Includes import documentation and other requirements for both the U.S. exporter and foreign importer.
Import licensing requirements
In the last decade, India has steadily replaced licensing and discretionary controls over imports with deregulation and simpler import procedures. Most of import 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, except to the extent that 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.
The following are designated import certificate issuing authorities (ICIA):
- The Department of Electronics for the import of computer and computer related systems
- The Department for Promotion of Industry and Internal Trade for organized sector firms except for
- import of computers and computer-based systems
- The Ministry of Defense for defense related items
- The Director General of Foreign Trade for small-scale industries not covered in the foregoing.
- The Embassy of India, Washington, DC, on behalf of any of the above.
Capital goods can be imported with a license under the Export Promotion Capital Goods plan (EPCG) at reduced rates of duty, 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, on 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 permitted free of duty under various categories of licenses. For the actual user, a non-transferable advance license is one such license. For those who do not wish to go through the advance-licensing route, a post-export duty-free replenishment certificate is available.
An advance license is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. that are consumed during their use to obtain the export product, may also be allowed under the plan. The raw materials/inputs are allowed in terms of Standard Input-Output Norms (SION) or self-declared norms of exporter.
The AA are issued on pre-export or post export basis in accordance with the FTP and procedures. It can be issued for:
An advance license may be issued for physical exports to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product.
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.
An advance license can be issued for deemed exports to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in the FTP Policy April 2015 - March 2020. An advance license for deemed exports can also be availed by the sub-contractor of the main contractor to such project provided the name of the sub-contractor(s) appears in the main contract. Such license for deemed export 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 (if applicable)
All import documents (ex-factory invoice, freight, insurance certificates, etc.) must be accompanied by any import licenses. This will enable the customs to clear the documents and allow the import without delay.
These must be attached so that the customs can verify the price and decide on the classification under which the import tariff can be calculated.
Letter of Credit (L/C)
All importers must accompany a copy of the L/C to ensure that payment for the import is made. Normally this document is counter-checked with the issuing bank so that outflow of foreign exchange is checked.
Not all consignments are inspected prior to clearance, and inspection may be dispensed with for reputable importers. In the current customs set-up, an appointment with the clearing agents for clearance purposes will avoid delays. In general, documentation requirements, including ex-factory bills of sale, 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 proposition. Customs have recently extended operations to 24 hours a day to ensure timely clearance of export cargo.
For more information on Classifications and Customs Procedures review the Customs Manual 2018 available under the “Customs” tab in the Central Board of Indirect Taxes and Customs (CBIC).
For more information on the Foreign Trade Policy and Procedures, kindly review updates under the “Policies” tab in the Directorate General of Foreign Trade (DGFT).