Import Licensing Requirements
Over the last decade, India has steadily made the process of importing products easier. Most items fall within the scope of India’s Open General License regulations. This means that products are deemed to be freely importable without restrictions and without a license unless they are regulated by the provisions of the policy or applicable laws.
Imports of items not covered by an Open General License 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.
Below are designated import certificate issuing authorities:
- The Department of Electronics for computer and computer-based systems
- The Department for the Promotion of Industry and Internal Trade (DPIIT), Technical Support Wing (TSW), for organized sector units registered under it, except for computers and computer-based systems
- The Ministry of Defense (MoD) for defense-related items
- The Director General of Foreign Trade (DGFT) for small-scale industries not covered above as well as on behalf of any of the above
- The Embassy of India in Washington, DC on behalf of any of the above authorities.
Capital goods, except those specified in a negative list, can be imported with an Authorization under the Export Promotion Capital Goods plan at zero customs duty, subject to the fulfillment of a time-bound export obligation.
Duty exemption/remission schemes are also offered, which enable duty free import of inputs for export production, including replenishment of inputs.
Advance Authorization
Certain products require an advance license to allow duty free importation to India. These include inputs that are physically incorporated into products made in India for export. In addition, fuel, oil, and catalysts consumed/utilized to produce export products, are also allowed under this plan. Raw materials and inputs are allowed in terms of Standard Input-Output Norms, or under self-declared norms of Indian exporters.
Advanced Licenses are issued on pre-export or post-export bases in accordance with foreign trade policies and procedures, and can be issued for:
- Physical exports: An Advance License may be issued for physical exports to a manufacturer, exporter, or merchant exporter tied to supporting manufacturers for the import of inputs required for an export product.
- Intermediate supplies: 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; and
- Deemed exports: An Advance License may be issued for deemed exports to the main contractor for the import of inputs required for the manufacture of goods to be supplied to the categories mentioned in the Foreign Trade Policy. An Advance License for deemed exports can also be acquired by a subcontractor, provided the name of the subcontractor appears in the main contract. Such licenses for deemed exports can also be issued for supplies made to UN organizations or under the Aid Program of the UN, or other multilateral agencies, and paid for in foreign exchange.
- An Advance License may be issued for supply of ‘stores’ on board of foreign going vessel / aircraft, subject to condition that there is specific Standard Input Output Norms in respect of item supplied.
Import Declaration
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 (where applicable)
All import documents (e.g., ex-factory invoices, freight documentation, insurance certificates) must be accompanied by import licenses. This enables customs to properly clear the documents for timely import.
Letter of Credit
Importers must include a copy of the letter of credit to record payment for imports. This document is normally verified by the issuing bank.
Not all consignments are inspected prior to clearance, and inspections may be waived for known importers. Under the current customs regime, an appointment with the clearing agent helps avoid delays. In general, documentation requests and requirements are extensive, and delays are frequent in India.
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, and furnishing a bank guarantee for this purpose can be a costly option. Indian customs authorities have recently extended operations to 24 hours to ensure more timely clearances of imports.