As a shipper, your first step in the process is to obtain an Importer and Exporter Code, or IEC, from the Indian Directorate General of Foreign Trade (DGFT).
If your business is the exporter in a global trading arrangement, it is imperative to have an IEC. If you are doing business as the buyer, and are based outside of India, you should check that your supplier has registered with the DGFT and already has an IEC. If they do not, it is important to alert them to getting an IEC. The IEC application is managed via an online process, and is usually completed in a few days’ time.
Shipping Tutorials: How to import goods from India?
With a booming economy and a large population, India is a lucrative choice for wholesale importing.
India Import Customs Requirements
Importing can be smooth and efficient if proper steps are followed. Certain goods that fall under the following categories require special permission or licensing.
1) Licensed or Restricted Items – Licensed items can only be imported after obtaining an import license from the DGFT. These include goods such as precious and semi-precious stones, safety and security products, seeds, plants, animals, pharmaceuticals and chemicals, and various electronic items.
2) Prohibited Items – These goods are strictly prohibited from import and include tallow fat, animal rennet, wild animals, and unprocessed ivory.
3) Canalized Items – Canalized items can only be imported by specified transportation channels and methods, or through government agencies such as the State Trading Corporation (STC). These include petroleum products, bulk agricultural products such as grains and vegetable oils, and some pharmaceutical products.
Every importer is required to begin by submitting a Bill of Entry under Section 46, which states the value and description of goods entering the country. The Bill of Entry must be submitted in this manner:
- The original and a duplicate for customs
- Copy for the importer
- Copy for the bank
- Copy for making remittances
Under the Electronic Data Interchange (EDI), no formal Bill of Entry is required (as it is recorded electronically) but the importer is required to file a cargo declaration after prescribing particulars required for processing of the entry for customs clearance. Bills of Entry can be one of three types:
1) Bill of Entry for Home Consumption – This form is used when the imported goods are cleared on payment of full duty. Home consumption means use clearance of goods on payment of duty. It is a white colored document and often called the ‘white bill of entry’.
2) Bill of Entry for Into Bond – If the imported goods are not required immediately, importers may store the goods in a Custom Bonded warehouse without the payment of duty under a bond and then clear them from the warehouse when required on payment of duty. It is called Into Bond Bill of Entry.
3) Bill of Entry for Ex-Bond Clearance – The third type is for ex-bond clearance. This is used to clear goods from Custom Bonded warehouse upon payment of duty.
The rate of duty applicable is as it exists on the date a good is removed from a warehouse. If the rate changes after goods have been cleared from a customs port, the customs duty as assessed on a Into Bond bill of entry and actually paid on the value listed on the ex-bond bill of entry (Bill of Entry for Ex-Bond Clearance) will not be equivalent.
Case Study: Pharma competency center saves money, solves compliance issues for pharma giant
A leading pharmaceutical manufacturer in India faced multiple issues with its cargo movements. It was working with third-party manufacturers based at multiple locations across the country, and neither the company nor its manufacturers had factory-stuffing permission at any of their locations.
India Export Customers Requirements
These are steps you should be taking when shipping from India:
- The seller of the goods for export must send the buyer a commercial invoice.
- There must be a packing list, which contains details of the products for shipment.
- The shipper must submit copies of the packing list, commercial invoice, and any other required documents to the customs authority, along with a customs declaration. These documents may be submitted manually using paper forms or electronically to the customs office.
- A customs officer will examine the declaration and supporting documents, and if deemed acceptable, will issue a Let Export Order(LEO), releasing the goods for loading onto the exporting ship or aircraft.
- After the cargo is loaded, the carrier or freight forwarder will raise an air waybill (for air freight) or bill of lading (for ocean freight). The buyer of the goods must receive a copy of this document, so that he or she can claim them when they arrive at the import destination.
Source: Shipa Guide to India
Top Cargo ports in India
India is a global center for global imports and exports and it is one of the biggest peninsulas in the world. As the economy continues to develop, India is a hub for global trade operations.
The nine coastal states of Maharashtra, Karnataka, Kerala, Goa, Gujarat, Tamil Nadu, Andhra Pradesh, Odisha, and West Bengal comprise the majority of seaports in the subcontinent.
These are the Top 5 ports in India:
- Jawaharlal Nehru Port Trust (JNPT) (5 million TEU traffic in 2018)
- Mundra (4.4 million TEU)
- Chennai (1.5 million TEU)
- Kolkata (796,000 TEU)
- O. Chidambaranar Port Trust (698,000 TEU)
Top Cargo Airports in India
India continues to develop its air freight capabilities with increased traffic in its major airports. Nine of the top ten airports for cargo in India had significant percentage jumps in traffic from 2017 to 2018.
|Airport code||Full name||Cargo Tonnes|
|DEL||Indira Gandhi International Airport||963,032|
|BOM||Chhatrapati Shivaji International Airport||906,321|
|MAA||Chennai International Airport||417,787|
|BLR||Kempegowda International Airport||348,403|
|CCU||Netaji Subhash Chandra Bose International Airport||163,323|
|HYD||Rajiv Gandhi International Airport||134,141|
|AMD||Sardar Vallabhbhai Patel International Airport||91,633|
|COK||Cochin International Airport||76,274|
|PNQ||Pune International Airport||41,566|
|TRV||Trivandrum International Airport||28,715|
Goods and Services Tax (GST) in India
The Goods and Services Tax or GST came into effect on July 1, 2017. The goal of introducing the tax was to replace all existing indirect taxes with a single comprehensive tax. Through GST, all previous taxes such as central excise tax, service tax, VAT and entertainment tax were consolidated. This major step has helped the citizens of India to file their taxes easily without the difficulties they faced earlier.
What is GST?
Goods and Services Tax is levied on the manufacturing and sales of goods and services throughout India. The tax is charged at every stage of the manufacturing process. GST is applicable for both the customer and the manufacturer. It is a destination-based tax, collected at the point of consumption. At every stage of the manufacturing process where value is added to the product, GST is collected.
The types of GST are as follows:
- CGST (Central Goods and Services Tax): The tax is collected by the central government on the intrastate sale of goods and services.
- SGST (State Goods and Services Tax)State government collects this tax based on the intrastate supply of services and products.
- IGST (Integrated Goods and Services Tax): The tax is charged on the supply of products and services between two states. The taxes are shared between the central and state governments.
Effects of GST on the Indian economy
GST has simplified the taxation system of the country. Since GST is a single tax, calculating taxes at the multiple stages of the supply chain has become easier.
Production has developed. In the Indian retail industry, the total tax component is around 30% of the product cost. Due to the impact of GST, the taxes have gone down, meaning, the consumer pays fewer taxes. The reduced burden of taxes has enhanced the production and growth of retail and other industries.
Small and medium enterprises can now register under the Composition Scheme introduced by the GST system. Through this scheme, they pay taxes according to their annual turnover.
Companies can now avoid taxation roadblocks, such as toll plazas and check posts. Earlier, these created problems, including damage to unpreserved products while transporting them. So, manufacturers had to keep buffer stock to make up for the damages. A single taxation system has reduced these problems and businesses now can transport their goods easily across India. This has resulted in the improvement of their pan India operations.
GST has reduced the customs duty on exporting goods. The cost of production in the local markets has also decreased due to GST. All these factors have increased the rate of exports in the country. Companies have become more competitive when it comes to expanding their businesses globally.
Source: Impact of GST on Indian Economy
Top Commodities Exported from India (2018)
Refined Petroleum 12.7%
Packaged Medicaments 4.3%
Source: OEC India Profile
Top Commodities Imported from India (2018)
Crude petroleum 20.6%
Coal briquettes 5.52%
Petroleum Gas 3.43%
Source: OEC China Profile
Top Tradelanes from India (India is the origin point)
United States 16%
United Arab Emirates 8.3%
Hong Kong 3.94%
United Kingdom 2.95%
Source: OEC India Profile
Top Tradelanes to India (India is the destination point)
United States 6.42%
Saudi Arabia 5.35%
United Arab Emirates 4.84%
Source: OEC India Profile
Major Industries in India
- Textile Industry
A complex and diverse industry, including generation of raw materials such as jute, wool, silk and cotton to greater value-added goods such as readymade garments prepared from different types of manmade or natural fibers.
- Food Processing Industry
India’s food and grocery market is the sixth largest in the world, and contributes 70% of the industry sales. Nationwide, this industry is called a “sunrise sector,” with 1.85 million residents working in this industry.
- Chemical Industry
Regarded as the oldest domestic sector in India, the subcontinent is the third largest producer of chemicals in Asia. Indian chemical industry produces about 80,000 commercial goods ranging from plastic to toiletries and pesticides to beauty products.
- Cement Industry
The Indian cement industry is second largest in the world. India has 10 large cement plants regulated by different state governments. Additionally, India has 115 big cement plants and around 300 small cement plants.
- Steel Industry
The Indian steel industry has 400 years of history behind it. It has been such a successful industry sector because of the availability of raw material in abundance and cost-effective labor.
- Software Industry
This industry has experienced a massive expansion in the last 10 years, with the IT sector reaching $181 million USD in sales in 2018-19.
- Mining Industry
Indian mining industry provides job opportunities to approximately 700,000 people, even if it is a smaller scale industry than other major sectors on the subcontinent.
- Petroleum industry
India is one of the most flourishing oil markets in the world and in the past 50 years has witnessed the expansion of top national companies including ONGC, HPCL, BPCL and IOC. India ranked third in energy and oil consumption in the world, after China and the United States. It is the fourth largest importer of Liquefied Natural Gas (LNG) worldwide.
- Fisheries in India
India is the third largest producer of fish in the world. The fishing industry is also known as “Blue Revolution.” This sector is important for India because it provides job opportunities, along with nutrients for local populations.
Source: India Industry
Logistics To Connect Your World
Agility offers the supply chain smarts, technology and personal service that connect your business to global markets, so you can grow.
Agility Emerging Markets Logistics Index – India
India has the greatest potential among emerging markets, according to a survey of logistics professionals for the 2020 Agility Emerging Markets Logistics Index.
In the survey of 780 logistics executives, India, China, Vietnam, Brazil and Indonesia rank as the countries with greatest potential as logistics markets.
In the overall Index, a broad gauge of competitiveness, India finished No. 2, behind China in the 50-country Index, which uses data to rank countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. After India, the top countries were United Arab Emirates, Indonesia, Malaysia, Saudi Arabia, Qatar, Mexico, Thailand and Turkey.
China, India and Indonesia rank highest for domestic logistics; China, India and Mexico are top for international logistics; and UAE, Malaysia and Saudi Arabia have the best business fundamentals.
In business fundamentals, India at No.18, tumbled eight spots from 2019, suggesting economic reforms have not gone far enough for India to maintain its place.