Your firm is planning to import textile machinery from Canada. Describe the procedure involved in importing. Or
Describe import trade procedure.

1. Trade enquiry : First of all, the Indian importer has to make trade inquiries from various exporters. For this purpose, he sends a letter of enquiry to the exporters seeking information about the availability of goods, the price at which the goods are available, the terms and conditions concerning the delivery and payment. In the letter of enqiry, the importer should specify the quantity, quality and description of the goods desired. In reply to the enquiry, the importer will receive a quotation from the exporter. The quotation states the price at which the goods will be supplied. It also contains the particulars as to the quantity and quality of goods available, the terms and conditions of sale set by the exporter etc.

2. Procuring import license : Any person who wants to import goods into India is required to obtain an import license under the Import and Exports Control Act 1947. In order to get an import license, an application in the prescribed form as to be made to the Controller of Exports and Imports. The completed application form has to be submitted along with the following documents : (a) Treasury Receipt from the Reserve Bank of India or the State Bank of India certifying the payment of import license fee; (b) Income tax verification certificate from the Income tax authorities; (c) A certificate from a Chartered Accountant Certifying the total C.I.F. value of goods (invoice price of goods plus freight charges and insurance upto the place of destination) imported by the applicant in the previous financial year, if any.

The Controller of Imports and Exports, after scrutinising these documents, issue the import license in duplicate.

3. Obtaining foreign exchange : After obtaining the import license, the importer has to procure the necessary amount of foreign currency of the country from which he intends to import the goods. Under the Foreign Exchange Regulations Act, the importer is required to submit an application in the prescribed form along with the import license to any exchange bank. The exchange bank will endorse and forward the application to the Exchange Control Department of the Reserve Bank of India. After scrutinizing the application in accordance with the exchange policy of the Government of India, the Reserve Bank of India, will sanction the release of foreign exchange. '

4. Placing an order or indent : The next step in the import trade procedure is to send an order for the import of goods. The order may be sent directly or through an ident house. Indent house are intermediaries specializing the foreign trade. They maintain wide contacts with foreign firms and charge commission for their services. In case, the importer wants to make use the service of an indent house, he enters into an agreement with the indent house for the supply of specified goods. For this purpose, the indent house fills up the prescribed form and gets it signed by the importer. The indent form contains the particulars of the goods to be imported and the term and conditions with regard to price, shipment, delivery, payment etc.

5. Sending Letter of credit : In case the Indian importer does not enjoy the full confidence of the exporter, he has to give a proof of his creditworthiness. For this purpose, he may send a letter of credit to the foreign supplier. The importer can obtain the letter of credit by depositing amount of money in the bank. A letter of credit contains an undertaking by the bank to honour bills of exchange drawn by the exporter on the importer up to the amount specified in the letter of credit.

6. Receiving shipping documents : After receiving the letter of credit the foreign supplier will despatch the goods and intimate the importer that the goods have been shipped. He will draw a bill of exchange on the importer for the value of god goods despatched and attach to it all the shipping documents, namely, bill of lading, Insurance policy, invoice, certificate of origin and consular invoice. The exporter then forwards through his bank the bill of exchange along with the shipping documents to the importer. The exporter’s bank will deliver the documents to the importer as per the instructions of the exporter.

7. Clearing the goods : After obtaining the documents of title to the goods, the importer waits for the arrival of the ship. When the ship arrives at the ports of destination, the importer makes arrangements for the clearance of the goods from the customs authorities.

For this purpose, he has to comply with the following formalities :

(a) Delivery Order : The importer has to obtain the “delivery order” from the shipping company. This order is given by making an endorsement on the back of bill of lading.

(b) Port Trust Dues Receipt : Then the importer has to pay a charge which is collected on all goods entering the boundaries of the country. The charge represents the cast of services rendered by the dock authorities in connection with the landing of goods. When the importer pays this charge, the Port Trust office issues “Port Trust Dues Receipt”.

(c) Bill of Entry : It is a document certifying that the goods of specified description and values are entering into the country from abroad.

8. Making payments : The import trade procedure comes to an end when the importer makes the payment to the exporter. Unless the payment for the goods has been made in advance, the importer may adopt any of the following methods for making payments.

(a) Letter of Credit : This importer may obtain a letter of credit form his bank in favour of the exporter. Under this arrangement, the bank agrees to honour the bill of exchange drawn upon it by the exporter upto the specified amount.

(b) Bill of Exchange : The importer can make payment by accepting and honouring the bill of exchange drawn on him by the exporter.

After taking delivery of the goods, the importer inspects the quality of the goods. If he is not. satisfied, he will negotiate with the exporter.