How to start Import business in India :A Comprehensive Guide.

Saurabh Pandey
Jun 20, 2023
6 min read

Updated: Aug 22, 2023

Introduction

India, with its vibrant economy and thriving trade environment, offers immense opportunities for businesses looking to import goods into the country. However, understanding and complying with the import regulations in India is crucial for a smooth and successful import venture. In this blog, we will explore "how to start import business in India " also we will explore the intricacies of the import process in India, highlighting the importance of regulations, key regulatory bodies, and the necessary documentation. Additionally, we will provide financial statistics to emphasize the significance of imports in India's economy.

We will delve into the intricacies of the import process in India, providing a step-by-step breakdown of the procedures, key regulatory bodies, and essential documents required. By the end of this article, you will have gained a solid understanding of how to successfully import goods into India.

Overview of Import Regulations in India

1.1 Importance of Import Regulations

In 2020-2021, India's total merchandise imports amounted to USD 389.18 billion, demonstrating the significant role of imports in the country's economy.
Import regulations help maintain a balance of trade, protect domestic industries, ensure product safety, and regulate imports of restricted and prohibited goods.

1.2 Regulatory Bodies and Authorities

The Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of Foreign Trade (DGFT) are the primary regulatory bodies overseeing import activities.

1.3 Tariffs, Customs Duties, and Import Taxes

India follows a tariff-based system, with customs duties varying based on the product category and its tariff classification.
The average applied tariff rate in India is approximately 13.79%.
Import taxes, such as the Integrated Goods and Services Tax (IGST), are also applicable on imported goods.

1.4 Restricted and Prohibited Goods

Certain goods, such as narcotics, counterfeit currency, hazardous waste, and certain agricultural products, are completely prohibited from importation.
Restricted goods require specific permits, licenses, or certifications for importation.

Pre-Import Preparation

2.1 Obtaining Importer-Exporter Code (IEC)

Before importing goods into India, businesses must obtain an IEC from the DGFT, which serves as a unique identification number for importers and exporters.
As of August 2021, over 450,000 IECs were issued in India.

2.2 Registration with Customs Authorities

Importers must register with the customs authorities by filing the appropriate forms and providing necessary information.
This registration enables importers to carry out customs clearance processes.

2.3 Understanding Product-Specific Regulations

Different products may have specific regulations concerning quality control, labeling, packaging, and certification requirements.
Compliance with these regulations ensures smooth importation and adherence to product standards.

2.4 Determining Import Licensing Requirements

Certain products require import licenses, such as those related to health, defense, and strategic sectors.
Importers must identify whether their goods fall under any licensing requirements.

Document Preparation

what-are-the- document-required-for-imports-in-india

3.1 Proforma Invoice and Purchase Order

A proforma invoice and purchase order provide details of the transaction, including the buyer and seller information, product description, quantity, price, and payment terms.

3.2 Commercial Invoice

The commercial invoice is prepared by the exporter and contains information regarding the goods being imported, the value, terms of sale, and other necessary details for customs clearance.

3.3 Bill of Lading or Airway Bill

The bill of lading or airway bill serves as evidence of the contract of carriage and receipt of goods by the carrier.

3.4 Packing List

The packing list provides a detailed breakdown of the contents, quantities, and packaging specifications of the imported goods.

3.5 Insurance Certificate

An insurance certificate provides evidence of insurance coverage for the goods during transit.

3.6 Import License, if applicable

Certain products require an import license issued by the relevant authorities.

3.7 Other Relevant Documents

Additional documents may include certificates of origin, certificates of conformity, test reports, and any specific documentation required for product-specific regulations.

Customs Clearance Process

4.1 Arrival of Goods and Filing of Bill of Entry

Upon arrival, the importer or their customs agent files a Bill of Entry (BOE) with customs, providing details of the imported goods.

4.2 Customs Examination and Assessment

Customs authorities examine the goods to ensure compliance with regulations, verify the declared value, and assess applicable customs duties, taxes, and charges.

4.3 Payment of Customs Duty and Taxes

Importers must pay customs duties, taxes, and other applicable charges based on the assessed value of the goods.

4.4 Customs Clearance and Release of Goods

Once customs duties and taxes are paid, and compliance is established, customs clearance is granted, and the goods are released for delivery.

4.5 Import Inspection and Testing, if required

Certain products may undergo inspection, sampling, and testing by designated agencies to ensure conformity with quality and safety standards.

Post-Clearance Compliance

5.1 Importer's Obligations and Compliance Requirements

Importers are responsible for adhering to post-clearance compliance requirements, such as product labeling, certifications, and regulatory obligations.

5.2 Record-Keeping and Audit

Importers must maintain records of import transactions, invoices, shipping documents, and other relevant records for a specified period.

5.3 Reconciliation and Post-Clearance Verification

Post-clearance verification may be conducted by customs authorities to reconcile declared values and ensure compliance with customs procedures.

5.4 Trade Facilitation Measures

Various trade facilitation measures, such as Authorized Economic Operator (AEO) programs and Single Window Systems, aim to streamline import processes and reduce administrative burdens.

Duty Exemption Schemes and Incentives

6.1 Duty Exemption for Export Production

The Duty Exemption Scheme allows importers to import goods duty-free or at reduced rates for manufacturing or processing goods intended for export.

6.2 Advance Authorization Scheme

Under this scheme, importers can obtain an authorization to import inputs required for export production without payment of customs duties.

6.3 Export Promotion Capital Goods (EPCG) Scheme

The EPCG scheme allows importers to import capital goods at concessional rates of duty for enhancing export competitiveness.

6.4 Special Economic Zones (SEZs) and Free Trade Warehousing Zones (FTWZs)

SEZs and FTWZs offer various incentives, such as duty-free importation, streamlined customs procedures, and tax benefits to promote exports and attract foreign investment.

6.5 Other Incentives and Benefits

India offers several other incentives, such as duty drawback, refund of GST, and export promotion schemes, to encourage exports and boost the economy.

Challenges and Best Practices

7.1 Common Challenges in Importing to India

Complex regulatory framework
Tariff and non-tariff barriers
Lengthy customs clearance procedures
Compliance with product-specific regulations

7.2 Best Practices for Successful Imports

Conduct thorough research and due diligence
Seek professional assistance when needed
Ensure accurate and complete documentation
Maintain strong communication with suppliers and customs agents

7.3 Engaging with Customs Brokers and Freight Forwarders

Customs brokers and freight forwarders can provide expertise in navigating the import process, ensuring compliance, and managing logistics effectively.

Conclusion

Successfully importing goods into India requires a deep understanding of the import regulations, meticulous preparation, and adherence to compliance requirements. By familiarizing yourself with the regulatory bodies, documentation, and customs clearance processes outlined in this guide, you can streamline your import operations and navigate the complexities with confidence. Remember to stay updated on changes in regulations and leverage duty exemption schemes and incentives to optimize your import activities. With careful planning, attention to detail, and the right partners, you can unlock the immense potential offered by the Indian market and establish a successful import business.

The import process in India may seem daunting at first, but with a systematic approach and understanding of the regulations, businesses can successfully navigate through the procedures. By following the guidelines and ensuring compliance with the necessary requirements, importers can take advantage of the vast opportunities offered by the Indian market.

This comprehensive guide has provided an in-depth overview of the import process in India, from understanding import regulations and document preparation to customs clearance and post-clearance compliance. By staying informed, seeking professional assistance when needed, and adhering to the best practices discussed, importers can streamline their operations, mitigate risks, and achieve their import objectives in India. Remember, thorough preparation, attention to detail, and compliance are the keys to a successful import venture in India.