How to Import Edible Oil from China
A Complete Guide: Import Edible Oil from China
India occupies a prominent position in the world’s oilseed industry with the contribution of nearly 10% in worldwide production. But the demand for edible oil is much higher than the domestic production, leading to dependence on imports. Over the years, the agriculture sector in India has made considerable progress in increasing the yields. However, in case of oilseed, the performance has not been equally credible. In FY2016 India’s total edible oil demand stood at 24 million tonnes among which 15 million tonnes were imported. Here are various steps and formalities to Import Edible Oil from China.
Process and Formalities to Import Edible Oil
In this category, import procedure is the basic idea about formalities and procedures to Import Edible Oil from China are explained.
Documentation and procedure to import edible oil: As you know, for any importation of goods, necessary import documentation and customs clearance procedure of importing country has to be completed as per the Foreign Trade Policy of that importing country. To import edible oil, import entry document along with the carrier document (Bill of Lading/Commercial Invoice, Packaging list, Certificate of Origin) and other required documents are filed and necessary import procedure are completed to take delivery of goods.
The following documents are required:
- Import permit: This document is issued by Ministry of Agriculture, Government of India.
- Sanitary Import permit: It is also a document issued by the Department of Animal Husbandry, Government of India (in the case of livestock produce).
- Certificate of Origin: It should contain the information on the country of origin and issued by approved authorities in exporting countries, required to import edible oil.
- End-Use Declaration: The food importer has to clearly state the End use of the imported food product.
- Pumping Guarantee Certificate: This is required to import edible oil in bulk.
- Bill of lading: It is a bill of entry required for sea shipment.
- Airway bill: It is required for air shipment.
How to Import Edible Oil?
The DGFT (Director General of Foreign Trade) is the chief governing body, responsible for the matters related to EXIM (India’s Export-Import Policy). The first thing to know that import of food products in India is regulated by the chief governing body i.e. Food Safety and Standard Authority of India (FSSAI). The imported food products are required to meet the standard as per the FSSAI regulations otherwise, the shipment can be rejected. Therefore, an importer in India who is willing to buy edible oil should be aware of the various notifications and the procedures relating to import food products.
Before starting an import business, numbers of licenses and registrations are required. The following is the list of licenses and the registrations required to Import Edible Oil in India are as follows:
- Registration of your company: It is beneficial to have a registered company/firm so that you can start your business. Also, it helps to improve the transferability of business.
- VAT: Registration for VAT is a next mandatory required for the sale of goods and products in India.
- IEC: The IEC (Import Export Code) is required for the purpose of import and export of goods. IEC can be obtained from the DGFT.
- Approval from FSSAI: It is a very important step to obtain a product approval from FSSAI. If a non-standardized product is imported that means the product does not conform to the food standard that is prescribed under Food Safety and Security Act, then import could be canceled.
- Bill of Entry: Every importer is required to submit a Bill of Entry which certifies description and value of goods coming into the country.
- FSSAI clearance: An application has to be filed in the Food Import Clearance System (FICS) of FSSAI to obtain NOC (No Objection Certificate).
The company or a firm must engage an experienced custom Clarence agent or broker who has experience dealing with Import Edible Oil in the past. Then, the agent will be responsible for all documentation and for arranging shipment, insurance, custom handling, and Clarence in India. Once the product arrives in India, the custom Clarence agent would be notified and then he makes customs duty payment and clears the goods through customs. After that FSSAI dept. would be notified and an inspector from FSSAI dept. would then ensure the products conform to FSSAI Labeling and FSSAI standards. If approved, the food will be released to the importer in India.
Guidelines for the labeling of Import Edible Oil in India
The FSSAI has specified the labeling requirements for edible oil and fats:
- The first criteria that need to be followed are that expressions that exaggerate about the quality of the product must not be written on the packaging or on the label. You cannot expressions like super refined, extra refined, double refined, ultra refined, etc.
- Each container of solvent extracted oil or any de-oiled meal which is packed for sale must have at the time of sale, written in English or in Hindi the following particular.
- The Name.
- The Trade name.
- Description of solvent-extracted oil or de-oiled.
- The volume of the content.
- If the Declaration of nutritional value is made per serving, the amount in gram or milliliter shall be included.
- The oil in which hydrogenated vegetable fats are used shall declare on the label that “hydrogenated vegetable fats used”.
The shelf life of food products: For the purpose to Import Edible Oil, the importer should not that shelf life of imported edible oil should not be less than 60% of original shelf life.
What makes importing to India different from other countries?
India is a developing country and its product requirement and labeling requirement are fairly well established. In India, there is the bureaucracy that makes confirming applicable product safety standards.
BIS product certificate scheme: Bureau of Indian Standard has developed a standard, applicable to a wide range of products like Food and related products, edible oil, etc.
Buyers of the edible oil products need to ensure the compliance with at least one applicable standard:
- Household electrical goods
- Food and related products
- Diesel Engines
- Oil pressure stoves
- Automobile parts
- Cylinders and regulators
- Medical tools
- Steel products
IS Indian Standard: BIS certification is not a uniform standard that applies to all products. Instead, products are regulated by IS. Today, there are 18,773 IS’s, standard, some of which are under revision.
ISI mark: it is similar to CE mark in Europe. The ISI marks are must print on products compliant with the applicable IS standard. Thus, ISI is a part of the scope of IS regulations. Most are regulated products may carry the IS mark. Thus, you need to secure IS compliant before you send your ISI logo files to your Chinese exporter.
Indian Import and Custom Value
In India, import duties and other taxes are calculated based on the CIF price. CIF stands for cost, freight, insurance. It is an international shipping incoterm where Incoterms specify when cargoes shall be transferred from the supplier to the importer.
CIF includes the value of products, shipping, and insurance. So the import duties are calculated as a percent of CIF price.
Other fees and taxes
Indian importers must also aware of additional taxes levied on imports from China. Among these is a countervailing duty, CESS all ranging from 1% to 12%. In India, HSN code for edible oil is 15111000 and the custom basic duty on edible oil is 12.5% and custom cess is 3%. The government recently raised the import duty on CPO (crude palm oil) to 15% from 7.5% and RPO (refined palm oil) to 25% from 15%.
Edible oil attracts 5% tax under the goods and services tax.
Why India Import Edible Oil?
India is the largest importer of edible oil and India imported 60% of edible oil is palm oil.
Reasons to Import Edible Oil
- International prices are low due to a glut in the market.
- Government does not provide as high MSP (minimum support price) on edible oil
- In India, edible oil production involves three stages-
- Crushing and expelling.
- Solvent extraction.
- Oil refining.
Whereas, in China, the above three processing stages are done in one vertically integrated plant which results in shorter and compact supply chain.
- Poor economies of scale.
- Lack of significant investment in large, integrated plant.
- Lower oil recoveries from oilseeds.
Benefits of Importing Edible Oil from China
India consumes nearly 22 million tons of edible oils. Domestic product is approx. 7 million tons and the rest is imported.
- Import of edible oil benefits the Indian importer as it is the best option for reducing the overall manufacturing cost.
- Cheaper products including packaging, chemical cast parts and more increase the profit margins.
- China does not require any special license as required to purchase edible oil, as long as you follow International Trade regulation, you are always free to import anything in almost any quantity.
- Importing products and services from China at the low cost of resources provides competitive advantages.
- Import Edible Oil from China provides you a direct control over your business and distribution model, which ultimately gives you a flexibility that a major retailer does not have.
- China’s manufacturing and production sector have experienced a prolonged, dramatic boom. So, importing edible oil can prove to be an effective business decision.
Major Chinese supplier
- Sichuan Hongya Yaomazi Food Co. Ltd.
Location: Sichuan, China.
- Foshan Suguan Packaging Co. Ltd.
Location: Guangdong, China.
- Beijing Sentinain Technology, Inc.
Location: Beijing, China
- Huizhou YangRui Printing and Packaging Co. Ltd.
Location: Guangdong, China.
- PrimeLine International
Location: Jiangsu, China.
Minimum Order Quantity
MOQ refers to the minimum order quantity of products that the seller wants to sell. MOQ generally depends on the types of goods you are importing, as it is different from different goods. If the buyer cannot reach the MOQ requirement, then the supplier is not willing to enter production. MOQ varies product by product and also depend on the supplier.
Find Your Suppliers in China and Place the Order to Import Edible Oil
Place your order with the exporter or shipper and identify shipping terms that will be used. Once you have selected your supplier, vendor, and then request a Proforma Invoice for your purchases to include the HSN system and description and value of each item. Your P/I must also show the weight and packed dimensions and your terms of purchase.
Arrange your cargo transport
There are many costs associated with shipping goods are container fees, packaging, terminal handling, and broker fees. And to get a complete picture if shipping costs, each of these factors should be taken into account. Now, once happy with the freight quote you will need to send supplier’s contact details. They will take it from there and also make your transportation quick and safe.
Track your cargo: Shipping goods internationally obviously take time. So, during that time, you should check your commercial invoice, packing list, the bill of lading, and other freight documents. If the problem arises that you need to troubleshoot, you should know the steps from which your goods go through when being cleared by customs of your country.
Obtain your shipment: When the goods arrive, make arrangements for your custom clearance agents, / broker to clear the goods through customs. And if everything goes when then it’s your right to pick up your shipment.
CUSTOM CLEARANCE PROCEDURES IN INDIA
All goods/products imported in India have to pass through the customs clearance after they cross the Indian border. The imported goods are examined, appraised, assessed, evaluated, and then allowed to be taken out of customs charge for use by the importer. The procedure for Customs clearance of goods imported in India is as follows:
Import Manifest: As per the section 30 of the Customs Act, 1962, the persons in charge of carrying imported goods should hand over, within 24 hours of the arrival of the conveyance, an import manifest to the customs. The import manifest is a complete list of all goods the conveyance carries on board, including those to be transshipped and those to be carried to the subsequent ports of call.
Entry in the Import Department of Customs House: On receipt of information regarding the arrival of the goods, the importers or their customs agents information to make an entry by filing a Bill of Entry, in the Imports Department of Customs House
Clearance of Goods: After payment of duty, the importer should obtain the duplicate copy of Bill of Entry on which order for examination of the goods is given by Customs and get the goods examined. If the description of goods is found to be correct, on the basis of declared particulars, clearance of goods is allowed by the appraiser.
Warehousing the Goods: The imported goods can be warehoused at the port of shipment without the payment of duty by presenting a “Bill of Entry for Warehousing” to the Bonds Department.The warehoused goods can be cleared in one or more installments.
Foreign Exchange: Once an importer is allowed to remit foreign exchange out of the country, he has an obligation to import the permitted goods. If no goods or goods of lesser values are imported then it would lead to leakage of foreign exchange.
Mail Transfer (MT): In this method of payment, in order to pay cash to a third party or credit to the account of a person who has an account with the bank is made, in writing, which is sent by email. This is similar to a telegraphic transfer, but the difference is that it is sent through the post. Issuing bank issues Mail transfer and is dispatched on the same day of receipt of payment.
Bank Drafts and Cheques: A bank draft is a payment order issued by a bank on its own branch. The bank draft is handed over to the buyer who sends it to the beneficiary. The beneficiary obtains payment on presentation to the bank on which the bank draft is drawn. The beneficiary is indicated in the draft. Bank drafts are the most popular methods of remittances.
Bill of Exchange: A bill of exchange is an order drawn by a person upon another person asking the latter to make payment to a third party. Bill of exchange is an important method of payment. It is made by the exporter and sent to the place of importer through a commercial bank along with the documents.
Telegraphic Transfer (TT) This is a method of foreign payments through the telegraphic transfer of funds to persons in foreign countries. The money is deposited with the banks in India and the Indian banker sends a telegram or fax to the foreign branch to make certain payments to the specific party, on that very date. Then, the foreign branch makes the necessary payments in foreign exchange to the specific party. Telegraphic transfer is the quickest method of transmitting funds, involving no risk.
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