Define import trade. Explain its procedure in detail.

Import trade refers to buying of goods and services from another country or countries i.e. a foreign country. The procedure of import trade varies from one country to another country depending upon the policy implemented in that country. Import of goods and services is controlled by the government in most of the countries. India follows the following import procedure, which is divided into four stages.

[A] Ist Stage : Preliminary Stage : 

(1) Registration : In order to carry out import, the importer has to get himself registered with the authorities given below:

• Director General Foreign Trade (DGFT) in order to get an Import-Export Certificate Number. 
• The Income Tax department to obtain Permanent Account Number. 
• To carry out GST formalities.

(2) Negotiation or Trade enquiry : The importer must collect information from overseas suppliers regarding the goods he wants to import of a product. It contains details like

• Price 
• Delivery schedule,
• Credit period and 
• Terms and conditions of sale, payment and delivery.

[B] IInd Stage : Pre-import Stage : 

(i) Import License / Quota Certificate : The Export Import (EXIM) Policy of our country indicates which goods need license for import and which can be imported freely. For goods that require a license, the importer should get a quota certificate and acquire the license. At the time of importing goods, the IEC number is to be mentioned.

(ii) Foreign Exchange Clearance : The exporter has to be paid in foreign exchange by the importer as he resides in a foreign country. For this the Indian currency has to be exchanged for foreign currency. This is done by Exchange Control Department of the Reserve Bank of India (RBI). The importer has to get the foreign exchange sanctioned. For this he applies in a prescribed form to a bank authorised by RBI. After scrutiny of the documents, the necessary foreign exchange is sanctioned.

(iii) Placing an Order : Once the foreign exchange clearance is obtained from RBI the importer places an import order with the exporter for supply of goods. This order contains information on all aspects relating to the goods to be imported. These include quality, quantity, size, grade, price, packing and shipping, ports of shipment, insurance, delivery schedule and modes of payment. This order is called as indent.

(iv) Letter of Credit : If the exporter agrees to a letter of credit, then the importer obtains it from his bank and forwards it to the exporter. It minimises the risk of non-payment for the exporter. At the same time, the importer should arrange for sufficient funds to be paid on delivery of the goods.

(v) Clearing and Forwarding Agent : The importer then appoints C & F agent to look after the various customs formalities and documentation work with respect to import of goods.

(vi) Shipment Advice: Once the goods are loaded on the vessel, the exporter sends a shipment advice to the importer. This document contains details about the goods, invoice number, bill of lading and name of the vessel, the port of export and date of sailing of the vessel. This will help the importer for custom clearance and unloading of goods.

[C] IIIrd Stage : Import Stage: 

(1) Receipt of Document : The importer receives the documents sent by the exporter through his bank. They are as follows Bill of Lading, Certificate of Origin, Certificate of Inspection, Packing List, Commercial Invoice, etc.

(ii) Bill of Entry : The clearing and forwarding agents, then prepare a bill of entry. This bill is presented to the dock superintendent for release of goods. The bill of entry has details like number of packages, quality of good and price of goods.

(iii) Delivery Order : For taking delivery of the goods a delivery order is needed. This is obtained from the shipping company by the C & F agent. Once this is received the freight charges are paid and goods are allowed to be unloaded from the ship.

(iv) Customer Clearance : The importer has to present the Bill of Lading, Bill of Entry and Packing List to the customer authority who will certify it and give customs clearance.

[D] IVth stage : Posts Import Stage: 

Various duties have to paid in order to take the goods out of port are:

1. Port Trust Dues : The clearing and forwarding agent has to make the payment of port trust dues. 

2. Customer Duty : Also paid by the clearing and forwarding agent to the custom authorities. 

3. Insurance Premium : Under the FOB (Free of Board) impact, the importer has to make the payment of Insurance Premium. 

4. Payment of Freight: The shipping contract will lay down the amount of freight to be paid and it has to be paid by the importer for getting clearance of goods. 

5. Exporters Payment: The exporter draws a Bill of Exchange on the importer according to the terms and conditions of the contract. 

6. Follow Up : It is the duty of the importer to take a follow up of the goods. If there are any discrepancies in the order or goods it has to be intimated to the exporter. Thus, the procedure of importing goods comes to an end.