Q.Your firm is planning to import textile machinery from Canada. Describe the procedure involved in importing.

The import of textile machinery from Canada follows the import procedure: trade enquiry (and proforma invoice) → procure an import licence (check EXIM policy, obtain IEC number) → obtain foreign exchange (RBI-authorised bank) → place the import order (indent) → obtain a letter of credit → arrange finance → receive shipment advice → retire the import documents → arrival of goods (import general manifest) → customs clearance and release (delivery order, dock dues, bill of entry, payment of import duty, release order). …

The typical import procedure your firm would follow:

1. Trade enquiry — First gather information about the countries and firms exporting textile machinery, using trade directories, trade associations and organisations. Approach the Canadian export firms with a trade enquiry (a written request for information on price and terms). In reply, the exporter sends a proforma invoice giving the quality, grade, design, size, weight, price and terms.

2. Procurement of an import licence — Consult the Export Import (EXIM) policy to check whether textile machinery can be imported freely or needs a licence; if required, procure the import licence. Every importer must register with the DGFT (or Regional Licensing Authority) and obtain an Import Export Code (IEC) number, quoted on import documents.

3. Obtaining foreign exchange — Since the Canadian supplier wants payment in foreign currency, apply (in the prescribed form, with the import licence) to a bank authorised by the RBI; the Exchange Control Department of the RBI regulates all foreign-exchange transactions, and after scrutiny the bank sanctions the required foreign exchange.

4. Placing order or indent — Place the import order (indent) with the exporter, stating price, quantity, size, grade, quality, and instructions on packing, shipping, ports, delivery schedule, insurance and mode of payment. Draft it carefully to avoid disputes.

5. Obtaining a letter of credit — If payment is by letter of credit, obtain it from your bank and forward it to the Canadian supplier; it guarantees payment of the export bills up to a certain amount — the most secure method of settlement.

6. Arranging for finance — Arrange finance in advance to pay the supplier when the machinery arrives, so as to avoid heavy demurrage (penalties) on goods lying uncleared at the port.

7. Receipt of shipment advice — After loading, the supplier sends a shipment advice giving the invoice number, bill of lading/airway bill number and date, name of the vessel and date, port of export, description and quantity of goods, and sailing date.

8. Retirement of import documents — The supplier's set of documents (bill of exchange, commercial invoice, bill of lading/airway bill, packing list, certificate of origin and marine insurance policy) comes through the banks. The documentary bill of exchange is either a sight draft (documents released only against payment) or a usance draft (released against acceptance). Getting the documents by paying/accepting the bill is the retirement of import documents.

9. Arrival of goods — The person in charge of the carrier informs the officer at the dock/airport of the arrival, providing an import general manifest — the document listing the imported goods, on the basis of which the cargo is unloaded.

10. Customs clearance and release of goods — As clearance is lengthy, appoint a C&F agent. The steps are: …