International trade of second-hand equipment has been witnessing steady growth in the past few years. India is amongst the prominent importer of used machinery and equipment globally. Shipping such products in India are subjected to various legal implications, which should be abided by the importers. Those who wish to import such products for commercial purposes in India must secure the IEC certificate alongside import authorization and other legal permits. Both these permits cum licenses are granted by the Directorate General of Foreign Trade, aka DGFT. Let’s find out how to get permission to import second-hand equipment.
Role of Import-Export Code (IEC) in International Trade
IEC certification or IEC code is a 10-digit unique identification code assigned to those who wish to commence import-export business in India. Directorate General of Foreign Trade, aka DGFT accords this code against duly-filed e-form and the applicable fee. IEC is among the fundamental legal permit required by the importers and exporters in India. The applicant can visit the DGFT portal to apply for IEC registration. While filling in details in the e-form, the applicant will be prompted to upload some mandatory documents as shown below:
Why do I need Import authorization when I have IEC in place? – Import Second-Hand Equipment
Import authorization refers to a legal permit required for importing notified and restricted products (including import second-hand equipment) listed under the Foreign Trade Policy (FTP). Take note that import authorization is not mandatory for products that fall outside ITC (HS) classification list. Having IEC alone is not enough to import FTP’s notified goods in India. The terms and conditions for the grant of import authorization revolve around the following:
- Description and quantity of goods to be shipped in India
- The purpose of importing goods
- Export obligation, if any
- Proposed Minimum value addition, if any
- Minimum import or export valuation
- Bank guarantee or legal paperwork or bond with concerned customs
- Validity period.
Foreign Trade Policy Norms for importing second-hand equipment
Section 2.31 of the Foreign Trade Policy underpins provisions concerning the import of second-hand equipment or goods in India. Below is the tabulated form enlisting products and their corresponding legal permits for importing second-hand goods.
| Serial Number | Categories of second-hand equipment | Import Policy | Applicable Conditions, if any |
| 1. | Personal computers (PCs)/ laptops including their reconditioned/refurbished spares | Restricted | Authorization required for import |
| 2. | Photocopier machines/ Digital Multifunction Print & Copying Machines | Restricted | Authorization required for import |
| 3 | Air conditioners (ACs) | Restricted | Authorization required for import |
| 4. | Diesel generating (DG) sets. | Restricted | Authorization required for import |
| 5. | Re-conditioned/Refurbished spares of Capital Goods | Free | Subject to the production of a (CEE) i.e. Chartered Engineer certificate to the effect that such spares adhere to at least 80 percent residual life of original spare. |
| 6. | All other second-hand capital goods* {other than (a) & (b) above} | Free | |
| 7. | Second-Hand Goods other thancapital goods | Restricted | Authorization required for import |
What do you mean by capital goods*?
Capital goods refer to a company’s physical assets without which no production process can come into effect. Sometimes these goods are referred to as property, plant, and equipment (PPE). To understand clearly what exactly capital goods mean, let’s take an example of a pizza hub.
The pizza hub consolidates several assets such as counter, furniture, oven, utensils, and so on, which makes it operational. These assets are known as capital goods. In the manufacturing sphere, capital goods are known as a subset of a finished good. Simply put, they act as a spare for finished goods that make them functional. A capital good is a broad term that consolidates countless products, including used spares and parts, but not finished products.
Other paperwork required to import second-hand equipment
Following is the paperwork required to import second-hand equipment:
- Bill of Entry
- Packing List
- Commercial invoice
- Foreign Exchange Control Form (Form A-1)
- Bill of Lading
- Certified Engineer’s Report
- Terminal Handling Receipt
- Product Manual
- Cargo Release Order
- Inspection report
How to apply for permission to import second-hand equipment online?
Following is the procedure to apply for permission to import second-hand equipment online:
- Head to the DGFT portal and completes the registration formalities via OTP validation.
- Use the temporary credentials received on the registered email id or phone to log in to the portal
- Head to the services and choose the import Management system.
- Next, choose option- “Restricted Imports”. This will lead you to a new window where the e-form for authorization will be accessible.
- Once the e-form appears on your screen, fill in legitimate details about the firm, import, and port.
- Add available licenses or registration, if needed.
- Enter the purpose of import under the port details
- After filling in all the details, head to the payment section for the fee submission
- Post payment, note down the acknowledgment number for application tracking.
Conclusion
One must know the above conditions to import second-hand equipment in India. Although the Foreign Trade Policy[1] entails relaxed norms for imports, there is some limitation on which products make their way into the Indian Territory. Needless to say that severe penalties would come into effect if someone tries to ship notified products without authorization.
Read Our Article:How to obtain IEC Code in India
