(%))),
(aris*
)ollowin" are the $rochures
-ni$orm )ustoms and (ractice $or Documentary )ollection and )ommercial Terms
-ni$orm Rules o$ )ollections (%))?!!)
-ni$orm Rules $or a )ombined Transport Document (%))!C)
%6). Terms 19
R=% regulations $or 7a3ing (ayments by importers
Import Policy
For items not mentioned as (rohibited, Restricted or )analised >ist $or import in %T)(:<)
)lassi$ication o$ 2+port and %mport itemsD import o$ such items are $reely permitted* There is no
need to obtain any license or permission $or importing such goods* The %T)(:<) )lassi$ication
o$ 2+port and %mport items contains chapters and in each chapter there are column heading
covering 2+im )ode, items description, policy and nature or restriction* The in$ormation related
to import policy $or any item can be obtained $rom our site under )ustoms Duty )alculator
<chedule*
Procedure to $e followed for "rant of import license
An application $or grant o$ an import licence or ))( $or import o$ the items mentioned as
restricted $or import in %T)(:<) )lassi$ication o$ 2+port and %mport items may be made to the
regional licencing authority concerned*
0ode of payment
(ayments in retirement o$ bills dra,n under >4) as ,ell as bills received $rom abroad $or
collection against imports into %ndia, must be received by authorised dealers, irrespective o$
amount, by debit to the account o$ the importer ,ith themselves or by means o$ a crossed che&ue
dra,n by him on his other ban3ers* (ayment against bills should not be accepted in cash* This
rule also applies to private imports ,here the amount involved is Rs* !9,999 or more*
(ayment $or import bills1#here the import bills are dra,n in %ndian Ruppes (%6R), an e&uivalent
amount(plus ban3 charges) is debited to the account o$ the importer by the authorised dealer and
the amount remitted to the $oreign seller* %n case the bills are dra,n in $oreign currencies, the
%6R e&uivalent is arrived at by applying the appropriate $oreign e+change rate*
Fi+ing o$ Re* 2&uivalent1%n order to bring uni$ormity in the handling o$ import bills under >4)
authorised dealers have been directed by the R=% o$ $ollo, the $ollo,ing procedure/
<ight import bills received under >4) and con$orming to credit terms, may be held in $oreign
currency $or a ma+imum period o$ 19days $rom the date o$ receipt o$ documents by the =an3*
%n case o$ non1payment by the dra,ee ,ithin 19days, the importerAs liability on the $oreign
currency bill shall be crystallised by converting the $oreign currency amount in to rupee at the
=*)* <elling rate prevailing on the 19day or the $or,ard e+change contract rate ,here applicable*
Authorised dealers shall 3eep a proper record o$ the date o$ receipt o$ documents*
%n case the 19th day is holiday or a <aturday, the importerAs liability in rupees shall crystallise in
the ne+t $ollo,ing ,or3ing day*
Authorised dealer shall carry s,ap costs $rom the customer*
Authorised dealer shall charge interest at the rate as prescribed by R=% $or advances to non1
priority sectors $rom time to time on rupees advances made against the import bills pending
retirement by the customer* <uch interest shall be recovered $rom the date o$ negotiation or the
date o$ crystallisation o$ the rupee liability and therea$ter penal interest shall be recovered*
#hen the rupee liability on an import bill is crystallised at the For,ard 2+change )ontract Rate
and it results in early4late delivery, the charges as per F2DA% rule shall be levied*
Authorised dealers shall charge commission4handling charges at the rate o$ 9*1?H on the bill
amount at the time o$ converting $oreign currency into %6R irrespective o$ the $act ,hether the
bill is retired ,ithin 19 days or later*
*ime limit for import remittance
The remittance against imports should be completed not later than I months $rom the date o$
shipment* Accordingly, de$erred payment arrangements involving payments beyond Imonths are
not permissible ,ithout approval o$ R=%4'ol*
:o,ever, no obEection to importers ,ithholding a small part o$ the cost o$ the goods not
e+ceeding 1? percent to,ards guarantee o$ per$ormance etc* Authorised dealers may ma3e
remittances o$ amounts so ,ithheld provided the earlier remittance had been made through them*
6o interest payment should be allo,ed to be remitted on these ,ithheld amounts*
<ometimes, settlement o$ import dues may be delayed due to disputes, $inancial di$$iculties,
Authorised dealers are permitted by the R=% to ma3e remittances in such cases even i$ the period
o$ I months e+pires, provided1
Authorised dealer is satis$ied about the bona $ides o$ the circumstances leading to the delay in
payment*
6o payment o$ interest is involved $or the additional period*
%n case, ,here the overseas supplier insists on payment o$ interest, it may be allo,ed in
accordance ,ith the provisions contained in para 8A*1! up to a ma+imum period o$ I9 days
beyond 1C9days $rom the date o$ shipment provided the import bill is paid ,ithin that period*
Remittances against import o$ boo3s may be allo,ed ,ithout restrictions as to time1limit,
providedno interest payment is involved nor has the importer $orgone any part o$ the
discount4rebate normally allo,ed to importers to,ards compensation $or delay in settlement o$
dues*
%nterest remittance on import bills1interest accrued on usance bills under Anormal interest clauseA
or o$ overdue interest paid on sight bills $or a period* not e+ceeding I months $rom the date o$
shipment in respect o$ imports ,ithout prior approval o$ R=%* %n case o$ pre1payment o$ usance
import bills, remittances may be made only a$ter reducing the proportionate interest $or the
une+pired portion o$ usance at the rate at ,hich the interest has been claimed or the AprimeA rate
(or its e&uivalent) o$ the country in the currency o$ ,hich the goods are invoiced, ,hichever is
higher* #here interest is not separately claimed remittances may be allo,ed a$ter deducting the
proportionate interest $or the une+pired portion o$ usance at the prevalling AprimeA*
:o,ever, interest under normal interest clause ,ould mean interest at the prime rate (or its
e&uivalent) o$ the country in the currency o$ ,hich the goods are invoiced*
%mpoterAs documents1The importer should comply ,ith certain obligations/ submission o$
2+change )ontrol )opy o$ =ill o$ 2ntry $or :ome )onsumption4(ostal #rappers to the
authorised dealer* This ,ill act as evidence that the goods $or ,hich the payment ,as made, have
actually been imported into %ndia*
Authorised dealers should ensure that in all cases, including cases o$ advance remittances
permitted (;ide para 8A, 19, these are submitted by their importer customers and are veri$ied* %n
respect o$ imports made on D4A basis, since goods ,ould normally be cleared be$ore the due
date o$ payment, authorised dealers should insist on production o$ documentary evidence o$
import i*e* 2+change )ontrol )opy o$ =ill o$ 2ntry $or :ome )onsumption4 postal ,rappers at
the time o$ e$$ecting remittance o$ import bill* Authorised dealers should also advise this
re&uirement to their importer customers in ,riting ,hile delivering the documents against
acceptance*
Postal Imports
Remittances against bills received $or collection in respect o$ imports by post parcel may be
made by authorised dealers, provided the goods imported are such as are normally despatched by
post1parcel* %n these cases the relative parcel receipts must be produced as evidence o$ dispatch
through the post and on underta3ing to submit importers should $urnish post parcel ,rappers
,ithin three months $rom the date o$ remittance*
%$ the parcel has already been received in %ndia, the parcel ,rapper should be produced in
support o$ the remittance application* #here goods to be imported are not o$ a 3ind normally
imported by post parcel or ,here authorised dealer is not satis$ied about the bona $ides o$ the
applications the case should be re$erred to R=% $or prior approval ,ith $ull particulars together
,ith relative parcel receipts4or ,rappers*
Customs Clearance of imported "oods
)ustoms Authorities and the )learing agents play the 3ey role in the import o$ goods* All goods
imported into %ndia have to pass through the procedure o$ )ustoms clearance as they cross %ndian
border* The goods are e+amined, appraised, assessed, evaluated and then allo,ed to be ta3en out
o$ charge o$ the )ustoms $or use by the importer* The entire process o$ customs clearance is
comple+ and to carry out this procedure smoothly, the help o$ accredited customs clearing agents
has to be ta3en*
The importers need to present a =ill o$ 2ntry on receipt o$ the advise o$ the arrival o$the vessel*
The =42 is noted in %mport Department, ,ith corresponding endorsementmade against the
consignment entry in the %'7 along ,ith the date* The =42 ,ill then be presented in the
Appraising Department ,ith all the relevant documents li3e invoice, =ill o$ >ading, %mport
license and catalogue literature* The appraising procedure may be o$ t,o types*
The First )hec3 (rocedure1Applicable only ,hen appraisers4assessing group $inds it di$$icult to
complete the assessment on the basis o$ the documents made available*
The <crutinising Appraiser in the group gives the e+amination order* The goods are then
e+amined in the doc3s and the =42 rerutned to the <crutinising Appraiser $or completion and
license debit* %n this case the )ustoms Aout o$ chargeA is given by the Accounts Department soon
a$ter the recovery o$ duty*
The <econd )hec3 (rocedure1-nder this C9 to 9 percent o$ the consignments are cleared*
%$ the documents are ade&uate $or determining the classi$ication, value, %T) license, the $orm is
completed by the Appraiser and then countersigned by The Assistant )ollector* %t is then
$or,arded to the >icense Department $or licensing debit and audit* Then it is returned to the
importers $or payment o$ duty in the Accounts4)ash department* A$ter recovery o$ duty the
original =42 is retained in the Accounts Department and the duplicate and other copies are
returned to the importer $or getting the goods e+amined in the doc3s*
%n the doc3s, the <hed Appraiser42+aminer shall e+amine the goods and i$ in order, shall give the
out o$ charge $or ta3ing delivery $rom the custodian o$ the goods vi5* (ort Trust, a$ter payment o$
(ort Trust charges*
%rrespective o$ the procedure, e+amination o$ cargo $or assessment purpose is chie$ly the
$unction o$ the Appraising Department having special sta$$ o$ e+aminers in the doc3s4Air cargo
shed* The records o$ the e+amination and ,eighment should be declared, attested and dated at
the time o$ the e+amination* %$ the e+amination spreads over more than one day, the result on
each dayAs progress should be disclosed*
These apart some o$ the )ustoms house in %ndia have introduced the simpli$ied computer
procedure $or speedy clearance o$ consignment through =42*
Custom #uthorities
The customs administration vests in )=2) $or implementing the provisions o$ the )ustoms
Act*1I!* There are t,o main ,ings o$ )ustoms :ouse* %n the AAppraisementA ,ing the Eob o$
collection o$ revenue is assigned, ,hile the A(reventiveA one aims at prevention o$ smuggling*
The )ustoms authority $unctions under the 7inistry o$ Finance (7oF) ,ith the )entral =oard o$
2+cise & )ustoms at the ape+* The board is headed by a )hairman and assisted by 7embers*
The 7ember ()ustoms) loo3s a$ter the $ollo,ing matters/
)ustoms >a, and its interpretation and application, policy and broad procedures(.ther than
those concerning anti1smuggling)
2n$orcement o$ %mport 2+port prohibitions
Foreign Travel and )ases on imports and e+ports
=aggage concessions and rulesD
)ustoms ;aluationsD
Tari$$ )lassi$ication and Tari$$ advicesD)ustoms procedures, )ustoms :ouse
Agents RegulationsD
#arehousing, inland =onded #arehousesD
FTJs, 2(Js, 199H 2.-s etc*
7atters relating to Dra,bac3D
)ustoms )o1operations )ouncil, 'ATT and 2<)A( and international tal3s and agreements,
organisations concerning customsD
All other ,or3s on )ustoms not speci$ied else,hereD
<upervision and control over )ustoms )ommissionerate o$ 7umbai, )alcutta, )hennai, Oandla,
=angalore, )ochin, Delhi , ;isa3hapatnam, 'oa and Tuticorin and )ustoms Divisions o$ other
)entral 2+cise )ommissioners, Assistant )ommissionerates regarding )ustoms ,or3 handled by
them*
)hemical laboratories and
Directorate o$ Dra,bac3
The 7inistry o$ Finance (7oF) issues )ustoms 6oti$ications to levy duty on the imported goods*
The )hanges are made each year on the Day o$ the Fiscal =udget* )ustoms clearance o$ the
imported goods is done by the customs Authorities $unctioning under the overall charge o$ 7oF*
The hierarchy o$ the Authorities/
)entral =oard o$ 2+cise & )ustoms ()=2)) in the 7oF
-nder ,hich operates/)ustoms )ommissionerates o$ 7umbai, )alcutta, )hennai, Oandla,
=angalore, )ochin, Delhi, ;i5ag, 'oa and Tuticorin*
Directorate o$ Dra,bac3
Field >evel/(rincipal )ommissioners )ustoms ,)ommissioners,Addl* )ommissioners ,Dy*
)ommissioners,Asst* )ommissioners,(ort o$ clearance*
Classification of Customs tariff
The basic legislation is the Indian #ustoms Act, &'() read ith #ustoms Tariff Act, &'*+.
,ection &) of the #ustoms Act,'() empoers levy of duties on goods imported into or
exported from India.
:o,ever, the rates at ,hich the di$$erent import e+port duties shall be leviable have been
respectively speci$ied in the First and <econd <chedule to the )ustoms Tari$$ Act, 18?1called
the import Tari$$ and 2+port Tari$$ respectively*
#ith e$$ect $rom Feb* !C, 1CI, the ne, tari$$ import schedule based on international convention
o$ :armonised )ommodity and )oding system, commonly 3no,n as :armonised )oding
<ystem came into being* The basic $eatures o$ the %mport Tari$$
6omenclature are outlined belo,/
The headings, the <ection and )hapter 6otes and the interpretive Rules, )ustoms duties are
levied in three ,ays1<peci$ic rate1at the rate prescribed per unit o$ item i*e* ,eight or number o$
lengthD Ad1valorem duty1levied on the value o$ the itemD <peci$ic and advalorem1levied in both
,ays*
Types & >evy o$ )ustoms duties/1
=asic duty/ all goods imported into %ndia are chargeable to duty as prescribed in the 1st <chedule
o$ )ustoms Tari$$ Act* This <chedule is amended $rom time to time o$ )ustoms Tari$$ Act* This
duty can be levied either as a percentage o$ value o$ goods or at a speci$ied rate*
<urcharge/ %t is levied at the rate o$ 19H o$ the basic rate on all commodities e+cept crude oil and
petroleum products, 'ATT1bound items, gold and silver* Additional Duty/ Also 3no,n as
countervailing duty, is levied on the cost o$ imported goods and is e&ual to e+cise duty levied on
li3e goods ,hen manu$actured in %ndia* The obEective is to ensure that the protection provided by
the import duty to domestic industry is not eroded*
<pecial Additional Duty/ %t is levied at the rate o$ BH* Anti1dumping Duty/ This is levied on
speci$ied goods imported $rom speci$ied countries to protect indigenous industry $rom inEury
resulting $rom -<A, Oorea and so on*
)ustoms Duty Assessment/ The assessment o$ goods to duty is done on the basis #hether the
goods covered by the =42 are such as are regularly imported, or are re&uired to be tested by the
customs house laboratory $or $ul$ilment o$ license conditions, or The appeaiser desires to see the
representative sample be$ore completing the bill o$ entry $or the purpose o$ veri$ication o$ the
value4description, etc* or The re&uired document is not $orthcoming*
)ustoms Duty Rates/ #hen the import invoice is in any currency other than %ndian rupees,
customs $i+ the e+change rate $or conversion into the %ndian rupees at a predetermined rate
,hich is published in customs houses on a daily basis*
%mports $rom speci$ied countries enEoy pre$erential duty* This is generally the result o$ special
status accepted under bilateral trade agreements or other,ise* :o,ever, the incidence o$ customs
duties on various goods imported are obtained as $ollo,s/
Total duty payable@(>anded cost including )%F o$ the item concerned P =asic customs duty
under the )ustoms Tari$$ Act P <urcharge thereon P Additional duty P <pecial Additional duty as
per Finance Act)*
'etting %mport >icense chec3ed1The appraising o$$icial chec3s the license $or their description,
value, validity period, importers name, etc* %t is $or the importer to establish that the goods
satis$ied the description in the license unless he is able to establish the $act he ,ould not be
entitled to la,$ul import thereo$* %$ the appraising o$$icial is satis$ied that the license is in order,
he ,ill send the license ,ith =42 to license section $or registration and audit* The department
maintains a register $or every license accepted and debited sho,ing the last balance on the
license*
The importer is li3ely to 3no, the term o$ license, the type o$ goods and ,hether they can be
la,$ully imported as per the terms o$ the license* %n case there is any error on the part o$ the
appraising authority then possession o$ even a valid license ,ill not con$er any right upon the
importers to import such goods again on the basis o$ similar licenses*
=ill o$ 2ntry1This is a document on the strength o$ ,hich clearance o$ imported goods can be
e$$ected* %ts $orm has been standardised by the )entral =oard o$ 2+cise and )ustoms* All goods
discharrged $rom a vessel, $rom $oreign or coastal (orts, are cleared on this prescribed $orms
presented under the =42 Regulations, 181*
%t should be presented $or AnotingA in the import dept* o$ the customs house a$ter theimport
'eneral 7ani$est ,hich gives a detailed description item ,ise o$ the goods brought by the
concerned vessel is $iled by the steamer Agent*
Import Policy
For items not mentioned as (rohibited, Restricted or )analised >ist $or import in %T)(:<)
)lassi$ication o$ 2+port and %mport itemsD import o$ such items are $reely permitted* There is no
need to obtain any license or permission $or importing such goods* The %T)(:<) )lassi$ication
o$ 2+port and %mport items contains chapters and in each chapter there are column heading
covering 2+im )ode, items description, policy and nature or restriction* The in$ormation related
to import policy $or any item can be obtained $rom our site under )ustoms Duty )alculator
<chedule*
Procedure to $e followed for "rant of import license
An application $or grant o$ an import licence or ))( $or import o$ the items mentioned as
restricted $or import in %T)(:<) )lassi$ication o$ 2+port and %mport items may be made to the
regional licencing authority concerned*
5arehousin" of Imported "oods
An importer may not li3e to clear or may have certain problems in clearing the imported goods
immediately on payment o$ duty $or home consumption* %n that case the importer can deposit the
goods in a (ublic or (rivate =onded #arehouse, provided he is satis$ied ,ith the arrangement*
Thus, the importer can avail the $acility o$ de$erring payment o$ duty on imported goods pending
their actual clearance* To,ards this the importer should $ile a set o$ yello, coloured =42 3no,n
as ,arehousing =42*
<el$1Assessment <cheme/ Applicable to goods ,ithout any %T) license4))( or any restrictions
thereo$* The obEective is to enable importers e$$ecting repetitive imports o$ some commodities to
assess their o,n =42 and determine their duty liability and pay the duty accordingly* Any
importer, including 'ovt* bodies and (<-s, ,ith proven identity and trac3 record can avail o$
this*
This process does a,ay ,ith the procedure o$ processing, and the time consumed by the
appraising and licensing sections*
#hen the duty is paid, the goods ,ould be cleared in the doc3s, provided the goods are partly
e+amined and payment o$ duty veri$ied*
'reen )hannel / This $ast1trac3 $acility has been introduced to simpli$y and e+pedite the process
o$ cargo clearance* %nstead o$ going in $or a hundred per cent e+amination only a part o$ the
cargo is chec3ed* =ul3 importers, 'ovt* Depts* & (<-s, consignment o$ a single product o$ ,ell
3no,n brand name and importers ,ith identi$ied and unblemished trac3 record are allo,ed to
avail this $acility*
Export of ser&ices
A ne, )hapter has been added in the revised 2G%7 (olicy 181!99!, 7arch 1 2d*,
recognising the importance o$ e+port o$ services and the potential in the sector* Apart $rom
e+tending all possible $acilities applicable to merchandise e+ports, the threshold limit $or
recognition as <ervice 2+port :ouse etc* has been pegged at 140rd o$ the level prescribed $or
merchandise e+ports*
The salient provisions o$ 2G%7 (olicy relating to services e+ports are given belo, /
F<ervicesF include all the 1I1 tradeable services covered under the 'eneral Agreement on Trade
in <ervices ,here payments $or such services is received in $ree $oreign e+change*
Facilities $or service providers/
The service providers shall be eligible $or the $acility o$ 2()' <cheme as described in )hapter I
o$ 2G%7 (olicy* The provisions o$ paragraph I*?(vii) shall also e+tend to the service providers
availing licences under this scheme*
The service providers shall also be eligible $or the $acility o$ 2.-42(J4 2:T(4<T( scheme*
<ervice providers are also permitted to import dra,ings, designs, integrated circuits and layout
designs, so$t,are in dis3ettes and )Ds related to their line o$ services as a part o$ passenger
baggage ,ithout a licence*
Facility o$ import o$ restricted items by service providers/
<ervice providers shall be entitled to import restricted items up to 19H o$ the $oreign e+change
earned by them during the preceding licensing year $or import o$ essential goods related to their
line o$ business, including o$$ice and other e&uipment re&uired $or their o,n pro$essional use*
Import throu"h Courier
As laid do,n by the current 2+im (olicy, import o$ goods through courier is permitted in
accordance ,ith the )ourier %mports & 2+ports ()learance) Regulations, 1C*
%$ the )%F value o$ the consignment imported does not e+ceed Rs*199999, the relative =ill o$
2ntry is re&uired to be $iled by the registered courier service*
%$ the )%F value is Rs*199999 or more, importers are to $ile separate =42 as in the case o$ other
imports*
%n case o$ remittances $or imports through courier services, authorised dealers should ensure
submission o$ 2+change )ontrol )opy o$ =ill o$ 2ntry $or home consumption in the case o$
imports valued at Rs* 199999 or more*
This is not regarded as baggage $or the purpose o$ assessment o$ duty and clearance thero$* The
practice o$ charging a uni$orm duty on articles imported through courier has been discontinued*
%mports by courier are no, classi$ied on merits in the respective customs Tari$$ headings* The
ne, system o$ assessment and clearance o$ goods imported by courier is no, governed under the
)ourier %mports & 2+ports ()learance) Regulations 1C*
%mports ,ithout Fore+ remittances/
%mports not involving $oreign e+change remittance is allo,ed as given belo,( vide (ara ?*B1 o$
the :andboo3 o$ (rocedures)/
%mport o$ items by -nited 6ations .rganisation and <pecialised Agencies and its o$$icials
,ithout payment o$ )ustoms duty*
%mport o$ 7edical 2&uipment by %ndian Doctors and (ro$essionals is allo,ed under the =aggage
Rules, 1B*
'oods as =aggage by Foreign 7ountaineering 2+pedition Teams and (ainting and other Display
Articles, e+cept consumables, are allo,ed* Foodstu$$s and 7edicines by )haritable organisations
are also allo,ed*
%mport o$ $ood parcels, e+cept alcohol and tobacco, subEect to a limit o$ Rs* 199 999 per annum
is allo,ed $or personal consumption o$ $oreign citi5ens*
%mport o$ $ree gi$ts and relie$ supplies by certain organisations4institutions e*g* %ndian Red )ross
<ociety, 6ational De$ense Fund is allo,ed*
Also import o$ e&uipments, ra,1$ilms etc* by $oreign publicists li3e Radio, (ress, Films,
Television teams are allo,ed*
%mport o$ e+hibits including construction and decorative materials re&uired $or the temporary
stands o$ the $oreign e+hibitors at the e+hibitions, $air or similar sho, or display $or a period o$ I
months on re1e+port basis is allo,ed provided these $airs are sponsored4approved by the 'ovt* o$
%ndia in the 7inistry o$ )ommerce4%ndia Trade (romotion .rganisation and is being held in
public interest*
Import for personal use
%mporters under this category do not need any %2) number* %mport o$ goods by any person as
passenger baggage is permitted to the e+tent admissible under the =aggage Rules 1B*
:o,ever, &uinine o$ more than ?99 tablets or @ pounds po,der or 199 ampules is not
permissible*
Also, $or any tourist, articles o$ high value ,hose re1e+port is obligatory under the =aggage
Rules shall be re1e+ported on his leaving %ndia* .ther,ise, those goods shall be deemed to be
regarded as prohibited goods under the )ustoms Act, 1I!*
Any type o$ goods $or ,hich the c*i*$* value shall not e+ceed Rs* !999 can also be imported
through (ost or other,ise $or personal use, provided they are not/
;egetable seeds e+ceeding 1 pound in ,eight, bees, tea, boo3s and periodicals, alcoholic
beverages, consumer electronic items (save hearing aids and li$e saving e&uipments and items $or
,hich import is canalised under 2G%7 (olicy*
6evertheless, the customs duty, as applicable, shall have to be paid* As regards the procedure $or
personal imports is concerned the same may involve sending o$ advance remittance i$ re&uired
by the overseas supplier, opening o$ letter o$ credit, retirement o$ documents and remittance o$
$oreign e+change, customs clearance o$ the goods and payment o$ customs duty*
Import of Samples
=ona $ide technical and trade samples o$ items, even those in the restricted in
%T)(:<))lassi$ications o$ 2+port and %mport items is allo,ed ,ithout a license $or a value
notmore than Rs* 1 la3h()%F) in one consignment save vegetable seeds, bees and ne, drugs by
any importer* Tea samples not above Rs*!999 ()%F) in one consignment is allo,ed ,ithout a
license by any person connected ,ith Tea industry*
Prototype import
This may be allo,ed on payment o$ duty ,ithout a license to an actual user, industriDal ecgaged
in the production o$ or hgaving industrial license4>o% or research, as the case may be, provided
the number o$ items imported does not e+ceed 19 in number in a year*
Import of Computer/Computer Software
)omputers including personal computers, Oeyboards or monitor valued upto Rs* 1*?9 lac and Rs*
899941 respectively can be imported $reely ,ithout any licence* )omputer <o$t,are can also be
imported $reely ,ithout licence despite the $act computer so$t,are is regarded as )onsumer
'oods*
Passen"er 3a""a"e
-nder the Rules various 3inds o$ articles can be imported upto certain value limit depending
upon the duration o$ stay o$ the passenger abroad and on the basis o$ Resident and 6on1Resident
<tatus o$ the passenger*
(assenger =aggage Rules and import duty structure $or baggage as applicable $or such imports
under the =aggage Rules has been given seperately