Includes import documentation and other requirements for both the U.S. exporter and foreign importer.
Import licensing requirements
Over the last decade, India has steadily made it easier to import products. Most items fall within the scope of India’s EXIM Policy regulation of Open General License (OGL). This means that they are deemed to be freely importable without restrictions and without a license, unless they are regulated by the provisions of the Policy or any other law.
Imports of items not covered by OGL are regulated and fall into three categories: banned or prohibited items, restricted items requiring an import license, and “canalized” items, importable only by government trading monopolies and subject to Cabinet approval regarding timing and quantity.
Below are designated import certificate issuing authorities (ICIA):
- The Department of Electronics for computer and computer related systems.
- Department for the Promotion of Industry and Internal Trade (DPIIT), Technical Support Wing (TSW), for organized sector units registered under it, except for computers and computer-based system.
- The Ministry of Defense for defense related items.
- The Director General of Foreign Trade for small-scale industries not covered above.
- The Embassy of India, Washington, DC, on behalf of any of the above authorities.
Capital goods can be imported with a license under the Export Promotion Capital Goods plan (EPCG) at reduced duty rates, subject to the fulfillment of a time-bound export obligation. The EPGC plan now applies to all industry sectors. It is also applicable to all capital goods without any threshold limits, upon payment of a five percent customs duty.
A duty exemption plan is also offered, under which imports of raw materials, intermediates, components, consumables, parts, accessories, and packing materials required for direct use in products to be exported may be imported duty free under various license categories.
Certain products require an advance license to allow duty free imports of inputs which are physically incorporated into export products. In addition, fuel, oil, energy, and catalysts consumed to produce export products are also allowed under this plan. The raw materials/inputs are allowed in terms of Standard Input-Output Norms (SION), or self-declared norms of exporters.
Advanced Licenses are issued on pre-export or post export bases in accordance with the Foreign trade policy and procedures, and can be issued for:
- Physical exports: An Advance License may be issued for physical exports to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for the import of inputs required for an export product.
- Intermediate supplies: An Advance License may be issued for intermediate supply to a manufacturer/exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance License.
- Deemed exports: An Advance License may be issued for deemed exports to the main contractor for the import of inputs required for the manufacture of goods to be supplied to the categories mentioned in the Foreign Trade Policy (Note: Updates to India’s Foreign Trade Policy (FTP) are delayed until March 31, 2022. Exemption from the payment of Integrated Goods and Service Tax (IGST) and compensation cess on the imports made under the advance/EPCG authorizations, and by the export-oriented units, were also extended through March 31, 2022. The validity of “status holder” certificates for exporters were extended similarly). An Advance License for deemed exports can also be acquired by a subcontractor for projects, provided the name of the subcontractor appears in the main contract. Such licenses for deemed exports can also be issued for supplies made to United Nations Organizations or under the Aid Program of the United Nations, or other multilateral agencies and paid for in foreign exchange.
Importers are required to furnish an import declaration in the prescribed bill of entry format, disclosing full details of the value of imported goods.
Import Licenses (where applicable)
All import documents (e.g., ex-factory invoices, freight documentation, insurance certificates) must be accompanied by import licenses. This enables customs to properly clear the documents for timely imports.
Letter of Credit (L/C)
Importers must include a copy of the L/C to record payment for imports. Normally this document is verified with the issuing bank.
Not all consignments are inspected prior to clearance, and inspections may be waived for known importers. Under the current customs regime, an appointment with the clearing agent(s) helps avoid delays. In general, documentation requests/requirements are extensive, and delays are frequent.
Clearance delays cost time and money, including additional detention and demurrage charges, making it more expensive to operate and invest in India. For delayed clearances, importers seek release of shipments against a performance bond; furnishing a bank guarantee for this purpose is a more expensive option. Indian Customs has recently extended its operations to 24 hours to ensure more timely clearances of imports.