External Trade: Procedure for Import Trade, Trade Enquiry, Obtaining Import Licence and Foreign Exchange (For CBSE, ICSE, IAS, NET, NRA 2022)

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Procedure for Import Trade

Procedure for Import Trade

Trade Enquiry

It is a written request by the importer to the exporters for supply of relevant information regarding the price, quality, quantity and various terms and conditions of export etc. In response to the trade inquiry of the importer, the exporter prepares the quotation and sends it to the importer.

Obtaining Import Licence

An importer cannot import goods without having a valid licence from the Import Licensing Authority. In India it is compulsory to get the IEC number from the DGFT.

Obtaining Foreign Exchange

As foreign exchange transactions are controlled by Reserve Bank of India, the importer has to submit an application along with necessary documents to the Exchange Control department of RBI. After scrutinising the application, the Reserve Bank of India will sanction the release of foreign exchange.

Placing the Indent or Order

Indent is the purchase order to the exporter by an importer for specified goods. The indent may be sent directly to the manufacturer of goods or to the exporting agent.

Sending Letter of Credit

Generally, the parties in external trade are not very well known to each other. So, the exporter wants to be sure of the creditworthiness of the importer. Usually, the exporter asks the importer to send a letter of credit. An importer can get a letter of credit issued as per terms and conditions of his banker and send it to the exporter. It ensures payment of bill of exchange drawn by the exporter up to the amount specified in the letter of credit.

Procuring the Shipping Documents

The importer will arrange to obtain necessary documents such as bill of lading, shipping bill, etc. , after receiving the advice letter from the exporter. The documents are procured to take delivery of the goods. He has to go to the exporter՚s bank to make payment in order to get the necessary documents for taking delivery of the goods.

Appointment of Clearing Agent

The importer may take delivery on his own or appoint an agent known as clearing agent, to take delivery of the goods. The importer sends necessary documents to his agent to clear the goods. The clearing agent charges commission for his services for clearing the goods.

Formalities to be Completed by the Clearing Agent

Endorsement for Delivery

When the ship arrives at the port, the clearing agent approaches the concerned shipping company and gets the bill of lading endorsed in his own name from the shipping company. If the freight has not been paid by the exporter, it will have to be paid before endorsement of the bill of lading.

Bill of Entry

The agent has to fill in and submit three copies of the bill of entry to the custom authority. The custom authority will calculate the duty and receive the same from the clearing agent.

Payment of Dock Charges

The agent has to complete and file two copies of Port Trust receipt and three copies of Bill of entry to the landing and shipping dues office. After receiving the dock charges, the dock authority will return one copy of Port Trust receipt and two copies of the Bill of entry to the agent. Then the agent has to submit this copy along with two copies of Bill of entry to the custom office. If customs duty is to be paid, he will make the payment and take delivery of the goods.

Despatch of Goods by Rail/Road

The clearing agent has to arrange carriage of the goods to the railway station or the transport authority after taking the delivery from the dock authority. He will despatch the goods by rail/road to his principal and get the railway receipt/carrier receipt.

Advice to the Importer

The clearing agent has to write a letter of advice to the importer after despatch of goods. In this letter of advice, information regarding arrival of goods and their despatch by rail/road are specified. He has to enclose with it the railway receipt/carrier receipt and a statement of his expenses and charges.

Delivery of Goods from Railway/Transport Authority

The importer can take delivery of the goods from the railway or transport authority and carry them to his godown.

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