Import Guidence

NEW FOREIGN TRADE POLICY 2015-2020

2015-04-05T18:31:00.001+05:30

Minister of Commerce & Industry Smt. Nirmala Sitharaman released the much awaited Foreign Trade Policy - 2015-20

The Major highlights are given below for your ready reference:

1. Merchandise Export from India Scheme (MEIS) : A New Scheme introduced in place of existing (five) Chapter 3 Schemes.

2. The benefit under MIES will be determined based on Exporting Product and Exporting Country divided in various Groups. The benefit will range between 2% to 5% of FOB Value of Exports.

3. Served From India Scheme (SFIS) is being replaced by a New Scheme - Services Export from India Scheme (SEIS)

4. All Service Providers of Notified Services located in India will be eligible for the benefits regardless of their constitution or profile of service provider.

5. The SEIS benefit of 3% or 5% will be based on Net Foreign Exchange Earned.

6. The Duty Credit Scrips issued under both MEIS and SEIS will
a. without any actual user condition
b. Freely Transferable
c. No longer restricted for any specified types of goods.
d. Can be used for payment of Customs Duty /Excise Duty/Service Tax

7. The units in SEZ will also be allowed to claim incentive under MIES and SIES Schemes.

8. The Nomenclature of Status Holder Scheme has been changed to One, Two, Three, Four and Five Star Export House.

9. The Criteria for Export performance for the recognition of status holder have been also changed from Rupees to US Dollar. The Minimum Export Performance in FOB Value during current and previous 2 Years is now 3 Million USD.

10. Manufacturer Status Holders will now enabled to Self Certify Country of Origin from India to qualify under various PTA, FTA, CECAs and CEPAs

11. To Boost "Make in India" Specific Export Obligation under EPCG will be reduced to 75% if goods are procured from domestic capital goods manufacturer.

12. Hard Copies of CA /CE / CS Certificates will not be required for various application. Online Upload facility of its soft copy will be made available in the new Online Application Process for Chapter 3 & Chapter 4 Schemes.

13. Document Records of EPCG Authorisation will now be required to be maintainedonly for 2 Years after redemption.

14. A facility has been created to upload documents in Exporter Importer Profile which will hold copies of IEC, PAN, RCMC, Industrial Licence etc.. Once uploaded, No separate submission of these copies will be required with each application.

15. Communication with Exporter/Importer will be done through SMS/Email and thus mandatory fields like mobile no. and email address will be added in the IEC data base.

16. Application of refund of TED will now be made online.

17. EOUs, EHTPs, STPs have now been allowed
a) Share Infrastructural facilities among themselves
b) Inter unit transfer of goods and Services
c) To set up facility of Warehouses near the port of export.

18. Goods falling in the category of handloom products, books/periodicals, leather footwear, toys and customized fashion garments, having FOB Value upto Rs. 25,000/- per Consignment (finalized using e-commerce platform) shall be eligible for benefits under FTP.

19. e-Commerce Exports will allowed to be done under Manual Mode through Foreign Post Offices at New Delhi, Mumbai and Chennai and under Courier Regulations through Airports at Delhi, Mumbai and Chennai Only.

20. A New Chapter is introduced to resolve Quality Complaints and Trade Disputes. A Committee on Quality Complaints and Trade Disputes (CQCTD) is being constituted.

21. Vishakhapatnam and Bhimavaram in Andhra Pradesh are to be recognised as towns of export excellence for product category - Seafood.

22. New ANF & Appendices have also been notified along with the new FTP.

Please note that specific Application, procedures and documentation will have to be prepared, applied and submitted as defined under the New FTP and Handbook of Procedures to avail of any of the said benefits under the new FTP.

The Official Highlights of the NEW FTP is available on the below link:
(Highlights of the FTP 2015-20)

India imposes anti-dumping duty on chemical from China

2011-07-15T12:10:00.001+05:30

India has imposed an anti-dumping duty of up to $ 0.556 per kg on cheap imports of 'Sodium Tripoly Phosphate' from China for a period of five years.

The chemical is primarily used in industrial cleaning processes and ceramics manufacture.

The Directorate-General of Anti-Dumping and Allied Duties (DGAD), a nodal agency under the Commerce Ministry, recommended the imposition of the duty after an investigation. A DGAD probe concluded that the domestic industry had suffered material injury on account of dumping of the product by China.

The duty would range between $ 0.238 per kg and $ 0.556 per kg, it said.

Government: Import of Rubber chemical may attract safeguard duty

2011-07-01T15:04:00.001+05:30

After a petition filed by M/s. NOCIL Ltd, which accounts for more than 50 per cent of the rubber chemical output, the Revenue Department has notified the imposition of safeguard duty on an imported product commonly used in treating natural rubber.

The Office of the Directorate-General of Safeguards identified the rubber chemical as PX-13 or 6PPD, which is extensively used in treating natural rubber, synthetic rubber, butadiene rubber, nitrilie rubber, carboxylated rubber and other synthetic rubber-based compounds, and availed of in the manufacture of various rubber products.

Arguing that the product has had a history of dumping since 2003, the domestic industry, in its petition, presented before the Court the import and injury-related data from 2000-01 to 2010-11 (December 2010).

According to Mr I.D. Majumder, Director-General (Safeguards), the petitioner claimed "a sudden, sharp and significant increase" during the injury period despite the imposition of anti-dumping duty on the product.

Government mulling rollback of countervailing duty on coal imports

2011-06-20T14:55:00.001+05:30

The Finance Ministry is mulling over a rollback of the countervailing duty (CVD) on coal imports meant for power infrastructure projects.

Government sources said that the consideration was for relaxing the five per cent CVD for imports specifically meant for thermal power generation or coal-based power plants and related infrastructure projects. Currently, there is five per cent Customs duty on non-coking coal, in addition to one per cent excise duty announced on 130 items in the last Budget.

In the 2011-12 Budget, the government had imposed CVD of five per cent on coal imports in cases where the importers avail of Cenvat credit facility. This move was initiated when a levy of one per cent excise duty was proposed by the government on 130 items without Cenvat credit. But if Cenvat credit is taken, then these goods would attract a tariff rate of five per cent, which is applicable for all categories of coal imports such as lignite, coke, tar and others.

Finance Ministry officials contend that the CVD was imposed to provide a level-playing field for domestic manufacturers and was charged at a rate equal to the excise duty rate.

Cenvat credit rate denotes the credit availed by a manufacturer of goods in the form of a deduction of input tax paid on the purchase of raw materials, fixed assets, packing material etc. from the total tax payable to the government, while CVD is also known as anti-subsidy duty.

Government may impose import duty on sugar in a week

2011-06-16T11:35:00.001+05:30

The government is likely to impose import duty on sugar in a week as cane planting gathering speed in the country

The Finance Ministry, which is seeking 15 per cent import duty, is likely to take a decision on the Food Ministry's proposal to end duty-free imports of sugar. It may be recalled that the Ministry, while extending an earlier deadline in April, had given the nod for duty-free imports till June 30.

A Food Ministry official, who foresees the Finance Ministry making an announcement regarding the increase in duty soon, believes that the government does not want the industry and farmers to be disadvantaged by imports.

Nevertheless, experts reckon that with the decline in domestic prices due to surplus output, the likelihood of imports was anyway low, even without duty.

Being the world's top sugar consumer and the biggest producer after Brazil, India's production is forecast to touch 24.5 million tonnes, against an annual consumption of about 22 million tonnes in the 2010-11 year ending in September. In the previous season, production was 19 million tonnes.

Meanwhile, the domestic sugar industry has been putting pressure on the government to convince the Food and Commerce ministries of the need to urgently open the exports quota as it has almost been used up. With sugar production in 2011-12 projected to be higher than the previous seasons at around 29.3 million tonnes, a decision on opening up exports becomes all the more essential.

As of now, sugar mills have exported close to 400,000 tonnes, of the half million tonnes permitted by the government under open general licence (OGL) for the 2010-11 sugar year, which began in October

Finance Minister gives DEPB 3-month extension for one last time

2011-06-14T14:23:00.001+05:30

THE Duty Entitlement Passbook (DEPB), the popular-export incentive scheme, has got a three-month extension from the Finance Ministry. It was to end on June 30.

However, the Ministry has made it clear that exporters should brace themselves to switch to the duty drawback scheme by October as it would not grant any further extensions to DEPB.

According to a source, by permitting exporters to enjoy the benefits offered by DEPB for three more months, the government wants to ensure a smooth transition to the new scheme.

The source apprised that a three-member panel, comprising Secretaries from the Commerce and Finance ministries, would work out the modalities of migration to the duty drawback scheme.

Last week, the Finance Minister, Mr Pranab Mukherjee and Commerce Minister, Mr Anand Sharma met and discussed the issue and decided to extend the scheme.

It is a known fact that the Finance Ministry is firm on ending DEPB, contending that it allows exporters double benefit instead of just neutralising the import duty on inputs that go into exports.

In 2010-11, the scheme cost the exchequer Rs 8,520 crore, of which more than 60 per cent was exploited by large engineering and chemical exporters.

In contrast, the drawback scheme just neutralises levies paid on inputs. The rates are fixed annually, based on the changes in the duty structure in the Budget.

In this direction, an expert panel headed by Planning Commission member Mr Saumitra Choudhury will evaluate the duty drawback rates for all export products, including those covered under DEPB now.

Besides, the Finance Ministry has also asked the Commerce Ministry to direct export promotion councils to provide relevant data to the panel. The industry is not against the DEPB phase-out, as long as a substitute scheme is in place.

Fieo asks Mr. Anand Sharma for interest subvention, DEPB extension

2011-06-09T12:28:00.001+05:30

DRAWING attention to the concerns over constant increase in export credit rate over the last one year, Mr Ramu S. Deora, President, Federation of Indian Export Organisations (Fieo), pointed out recently that exporters were competing with countries having credit rates below 5 per cent.

Speaking at an Interactive Session in Chennai recently, Mr Deora said that the base rate of Indian banks had moved up between 2-2.50 per cent in the last 7 to 8 months, pushing up export credit, but on the contrary, interest subvention for exports had been withdrawn from April 1, 2011.

According to the Fieo Chief, export finance cost, which was 7 per cent in July 2010, had now moved up to somewhere between 11-11.5 per cent, which is a whopping increase of about 57-64 per cent. Hence, Mr Deora urged the Commerce and Industry Minister, Mr Anand Sharma to prevail upon the government to draw the line between exports and domestic finance and make available export credit to the MSME sector at 7 per cent, and to others at 9 per cent in order to maintain export momentum.

On the DEPB scheme, Mr Deora acknowledged that it had been a time-proven instrument, helping Indian exports grow to the present level. "DEPB is well suited to the needs of small exporters, since it is not feasible for them to effect imports on their own account as economic volumes are not generated," Mr Deora said.

The Fieo chief observed that the uncertainty over continuation of the DEPB Scheme after June 30, 2011 had been a cause of concern to exporters, which could taper down growth. Hence, he urged Mr Sharma to extend the DEPB scheme till GST becomes operational or at least till the fiscal-end.

While suggesting a host of measures to cut transaction cost of exports, ranging between 7- 10 per cent of exports value, Mr Deora also alluded to the occurrences of long delay while ratifying the Norms for Advance Authorisation, issued under Paragraph 4.7 on self-declaration basis where SION does not exist.

Raising concern on the delays and paperwork involved in closure of advance authorisation at DGFT, the Fieo president contends that the same procedure should be put in force at the Customs also.

Mr Deora also asked the government to implement full EDI connectivity amongst the agencies involved in import/exports for seamless movement of cargo, which could go a long way in reducing transaction time and cost to a large extent.

Meanwhile, on the issue of DEPB extension and re-introduction of interest subvention, the Commerce Minister, Mr Sharma has made it clear that both issues have been taken up with the Finance Minister, who had given an assurance of adequately addressing the exporters' concerns.

Mr Sharma also announced that from now on the DGFT's zonal office would provide time-bound clearances, which would be audited every quarter. Besides, he also apprised that he was trying to make available the discharge of export obligations electronically in order to do away with the voluminous documents and delays.

The minister also assured that he would review the delays in imposition of provisional anti-dumping duty so that the same could be imposed in reasonable time, compared with the best practices. For providing commercial information to exporters, Mr Sharma agreed to strengthen commercial missions abroad and open more such missions.

With regard to the new manufacturing policy, Mr Sharma said it would be announced shortly with the aim of augmenting the share of manufacturing in GDP from 16 per cent to 25 per cent.

Tea imports plunge 25 pc to 19.26 m kg in FY11

2011-06-08T12:29:00.001+05:30

Tea Board data indicates that imports in the last fiscal plunged by more than 25 per cent to settle at 19.26 million kg.

According to the data, the country had imported 25.84 million kg of tea in the year-ago period.

Considering that India, the world's largest consumer of tea, imports the brew only to re-export to other countries, the decline in imports is a pointer to fall in re-exports.

Data shows that imports from Argentina, Canada, Kenya, Nepal, the UK and the US climbed, while inbound shipments from China, Indonesia, Iran, Malawi and Sri Lanka dipped.

A major fall was witnessed in tea imports from Vietnam. While in 2009-10, the country imported 7.21 million kg of tea from South-East Asian countries, in the last fiscal the figure slid to 0.72 million kg.

Similarly, exports from Indonesia to India dropped to 1.44 million kg in 2010-11 from 2.23 million kg in the earlier period.

Sri Lanka shipped less quantity to India in 2010-11 at 0.39 million kg from 0.93 million kg despatched in the year-ago-period.

As regards major tea exporting countries to India, Nepal sent 8.65 million kg in the past fiscal, against 7.47 million kg in the year-ago period.

Likewise, in 2010-11 shipments from Kenya to India stood at 4.51 million kg compared to 2.27 million kg the earlier year.

Exporters pin hopes on corporate India’s appeal to FM

2011-06-07T13:29:00.001+05:30

EXPORTERS are counting on fresh representations by leading corporate houses to retain the popular Duty Entitlement Pass Book (DEPB) scheme, despite the Finance Ministry making it clear that it is not in favour of extending the scheme beyond June 30.

Finance Ministry estimates suggest that the DEPB drains about Rs 8,000 crore every year. The scheme neutralises the impact of basic and special Customs duties on the import content of exports. With the grant of duty credit against the export product under DEPB, exporters end up saving around 8-10 per cent on the cost of their exports.

Since it overcompensates exporters, the Finance Ministry feels DEPB is not WTO-compliant. It has asked exporters to fall back on the duty drawback facility, which does the same neutralisation by compensating for domestic taxes paid.

However, exporters are not too keen on lower duty drawback rates, as they feel that it under-compensates them because several domestic taxes are not considered. Both the Finance Ministry and the Commerce Ministry are of the view that all problems will be sorted out with the launch of the goods and services tax (GST).

But as GST may take a year to be implemented, exporters have once again begun lobbying with the Finance Ministry to extend DEPB. Their efforts have got a shot in the arm after the initiative of the industrial houses, who have taken up the matter with the Finance Minister, Mr Pranab Mukherjee. It is learnt that corporate leaders have made it clear to Mr Mukherjee that discontinuing DEPB would substantially hit
exports.

Keep fingers crossed on DEPB, Khullar tells exporters

2011-06-07T13:25:00.001+05:30

EXPORTERS have been asked by the Commerce Ministry to "keep their fingers crossed" on their demand for extension of the duty entitlement pass book (DEPB), a tax neutralisation scheme on exports, beyond June 30.

Exporters have begun pressing their case with both the Commerce and Finance Ministries for continuation of the sops after the Revenue Department made it clear that the DEPB window would close from next month-end.

The Chairman of CII's National Committee on Exports, Mr Sanjay Budhia, pointed out that exporters across different sectors were worried as no alternative scheme was being offered in place of the DEPB.

According to an official, the Commerce Secretary, Dr Rahul Khullar, advised representatives of business chambers and export promotion councils, who called on him, to "keep their fingers crossed" as it was up to the Revenue Department to take the final call on the
issue.

Duty-free sugar imports allowed till March 31

2011-01-13T09:44:00.001+05:30

The Union government has extended the zero-duty regime on refined and raw sugar imports till March 31. The move is aimed at arresting the galloping inflation.

In April 2009, the government removed import duty following a sharp decline in output to nearly 15 million tonnes against the annual domestic demand of 23 million tonnes.

After the zero-duty regime lapsed on December 31, 2010, it brought into effect the earlier duty structure of 60 per cent.

However, a fresh notification issued by the Central Board of Excise and Customs (CBEC) on January 8 extended the duty-free regime till March 31.

Meanwhile, the Food and Agriculture Minister, Mr Sharad Pawar, said that the Centre would start issuing permits for export of five lakh tonnes of sugar under open general licence (OGL) after January 30.

Mr Pawar denied any move to cancel the earlier decision to allow the exports of five lakh tonnes of the sweetener following the sudden rise in food prices.

The Directorate of Sugar on January 1 had issued detailed guidelines for export of the five lakh tonnes which was to be pro-rated among individual mills based on their average annual production for the last three years.

The guidelines stated that all applications by mills seeking release orders for their export entitlements "will be processed within 3 working days."

Mr Pawar's statement now that the permits would be issued only after January 30 means that the three working days processing time limit no longer holds. That effectively translates into a suspension of exports.

Imports of sensitive items rises by 14 % in April to October.

2011-01-13T09:43:00.001+05:30

Imports of sensitive items increased by 14 per cent to Rs 40,499 crore during April-October 2010, with sharp increases in foodgrains, dairy products, edible oils, rubber and alcoholic beverages.

Rise in imports of crude edible oil increased the total oil imports to Rs15,882 crore, a 12 per cent rise when compared to the same period of 2009.

Dairy products imports trebled to Rs 536 crore in the seven-month period, while rubber imports increased by 93.1 per cent to Rs 977.24 crore.

Automobile imports more than doubled to Rs 1,249 crore, compared to Rs 583 crore in the same period of 2009.

Alcoholic beverages imports went up by 55 per cent to total Rs 102 crore.

Imports of cotton, silk and tea and coffee fell by 26.7 per cent and 19.5 per cent during the period to Rs 945.44 crore and Rs 149.19 crore, respectively.

The sensitive items are a list of more than 300 products crucial for the economy and are monitored by the Commerce Department on a regular basis.

Imports of sensitive items amounted to 4.6 per cent of the total imports during the period. Imports of sensitive items from Indonesia, China, Malaysia and the US have gone up, while those from Myanmar, Canada, Brazil and Japan have declined.

Gold imports up by 42 pc in Nov.

2011-01-12T09:53:00.001+05:30

Gold imports shot up by over 42 per cent to total 39.8 tonnes in
November despite the ruling high price.

India, the world's largest consumer of the yellow metal, imported 28
tonnes during November 2009, according to data given by the Bombay
Bullion Association (BBA).

With the wedding season under way, prices would continue to reach
greater heights, the World Gold Council (WGC) Managing Director
(Middle East and India), Mr Ajay Mitra, said.

Natural rubber imports at concessional duty rates allowed

2011-01-12T09:52:00.001+05:30

The Finance Ministry has allowed concessional imports of natural
rubber for the remaining part of 2010-11, a move that may help meet
the rising demand of the tyre industry.

As much as 40,000 tonnes of natural rubber can be imported till March
31, 2011, at a concessional Customs duty of 7.5 per cent, as against
the existing basic Customs duty level of 20 per cent, the Revenue
Department said.

The tyre industry had been demanding an import duty cut as they
struggled to pass on the rise in raw material costs to the end users.

Natural rubber imports during April-November 2010 totalled 1,43,468
tonnes, showing a 3 per cent increase over the same period of 2009.

Served from India Scheme (SFIS)

2010-11-30T18:20:00.000+05:30

Served from India Scheme (SFIS) :- (Under Chapter 3 of FTP)

· Eligibility for the Scheme for the Services Listed in Appendix 10 of HBP V1

· Minimum Foreign Exchange Earning of Rs. 10 Lakh in preceding Financial Year

· For Individual Exporter Minimum Foreign Exchange Earning is 5 Lakh for Duty credit Scrip.

· Duty credit benefit of 10% of Free Foreign Exchange earnings will be entitled.

The Duty Credit Scrip utilized in Import :

· Import of any Capital Goods

· Office Equipment and Professional Equipment

· Office furniture and Consumables which are freely importable or Restricted under ITC (HS) are allowed for imports against this licence.

The Duty Credit Scrip is Non Transferable but Utilised in Import within Group Company.

Ineligible Remittances and Services for SFIS scheme Hand Book of Procedure Para 3.6.1 Foreign exchange remittances other than those that are earned for rendering of services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible. For calculation of entitlement, following shall not be taken into account. a) Foreign Exchange remittances: I. related to Financial Services Sector 1. Raising of all types of foreign currency Loans; 2. Export proceeds realization of clients; 3. Issuance of Foreign Equity through ADRs / GDRs or other similar instruments; 4. Issuance of foreign currency Bonds; 5. Sale of securities and other financial instruments; 6. Other receivables not connected with services rendered by financial institutions; and II. earned through contract/regular employment abroad (e.g. labour remittances); b) Payments for services received from EEFC Account; c) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc. (However, remittances received on account of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible.); d) Foreign exchange turnover by Educational Institutions like equity participation, donations etc. (However remittances received on account of the course fees and consultancy provided by the institution shall be eligible.); e) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units; f) Clubbing of turnover of services rendered by SEZ / EOU / EHTP / STPI / BTP units with turnover of DTA Service Providers; g) Service Providers in Telecom Sector (Sr. No 2C of Appendix 10); h) Foreign Exchange earnings for Services provided by Airline and Shipping Lines Service providers for routes plying from any country X to any country Y only, not touching India at all; and i) Exports of Goods.

FDA Monitoring Food Imports from India

2010-11-16T17:41:00.001+05:30

The US Food and Drug Administration has set up the Inter Agency Import Safety Group, an outcome of which has been the establishment of FDA offices in China and India. Consequent to facing severe criticism, FDA is stringently monitoring the quality of food imports from countries that they view as 'high risk', including India. A recent example is the rejection by FDA of containers of rice from India due to presence of fifth (dirt) ingrained in the rice, which was found in a macroscopic/microscopic examination conducted by the FDA approved lab. It would therefore be in the interest of Indian Agricultural & Processed Food Products Exporters to US to ensure that their products meet the stringent monitoring of quality by the USFDA. Before the export orders are executed, the exporter must obtain complete information about standards relating to product, process, packaging, labelling etc.

Strategy in Export and Import Correspondence

2010-06-07T17:03:00.001+05:30

Always use clear, simple and straightforward language when corresponding with a foreign buyer. Avoid poetic and artistic expressions, idioms, colloquialisms, and slang, these will confuse the buyer.

Avoid using too many abbreviations in fax (facsimile), e-mail (electronic mail), telex (teletype exchange) and cablegram for the purpose of saving transmission costs. An abbreviation often is ambiguous and can create misunderstandings.

When to Reply

For the established buyer, reply within 24 hours after the receipt of buyer's fax, letter, e-mail, telex or cablegram. If for some reason a fax, an e-mail or a telex reply will be sent after a few days, let the buyer knows immediately that you will respond within the next few days. However, if the buyer's demands are unreasonable, it is helpful to maintain complete silence for few days. Being silent is an intimidating tactic.

For the prospective buyer, also reply within 24 hours if the communication is initiated by the exporter. Otherwise, please refer to the Uninvited Inquiries in International Trade below.

The exporter must reply within the shortest possible time, but never expect the buyer to do the same.

Means of Reply

Use fax (facsimile) or e-mail (electronic mail) in corresponding where possible. The fax is still widely used in international correspondence.

A letter will take several days to a few weeks to reach the buyer. Sometimes a letter may be lost. A letter, however, is preferred over a fax or an e-mail for the initial contact.

Avoid replying by telephone as there is no reference copy at both sides for future use. Moreover, the calls may often be answered by people unfamiliar with English in a non-English speaking country and the contact person may not be available to take the calls.

Different Date Formats, Decimal Fractions, and Units of Measurement

The date 2/3/04 is February 3, 2004, in some countries and it is March 2, 2004, in others. If the foreign importer needs the shipment on February 3, 2004, and the exporter enters March 2, 2004, in the order, such a misunderstanding can create chaos for importer and exporter. It is better to write the month in word, instead of number, in the international trade.

A comma, not a decimal point, is used to separate a whole number from the decimal place in some countries. For example, 800.05 is written as 800,05 in Germany.

A unit of measurement like the ton may refer to the metric ton (2204.6 lbs. or 1000 kgs.), short ton (2000 lbs. or 907 kgs.), or long ton (2240 lbs. or 1016 kgs.). The exporter must clearly differentiate units of measurement in the correspondence to avoid problems. Please see Conversion Factors - Units of Measurement.

Uninvited Inquiries in International Trade

Few companies venture into international trade totally unfamiliar with the English language. Most export and import businesses have personnel who can write and read English, though some have difficulty with spoken English. It is a lack of fluency in English that has prompted some buyers to write in their own language, not because they do not know English at all. Some buyers use their own language because of national pride.

Sometimes an exporter may receive an inquiry from a prospective foreign buyer in a language other than English. If the inquiry is from an export priority market, it is important to reply in the buyer's language. For other markets, reply in the buyer's language if possible or else use the English language.

Some inquiries are for purpose of product and price information, not for importation. Unless the prospective foreign buyer is known to the exporter, it is not necessary to reply at once. Reply by letter and do not divulge sensitive information like the bottom price.

A buyer rarely places an immediate order in the initial contact. At times the inquiry is from a foreign competitor inquiring on the pretext of buying, or to put it bluntly 'spying' on the exporter.

By: Bhadresh Bhatt

Customs Clearance of imported goods

2010-06-07T16:13:00.001+05:30

Customs Authorities and the Clearing agents play the key role in the import of goods. All goods imported into India have to pass through the procedure of Customs clearance as they cross Indian border. The goods are examined, appraised, assessed, evaluated and then allowed to be taken out of charge of the Customs for use by the importer. The entire process of customs clearance is complex and to carry out this procedure smoothly, the help of accredited customs clearing agents has to be taken.

The importers need to present a Bill of Entry on receipt of the advise of the arrival of the vessel. The B/E is noted in Import Department, with corresponding endorsement made against the consignment entry in the IGM along with the date. The B/E will then be presented in the Appraising Department with all the relevant documents like invoice, Bill of Lading, Import license and catalogue literature. The appraising procedure may be of two types.

The First Check Procedure-Applicable only when appraisers/assessing group finds it difficult to complete the assessment on the basis of the documents made available.

The Scrutinizing Appraiser in the group gives the examination order. The goods are then examined in the docks and the B/E returned to the Scrutinizing Appraiser for completion and license debit. In this case the Customs 'out of charge' is given by the Accounts Department soon after the recovery of duty.

The Second Check Procedure-Under this 80 to 90 percent of the consignments are cleared.

If the documents are adequate for determining the classification, value, ITC license, the form is completed by the Appraiser and then countersigned by The Assistant Collector. It is then forwarded to the License Department for licensing debit and audit. Then it is returned to the importers for payment of duty in the Accounts/Cash department. After recovery of duty the original B/E is retained in the Accounts Department and the duplicate and other copies are returned to the importer for getting the goods examined in the docks.

In the docks, the Shed Appraiser/Examiner shall examine the goods and if in order, shall give the out of charge for taking delivery from the custodian of the goods viz. Port Trust, after payment of Port Trust charges.

Irrespective of the procedure, examination of cargo for assessment purpose is chiefly the function of the Appraising Department having special staff of examiners in the docks/Air cargo shed. The records of the examination and weighment should be declared, attested and dated at the time of the examination. If the examination spreads over more than one day, the result on each day's progress should be disclosed.

These apart some of the Customs house in India have introduced the simplified computer procedure for speedy clearance of consignment through B/E.

Custom Authorities :--

2010-06-07T16:07:00.001+05:30

The customs administration vests in CBEC for implementing the provisions of the Customs Act.1962. There are two main wings of Customs House. In the 'Appraisement' wing the job of collection of revenue is assigned, while the 'Preventive' one aims at prevention of smuggling.

The Customs authority functions under the Ministry of Finance (MoF) with the Central Board of Excise & Customs at the apex. The board is headed by a Chairman and assisted by Members. The Member (Customs) looks after the following matters:

Customs Law and its interpretation and application, policy and broad procedures(Other than those concerning anti-smuggling)
Enforcement of Import Export prohibitions
Foreign Travel and Cases on imports and exports
Baggage concessions and rules;
Customs Valuations;
Tariff Classification and Tariff advices;Customs procedures, Customs House
Agents Regulations;
Warehousing, inland Bonded Warehouses;
FTZs, EPZs, 100% EOUs etc.
Matters relating to Drawback;
Customs Co-operations Council, GATT and ESCAP and international talks and agreements, organisations concerning customs;
All other works on Customs not specified elsewhere;
Supervision and control over Customs Commissionerate of Mumbai, Calcutta, Chennai, Kandla, Bangalore, Cochin, Delhi , Visakhapatnam, Goa and Tuticorin and Customs Divisions of other Central Excise Commissioners, Assistant Commissionerates regarding Customs work handled by them.
Chemical laboratories and
Directorate of Drawback

The Ministry of Finance (MoF) issues Customs Notifications to levy duty on the imported goods. The Changes are made each year on the Day of the Fiscal Budget. Customs clearance of the imported goods is done by the customs Authorities functioning under the overall charge of MoF. The hierarchy of the Authorities:

Central Board of Excise & Customs (CBEC) in the MoF Under which operates:Customs Commissionerates of Mumbai, Calcutta, Chennai, Kandla, Bangalore, Cochin, Delhi, Vizag, Goa and Tuticorin.

Directorate of Drawback
Field Level:Principal Commissioners Customs ,Commissioners,Addl. Commissioners ,Dy. Commissioners, Asst.Commissioners,Port of clearance.

TT Buying and Selling Rate !!!!!!!!!!!

2010-06-07T16:02:00.000+05:30

TT Selling Rate: This rate is applied for all clean remittances outside India. For selling foreign currency to its customer by the bank such as for issuance of bank drafts, mail/telegraphic transfer etc.

TT Buying Rate: This rate is applied for purchase of foreign currency by banks when the banks in India have already obtained the cover in India. Thus all foreign inward remittances which are made payable in India are converted by applying this rate. A mail transfer issued by a bank in Dubai for US $ 10,000 drawn on any commercial bank having branch at the overseas destination will be converted into rupees at TT buying rate.

Reading Rates-The rates announced by the banks every day morning are card rates.

Reputed importers can always bargain with the bank for improvement in the card rates for reducing their rupee liability on conversion of foreign currency into Indian rupees. Also a distinction is made between spot rates and forward rates. Spot rates are applicable on the day of transaction, whereas forward rates are fixed in advance for a transaction that will mature at a specified date or during a specified period in future imports.

Mode of Pricing and INCO TERMS

2010-06-07T15:55:00.001+05:30

While finalizing the terms of import contract, the Importer, should, inter Alia, be fully conversant with the mode of pricing and the manner of payment for the imports. As regards mode of pricing, the overseas supplier normally quote the terms prevailing in international trade.

The importer for his benefits should know the meaning of the technical terminology. To avoid ambiguity in interpretation of such terms, International Chamber of Commerce, Paris, Has give detailed definition of a few standard terms popularly known as 'INCO TERMS'. These terms have almost universal acceptance and are explained below:

Ex-work

'Ex-work' means that the seller's responsibility is to make the goods available to the buyer at works or factory. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. This terms thus represents the minimum obligation for the seller. It is mostly used for sale of plantation commodities such as tea, coffee and cocoa.

Free on Rail (FOR)/Free on Truck (FOT)

These terms are used when the goods are to be carried by rail, but they are also used for road transport. The seller's obligations are fulfilled when the goods are delivered to the carrier.

Free Alongside Ship (FAS)

Once the goods have been placed alongside the ship, the seller's obligations are fulfilled and the buyer notified. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. The buyer has to bear all costs and risks of loss or damage to the goods hereafter.

Free on Board(FOB)

The sellers's responsibility ends the moment the contracted goods are placed on board the ship, free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that a Received for Shipment' Bill of Lading is not sufficient. Such B/L if issued must be converted into 'Shipped on Board B/L' by using the stamp 'Shiped on Board' and must bear signature of the carrier or his authorized representative together with date on which the goods were 'boarded'.

Cost and Freight (C & F)

The seller must on his own risk and not as an agent of the buyer, contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. This being a shipment contract, the point of delivery is fixed to the ship's rail and the risk of loss or of damage to the goods is transferred from the seller to the buyer at that very point. As will be seen though the seller bears the cost of carriage to the named destination, the risk is already transferred to the buyer at the port of shipment itself.

Cost Insurance Freight (CIF)

The term is basically the same as C & F but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage.

By : Bhadresh Bhatt

Precautions to be taken at the time of establishing Letter of Credit

2010-06-05T15:10:00.001+05:30

Letter of credit offers almost complete protection to the seller but the buyer is put to many disadvantages and has to make payments against documents only. Before agreeing to open a letter of credit in favour of the seller, the opener must be satisfied with the creditworthiness and general reputation of the seller. Entire success of an L/C transaction depends on proper conduct of the seller.

Confidential report on the seller must be obtained at the time of first transaction with him.

Letter of credit also does not offer any protection for the quality/quantity of goods supplied under the L/C. It would, therefore be necessary to know the nature of goods and specify submission of quality reports/inspection reports from an independent agency to ensure receipt of goods of proper quality. This is particularly important in case of import of chemicals and such other goods. The opener has to submit an L/C application to the opening bank. The instructions contained in the L/C application is the mandate for the issuing bank and letter of credit will be issued in accordance with this application. It is, therefore, necessary that complete and precise information must be given in the L/C application form specifying therein the description, unit rate and quantity of the goods covered under L/C and details of documents required in absolute clear and unambiguous terms. The reference to underlying sale contract must be avoided as far as possible. The L/C application must nevertheless contain all the required/information based on which L/C could be opened by the bank.

After the L/C has been issued by the bank, a copy thereof must be obtained immediately. The L/C must be scrutinized to ensure that it has been properly issued and is in conformity with L/C application. Discrepancy, if any, must be brought to the notice of opening bank immediately.

Import contact may be concluded either in terms of INR or in foreign currency. Where the contracts are in INR, the related documents are also prepared in INR and no conversion is involved. However, where the bill is drawn in foreign currency, the payment is made in Indian rupees equivalent to the foreign currency. The equivalent rupee value is arrived at by applying suitable exchange rate. These rates are applied by banks to standardise the foreign exchange-rupee conversion process.

When the price of foreign currency is quoted in terms of home or local currency it is called direct quotation basis. This has been in application since 02.08.1993. However, there is a difference between inter-bank exchange rates and merchant rates.

Merchant rates are the exchange rates applied by the bankers for transaction with their customers for various purposes, including imports and exports. These rates are calculated by the banks as per the guidelines issued by the Foreign Exchange Dealers Association of India (FEDAI). Inter-bank rates are the rate for transactions amongst the authorised dealers in foreign exchange and depend on the market conditions.

Since exchange rates are volatile, documents delivered by the bank at the time of a favourable exchange rate will enable the Indian purchaser to pay less of Indian rupees. Forex rates are always quoted as two way price i.e. at a rate at which the bank is willing to sell foreign currency(buying rate) and at a rate at which the bank is willing to buy foreign currency(selling rate). There is always some difference in buying and selling rates. However, the maximum spread available to bank is restricted in terms of celling imposed by RBI. All exchange rates by authorised dealers are quoted in terms of their capacity as buyer or seller.

By : Bhadresh Bhatt

Letter of Credit vs Bank Gaurantee

2010-06-05T13:07:00.001+05:30

Letter of Credit vs Bank Gaurantee :

A letter of credit differs from a bank guarantee. An issuing or confirming bank's obligation is independent of, and unqualified by, the contract of sale under the transaction. A commercial credit is neither a performance bond, nor it is a guarantee of the quantity or quality of the goods shipped.

Letters of Credit are Separate Transactions

A contract for sale of goods between the seller and the buyer incorporates mode of settlement. Letters of credit by their nature are separate from the sale contract, and banks are not concerned or bound by such sale contracts even if the credits bear reference to them.

The credits stipulate documents which have to be tendered for payment and it, therefore, follows that in credits parties deal with documents and not with goods, services or performances to which the documents relate.

It is, therefore, in the interest of all the parties concerned that the conditions and terms of credit are complete and precise and banefit of excessive details.

Payment under a letter of credit does not depend on the performance obligation on the part of the exporter except those which the credit imposes. Banks accept documents under letters of credit for what those document purport to be on their face. Contract between the buyer and the seller is obligatory between themselves. The seller(beneficiary) cannot take advantage of any contractual terms in between the buyer and the opening bank and between the opening bank and the advising/confirming bank.

By : Bhadresh Bhatt

Getting and Import Export Code No for Export and Import

2010-06-05T12:55:00.000+05:30

Registration with Regional Licencing Authority and obtaining IEC Code

Registration with Regional Licensing Authority:

Registration with Regional Licensing Authority is a pre-requisite for import of goods. The Customs will not allow clearance of goods unless:

The importer has obtained IE Code Number from Regional Licensing Authority. However, no such registration is necessary for persons importing goods from/ to Nepal provided Value of a single Consignment does not exceed Rs. 25000/=

Obtaining IEC Code Number

An application for grant of IEC Code Number should be made in the prescribed proforma given at Appendix 3.I. The application duly signed by the applicant should be supported by the following documents:

Bank Receipt (in duplicate)/demand draft for payment of the fee of Rs.1000/- Certificate from the Banker of the applicant firm as per Annexure1 to the form. Two copies of passport size photographs of the applicant duly attested by the banker of the applicant.
A copy of Permanent Account Number issued by Income Tax Authorities, if PAN has not been allotted, a copy of the letter of legal authority may be furnished. If there is any non-resident interest in the firm and NRI investment is to be made with repatriable benefits, full particulars thereof along with a photocopy of RBI's approval. If there is NRI investment without repatriation benefit, a simple declaration indicating whether it is held with the general/specific permission of the RBI on the letter head of the firm should be furnished. In case of specific approval, a copy may also be furnished.

Declaration by the applicant that the proprietors/partners/directors of the applicant firm/company, as the case may be, are not associated as proprietor/partners/directors with any other firm/company the IEC No. is allotted with a condition that be can export only with the prior approval of the RBI.
By : Bhadresh Bhatt

Pricinpal Law & Import Export Policy

2010-06-05T11:42:00.000+05:30

Principal Law :-

Imports in to India are governed by Foreign Trade (Development & Regulation) Act 1992. Under this Act, imports of all goods is Free except for the items regulated by the policy or any other law for the time being in force.In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 the Government has issued the following Rules & Order:

Foreign Trade(Regulation)Rules, 1993, which inter alia, provide for grant of special licence, application for grant of licence, fee, conditions for licences, refusal of licence, amendment of licence, suspension of a licence, cancellation of licence, declaration as to the value and quality of imported goods, declaration as to the Importer- Exporter Code number, utilisation of imported goods, provisions regarding making, signing of any declaration/statement or documents, power to enter the premises and inspect, search and seizure of goods, documents, things and conveyance, settlement, confiscation and redemption and confiscation of conveyance.
Foreign Trade (Exemption from Application of Rules in Certain Cases) Order 1993
Notifications under Foreign Trade (Development & Regulation) Act 1992.

Import Export Policy :

The present import policy and procedures in respect of various commodities/category of importers, are, inter alia, contained in the following publications issued by the Ministry of Commerce and revised from time to time:
Import - Export Policy, 2009-2014 as modified upto 27.08.2009
Handbook of Import - Export Procedures(Volume 1), 2009-2014 as modified upto 26.08.2009.
Handbook of Import - Export Procedures: (Volume 2) Duty Exemption Scheme:
Input - Output and Value Addition Norms, 2009-2014.
ITC(HS) Classification of Import and Export Items.