The concept of bringing goods and services into a nation from abroad usually for the purpose of the sale is known as an import. The term “importers” represents those individuals who buy such goods and services and belong to the country where imports are done. Similarly, the term “exporter” represents a person situated in the other country who is responsible for selling those goods and services. Therefore, if a product/service is imported, it means that it has been brought into a nation from another nation in a legal manner usually for trading purposes. Foreign producers provide imported goods and services to domestic consumers.
An import for the receiving nation is the export for the sending nation. The basis of international trade is formed by the activities of imports and exports. In cases of imports, there is the involvement of customs authorities in both exporting and importing countries. Imports are also subjected to various restrictions such as tariffs, trade agreements, import quotas, etc., which need to be paid by the involved countries. There are two logical meanings of “Imports” that can be understood; first, it is referred to as the set of commodities and services imported, and second, it is also the fiscal (economic) value of all the products and services imported. The transaction of goods and services (sales, barter, gifts or grants) between the residents and non-residents are included under imports.
Import Procedure: How to Apply for Assistance
Stage 1: Making Trade Enquiry and Receiving Pro-Forma Invoice/Quotation Offer:
Making trade inquiries from the prospect exporters or their agents is the first step in importing the goods. The intended importer enquires about the following data:
- Description of the goods to be imported such as quality, size, design, etc.,
- Price per unit,
- Availability of goods as per the quantity,
- Terms of payment (D/P, D/A, Letter of credit),
- Terms of shipment (FOB, C&F, CIF),
- Delivery schedule, and
- Date till the offer is valid.
The importer takes a decision based on Pro-forma invoices/quotation offers received from different suppliers in response to the inquiry. Once all the offers are evaluated carefully, the importer selects the supplier with whom they want to execute the import order/indent.
Stage 2: Obtaining Import License:
It is important for the importers to have the import license for those products which cannot be imported without proper licensing.
In order to get the license, the importer should forward an application in the prescribed format and submit it to the licensing authority with the below mentioned documents:
- Capital receipts regarding tees of import license;
- Certificates regarding the quality of goods imported by the applicant in the last year; and
- Certificate approved by Income tax authorities verifying the Income-tax.
The import license is issued in duplicate by the licensing authority once they analyze the documents to their satisfaction level regarding the claims of the applicant.
Stage 3: Obtaining Foreign Exchange:
Once the license is obtained, the application has to be submitted by the intending importer in the prescribed format to the Exchange Control Department of RBI under the Foreign Exchange Management Act (FEMA), when it is forwarded by the exchange bank.
Once the complete scrutiny of the application is done, the amount of foreign exchange is released by the RBI The release of exchange is specifically for a one-time transaction, regarding the order positioned by the importer.’
Stage 4: Placing the Indent or Order:
Once both the import license and the required amount of foreign exchange are obtained, the order can be placed by the importer either directly or with the help of ‘Indent Houses’.
The order which is sent to another country for the import of goods is called indent; whereas, the import agent or firm which imports the goods for the importer is known as an indenting house.
Stage 5: Arranging Letter of Credit:
The bank is instructed for issuing a letter of credit by the importer if he is required to arrange a letter of credit as per the terms of the payment. This letter of credit can be issued by the bank of the importer on the basis of his solvency.
The document which is being issued by the bank for providing authorization to the negotiating bank for paying the amount mentioned to the named party in his order is known as the Letter of Credit.
Stage 6: Obtaining Shipping Documents:
Once the bill is accepted, the shipping documents are received by the importers in case of D/A (Document against Acceptance), whereas, in case of D/P (Document against Payment) the shipping documents are received by the importers as soon as he pays the bill.
Further, in case of a credit arrangement letter, the shipping documents are received by the importer from his bank.
Stage 7: Appointing Clearing Agent:
Once the shipping documents are received, the importer appoints a clearing agent for the fulfillment of other formalities, if he does not wish to complete them by himself.
Stage 8: Functions Performed by the Clearing Agent:
It includes the following functions:
- Filling-up bill of entry,
- Payment of dock charges,
- Getting custom clearance,
- Getting a bill of lading enclosed for delivery,
- Taking delivery from the dock,
- Dispatching goods to the importer by rail/road, and
- Sending advice to the importer.
Stage 9: Taking Delivery of Goods from Railway/Carrier:
When the advice from the clearing agent is received, the importer carries the goods to his warehouse after taking delivery from the railway/lorry receipt
Stage 10: Making Payment:
Payment mode is decided on the basis of the agreement between the importer and the “P.m1. The aspects of payments depend upon the following cases:
- Shipping documents are received by the importers when they provide and full payment is made on the date of maturity, in cases of D/A Bills
- The importer is required to pay the bill of exchange for obtaining the shipping documents, in cases of D/P Bills.
- shipping documents Ate received by the importer once the payments are made, in cases of letter of credit.