This article throws light upon the thirteen main steps involved in the import of goods. Some of the steps are: 1. Obtaining the Import Licence 2. Obtaining Foreign Exchange 3. Placing an Order 4. Sending Letter of Credit 5. To Receive the Shipping Documents 6. Appointment of Clearing Agents 7. Endorsement for Delivery 8. Bill of Entry 9. Bill of Sight 10. Payment of Dock Charges and Other Few.
Step # 1. Obtaining the Import Licence:
Most of the countries put restrictions upon the imports of goods. An importer is not free to import goods of his choice. An importer cannot import goods without a valid import licence. Importers have to obtain a licence from the government. In India, the import trade is controlled under the Imports and Exports (Control) Act, 1947.
Step # 2. Obtaining Foreign Exchange:
After obtaining the licence, the importer has to make arrangement for obtaining the required amount of foreign exchange. In our country, foreign exchange is controlled by Reserve Bank of India.
For obtaining foreign exchange, the importer has to submit an application to the Exchange Control Department of the Reserve Bank of India. After scrutinising the application, Reserve Bank of India sanctions the release of foreign exchange.
Step # 3. Placing an Order:
After having received import licence and foreign exchange, the next step in the import of goods is that of placing the order for required goods. The order is also called Indent. Indents may be either open or closed.
In the case of open indents, no particulars regarding the source of purchase, the brand of goods or the price to be paid for them are indicated in the indent but in the case of closed indents, full particulars of goods regarding the price, the brand, packing, shipping instructions, etc. are given in the indent. The indent may be sent directly to the manufacturers of the goods or to the Exporting Agent.
Step # 4. Sending Letter of Credit:
Generally, foreign traders are not known to each other. To be on the safe side, the exporter wants to be sure about the credit-worthiness of the importer. Usually, the exporter asks the importer to send a letter of credit. An importer can obtain a letter of credit from his banker and send it to the exporter.
A letter of credit may be defined as a letter issued by a bank in the importing country in favour of exporter containing an undertaking that the bills of exchange drawn by the foreign trader on the importer will be honoured on presentation upto the amount specified thereon.
Step # 5. To Receive the Shipping Documents:
After receiving the advice letter from the export agent, the importer will proceed to procure the document like bill of lading, shipping bill, etc. so that he may take the delivery of goods when they arrive at port. After that, he will go to the agent of exporter, will make the payment and receive the documents.
There are two types of documentary bill:
(i) D/P-Documents against Payment.
(ii) D/A-Documents against Acceptance.
In the case of D/P bill, the documents of title of goods are delivered to the importer on the full payment of the bill. But in the case of D/A bill, the documents will be delivered to the importer on acceptance of the bill of exchange.
Step # 6. Appointment of Clearing Agents:
After having received the required documents from the bank, the importer appoints a clearing agent to do the job of clearing the goods for him. The importer sends the shipping documents to the clearing agents. Clearing agents charge certain commission for this work.
Step # 7. Endorsement for Delivery:
The name of the ship is inserted in Bill of Lading. The clearing agent waits for the arrival of the ship. When the ship arrives at the port, the clearing agent will approach the shipping company and present the Bill of Lading for endorsement in his favour. If the exporter has not paid the freight, he will make the payment of the freight before taking the delivery order.
Step # 8. Bill of Entry:
The agent will now proceed to pay the custom duty. The agent will, therefore, fill in a form called Bill of Entry. It is to be filled in triplicate and submitted to the custom office. The Bill of Entry contains full description of the goods.
The Bill of Entry are printed in three different colours- (i) Black, (ii) Blue, and (iii) Violet. The black form is used for free goods, blue form is used for goods to be sold within the country and the violet form is used for goods meant for re-export.
Step # 9. Bill of Sight:
Sometimes clearing agent does not have detailed information about the goods. Then he will prepare a statement known as ‘Bill of Sight’. In this statement he will give as much information as he possesses. In such case, the statement is completed by the custom authorities on the arrival of goods.
Step # 10. Payment of Dock Charges:
The clearing agent will submit two copies of the application duly filled in to the Lading and Shipping Dues Office and will make the payment of dock charges. He will receive back one copy of the application. He will submit these copy along with three copies of bill, of entry to the custom office. If duty is to be paid, he will make the payment and will take the delivery of the goods.
Step # 11. Delivery of Goods and Despatch by Rail:
Having completed all the above formalities, the clearing agent will take the delivery of goods from the docks and will carry the goods to the railway station. He will then despatch the goods by rail to his principal and receive the railway receipt.
Step # 12. Advice to the Importer:
Having despatched goods, the clearing agent will write a letter of credit to the importer giving information to him regarding the arrival of goods and their despatch by rail. He will enclose with the letter of credit, the railway receipt and a statement of his charges and expenses.
Step # 13. Delivery of Goods from Railway:
Now the importer can take the delivery of goods and carry them to his godowns having paid local octroi.