India's Export-Import Laws and Procedure in 2016
Learn about the India’s import and export laws and procedure to ship your goods and increase the productivity.
Actually Indian export and import systems were governed by India’s export import policy and foreign trade act. Exports and imports for most of the goods are free of cost, except items regulated by the EXIM policy. It is important to get the license for the logistics for all the shipping lines. The customs will never allow you to clear the goods until you get regional authority.
Goods which are specified in these categories can import freely without any kind of restrictions, if your importer has valid IEC. Most of the items can be imported freely in India. Shippingexchange.com is the largest online platform for logistics service provider and importers and exporters. You can get the rules, conditions and quotation at free of cost through this provider.
Indian Import Policy
The Indian import trade policy is classified into 3 categories such as
1. Canalized goodsThese are the items which can be imported by using specific methods or procedures of transport. A goods present in the category has to import through canalizing agency only. It includes bulk agricultural products, petroleum products and pharmaceutical products.
2. Restricted goodsThis can be imported after getting proper license from the regional licensing authority. This type of import licenses is valid for 18 months for other goods and 24 months for the capital goods. Before exporting, the exporter has to obtain the license to export this restricted goods. You have to follow some of the conditions and procedures which are available in the license if you export this restricted goods.
3. Prohibited goods
These goods are goods which are prohibited on import channels all over India. It includes tallow fat, animal rennet, oils of animal origin, wild animals as well as unprocessed ivory. Just like the imports, most of the goods can be freely exported and listed below the classification of export goods. This type of goods cannot be exported at any cost. It includes animal articles and wild animals which may cause risky infection.
India's Export Policy
The Indian export trade policy is classified into 3 categories such as
Just like imports, goods can be exported freely if they are not mentioned in the classification of ITC (HS). Below follows the classification of goods for export:
1. Restricted GoodsBefore exporting any restricted goods, the exporter must first obtain a license explicitly permitting the exporter to do so. The restricted goods must be exported through a set of procedures/conditions, which are detailed in the license.
2. Prohibited GoodsThese are the items which cannot be exported at all. The vast majority of these include wild animals, and animal articles that may carry a risk of infection.
3. State trading enterprise:
Some of the certain goods have to export through these designated STEs. The export of these goods is subjected to conditions in the EXIM policy.
Plant products and plants such as fruits and seeds are prohibited without any prior permission.
Types of Duties
Types of Duties which are covered under the Indian Export-Import Laws and Procedure are:
1. Basic DutyBasic duty is the typical tax rate that is applied to goods. The rates of custom duties are specified in the First and Second Schedules of the Customs Tariff Act of 1975. The First Schedule contains rates of import duty, and the second schedule contains rates of export duties. Most of the items in India are exempt from custom duty, which is generally levied on imports.
The first schedule contains two rates: Standard rate and preferential rate. The preferential rate is lower than the standard rate. When goods are imported from a place specified by the central government (CG) for lower rates, the preferential rate is applicable. In any other case, the standard rate will be applicable. If the CG has signed a trade agreement with the country of origin, then the CG may opt to charge a lower basic duty than indicated in the first schedule.
2. Additional Customs Duty (Countervailing Duty)In addition to the basic duty on imported goods, a countervailing duty is also applicable to imported goods. The rate of duty is equal to the rate of excise applied to goods manufactured in India. If the article is not manufactured in India, then goods of a similar nature are used to determine the correct duty amount. If there are different rates of duty on similar goods, then the highest rates of the known products will be applied to the article in question.
3. Additional Duty (VAT)
The CG may levy an additional duty equivalent to sales tax or VAT charged on sale/purchase in India. The rate cannot exceed 4 percent. However, the additional duty shall be refunded when the imported goods are sold if the following conditions are satisfied:
a. The importer pays all the custom duties;
b. The sale invoice shall bear the indication that the credit of such duty shall not be allowed; and
c. Importer shall pay VAT/sales tax on the sale of these goods.
4. Anti-Dumping Duty
The CG may impose an anti-dumping duty if an article is imported to India at less than its normal price, and will notify the importer if they decide to do so. The amount of duty cannot exceed the margin of dumping. The margin of dumping means the difference between the export price and the normal price.
The notification issued by CG in this regard shall be valid for five years. The period can be further extended. However, the total period cannot exceed 10 years from the date of first imposition.
5. Countervailing Duty on Subsidized Articles
A countervailing duty is a tariff applied to imported goods to neutralize the effect of a subsidy from the country of origin. If any country grants subsidies on any article to be imported to India, whether directly from the same country or otherwise, then the CG may impose a countervailing duty equal to or less than the subsidy itself. However, the duty will not be imposed if the the article is subsidized for the following reasons:
a. Research activities conducted by person engaged in manufacturing or export
b. Assistance to disadvantaged regions in destination country
c. Assistance in adaptation of existing facilities to new environment requirements.
The notification issued by CG in this regard shall be valid for five years and possibly subject to further extension. However, the total period cannot exceed 10 years from the initial date of imposition.
6. Safeguard DutyA safeguard duty is a tariff designed to provide protection to domestic goods, favoring them over imported items. If the government determines that increased imports of certain items are having a significantly detrimental effect on domestic competitors, it may opt to levy this duty on those imports to discourage their proliferation. However, the duty does not apply to articles imported from developing countries. The CG may exempt imports of any article from this duty. The notification issued by CG in this regard is valid for four years, subject to further extension. However, the total period cannot exceed 10 years from the date of first imposition.
7. Protective Duties
In addition to safeguard duties, the CG also bolsters domestic industries using protective duties. Should the Tariff Commission issue a recommendation for a protective duty, the CG may impose on any goods imported to India a protective duty to provide protection to domestic industry.
The duty cannot exceed the amount proposed in the recommendation. The CG may specify the period up to which protective duty shall be in force, reduce or extend the period, and adjust the effective rate.
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