Import trade refers to the purchase of goods from a foreign country. The procedure for import trade differs from country to country depending upon the import policy, the statutory requirements and customs of different countries. In almost all the countries of the world import trade is controlled by the Government.
The objectives of these controls are proper use of foreign exchange, restrictions on imports of non-essential and luxury goods, development of indigenous industries, etc. In India, the following steps are involved in importing goods from any foreign country.
Steps in Import Trade
Following steps are taken in import trade:
I. Trade Enquiry: First step in import trade is to make trade inquiries asking for details of goods, price, terms of sales etc.
II. Procurement of Import license and quota: An Import license is essential to import goods from a foreign country. A license is issued under import policy announced every year by the government.
III. Obtaining foreign exchange: After getting import license, foreign exchange is obtained from RBI. An application in a prescribed form is submitted giving details of exchange required.
IV. Placing the indent or order: An order is placed with the exporter for the supply of goods.
V. Dispatching a letter of Credit: To ensure payment the exporter asks for a letter of credit from the importer. The issuer of this letter guarantees the payment as per terms.
VI. Obtaining necessary documents: The exporter sends necessary documents giving details of goods dispatched.
VII. Customs formalities and clearing of goods: After receiving the necessary documents, importer has to receive the goods. He receives delivery order, pays dock dues, fill in the bill of entry, pay custom or import duty etc.
VIII. Making the payment: The payment is made as per the terms agreed earlier.
IX. Closing the transaction: If the goods are as per the satisfaction of the importer then the transaction is closed.