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Pankaj Tyagi
| Updated: 24 Jan, 2022 | Category: IEC

Import from China to India: Legalities and Documents

import from china to India

The demand for Chinese products is increasing globally. Every year India imports a massive number of Chinese products either for domestic selling or producing exportable goods. If you plan to serve any of those purposes, you must get familiar with the legal aspects of shipment. This articles pens down underlying legalities and procedures that will help you import from China to India.

Why is it Beneficial to Import from China to India?

Here are some important facts that justify why import from China to India is escalating every passing year:

  • Availability of cheaper goods with desirable quality
  • Ensure better profit margin for the domestic seller
  • Countless range of products
  • Bulk orders are not a problem
  • Low production and shipping cost

Key facts and Data Relating to India’s Import from China

  • India’s trade with China in FY 21 surpassed 125 billion dollars, with imports from China nearing a record 100 billion dollars, considering continued demand for the range of goods, mainly machinery.
  • As per the data of China’s General Administration of Customs released on Jan 14, in the past one year, the valuation of goods imported from China surpassed the overall bilateral trade in 2019. Trade fell from 92.8 billion dollars in FY 19 to 87.6 billion dollars in FY20 on account of the Covid-19 pandemic.
  • Trade has witnessed considerable growth in FY21 courtesy to recovery in demand and increasing imports of new commodities such as medical supplies. Bilateral trade stood at 125.6 billion dollars in FY 21, with the nation’s imports from China accounting for 97.5 billion dollars.
  • China is the source of almost 14 percent of overall Indian imports. Indian import from China includes; mobile handsets, electrical equipment, power, telecom, pharma, apparel, etc. India has a greater inclination towards Chinese products owing to its matchless price-value proposition.

How to Import from China to India: Steps, Mandatory Permits, and Documents

Step 1: Secure Import Export Code from DGFT

Before importing from China, every business must first secure IEC Registration, i.e., Import Export Code, from the Directorate General of Foreign Trade. The IEC refers to a pan-oriented registration that comes with lifetime validity. It is mandatory for both importers and exporters in India. In general, IEC serves the following purposes:

  • Clear formalities at customs for shipment clearance
  • Securing payment from the sellers of the importing nation

*Connect with a Corpbiz associate to secure IEC in a prompt and hassle-free manner.

Step 2: Ensures adherence to the norms of bylaws

After the IEC allotment, businesses may secure goods from exporting nations that are adherence to Section 11 of the Customs Act, 1962, Foreign Trade Policy, 2015-20, and Foreign Trade (Development & Regulation) Act (1992),

But, certain products- canalized or prohibited, as notified by the GOI- require additional consent and registration form DGFT and the other concerned authorities.

Step 3: Procure import licenses

To figure out whether registration is required to import a specific commercial product or service, an importer must classify the product by pinpointing its ITC i.e., Indian Trading Clarification on the Harmonized System of Coding classification.

ITC (HS) is India’s primary method of classifying products for trade and EXIM operations. It is granted by the Directorate General of Foreign Trade.

ITC (HS) refers to an 8-digit alphanumeric code that reflects a particular class of products, which permits the importer to follow norms relating to those products.

An import license may be either a specific license or a general license. Under a general license, items can be imported from any nation; meanwhile, a specific license legalizes import only from specific nations.

Import licenses help clear shipments from customs and come with a validity of 2 years for capital goods and 18 months for raw material, consumables, components, & spare parts.

Step 4: File Bill of Entry and other key documentation for custom clearance

After securing the license for import, the next step is the submit the import declaration in the Bill of entry along with PAN, based on BIN (Business Identification Number), as per Section 46 of the Customs Act (1962).

A Bill of Entry reflects detail about the following

  • Exact nature of goods
  • Precise quantity of goods
  • Total valuation of the shipment

If the goods received the clearance via the Electronic Data Interchange system, no formal bill of entry is filed as it is automatically generated in the system. But, the importer should file a shipment declaration post sharing details required to process the entry for the clearance purpose.

Suppose the Bill of Entry is filed in the absence of the EDI system. In that case, the importer must furnish supporting documentation, including an inspection certificate, COI, i.e., certificate of origin, Bill of exchange, and invoice cum packaging list.

Once the items are imported, the customs officials verify the detail cited in the Bill of entry and cross-check them with imported goods. If there are no errors, the said officials grant a ‘pass out order’ that permits imported items to be replaced from the customs.

Step 5: Identify import duty rate for good clearance

GOI imposes basis custom duty on imported items, as prescribed in the schedule of the Customs Tariff Act, 1975[1], in addition with the item-specific duties such as to safeguard duty, anti-dumping duty & social welfare surcharge.

Besides, the GOI imposes an integrated goods and services tax (i.e., IGST) under the GST system. The said rates vary in accordance with the classification of imported items as prescribed in Schedules notified u/s 5 of the IGST Act (2017).

Conclusion

India-china has an old and solid relationship when it comes to international trade. In the past few years, India’s trade from China has increased many folds, and it’s likely to increase further in coming years. This underpins a perfect opportunity for domestic sellers and traders who wish to reap a significant profit margin. The import from China to India is rising, and thus one can leverage this opportunity to set up a profitable business.

Read our Article:How to Start Export Business in India?

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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