Import & Export Trade

1. Name : Arshdeep Goklaney
Class : XIth (Commerce)
Roll No. : 19
Subject : Business Studies
Project Work : Import Trade & Its
Procedure
Submitted to : Mrs. Monika Babbar
Project Work :
Import Trade & Its Procedure

4. Title Slide No.
1. What is Import Trade ? 4
2. Procedure of Import Trade 5 – 17
3. Important Documents Used in Import Trade 18 – 25
4. Which countries does India import its
crude oil 26 – 27
5. Largest Trading Partners of India 28 – 29
6. Questions 30 – 31
 Trade Enquiry
 Obtaining Import Licence
 Obtaining Foreign Exchange
 Placing an Indent or Order
 Sending Letter of Credit (L/C)
 Arrangement and Shipment of Goods by Exporter
 Obtaining Document of Title
 Arrangement of Clearing Agent
 Clearing of Goods
 Taking Delivery from Railway or Transport
 Payment of Octroi Duty

5. When the trader of one country purchases goods from
traderofanothercountry, itis
knownas import trade. A trader cannot
importgoods, inany mannerhe wants,but hehas tofollowa fixed
procedure. This procedureis calledprocedure of importtrade.Underthis
procedure,various formalitiesare fulfilled.Whilefollowingthis procedure,
various documentsare alsoprepared.

6. An Indianimporterhastofollowthe followingprocedurewhile importinggoods:
(1) Trade Enquiry : As soon as a trader thinks of
importing goods, he makes trade enquiry. First of all,
he collects the information about the availability of goods of his requirements
and the name of the country and exporter he has to deal with. He can collect
this information from the agents of exporters in India, other importers and
trade commissioners of foreign countries. After collecting information about
the exporters he contacts them and gathers information from them about the
price of product, type of
about the price of product, type of product, the terms of payment etc. After
satisfying himself with all such information, importer takes the final decision of
importing the goods.
(2) Obtaining Importer Licence : Certain products are
prohibited to be imported. In order to import certain products
one requires an importer licence from the government. For

7. taking import licence, an application is given to controller
of imports and exports. Along with this application, three
statements are submitted : (i) Receipt of deposit of licence
fee, (ii) Certificate of income tax department,
(iii)Certificate attested by chartered accountant giving
details of imported goods in the previous year. If the
controller of import and export is satisfied with the
information provided by the importer, he issues an importer
licence to the importer. Along
with this import licence, a
quota certificate is also given
which specifies the value of goods that can be imported.

8. (3) Obtaining Foreign Exchange: After receiving
the import licence, the importer has to arrange the foreign
exchange. Almost in all the countries, transaction in foreign
currency is done by their central bank. In India, this work was done
by the Reserve Bank of India. Built in
(4) Placing an Indent or Order: Placing an order for goods, in the language
1991, under the liberalisation policy of the government, a foreign
exchange market was established. In this market, free sale and
purchase of foreign currency is done. Hence, the importer pays
the exporter by purchasing the currency from this market.
of international trade, is known as indent. The
details like name of product, type, quantity, price,
packing, time of delivery, insurance instructions etc.
are mentioned. Indents are of two types: (i) Open
Indent – In this indent very little information is
mentioned, like quantity of product, types
of products etc. All the rest is left on exporter to decide.

9. (ii) Close Indent – In this, all the information regarding goods is
mentioned.
(5) Sending Letter of Credit (L/C): In international trade, exporters
and importers are not known to each other. In such a situation, there is
always some doubt in the mind of the
exporter about the financial position of the importer. For
the satisfaction of the exporter, the importer sends a letter
of credit (L/C) to him. L/C is issued by the importer's
bank. In L/C, there is a written promise that the
Importer's Bank will accept a bill of exchange of a fixed
amount .L/C is issued to those customers only who are considered reputed customers of the
bank. From those customers who require L/C, bank takes some security and fix their limit of
that amount of letter of credit. Customers enjoy the facility of letter of credit up to that specified
limit. Bank can also ask its customers to deposit some money out if their L/C amount which is
called margin money. Letters of credit are usually of two types:

10. (i) Documentary Letter of Credit: When bank
adds this clause in letter of credit that all the
documents related to goods such as bill of lading,
insurance policy, consular invoice, certificate of
origination place etc. will be sent by the exporter to
the bank
(ii) Clean Letter of Credit: The letter of credit in which this clause is not added is called a clean
letter of credit. Under this, documents related to the goods
issuing the letter of credit, then it is called a documentary letter of credit and this method is
known as documentary credit.
are sent directly to the importer. This L/C is issued to
those customers only who are very reliable to the bank.
Letter Of Credit

11. (6) Arrangement and Shipment of Goods by Exporter: As soon as the exporter receive
the letter of credit from the importer, he arranges the goods
mentioned in indent. He keeps in mind the other things
mentioned in indent like quantity, packing etc. and when the
goods are ready in all aspects, the exporter appoints a forwarding
agent for further proceedings. The forwarding agent arranges the
shipment of goods and sends two main documents, i.e., bill of
lading and marine insurance policy to the exporter. After
receiving these two documents, exporter prepares the invoice and
writes
a bill of exchange equivalent to the amount of the invoice. In this manner, all the
related documents such as bill of lading, marine
insurance policy, invoice band bill of exchange are
prepared. After this the exporter sends these
documents, through his bank to the branch of any
foreign bank or to an authorised bank in the
importer’s country.

12. These documents are sent through bank only if there is some
term related to the payment, otherwise they can be sent
directly to the importer also.
(7) Obtaining Document of Title: There are two ways of
sending all the documents related with the goods to importer.
One, if there is no term or condition related with the payment,
then all the documents are directly sent to the importer. Two, if
there are terms and conditions related with the payment, then
document related to goods are sent to the bank. As soon as
the importer gets the information about the arrival of the
document in bank, he makes arrangement for receiving the
documents. There can be two modes of making payment.
One, cash payment, second to accept the bill of exchange. If
document is “ Document against Payment (D/P)”, then by
making payment document can be collected

13. If document is “ Document against Acceptance (D/A)”, then
by accepting bill, the document can be collected. When the
exporter sends documents related with the goods to the
bank, he informs the importer by a letter about the name of
the bank, where he has sent the documents. This letter is
called advice letter to import trader.
(8) Appointment of Clearing Agent: After receiving all the concerned documents, the
importer arranges for taking the delivery of goods. The importer, if he wants, can arrange for
taking the delivery of the goods by himself but the appointment of a clearing agent is more
appropriate. These agents are specialist in this work. Hence, at this stage, after apportioning a
clearing agent, all the documents are handed over to him.
(9) Clearing the Goods: At this stage, the clearing agent
clears the goods by fulfilling the following formalities:
(i) Payment of Custom Duties: Before taking the goods
from the ship, the agent has to go to the

14. custom office where he has to fill three
copies of bill of entry. In this bill, full
information of the goods imported is
given. On the basis of this information,
custom authorises determine the
custom duties payable. Two copies of
bill of entry are returned to the agent.
If due to some reasons, clearing does
not have full knowledge of the details of
the imported goods, then in place of
the bill of entry, the bill of sight is filled. The available
details are filled in and the remaining columns are left
blank. In such conditions, after inspecting the imported
goods, the custom duty is determined.

15. (ii) Payment of Dock Dues: After payment of the custom duties, the
clearing agent fills up two copies of the Dock challan for the payment
of the Dock dues. After payment of the dock dues, one copy is
returned to him as a receipt.
for delivery. The shipping company’s officer signs only
when the freight of the ship and other expenses related
with ship have been paid.
Endorsement for delivery is an
order for the captain of the ship to
give delivery of goods.
Sometimes, shipping company does not sign the bill of lading but issues
a delivery order separately. The captain of the ship gives the delivery of
the goods mentioned in the delivery order.
(iii) Endorsement for Delivery: Now the clearing agent has to get
the bill of lading signed by the officer in the office of the shipping
company. This is called endorsement

16. (iv) Taking Delivery of Goods: For taking the
delivery of goods, the clearing agent submits
the duty receipt, dock dues receipt and the
signed the bill of lading or order of the delivery
to the port authorities. When the authorities
are satisfied with the documents submitted,
then they allow the picking of the goods from the dock. At the time of taking delivery of the
goods, it is the duty of the clearing agent to check the goods properly. If the goods are damaged,
then the shipping company should immediately be informed. The goods should be picked
immediately as soon as the acceptance is received from the authorities. If it is not done within a
specified time limit, a fine is charged which is called Demurrage.
(v) Sale of Goods before Taking Delivery:
Sometimes, the importer sells the goods before
taking the delivery because he wants that purchaser
himself takes the delivery. In such a condition the
importer

17. issues written instructions to the dock authorities. This instruction is written on the bill of
lading. If all the imported goods have been sold to a purchaser, then he receive the goods in full,
otherwise a part of it is received by him and a part by the clearing agent.
(vi) Keeping Good in Bonded
Warehouse: If, due to some reasons, the
importer is not in a position of paying
the custom charges immediately or if he
does
not want to take the delivery immediately, then goods are kept in the bonded warehouse. The
officer of the warehouse gives a receipt of receiving the goods to the clearing agent which is
called a Dock Warrant. After paying the dues or on requirement , the goods are cleared
com the bonded warehouse.
(vii)Loading the Goods: If delivery of the goods has been taken
immediately, then the clearing agent arranges for its loading. The
goods are dispatched either by road transport or by rail transport. If
the goods are sent by the railway transport, then after booking the
goods with the railway,

18. Railway Receipt (R/R) is received. At the end, the clearing
agent sends the information of loading along with railway
receipt, commission and other expenses etc. to the
importer.
(10) Taking Delivery from Railway or Transport:
After getting information from the
clearing agent, the importer makes arrangement for taking delivery of the goods either from the
railway or from the transport company. The delivery can be taken either by him or by his agent
or by the clearing agent.
(11) Payment of Octroi Duty: When the goods reach the town, local administration imposes
a tax on the goods which is called octroi duty. Some goods are exempt from such octroi duty.
Whatever the condition is, after paying the octroi duty, the importer can carry the goods to his
godown.

19. In import trade, various documents are used. These documents have already been explained in
detail during the discussion of procedure of import trade. Some of them are as follows:

23. Bill of Sight

26. As there has been no major increase in oil prices since it has dropped in 2015 (still below
$50 per barrel), this means that India has had no need to change its sources for oil from
2014, just amping up the amounts that it imports [still monetary value is low because of
the fact that the oil price is much lower than its 2008 peak].
India imports most of its oil from OPEC nations, in a bid to promote trade and build
relations with major Middle Eastern partners, such as Iran, Kuwait, and Saudi Arabia,
where there is a large number of Indians living and working also.
Keeping diversified sources of oil is beneficial as when they get hit with problems, such as
Iran with the sanctions, we have other places to get our oil from. Equally, if one nation
had a monopoly of all our oil exports they would have a control over us and could use it
as a bargaining chip. On the

27. other hand, giving a substancial amount to a certain nation shows that we trust them
and want to trade with them.

28. According to the Ministry of Commerce and Industry, the fifteen largest trading
partners of India represent 59.37% of total trade by India in the financial year
2015-2016..These figures include trade in goods and commodities, but do not
include services or foreign direct investment
The two largest goods traded by India are Mineral fuels ( refined/ unrefined)
and gold (finished gold ware / gold metal). In the year 2013-14, mineral fuels
(HS code 27) are the largest traded item with 181.383 billion US$ worth
imports and 64.685 billion US$ worth re-exports after refining. In the year
2013-14, gold and its finished items (HS code 71) are the second largest traded
item with 58.465 billion US$ worth imports and 41.692 billion US$ worth re-
exports after value addition. These two goods are constituting 53% total
imports, 34% total exports and nearly 100% of total trade deficit (136 billion
US$) of India in the financial year 2013-14. The services trade (exports and
imports) are not part of commodities trade. The trade surplus in services trade is
US$ 73 billions in the year 2013-14.

29. Rank Country
Value (US$
billion)
Share of
overall
imports
1 China 61.5 15.8%
2 Saudi Arabia 21.4 5.5%
3 Switzerland 21.1 5.4%
4 United States 20.5 5.2%
5
United Arab
Emirates
20.3 5.2%
6 Indonesia 13.9 3.5%
7 South Korea 13.1 3.4%
8 Germany 11.8 3%
9 Iraq 11.3 2.9%
10 Nigeria 10.2 2.6%
11 Qatar 9.7 2.5%
India imports around 6000 commodities from 140 countries.[India imported
$390.7 billion worth of commodities in 2015, down by 15% from the previous
year. The following table shows India's 11 largest sources of imports

30. Q 1. What are products Imported by India ?
Q 2. What are ratio of the import of Oil in India ?
Answer : Oil, Gems, Precious Metals, Machinery, Medical Equipments, etc.
Answer :

31. Q 3. Name the Indian Companies who import some products from Other Countries ?
Answer : 1. Hema Connoisseur Collections (P) Ltd. 2. Pernod Ricard India Pvt. Ltd
3. Sula Selections 4. Brindco Ltd.- Importer of wines, spirits & beer
Q 4. Name the government department who check on import trade ?
Answer : Directorate General of Foreign Trade (DGFT) organisation is an attached
office of the Ministry of Commerce and Industry and is headed by Director General of
Foreign Trade. The shift was from prohibition and control of imports/exports to
promotion and facilitation of exports/imports, keeping in view the interests of the
country.
Q 5. Name the Clearing & Forwarding Agents who
clears the goods from dock ?
Answer : 1. GAT SHIP 2. AMZ TRANSIT 3. Cathol