Import Procedure | Class 11 Business Studies International Business

Import Procedure

Import Trade refers to buying from another country.

Following steps are involved in import trade:

1. Trade Enquiry: First of all, the importer selects the exporter who supply the required product and makes enquiry about the product and its price. The exporter responds to this enquiry in the form of a proforma invoice.

2. Obtaining Import License: Importers must get an import license in case of products which require a mandatory license. In India, every importer must be registered with DGFT (Director General of Foreign Trade) or regional licensing authority and get an import export code (IEC) number.

3. Obtaining Foreign Exchange: In this step, the importer needs to arrange the foreign currency to make payments for the imports. For this, he has to make an application to a bank authorized by RBI to issue foreign currency.

4. Placing Order or Indent: After obtaining import license, the importer places an order or indent with the exporter for supply of the specified product. The order should contain clear information about the price, quantity, grade, quality and the instructions regarding packing, shipping, delivery and payment.

5.Obtaining Letter of Credit: In order to ensure that there is no risk of non-payment, a letter of credit is sent by the importer to the exporter. Letter of credit is issued by the importer's bank to give guarantee of honouring the payment.

6. Arranging for Finance: The importer should make arrangements to pay the required money on arrival of goods at the port. 

7.Receipt of Shipment Advice: After loading the goods, the exporter sends a shipment advice to the importer. A shipment advice contains details about the shipment of goods such as invoice number, bill of lading, name of the ship and port, description of goods etc.

8. Retirement of Import Documents: Various documents such as invoice, bill of lading, insurance policy and certificate of origin are handed over to the importer against acceptance of the bill of exchange. Bill of exchange can be of two types: a. Sight draft - documents are handed over only against payment. b. Usance draft - documents are handed over against acceptance. 

9. Arrival of Goods: On arrival of goods in the importing country, the person in charge of the ship informs the person in charge of the dock by providing an import general manifest. Import general manifest is a document which contains details of the imported documents and on the basis of this document unloading of cargo takes place.

10.Custom Clearance: In this step, the importer takes the possession of goods after paying the freight charges. He also has to pay for dock charges and get a port trust dues receipt. Then, he has to fill a form called bill of entry and pay the duty. After examining the imported goods and receiving necessary charges, the port authority issues the release order.