of goods and services from outside the nation is called importing. Usually, it
is done in case the country is not able to produce that good themselves
efficiently due to lack of resources. The process of importing is a lengthy
one. There are lots of paperwork and decisions made in order to trade
internationally. Let’s have a look at the procedure here.
1.TRADE
ENQUIRY
The first
and foremost step is to enquire and collect all the information about the
countries and the firms that can export the required goods in the importing
nation. The importer comes into contact with the exporter with the help of a
‘trade enquiry’ where he requests for all the details related to the goods need
to be imported.
In response
to the enquiry, the importer receives a ‘Performa Invoice’ which
contains all of the information that he asked for.
2.IMPORT
LICENSE AND IEC NUMBER
Some goods
can be shipped across nations freely without any restrictions. But some goods
need a license to be imported to a certain territory. This list of restricted
goods can be checked through the ‘Export Import Policy’ (EXIM). A
license must be acquired if the required goods falls under this list.
Also, in
India, it is necessary for all the importers to register themselves under the
Directorate General Foreign Trade (DGFT) and get an Import Export Code (IEC)
which must be mentioned on the import documents.
3.FOREIGN
EXCHANGE
Now, the
importer has to arrange for foreign exchange as the payment for the goods must
be made in the currency of the exporting country. For instance, India will have
to pay in US Dollars if the goods are being imported from USA. In India, these
exchanges can be procured by the Exchange Control Department of Reserve Bank of
India.
4.PLACE
ORDER
After the
foreign exchange is procured, the importer has to place an order to the
exporter with all the necessary information such as quantity, quality,
insurance, weight, date and time of delivery, packaging and lot more. This
order can either be directly placed by the importer or could be placed through
a middleman.
5.LETTER
OF CREDIT (LOC)
An exporter
needs to be sure about the financial condition of the importer to secure his
payment. For this reason, he demands for an LOC from the importer which is
issued by the importer’s bank as a guarantee that the importer is financially
stable enough to make the payments. This LOC will only be issued by the bank if
they are sure about his credibility.
6.FINANCE
ARRANGEMENT
The importer
has to pay for the goods when they arrive in order to retrieve them. Therefore,
he must arrange the finance way before the delivery of the goods so that he
won’t be penalized for letting the goods stay at the port due to insufficient
funds.
7.RECEIPT
OF SHIPMENT ADVICE
After the
exporter has loaded the goods on the ship, he prepares a ‘shipment advice’
for the importer which contains information such as description of the goods,
bill of lading, date and time, name of the ship, invoice number and more.
8.IMPORT
DOCUMENTS
After the
shipment of the goods, the exporter hands over the important documents like
bill of lading, packaging list, marine insurance police, certificate of origin
etc. to the banker of the importer to be sent to the importer. These documents
are only delivered to the importer when he accepts the bill of exchange.
9.ARRIVAL
OF GOODS
At the
arrival of the goods, the one in charge of the ship informs the in charge of
the dock and provides him with a ‘general manifest’ which contains all
the information regarding the imported goods. The unloading of the goods in the
importing country takes place on the basis of this document.
10.CUSTOMS
CLEARANCE
In order to
take the delivery, the importer has to clear the customs duty. Firstly, the
importer has to get a delivery order by the shipping company in order to take
the delivery. Then he must pay the dock charges for receiving the goods on the
port. After this, a ‘bill of entry’ has to be filled by the importer for
the assessment of the customs duty. This bill of entry consists of the name and
address of importer and exporter and information about the goods.
Only after
the completion of these process is the importer allowed to take away the
consignment with him.
