A Step-By-Step Guide on the Import Process

When a business based in one country purchases a product or service provided by a business based in another country, it is called import. Imports are important because they help countries source products for domestic consumers that might not otherwise be available within their borders. 

If you are a regular visitor to Cogoport’s blog page, you might have read our guide to the export process. If you haven’t, you can take a look at it here. Next, we tackle the import process.

Shipping by sea and by air are the most popular modes of transportation in international trade. Importers can have their shipments delivered by ocean liner either as a Full Container Load (FCL) or Less than Container Load (LCL). A consignment that takes up an entire container is called an FCL shipment while one that occupies just a part of a shared container is called an LCL shipment. An FCL shipment is larger than an LCL shipment and also has a shorter transit time. Alternatively, importers can have their time-sensitive and valuable cargo delivered by air, although it costs more to transport by air than by sea. 

Check out Cogoport’s FCL shipping guide here, LCL shipping guide here, and air freight guide here.   

In this piece, we explain the multiple steps involved in importing goods into India via sea, using an FCL transaction as an example. Read on for:

• The stakeholders in the import process
• The processes involved in the import process
  

Stakeholders in FCL import‍

1. Exporter: The exporter produces or procures the goods and ships them to another country. Also called the shipper, supplier or seller. There are various types of exporters – merchant exporter, manufacturer exporter, service exporter, third-party exporter, project exporter and deemed exporter.        
2. Importer: The importer is the end-customer who buys the goods shipped by the exporter. Also called the consignee, customer or buyer. As with exporters, there are several types of importers as well – the actual user, established importer and registered importer.  
3. Origin Country: The country from where the goods are shipped. Additionally, the port in the origin country from where the cargo is shipped in containers is called the port of origin (POO) or port of loading (POL).
4. Destination Country: The final country where the goods are sent. The final port to which the containers are shipped is called the port of destination (POD).
5. Shipping Line: The carrier, ship or vessel that carries the cargo from origin to destination.
6. Origin Agent: The freight forwarder in the origin country who liaises with the shipping line, exporter and destination agent. In some cases, depending on the origin country’s shipping practices, the origin agent also works as the customs agent at origin. 
7. Destination Agent: The freight forwarder in the destination country who liaises with the shipping line, importer and origin agent. In most cases in India, the destination agent also stands in as the customs agent at destination.
8. Customs Authorities: Customs authorities at origin clear the goods for export while customs authorities at destination clear the goods for import.
9. Port Authorities: Present both at the origin and destination countries, they clear the goods to be loaded and unloaded from the ship respectively.
10. Intermodal Transportation Providers: Truck, trailer and rail service providers facilitate the movement of goods from the factory to the port of loading at origin and from the port of destination to the final destination of the imported goods.             

FCL Import Process in India: An In-depth Look 

The infographic above traces the main steps in FCL imports. But there are many small steps in between. Here’s a detailed guide to how the FCL import process works in India for a free on board (FOB) shipment. 

1. Origin activities (till vessel departure)

After the exporter and importer finalise the deal and make the shipping arrangements, the exporter shares the following documents and details with the importer and destination agent:  

• Container details
• Shipping Instructions (SI) filed with the carrier at origin
• Draft house bill of lading (B/L) issued by the origin agent. At times, the importer might seek corrections in the draft house B/L
• Confirmation of payment of local charges (for services availed of at port/terminal of origin) by the exporter
• Courier details after the house B/L is dispatched to the importer
• Surrender details, if B/L is surrendered at origin. (The exporter surrenders the original B/L to the carrier at origin unless the shipment is under “documents against payment” or letter of credit)   
• Shipped on board (SOB) confirmation of containers and details of planned vessel movement. (The SOB confirmation on the B/L confirms the goods have been loaded on the ship)

• The carrier issues a master B/L to the origin agent. Unlike the house B/L, which mentions the exporter as the shipper and the importer as the consignee, the master B/L designates the origin agent as the shipper and the destination agent as the consignee. The origin agent sends the master B/L to the destination agent.

Note: The origin activities listed here are all relevant to the importer. For origin activities handled by the exporter, refer to our guide to the export process here. 

2. In-transit activities

• After the goods receive export clearance and the ship leaves the port of origin, the destination agent tracks the shipment in-transit and informs the importer of any developments, such as delays.  
• Two days before the ship’s scheduled arrival at the port of destination, the carrier files an Import General Manifest (IGM) with customs. The IGM contains details of all the import shipments carried by ship along with their corresponding B/L numbers. This document is mandatory for import customs clearance. 
• If the shipment’s final destination is not the port of destination but an inland container depot (ICD), the carrier files a Sub-Manifest Transhipment Permit (SMTP), which details the import shipments being moved from the port to the ICD with their corresponding B/L numbers.
• The carrier sends a Cargo Arrival Notice (CAN) to the importer and the “notify party” mentioned on the B/L (who could be the importer or the destination agent). The CAN has a description of the goods, their weight, the number of packages, and collection charges if any. 

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3. Container movement at destination

After the ship arrives at the port of destination, the containers are off-loaded, loaded on trailers and moved to a container freight station (CFS) nominated by the carrier for customs clearance.

If the final destination of the goods is not the port of destination but an ICD, the containers are shifted there by inland haulage, which is of two types:

• Carrier haulage – The carrier nominates the haulage provider, decides the haulage charge and is fully responsible for the carriage of goods to the ICD.
• Merchant haulage – The importer appoints an independent haulage provider, negotiates the rates directly, and bears the responsibility of safe haulage of the goods.

4. Bill of Entry filing

• Within 48 hours of the ship’s arrival, the destination agent/customs agent files the Bill of Entry (BOE) – the most important document for import clearance. The BOE marks the entry of goods into a country before their consumption or warehousing and is a legal requirement.
• To file the BOE in India, the customs agent enters the required information on ICEGATE – the official website of the Central Board of Indirect Taxes and Customs – after which an Import Checklist is generated. The purpose of this checklist is to help the importer verify that the information provided by the customs agent is correct.
• Once the checklist is verified, the customs agent does the final filing of the BOE and receives an electronically generated BOE number for the shipment.

5. Customs assessment, examination, and clearance

• After the cargo arrives at the CFS/ICD and the BOE number is generated, the customs department’s electronic data interchange (EDI) system or a customs officer assesses the duty applicable, as per the declared cargo value and its classification based on the international Harmonised System of Commodity Classification.
• The EDI system/customs officer checks if the cargo is restricted/prohibited for import or if the importer needs additional licences/permissions for its import.
• If the customs officer isn’t sure about the cargo value or if the cargo is red-flagged by the EDI system, the officer requests an open examination of the goods.
• On successful completion of the examination and assessment, the customs officer endorses the BOE with a “Pass Out Order” stamp.
• The importer receives the BOE and completes payment of import duty.

Note: In most cases, customs assessment is done by the EDI system and no assessing officer is involved.

6. Document handover to the carrier

• Following import customs clearance, the importer hands over the commercial invoice cum packing list, purchase order, house B/L, import licence copy, declaration form, certificate of origin, letter of credit/bank guarantees, BOE number to the destination agent.
• The destination agent submits the same set of documents to the carrier with one exception – the master B/L replaces the house B/L. Additionally, the agent submits a release letter/endorsement to the carrier, asking it to issue the import delivery order (DO) directly to the consignee listed on the B/L (who could be the importer, their agent or their bank). 
• The carrier issues the DO to the consignee.

7. Last-mile delivery

The next and final step in the import process is last-mile delivery of the shipment. At this stage, the importer de-stuffs the containers takes delivery of the cargo and returns the empty containers to the carrier-appointed container yard. This plays out in two ways:

Case 1:

• The containers are de-stuffed at the CFS/ICD 
• The importer takes delivery of the de-stuffed cargo after handing over the DO to the CFS/ICD
• The cargo is then loaded on trucks and moved to the importer’s premises

Case 2:

• The stuffed containers are collected from the CFS/ICD, loaded on trailers and taken to the importer’s premises, where they are de-stuffed

And those are the steps involved in the import process. But before you go, there are a few things you must watch out for when importing goods and services from another country.   

Watch out for these hurdles

• Make sure that the documents/information you submit at various stages of the import process are accurate and complete as inaccuracies cause delays
• Don’t forget to check if the goods you wish to import are restricted/prohibited or if they need additional licences or permits
• Know the right classification for your cargo as that will help you calculate and budget for the import duty applicable  
• Just as you would supervise the de-stuffing of your cargo at your own warehouse, it is wise to have your agent monitor the de-stuffing process at a CFS/ICD to avoid damages. This is because not all CFS/ICD workers are trained to know if some shipments require special handling  
• In the case of factory de-stuffing, pick up your stuffed containers at the port/CFS within the allotted free time to avoid demurrage fees
• Return empty containers to the container yard within the allotted free time to avoid detention fees

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