Import-Export: Key Concepts & Procedures

IMPORT - EXPORT
KEY CONCEPTS & PROCEDURES
Presented by:
Saurabh Bapat

Presentation Take Aways
2
Key Concepts,
Terminologies &
Procedures
Imports Vs. Export
(Risk & Opportunities)
India’s Foreign Trade
Policy & Legal Framework
Duty exemption / Remission
schemes
Physical Exports Vs.
Deemed Exports

IMPORT
4
 Good or service brought into one country from another.
 Any direct purchase by residents outside the economic territory of a country are also an import. They
are termed as import of services.
 The higher the value of import compared to export, the more negative country’s balance of trade
becomes.
 Importing is not necessarily a bad thing!
 It gives access to important resources and products not otherwise available or at a cheaper cost.

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EXPORT
5
 Good or service shipped from one country into another.
 Commodities grown, produced, or manufactured in one country, and commodities of foreign origin
which have been substantially changed in this country, from the form in which they were imported, or
which have been enhanced in value by further manufacture in this country.
 The higher the value of export compared to import, the more positive country’s balance of trade
becomes.
 Export has its flip side too!
https://www.investopedia.com/terms/e/export.asp

IMPORT Vs. EXPORT
Risks & Opportunities
6
Risk Opportunity
IMPORT
Risk Opportunity
EXPORT

India’s Foreign Trade Policy & Legal
Framework
7
 The Foreign Trade Policy (FTP), 2015‐20, launched on 1st Apr’15 is notified by Central Government. Latest
update is w.e.f. 05.12.2017. It describes the market and product strategy, and the other measures required for
export promotion and enhancement of the entire trade ecosystem.
 Director General of Foreign Trade (DGFT) lays down the procedure to be followed by an importer / exporter /
any licensing / Regional Authority (RA).
 All goods imported into India have to pass through the procedure of customs for proper examination,
appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also
check the goods against the illegal import.
 Importer‐Exporter Code (IEC), a 10‐character alpha‐numeric number, is mandatory for undertaking any
export/import activities.
 Post GST, IEC will be equal to PAN.

India’s Trade Performance
8
 Foreign trade today constitutes 45%
India’s economy

INCOTERMS
10
Maintained by the International Chamber of
Commerce (ICC), this codification of terms is
used in foreign trade contracts to define which
parties incur the costs and at what specific
point the costs are incurred.

CUSTOM DUTY
11
 A tax imposed on imports by
the customs authority of a
country to raise state
revenue, and/or to protect
domestic industries from
more efficient or predatory
competitors from abroad.
 Customs duty is based
generally on the value of
goods or upon the weight,
dimensions, or some other
criteria of the item ), or a
combination of value and
other factors (compound
duties).

CUSTOM DUTY
12
 Basic Custom Duty: BCD varies for different items from 5% to 40%. The Central Government has the power
to reduce or exempt any good from these duties.
 Additional Custom Duty: Also known as countervailing duty or CVD is equal to excise duty imposed on a like
product manufactured or produced in India. The Government has exempted all goods, when imported into
India for subsequent sale, from the whole of the additional duty of customs. However, the importers will be
first required to pay the said duty and thereafter required to claim the refund.
 Special Additional Duty: SAD of Customs is imposed at the rate of 4% in order to provide a level playing field
to indigenous goods which have to bear sales tax. This duty is to computed on the aggregate of assessable
value, basic custom duty ,surcharges and additional duty of custom.
 Anti‐Dumping Duty: Dumping means exporting goods in a foreign market at a price which is less than their
cost of production or below their "fair" market value. Dumping gives a hard competition to a domestic
goods manufacturer. So Govt. imposed duty for import of specified goods with a view to protecting
domestic industry from unfair injury. It would not apply to goods imported by a 100% EOU (Export Oriented
Units) and units in FTZ (Free Trade Zones) and SEZ (Special Economic Zones).

ITC (HS) CODES
13
 ITC (HS) stands for Indian Trade
Classification (Harmonised
System).
 A compilation of codes for all
merchandise / goods for
export/ import.
 ITC (HS) is aligned at 6 digit
level with international
Harmonized System goods
nomenclature maintained by
World Customs Organization.
However, India maintains
national Harmonized System of
goods at 8 digit level.

Duty exemption / Remission schemes
14
 GOI enables duty free import of inputs for export production, including replenishment of inputs or duty
remission with an aim to promote exports.
 This not only stimulates the industrial growth and development but also brings the foreign currency after
the final export process. This significantly reduce the effective tax rates for the import companies.
 Duty exemption schemes
‐ Advance Authorization (AA) – All duties
‐ Duty Free Import Authorization (DFIA) – Only BCD
 Duty remission schemes
‐ Duty Drawback (DBK) Scheme
 Export Promotional Capital Good (EPCG) Scheme: To facilitate import of capital goods for producing quality
goods and services and enhance India’s manufacturing competitiveness.

DEEMED EXPORT BENEFITS
15
 “Deemed Export“ refer to those transaction in which goods supplied do not leave country and payment for
such supplies either received in Indian currency or free foreign exchange.
 The objective of providing benefits of Deemed Export is to provide level‐playing field to domestic
manufacturers in certain specified cases, as may be decided by Government of India from time to time.
 Supplies to Mega Power Projects
 Deemed exports shall be eligible for any/all of the following benefits in respect of manufacture and supply
of goods qualifying as deemed exports subject to certain term and conditions.
‐ Advance License for intermediate supply / deemed export/DFRC/DFRC for intermediate supplies.
‐ Deemed Export Drawback.
‐ Exemption from terminal excise duty where supplies are made against international competitive
bidding . In other case , refund of terminal excise duty will be given.

BILL OF LADING / BILL OF ENTRY
16
 Bill Of Lading (B/L): A document by which the Master of a ship acknowledges having received in good order
and condition (or the reverse) certain specified goods consigned to him by some particular shipper, and
binds himself to deliver them in similar condition, except force majure, to the consignees of the shippers at
the point of destination on their paying him the stipulated freight. A bill of lading specifies the name of the
master, the port and destination of the ship, the goods, the consignee, and the rate of freight.
 Bill Of Entry (B/E): An account of goods entered at a customhouse, of imports and exports, detailing the
merchant, quantity of goods, their type, and place of origin or destination. It is issued by the customs
presenting the total assigned value and the corresponding duty charged on the cargo.

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