Importing goods from China to India (process, documents and tariffs)

Importing goods from China to India (process, documents and tariffs)

In recent years, despite calls for boycotts and the impact of the epidemic, India’s imports from China and its trade deficit with China have continued to grow. Currently, about 14% of India’s total imports come from China. This means that opportunities are also increasing for importers. For example, importing electronic and electrical products may be of great benefit to you.

However, you may not be clear about common issues in the import process, such as different labeling requirements for products, certification, finding reliable Chinese suppliers, etc. All of this may make you feel that importing goods from China is a daunting task. Don’t worry! This article will take you through the entire process of importing goods from China to India.

1. Things You Need to Know Before Importing
2. The process of importing goods from China to India
3. Required Documents
4. Labeling Requirements
5. How to pay and reduce import duties?
6. Tariff Calculation
7. How to use India’s import duty calculator?

Things You Need to Know Before Importing

There are several things to be aware of before importing goods from China. First, we will discuss the legal permissions required for importing.

1. Register your legal entity. This is required for any type of business. For export business, it is necessary to register a legal entity in your company or brand name. The five legal entity forms to choose from include: sole proprietorship, partnership, limited liability partnership, private limited company, one-person company.
2. Apply for commodity tax registration. This is also a VAT/CST number issued by your state government. Even if you do not import goods from China, you need this number to sell products in India.
3. Apply for IEC code registration. This is a license from the DGFT department. The IEC code requires a bank account opened in the name of your company, which is possible after you register a legal entity in India.

The process of importing goods from China to India

1. Market research: Determine the types of goods you want to import and the market demand. Understand the consumer preferences, competitor situations and potential sales channels of the target market.
2. Find suppliers: Find reliable Chinese suppliers through the following ways:
   • Online platforms:
     • Alibaba: One of the world’s largest wholesale websites, with a large number of suppliers and products. Note that the top-ranked suppliers may have higher advertising costs, so they need to be carefully screened.
     • Global Sources: There are fewer suppliers, but the audit standards are higher and the fees are higher. Suitable for finding direct factories and high-quality suppliers, especially electronic and mechanical products.
     • Made in China: Similar to Global Sources, it is suitable for finding high-quality suppliers.
     • DHgate: Suitable for small batch orders, but you need to pay attention to the consistency of product quality when cooperating for a long time.
     • AliExpress: Suitable for individual buyers and small batch orders, but you need to pay attention to the consistency of product quality and after-sales service.
   • Industry exhibitions: Participating in China’s industry exhibitions, such as the Canton Fair, can directly communicate with suppliers face to face and understand product and market dynamics.
   • Wholesale Markets: Visit major wholesale markets in China, such as Yiwu (the world’s largest wholesale market), Guangzhou (the largest wholesale market for clothing and luggage), and Shenzhen (electronics market). These markets gather a large number of suppliers, which can be visited and negotiated on the spot.
   • Professional sourcing agents: Professional sourcing agents such as Jingsourcing can help you handle the entire import process, including supplier selection, price negotiation, production follow-up, quality control, product compliance testing, logistics, etc. These companies usually have rich experience and expertise and can provide one-stop services.
3. Signing a contract: Negotiate the price, quantity, payment method and delivery date with the supplier, and sign a formal purchase contract. Make sure that the quality standards, delivery time and liability for breach of contract are clearly stated in the contract.
4. Prepare documents:
   • Bill of Lading (sea) or Air Waybill: issued by the carrier to prove that the goods have been loaded on the ship or machine.
   • Commercial Invoice: Lists the name, quantity, unit price and total price of the goods in detail.
   • Packing List: Lists the items in each packaging box.
   • Hygiene/Food Safety Certificate (food only): Proves that the food meets safety standards.
   • Certificate of Origin (if applying for duty reduction): proves that the goods are originated from China.
   • Insurance Policy/Notes: Provides protection against possible losses during the transportation of goods.
   • Product Description/Catalog: Details the specifications and uses of the product.
   • GATT & DGFT Declaration: Declaration of compliance with international trade rules and Indian import regulations.
5. Arrange Transportation:
   • Ocean Freight: The lowest cost mode, suitable for large quantities of goods. It usually takes about 20 days from China to major ports in India.
   • Air Freight: The fastest, but more expensive, suitable for small quantities of goods or urgent needs.
   • Courier Services: Such as DHL, UPS, FedEx, etc., provide door-to-door services, suitable for fast transportation of samples or small quantities of goods.
6. Customs Clearance Procedures:
   • Submit Documents: Submit all necessary documents to the Indian Customs before the arrival of the goods.
   • Pay Duty: Pay the duty through the ICEGATE e-payment portal. Log in to the portal, select the document type (such as BE, MBE, BD, SB), enter the ICE code and location code, select the bill to be paid, and select the bank to complete the payment.
   • Check status: After payment, you can check whether the transaction is successful on the ICEGATE transaction status page.
7. Pick up the goods: After paying the tariff and completing the customs clearance procedures, go to the designated location to pick up the goods.

Required Documents

Before the goods arrive, you must prepare the following documents:

1. Bill of Lading (sea) or Airway Bill: issued by the carrier, certifying that the goods have been loaded on a vessel or machine.
2. Commercial Invoice: details the name, quantity, unit price and total price of the goods.
3. Packing List: lists the contents of each package.
4. Health/Food Safety Certificate (food only): certifies that the food meets safety standards.
5. Certificate of Origin (if applying for tariff reduction): certifies that the goods are originated from China.
6. Insurance Policy/Notes: provides protection against possible losses during the transportation of goods.
7. Product Description/Catalog: details the specifications and uses of the product.
8. GATT & DGFT Declaration: declares compliance with international trade rules and Indian import regulations.

Labeling Requirements

As an importer in India, you must strictly adhere to marketing and labeling requirements. Failure to comply with these regulations may result in your goods being seized by customs or even face fines. Here are the key information you need to include on your product labels:

1. Production Date:
   • Definition: Indicates the date the product was produced.
   • Importance: Ensures consumers know when the product was produced, which helps assess the shelf life and freshness of the product.
2. Product Name and Description:
   • Definition: Clearly list the name and detailed description of the product.
   • Importance: Helps consumers understand the specific information of the product to avoid confusion and misleading.
3. Net Weight:
   • Definition: Indicates the net weight of the product.
   • Importance: Ensures consumers understand the actual weight of the product to avoid disputes caused by weight differences.
4. Maximum Retail Price (Tax Inclusive):
   • Definition: Indicates the maximum retail price of the product, including all taxes.
   • Importance: Transparent price information helps consumers make purchasing decisions and avoid price fraud.
5. Batch Number:
   • Definition: Indicates the batch number of the product.
   • Importance: Batch numbers help track the production and circulation information of the product, which facilitates recalls and investigations when quality problems occur.
6. Your Address:
   • Definition: Indicate the full address of the importer.
   • Importance: Provide contact information to facilitate consumers and regulators to communicate with you.
7. Import Month and Year:
   • Definition: Indicate the specific month and year when the goods were imported.
   • Importance: Helps regulators and consumers understand when a product was imported and ensures that the product complies with relevant regulations and standards.
8. Country of Origin (Made in China/People’s Republic of China):
   • Definition: Indicates that the product’s origin is China.
   • Importance: Transparent origin information helps consumers understand the source of the product and meets regulatory requirements.

How to pay and reduce import duties?

Although it is impossible to avoid duties completely, some preferential policies and strategies can be used to reduce the burden of duties. Here are some specific methods and suggestions:

1. Take advantage of free trade agreements:
   • Understand the China-India Free Trade Agreement: Familiarize yourself with the Free Trade Agreement (FTA) between China and India, which usually provides tariff reductions or exemptions. For example, certain specific goods may enjoy lower tariff rates under the FTA.
   • Apply for preferential certificates of origin: Make sure your supplier can provide preferential certificates of origin (Form A, Form E, etc.) that meet the requirements of the FTA, which will help you enjoy tariff reductions when importing.
2. Apply for tax refunds:
   • Export-oriented companies: If your company is mainly export-oriented, you can apply for export tax refunds. According to India’s export tax refund policy, exported goods can be refunded part or all of the imported duties paid.
   • Submit a tax refund application: Submit a tax refund application through the ICEGATE portal, ensuring that all documents are complete and meet the requirements. Common types of tax refunds include Duty Drawback, Advance Authorization, and Post Shipment Duty Credit Scrips.
3. Plan your import time properly:
   • Avoid peak tariff periods: Tariff rates may fluctuate due to seasonal demand, policy adjustments and other factors. Try to avoid importing during peak tariff periods and choose periods with lower tariffs.
   • Pay attention to policy changes: Regularly pay attention to changes in tariff policies in India and China, learn about the latest tariff rate adjustments and preferential policies, and adjust import plans in a timely manner.
4. Use special economic zones (SEZs):
   • Special economic zones: Storing imported goods in India’s special economic zones can enjoy lower tariffs and tax incentives. Companies in SEZs usually enjoy tax exemptions or tax reductions.
   • Apply for SEZ qualifications: If your company is located in a SEZ, you can apply for relevant qualifications to enjoy more tax incentives.
5. Use bonded warehouses:
   • Bonded warehouses: Temporarily storing imported goods in bonded warehouses can delay the payment of tariffs until the goods are actually sold or processed.
   • Apply for bonded warehouse qualifications: Make sure your company is qualified to use bonded warehouses and operate in accordance with relevant regulations.
6. Optimize supply chain management:
   • Decentralized procurement: Don’t rely on a single supplier. Decentralized procurement can reduce risks and may find more favorable prices and terms.
   • Long-term cooperation: Establishing a long-term cooperative relationship with suppliers can help you get better prices and payment terms. Sometimes suppliers will also provide certain tariff reduction support.
7. Consult professionals:
   • Hire a customs broker: A professional customs broker can provide detailed tariff consultation and agency services to help you complete import procedures more efficiently.
   • Legal advisor: On complex tariff and tax issues, hiring a professional legal advisor can provide more comprehensive legal support and advice.

Tariff Calculation

India imposes tariffs on all imported goods. The tariff calculation is based on the value of the goods, the applicable rates, and other possible additional charges. The specific tariff rates can be determined by looking up the ITC-HS code.

Components of Tariffs

1. Basic Customs Duty (BCD):
   • Definition: The Basic Customs Duty is the primary tax levied on all imported goods, and the rate varies depending on the type of commodity and the country of origin.
   • Calculation Method: The BCD can be a fixed rate per unit or a percentage of the assessed value. Typically, a percentage of the assessed value is more common.
   • Assessed Value: The assessed value is usually the CIF (Cost, Insurance, and Freight) value. The CIF value includes the cost of the goods, transportation fees, and insurance costs.
2. Social Welfare Surcharge (SWS):
   • Definition: The Social Welfare Surcharge is an additional fee charged as a percentage of the Basic Customs Duty.
   • Calculation Method: SWS = BCD * SWS Rate
3. Integrated Goods and Services Tax (IGST):
   • Definition: The Integrated Goods and Services Tax is a value-added tax calculated based on the type of commodity and the assessed value.
   • Calculation Method: IGST = IGST Rate * (CIF Value + BCD + SWS)

Example Calculation

Assume the assessed value of your goods is 100,000 INR, the BCD rate is 10%, the IGST rate is 18%, and the SWS rate is 10%.

• Calculate Basic Customs Duty (BCD):
  • BCD=10%×100,000=10,000 INR
• Calculate Social Welfare Surcharge (SWS):
  • SWS=10%×10,000=1,000 INR
• Calculate Integrated Goods and Services Tax (IGST):
  • IGST=18%×(100,000+10,000+1,000)=18%×111,000=19,980 INR
• Calculate Total Tariff:
  • Total Tariff=BCD+SWS+IGST=10,000+1,000+19,980=30,980 INR

Precautions

• Ensure Accuracy: All input information must be accurate, especially the ITC-HS code and the value of the goods, as incorrect information can lead to inaccurate calculations.
• Update Rates: Tariff rates can change periodically. It is advisable to recalculate before each import to obtain the latest rate information.
• Consult Professionals: If you are unsure about certain information or encounter issues, consult professional customs brokers or lawyers who can provide detailed guidance and assistance.

By following the detailed calculation methods and examples provided above, you can more accurately estimate the tariff burden for importing goods from China to India. This will help you better plan your import operations and avoid unexpected expenses due to tariff issues. We hope this information helps you successfully navigate the process of importing goods from China to India.

How to use India’s import duty calculator?

In order to more accurately calculate the tariffs on goods imported from China to India, you can use the import duty calculator provided by the Indian government. Here are the detailed steps and precautions:

1. Visit the official website of ICEGATE:
   • ICEGATE (Indian Customs EDI Gateway) is the electronic data interchange portal of the Indian Customs, which provides a variety of online services, including the import duty calculator.
   • Visit the website: ICEGATE official website
2. Enter the import duty calculator page:
   • On the ICEGATE homepage, find the “Services” section and click the “Tariff Calculator” or “Import Duty Calculator” link to enter the tariff calculator page.
3. Enter the ITC-HS code of the product:
   • ITC-HS code: Indian Customs uses an 8-digit ITC-HS code (Indian Trade Classification-Harmonized System Code) to classify imported and exported goods. The first 6 digits are internationally used, and the last 2 digits are further classifications specific to India.
   • If you are not sure about the ITC-HS code of the product, you can search on the ICEGATE website or use other online tools. For example, enter the name of the product or part of the ITC-HS code, and the system will display the relevant codes for you to choose.
4. Fill in other necessary information:
   • Commodity Description: Briefly describe the goods you want to import so that the system can match the ITC-HS code more accurately.
   • Commodity Value: Enter the CIF (Cost, Insurance and Freight) value of the goods. The CIF value includes the cost of the goods, transportation costs and insurance costs.
   • Country of Origin: Select the country of origin of the goods (China).
   • Port of Import: Select the Indian port where the goods will arrive.
   • Other Information: Fill in other relevant information as needed, such as the quantity of goods, weight, etc.
5. Calculate Duty:
   • Click the “Calculate” button, and the system will calculate the corresponding tariff amount based on the entered information.
   • The calculation results usually include Basic Customs Duty (BCD), Social Welfare Surcharge (SWS) and Integrated Goods and Services Tax (IGST).
6. View and Save Results:
   • View the calculation results and make sure all the information is correct.
   • You can save or print the calculation results for subsequent reference and use.

Notes

1. Ensure the accuracy of the information: All the information entered must be accurate, especially the ITC-HS code and the value of the goods, otherwise the calculation results may be biased.
2. Update tax rates: Tariff rates may be adjusted periodically. It is recommended to recalculate before each import to obtain the latest tax rate information.
3. Consult professionals: If you are unsure about certain information or encounter problems, you can consult a professional customs broker or lawyer who can provide more detailed guidance and help.

By using ICEGATE’s import tariff calculator, you can estimate import tariffs more accurately, so as to better plan your import business and avoid unexpected expenses caused by tariff issues. I hope this information can help you smoothly complete the process of importing goods from China to India.

Onestopimport is a top sourcing provider in China, committed to assisting our clients in finding quality products from China at the most competitive prices while also providing reliable shipping services that alleviate the stress of importing DG. If you are interested in wholesale or dropshipping goods, including dangerous goods (document, declaration) from China, please don’t hesitate to contact us.