OVERVIEW
Imports and exports play an important role in the foreign trade of a country. Foreign trade can be defined as the exchange of goods and services between the countries, beyond international borders. By Import, we mean the physical movements of goods into a country from abroad or another country. Imports serve the needs of domestic people by making available goods produced in another country to the home country. In the same manner, Exports imply the physical movement of goods outside the home country in a legalized manner. It also serves the needs of foreigners. So, imports and exports have made the world a local market in which business is carried out beyond boundaries. The person involved in such trade is known as importers and exporters respectively.
LAWS GOVERNING EXPORTS AND IMPORTS
In our country, the law governing export and import is Foreign Trade (Development and Regulation Act), 1992 which has replaced the Imports and Exports (Control) Act, 1947 which gave ample powers to authorities’ concerns to control it. The salient feature of the above activities is as prescribed below-
A) The act empowers the Central govt. to make provisions for the development of the foreign trade by welcoming imports in the home country and Smooth flow of exports outside the country and other matters connected therewith.
B) The Central govt. has full powers to prohibit, restrict and regulate exports and imports in all or specified cases.
C) The Act empowers the Central Govt. to make an Export and Import (EXIM) Policy and amend it from time to time depending upon the circumstances.
D) The Central govt. is empowered under the Act to appoint a Director-General of Foreign Trade which shall advise the govt. in formulating export and import policy and implementing the policy.
E) It is mandatory for every importer and exporter to obtain an ‘Importer and Exporter Code Number’ from the Director-General of Foreign Trade.
F) The act empowers the Director-General or any other office so authorized can suspend or cancel the license so issued but it is essential that reasonable opportunity of being heard is given to the license holder before taking such step.
OTHER LAWS GOVERNING THE EXPORTS AND IMPORTS
In addition to the above-stated act, there are some other laws governing the imports and exports of goods in India.
- Tea Act, 1953.
- Coffee Act, 1942.
- The Rubber Act, 1947.
- The Marine Products Export Development Authority Act, 1972.
Export procedure
While processing an export order, the exporter has to follow the following procedure-
- Firstly exporter must confirm the order
The export on receiving the order must analyze the items specified, terms of payment, delivery, etc. Then only he must enter into a formal contract with the overseas buyer. - Procurement of the goods demanded by the buyer
- Insistence on quality control
Then he must lay down his emphasis on maintaining the quality specified by the foreign buyer. - Finance for exporting goods
Now the exporters are eligible to obtain pre-shipment and post-shipment finance from banks at reasonable interest to complete the transaction. Nowadays, packing credit advance is given to the exporters. 70% to 80% advance is given keeping the balance as margin. In the post-shipment 180 days, the time period is given to the exporter for completing the transaction. - Labeling, Packaging, Packing and Marking the goods to be exported
- Ensuring the goods to be exported
Marine insurance covers the risk of loss to the goods while the goods are transmitted to the buyer. In CIF, the exporter himself takes the insurance while in C&F buyer take policy. - Delivery of the goods
- Custom procedures
- Taking help of the Custom House Agents
- Documentation for the process
Foreign Trade Policy has prescribed the following documents essential- Airway bill, Commercial invoice, shipping bill - Submission of documents to the bank
After shipping the goods, it is mandatory for the exporter to present the certified documents to the bank within 21 days for onward dispatch to the foreign banks for arranging the payment. The documents should include- - Bill of exchange, Letter of Credit, Invoice, Packaging list, Bill of Lading, Inspection Certificate, Declaration under foreign exchange and other necessary documents.
- Realization of the export proceeds
Realizable in Indian Currency and must be realized in 9 months.
Import Procedure
All importers must follow the procedure described below at the time of importing goods.
