Chp-21 ~ Import Trade Flashcards
What do you understand by import trade?
Import trade involves purchasing goods from a foreign country.
Goods may be imported either directly or through certain agents.
Objectives, Purpose and Functions of import trade.
The main objectives of import trade are as follows:
1. to speed up industrialisation
2. to meet consumer demand
3. to improve standard of living
4. to overcome famine
5. to ensure national defence
What are the stages involved in the procedure of an import trade?
Stage 1 - Obtaining import licence
Stage 2 - Making trade enquiry and receiving quotation/proforma invoice
Stage 3 - Obtaining foreign exchange
Stage 4 - Placing an indent
Stage 5 - Opening a letter of credit
Stage 6 - Receiving shipping documents
Stage 7 - Appointing clearing agent
Stage 8 - Formalities by Clearing agent
Stage 9 - Taking delivery of goods from railway/carrier
Stage 10 - Making payment
How can an importer obtain an import licence?
When an importer wants to import an item for which import licence is required, he must first of all obtain an import licence.
For this purpose, the intending importer submits an application to import in the prescribed form to the licensing authority.
He must also submit the following documents along with the application:
a) treasury receipt for import licence fee paid
b) income tax verification certificate from income tax authorities
c) certificate of the value of goods imported, if any, in the previous year
What is a quota certificate?
In case of established importers, a Quota certificate is issued which specifies the quantity and volume of goods which the importer can import during the year.
the quota is fixed on the basis of the importer’s past imports duly certified by a chartered accountant.
What information is included in the enquiry made by the importer?
In the enquiry, the importer makes a written request to supply the following information:
a) specifications of goods such as size, quality, design, etc.
b) quantity of goods available
c) price per unit
d) terms of shipment (F.O.B., C&F, C.I.F.)
e) terms of payment (letter of credit, D/P, D/A)
f) delivery schedule
g) the date up to which the offer is valid
Who exercises control over foreign exchange in India and under which act?
The RBI exercises control over foreign exchange under the Foreign Exchange Management Act (FEMA).
What is a letter of credit?
A letter of credit is a document under which the issuing bank undertakes to make payment on behalf of the importer to the order of the exporter in exchange of the specified docuements.
What formalities are undertaken by a clearing agent?
The clearing agents usually performs the following activities:
a) getting endorsement for delivery
b) paying dock dues
c) preparing bill of entry
d) obtaining customs clearance
e) getting delivery from the dock
f) despatching goods to the importer
g) sending advice to the importer
What is a ‘Port Trust Dues Receipt’?
The clearing agent fills up a form called ‘Dock Challan’ for payment of dock charges.
After paying the necessary dock charges, the agent will receive back one stamped copy of the application to import as a receipt called, ‘Port Trust Dues Receipt’.
What are the different ways of making payment by importer to the exporter?
The importer may make payment in either of the following ways depending upon the terms of payment agreed upon with the exporter:
a) In case of letter of credit, the importer gets the shipping documents after payment.
b) In case of Documents Against Payment (D/P) bill of exchange, the importer gets the shipping documents on making payment of the bill of exchange.
c) In case of Documents Against Acceptance (D/A) bill of exchange, the importer gets the shipping documents after accepting the bill of exchange.
