How to handle customs and duties while shipping internationally from India
When shipping internationally from India, most first-time importers and exporters are often confused as to how to approach the customs and duties aspect of the shipping process. The easiest way to handle customs and duties in India is to enlist the services of a certified Customs House Agent (CHA). Although it is not mandatory for international shippers to be represented by a CHA, having an experienced CHA who is well-versed in Indian and international trade laws, understands customs procedures, and, preferably, is knowledgeable about the industry you work in, can save you a lot of trouble while exporting or importing. However, it is important as an international shipper to know a few important things about the process so that you can not only avoid any risks generally associated with customs clearance but also save on your duty payments wherever possible.
Registering as first-time importers or exporters
As a first-time shipper, it is critical that you register yourself as a first-time importer or exporter with the Indian Directorate General of Foreign Trade (DGFT) and get an Importer-Exporter Code (IEC). The IEC is a unique identifier for businesses that wish to ship internationally and is a prerequisite for engaging in international trade from and to India.
Getting your product classification right
While exporting or importing, it is important to classify your products based on the ITC HS (Indian Trade Clarification based on Harmonized System) code, simply referred to as HS codes. Every product you wish to export or import will fall under a specific HS code and may even fall under more than once categories. Each HS code has a different tariff structure and regulations that you must be aware of and abide by in order to get cleared by the customs authorities. In case your product appears to fall under more than one HS code, in which case you may have to be extra mindful to avoid misdeclaration and its consequences. These consequences can range from immediate ones like confiscation of goods and penalization to long-term ones like lost business, disrepute, and weakened customer relationships. Therefore, it is important to classify your goods accurately and learn all the regulations that are pertinent to your specific HS code.
Ensuring correct documentation and certification
Depending on the nature of your product, you may require additional certifications and accreditations to qualify for importing and exporting. For instance, packaged, frozen, and ready-to-eat food products must be licensed by the Food Safety and Standards Authority of India (FSSAI). Not having the requisite licenses and certifications can leave your goods stranded at the customs clearance stage.
Similarly, while importing, it is important to have a certificate of origin from the appropriate authorities so that you can benefit from reduction in customs duty and GST under different international trade agreements. For instance, the Comprehensive Economic Partnership Agreement (CEPA) can qualify certain goods to be exempt from certain components of customs duty when importing from and exporting to various countries. Being aware of such provisions and getting the right certifications and documentation can help you and your customer to save considerable amounts of money while importing to and exporting from India.
Vetting your Customs House Agent
As stated above, getting a Customs House Agent to handle your customs will be the easiest way of not only avoiding the risks associated with customs clearance but also leveraging the provisions made by the different trade regulators for greater savings and profits. However, you can’t trust every CHA to be able to help you with your customs clearance needs. You need to vet your CHA by looking for a number of credentials as well as desirable attributes. For starters, it is important to verify if your CHA is approved by the Directorate General of Anti-Profiteering (DGAP) to make sure they are reliable and trustworthy. They should have extensive working knowledge about filing the Shipping Bill and Bill of Entry and have an understanding of the industry you operate in.
Ideally, as a first-time importer or exporter, you must look for shipping partners who can handle as many aspects of the international shipping process as possible. For instance, Digital Freight Forwarding partners like Freightwalla also offer customs clearance services with the help of their in-house team of accredited CHAs. By partnering with them, you can clear customs in a hassle-free manner and focus on things that you excel at and those that really matter to operate and grow your business.