Procedure of Export Trade and Import Trade

To being exporting or importing goods from India, the business or

individual must obtain an Import Export Code or IE Code from the
Directorate General of Foreign Trade. Obtain the IE Code from the
business after obtaining PAN and opening a bank account. IndiaFilings
can help you obtain IE Code.

Importing and Exporting supports the development of national economies

and extends the global market. 
Exporting refers to the selling of goods and services from the home
country to a foreign nation. Whereas, importing refers to the purchase of
foreign products and bringing them into one’s home country. Further, it is
divided in two ways, which are,

i. Direct
ii. Indirect
Every nation is blessed with certain resources, assets, and abilities. For
instance, a few nations are rich in natural reserves, for example,
petroleum products, timber, fertile soil or valuable metals and minerals,
while different nations have deficiencies of these resources.

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.

Export procedure includes the following-

1. 1. Receiving the Order
The first and foremost step in export is to receive the order from
 your customer. Once you have an order in hand, you can move
on to the next steps.
2. 2. Credition of License and Quota
The next step is to apply for an Export license and get credited
with the export quota by the Government in order to send the
goods out of the country.
3. 3. Exchange Rate Fixation
Figuring out the exchange rate currency fixation between the
trading country will help you in having a clear idea of the amount
of exchange rate while exporting.
4. 4. Completion of Formalities of Foreign Exchange
After having an idea of exchange rates, the next step is to have
the formalities for foreign exchange to be completed on time.
5. 5. Making Arrangements for Order Execution
After successfully clearing the above 4 steps, it’s time to have
the setup ready for the goods to be exported.
You need to contact the cargo or ship port, or any freight
forwarding company in order for your order to be transported.
6. 6. Forwarding Agent Formalities’ Completion
It’s time now to have the export formalities completed of the
forwarding agent who is also known as the Customs Agent.
The Customs Agent is responsible for the verification of
documents, along with the involvement in checking the export so
as to verify the goods.
7. 7. Bill of Lading
This step involves the preparation along with the submission of
the Bill of Lading to the shipper by the goods carrier.
The Bill of Lading contains information about the goods that
need to be exported. In India, it is also known by the term “Let
Export Order” to clarify that everything is verified and the goods
are good to go.
8. 8. Handing over the Documents to Bank
The final step completes with handing over all the legal and
required documents, as stated by the bank to get the final
closure by the bank.
And this completes the detailed step-by-step information on the
export procedure.

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 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.

steps involved in importing of goods are:-

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, an importer must first classify the item by
identifying its Indian Trading Clarification based on a Harmonized
System of Coding or ITC (HS) classification.

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).

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;

 Commercial invoice cum packing list;
 Shipping bill or bill of export, or bill of entry (for imports).

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);

 GSTR refund form;
 Exchange Control Declaration;
 Bank Realization Certificate; and
 Registration cum Membership Certificate (RCMC).

The RCMC helps exporters and importers avail benefit or concession

under the Foreign Trade Policy 2015-20.

Commercial Invoice
The seller issues the commercial invoice to the buyer containing the terms of the
transaction like date of transaction, seller details, buyer details, value, shipping terms and
more. Customs duty is levied on the shipment usually based on the commercial invoice
raised by the seller.
Air Waybills
An airway bill is proof of shipment of goods by air. Air waybills serve as a proof of receipt of
goods for shipment by the air cargo agent, an invoice for the air shipment, a certificate of
insurance and a guide to the air cargo agent for handling, dispatch and delivery of the
consignment. A typical airway bill contains details about the shipper and the consignee, the
departure airport and destination airport, description of the goods, sign and seal of the
carrier.

Bill of Lading
Bill of Lading is provided by shipping agency for goods shipped by them. Bill of lading
usually contains information pertaining to the shipper, consignee, carrying vessel, ports of
loading and discharge, place of receipt and delivery, mode of payment and name of the
carrier.

Bill of Exchange
Bill of exchange is used when an importer agrees to pay the exporter in future on a date on
or before that is mutually agreed upon. Bill of exchange is an important written document in
wholesale trade wherein large amounts of money is involved. Bill of exchange can be
classified as a bill of exchange after date and bill of exchange after sight. Bill of exchange
after the date is when the due date for payment is counted from the date of the drawing.
Bill of exchange after sight is when the due date for payment is counted from the date of
acceptance of the bill.

Certificate of Origin
In general, the Customs Authority requests for the certificate of origin while clearing
Customs. Certificate of Origin is used to establish the origin of the product and is issued by
the Chamber of Commerce of the Exporter’s country. Certificate of origin usually contains
the name and address of the exporter, details of the goods, package number or shipping
marks and quantity, as applicable.

Packing List
Packing list contains detailed information about the goods being shipped, quantity, weight
and packing specifications. The packing list must contain a description of the goods and
have details regarding the shipping marks.
Letter of Credit
Letter of Credit is an arrangement wherein a Bank on the request of it customer agrees to
make payment to a beneficiary on receipt of documents from a beneficiary as per the terms
stipulated in the Letter of Credit. Letter of Credit or LC is used extensively in international
and domestic trade transactions.

EXTRAS

India is one of the major hubs for exporting particular items in the world. The state
of Gujarat independently shares 25% of the total Indian export market.
The International exhibitions that are held in the different parts of India are one
of the most helpful events for the established Indian brands to enhance their export
share.