How to Import Electronics from China?
Common Requirements to Import Electronics from China to India
To Import electronics from China to India, you need to have a registered company name if you want to import the electrical product in your firm name in India. Another option is that you hire an import agent/broker and they will import the electronics product for you if you do not have a company name registered with TIN.
How to Import Electronics from China in Your Registered Firm Name in India
International trading has gained a lot of attention from various traders all over the world. Trading includes exporting and importing of products and services from one nation to another. Nowadays, the trading all over the world has become simpler and quicker as compared to previous because of the presence of a new and effective process of trading.
Import Electronics from China to India and Run Successful business in India
If you are interested in importing any kind of electrical goods from China to India, then there are lots of things to be considered to meet your needs. First of all, you need to meet the following criteria for international trading like China to India.
Some are the essential requirements, to start an import and export business in India, like:
- A firm or company that must be registered in India
- A bank account, which needs to be current
- An IE code or Importer, Exporter Code and
It means that it is necessary to have a registered company (LLP/partnership/proprietary). Whether you have an office or a shop, it must be registered and you can get a license from the Municipal or Corporation. Another important thing to have is the bank current account combining with SWIFT code. You need to open a current bank in a reputed commercial bank, which has SWIFT code. Tax Identification Number is another essential to have, for that you have to register with the State Tax Department and CST or Central Sales Tax.
Importer Exporter Code is also essential while importing or exporting electronics goods from China to India or vice versa. This code consists of a 10 digit code, issued by Director General of Foreign Trade, Government of India, or Ministry of Commerce of Indian firms or companies. Submitting all the necessary documents to the government can give you a support to have the IE code in an easy and simple manner.
Things to Keep in Mind before you Decide to Import Electronics from China to India
- Select reputed supplier or any other website and ask them to send quotation, and to send the sample first before placing an order in bulk.
- You are importing electronics goods in your registered company name so raise a PO (Purchase Order) after you get Quote from the supplier.
- When the order gets completed. Your supplier will send you an invoice, make sure Invoice and PO (Purchase Order) prices are same.
- Contact third party shippers, who will take care of shipping. You have to keep all the necessary documents required while shipping.
- Do not go for shipping from supplier’s side; always choose your own freight forwarder.
Freight Forwarder: – A freight forwarder is also known as an NVOCC (non-vessel operating common carrier), is a person or company that manages and organizes point to point shipments for buyers or corporations to import electronics from China the manufacturer in China to India.
International freight forwarders also handle and manage the customs and other documentation required for international shipments. You can hire a freight forwarder in cities of India like Delhi, Bangalore, Chennai, Hyderabad, etc.
Procedures to import: According to the mutual agreement between the buyer in India and seller in China, the import shipment has taken place. Pricing, quality specifications, terms of payment, term delivery, and mode of transport and other terms and conditions are agreed and mentioned in the purchase order and import shipment of electronics products is affected accordingly.
Under importation of electronics goods, necessary import documentation and customs clearance procedures for importing country, i.e. India has to be completed either through an importer’s customs broker or by importer directly as per foreign trade policy of India. For importing Electronics product also, import entry documents along with carrier’s document (Bill of Lading /Airway bill), commercial invoice, packing list, certificate of origin and other required documents are filed and necessary import procedures are completed to take delivery of imported electronic goods. Nowadays, necessary information is filed online and produces required documents at the time of inspection, assessment, or delivery of import of electronic goods at destination customs location.
Certificate of Origin to import Electronics from China to India:
The source of origin of imported electronic goods is required in almost all countries so in India. The certificate of origin issued by necessary approved authorities at exporting country is required to import electronics from China. It helps to determine the origin of imported electronic goods to avail exemption on import duties and taxes. Different unilateral, multilateral, and a bilateral agreement between India and China allows importing and exports with an exemption of import duties wherein Certificate of Origin is the primary proof on country of origin of imported goods under Electronics goods.
Bilateral and Unilateral agreements under importation of Electronic goods: The countries each other may have bilateral, multilateral, and unilateral agreements which exempt documentation and rates of import tax and duties on some electronic products. The importer is advised to collect accurate information from necessary government agencies in India before import Electronics from China.
Restriction to Import
Some of the products may be prohibited to import in India based on foreign trade policy on imports. So importer can cross check the requirements of import of electronic products before placing an order with the buyer in China.
STIPULATIONS TO IMPORT ELECTRONICS FROM CHINA TO INDIA
CVD on RSP based valuation for the import of some items under Electronics
Some of the items under Electronics fall under RSP based valuation to estimate import tax. CVD is calculated on the basis of RSP based valuation to determine import duty. RSP means the retail sale price which means the maximum price at which the excisable goods in packaged form, may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for such sale.
Certain items under Electronics are subject to noise standards of the environment protection rules of India. The importer of such product has to contact the concerned government agency to collect accurate information.
Air Emission Standard
The import of some of the items under Electronics is subjected to emission standard of the environment protection rules of India. The importer of such product has to contact the necessary government agency to collect accurate information regarding the products.
The import of some of the Electronics goods needs the quality standard approval of government agencies at importing country.The importation of such electronic items is subject to compliance with said quality approval certificate from the quality approval authorities of India.
Some of the importing items under the Electronic attract anti-dumping duty. The reason for imposing anti-dumping duty is for rectification of the trade distortive effect of dumping and reestablishes fair trade between the countries. World Trade Organization WTO members as per GATT (General Agreement on Tariff and Trade) allowed their member countries to take the individual decision on imposing such anti-dumping duty to ensure fair trade rather than protecting domestic industry.
MOEF Permission from Environment Department to Import Electronics from China
India has an environmental department to regulate importation, consumption, and usage of materials affecting the environment. Permission from such environment department is essential to import some of the items under Electronic. In India, Ministry of Environment, and Forest (MOEF) is the authorized government agency to regulate such materials including importation.
Foreign Trade License
As a part of importing norms, India insists Foreign Trade License issued by the foreign trade office to import some of the specific items under Electronics. Importers may kindly contact whether your product intended to buy may fall under the said category of Electronics.
Test Report of Analysis from Laboratory
For the purpose of importing Electronic goods, the importer must obtain a test report from an accredited laboratory authorized goods. Such certificate is submitted with customs location of India to process importation. If non-fulfillment of obligations by the importation of Electronic goods, the importer should re-export the hazardous waste within 90 days from the date of arrival as per hazardous waste management, handling, and transboundary rules.or governed by India is required. A necessary sample of imported Electronic goods is drawn as per the procedures and rules and submits to such authorized laboratory and obtains analysis report. Normally three sets of samples of importing Electronic goods are drawn and forwarded to laboratory notified by environment and forest department. Test report retains for minimum two years to confirm on obligation fulfillment by the importer on importation Electronic
Reexport of Hazardous Material Imported
If any of the imported hazardous Electronic goods do not follow the necessary norms then such goods have to be destroyed or to be removed out of importing country. Such non-compliant imported hazardous Electronic goods may be also fined by imposing penal charges, apart from destruction or return to origin country.
In India, the customs clearance procedures and processes to import Electronic goods may be restricted through some of the ports. This is arranged to provide all necessary infrastructure to meet various processes and requirements to import Electronic goods.
India may impose a safeguard duty on importing some of the items under Electronics as per the foreign trade policy.
STANDARDS AND REGULATIONS TO IMPORT ELECTRONICS FROM CHINA TO INDIA
India is not only a rapidly developing country but also the fastest growing market. However, its product regulations and labeling requirements are fairly well established. There’s the bureaucracy that makes confirming applicable electronic product safety standards, and labeling requirements.
BIS (Bureau of Indian Standards)
BIS has developed different product standards, applicable to a wide range of products. Electronics, textiles, and machinery are all covered by the BIS Product Certification Scheme.
While BIS certification is not mandatory for all products, buyers of the following products need to ensure compliance with at least one applicable standard:
- Electronic Goods
- Food & related products
- Diesel Engines
- Oil Pressure Stoves
- Automobiles Accessories
- Steel Cylinders and Regulators
- Medical Equipment
- Steel Products
Indian importers must confirm if their product is applicable to mandatory BIS certification before ordering from a Chinese supplier.
IS (INDIAN STANDARD)
In India, BIS certification is not a uniform standard or directive that applies to all products. Instead, electronics products are regulated by a specific IS (Indian Standard).
As of today, there are 18,773 IS standards, some of which are under revision. Also, there are both mandatory and non-mandatory Indian Standards (IS). The Importer may still decide to ensure compliance with applicable Indian Standards (IS), even if it’s not legally required.
IS standard regulates various aspects of different products, including substances, heavy metals, electrical safety, currents, voltage, and metallurgy. The specific Indian Standard (IS) requirements for your electronic product can be purchased from the BIS website.
In India, the ISI mark is printed on electronic products compliant with the applicable IS standard. Thus, it’s part of the scope of IS regulations and not a separate product directive.
Many IS regulated items may carry the ISI mark, but non-compliant items (even those where IS compliance is not mandatory) shall not carry the ISI mark. Thus, the importer need to secure IS compliance before sending their ISI logo files to your Chinese manufacturer.
How BIS regulations apply to Indian importers of electronic goods
BIS was initially intended to regulate products that manufactured in India. Thus, many government websites in India tend to refer to the manufacturer as the party responsible to ensure IS compliance. However, that doesn’t apply to foreign manufacturers (e.g. Chinese).
When an Indian importer, bring in items from China, he is responsible to ensure compliance with the applicable IS standard – not the Chinese supplier.
In order to obtain BIS certification, the importer must submit product’s component and material samples for pre-production certification to a BIS accredited laboratory. In many cases, the sample testing is also followed up by an inspection, executed by BIS offers, in the Chinese manufacturer’s production facility. All traveling expenses shall be covered by the importer.
If your electronic product and the manufacturer pass the tests, you’ll obtain a BIS certificate. If the product testing and inspection, fail then additional testing and factory inspections may be required, if requested by BIS.
Securing Compliance When to Import Electronics from China to India
Chinese manufacturers may never hear of BIS, Indian Standards (IS) or the ISI mark. Compliance with a certain standard requires that the Chinese supplier has access to relevant IS files, outlining the technical specifications the product must meet in order to obtain certification.
But not all suppliers are capable, or even willing, to comply with IS technical specifications. If Indian Standard (IS) compliance is mandatory for all electronic products, importer better source suppliers that can show previous compliance. Otherwise, the importer might end up in an endless product development process leading nowhere. That said, Chinese manufacturer’s advertising IS compliance are few and far in between.
In case you cannot find IS compliant suppliers, the importer should at least look for suppliers, advertising EU or US compliance, as these suppliers are more likely to possess the technical skills required to ensure IS compliance.
India RoHS and WEEE
In 2012, India adopted regulations modeled on the European Union RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment) directives. RoHS regulates heavy metals in electronics, including lead and cadmium, while the WEEE directive requires manufacturers and importers of electronics to pay a yearly fee covering the collection and recycling of electronic waste.
These regulations are aimed at electronics manufacturers in India, but many of which are already compliant with the European Union versions of these directives, importers are also required to ensure compliance. In 2012, electronics suppliers were given two years to comply. Thus, the directives are supposed to be fully implemented by manufacturers in China and importers in India.
These regulations are among the most sophisticated product directives implemented by India and are certain to have a major impact on the electronics industry.
Indian electronics importers must comply with rather a stringent marking and labeling requirements. Indian importers failing to comply may have their cargo seized by customs authorities, and relabeling exporting cartons and product packages is only possible if such a request is granted. If not, the importer may find themselves in a world of trouble. So, let’s look into these labeling requirements. Below follows a list of items that you must include:
- Product name and description
- Net weight
- Date of Manufacture
- Your address
- Maximum retail price (MRT), including taxes
- Batch ID
- Month and year the product was imported
- Country of Origin
- Certain types of products must be labeled with the sizes and Country of Origin (e.g. Made in China) on the items themselves.
IT hardware companies/ manufacturers are required to label their products with a certification tag before being allowed to import in India. Earlier, labeling requirements had allowed manufacturers to simply label their products through stickers. According to the new requirements, some electronic goods may require the Chinese manufacturers to “screen print, emboss or engrave” the certification statement onto the product and printed on the packaging material.
CUSTOMS DOCUMENTS TO IMPORT ELECTRONICS FROM CHINA TO INDIA
Here are legal documents, common documents and specific documents required to complete import customs procedures.
Bill of Entry:
It is one of the major import documents for import customs clearance. Bill of Entry is the legal document to be filed by CHA or Importer duly signed. Bill of Entry in India is one of the indicators of ‘total outward remittance of the country’ regulated by the Reserve Bank and Customs department. It must be filed within thirty days of arrival of goods at a custom location.
Once, after filing the bill of entry along with necessary import customs clearance documents, assessment and examination of electronic goods are carried out by the concerned customs official. After completion of import customs formalities, a ‘pass out order’ is issued under such bill of entry. Once an importer or his authorized customs house agent obtains ‘pass out order’ from concerned customs official, the imported electronic goods can be moved out of customs.
An invoice is one of the prime documents required for import customs clearance for value appraisal by the concerned customs official. Assessable value is calculated on the basis of terms of delivery of electronic goods mentioned in commercial invoice produced by the importer at custom locations. The concerned appraising officer verifies the value mentioned in commercial invoice matches with the actual market value of same electronic goods. This method of inspection by appraising officer of customs prevents fraudulent activities of the importer or exporter. So Invoice plays a pivotal role in value assessment in import customs clearance procedures.
Bill of Lading
BL is one of the documents required for import customs clearance. It is a carrier’s document required to be submitted to customs for import customs clearance purpose. Bill of lading issued by carrier provides the details of cargo with the terms of delivery.
Import license may be required as one of the documents for import customs clearance procedures and formalities under specific electronic products. This license may be mandatory for importing specific electronic goods as per guidelines provided by the government. Import of such specific products may have been being regulated by government time to time. So, the government insists an import license as one of the documents required for import customs clearance to bring those materials from foreign countries like China.
An Insurance certificate is the documents required for import customs clearance procedures. It is a supporting document against the importer’s declaration in terms of delivery. Insurance certificate under import shipment helps customs authorities to verify, whether selling price includes insurance or not.
Purchase order/Letter of Credit
A purchase order reflects all terms and conditions of sale contract which enables the customs official to confirm on value assessment. If an import consignment is under the letter of credit basis, the importer can submit a copy of the Letter of Credit along with the documents for import clearance.
Technical Write up for Specific Goods if any
Technical write up, the literature of imported electronic goods or any other similar documents may be required as one of the documents for import clearance under some specific goods. For example, if electronic machinery is imported, a technical write up our literature explaining its function can be attached along with importing documents. This document helps customs official to derive the exact market value of such imported electronic machinery, in turn, helps in value assessment.
An industrial license copy may be required under specific electronic goods importing. If an Importer claims any import benefit as per guidelines of the government, such Industrial License can be produced to avail the benefit. In such case, Industrial license copies may be required to submit to the customs authorities as one of the import clearance documents.
Registration Cum Membership Certificate if any
For the purpose of availing import duty exemption from government agencies in India under specific electronic goods, production of RCMC with customs authorities is one of the requirements for import clearance. In such cases also importer needs to submit a Registration Cum Membership Certificate along with import customs clearance documents.
The customs officials may not be able to identify the quality of electronic goods imported. In order to assess the value of such electronic goods, customs official may draw the sample of such imported goods and arranges to send for testing to government authorized laboratories. The concerned customs officer can complete appraisement of such electronic goods only after obtaining such test report. So test report is one of the documents under import customs clearance and formalities.
DEEC/DEPB /ECGC Documents for Duty Benefits
If the importer avails any duty exemptions against imported electronic goods under different schemes like DEEC/DEPB/ECGC etc., such license is produced along with other import clearance documents.
Central Excise Document
If the importer avails any central excise benefit under imported electronic goods, the documents pertaining to the same need to be produced along with other import customs clearance documents.
In India, as per the guidelines of Government, every importer needs to file GATT declaration and a DGFT declaration along with other import customs clearance documents with customs. GATT declaration has to be filed by the Importer as per the terms of General Agreement on Tariff and Trade.
CUSTOM CLEARANCE PROCEDURES IN INDIA TO IMPORT ELECTRONICS FROM CHINA
All electronic goods imported in India have to pass through the customs clearance after they cross the Indian border. The imported electronics 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 electronic 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 electronic items 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 electronic goods, the importer itself 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 electronic goods is given by Customs and get the goods examined. If the descriptions of all electronic items are found to be correct, on the basis of declared particulars, clearance of goods is allowed by the appraiser.
Warehousing the Goods: The imported electronic goods can be warehoused at the port of shipment without the payment of duty, but 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 electronic goods. If no goods or goods of lesser values are imported then it would lead to leakage of foreign exchange.
CUSTOMS AND TAXES WHEN IMPORTING ELECTRONIC PRODUCTS FROM CHINA TO INDIA
Importing electronic products from China involves various taxes. All the applied taxes are calculated, depending on India’s customs and taxes on that product.
Customs duty is a variant of Indirect Tax which is applicable on all imported electronic goods and a few goods exported out of the country. Duties levied on import of goods are termed as import duty. Many countries levy customs duties on import/export of goods as a means to raise revenue and/or shield domestic institutions from predatory or efficient competitors from other countries. Customs duty is levied as per the value of goods, weight, and other such criteria according to the goods.
Customs Duty in India
Customs duty in India is defined under the Customs Act, 1962 and enables the government to levy duty on exports and imports, prohibit export and import of goods, procedures for importing/exporting, penalties, etc. All matters related to customs duty fall under the Central Board of Excise & Customs (CBEC). The CBEC is a division of the Department of Revenue of the Ministry of Finance. CBEC formulates policies that concern collection or levying of customs duties, customs duty evasion, smuggling prevention, and administrative decisions.
Types of Customs Duty:
Customs duties are levied almost on all electronic goods imported into India. Import duties are not applicable to items including life-saving drugs/equipment, fertilizers, food grains etc. Import duties are further divided into basic duty, additional customs duty, true countervailing duty, protective duty, education cess and anti-dumping duty or safeguard duty.
Basic Custom Duty
Basic customs duty is levied on imported items that fall under the ambit of Section 12 of the Customs Act, 1962. These duties are levied at the rates prescribed in the First Schedule to Customs Tariff Act, 1975, under the terms specified in Section 2 of the act. The levied rates may be standard or preferential as per the country of import. In India, basic customs duty levied on import electronics from China is depends on the HSN codes of the goods. The electronic products, mostly imported under HSN code 90219090, chapter 85 and 90214090. Basic customs duty on import electronics from China in India is 10% in chapter 85 and 7.5% under 90219090 and 90214090 HSN code.
Additional Customs Duty (Countervailing Duty (CVD)):
This duty applies to imported items under Section 3 of Customs Tariff Act, 1975. It is equal to the Central Excise Duty that is levied on goods produced within India. This duty is calculated on the aggregate value of goods including BDC and landing charges. The CVD on the import electronics from China is 12%. And special customs duty is levied at 4% under chapter 85 and CVD under HSN code 90219090 and 90214090 is 0% but special CVD is 4%.
Protective duty is imposed to shield the domestic industry against imports at a rate recommended by the Tariff Commissioner. It is nil on electronic items.
This duty on electronic products is levied at 2% and higher education cess at another 1% of the aggregate of other customs duties.
Anti-dumping duty may be imposed if the imported electronic goods are at below fair market price; however, the Chinese government has provided certain industries and/or domestic manufacturers with subsidies. This means that the relevant Chinese manufacturers are allowed to sell products below the market price.
An Anti-Dumping Duty must take seriously since these are often in the range of 40 – 60% (as a comparison, the average duty rate is around 5% in most western countries).
Safeguard duty may apply if the government feels that a sudden increase in exports can potentially damage the domestic industry.
Customs Duty Rates:
Customs duty rates can be specific. In general, duty varies anywhere from 0% to 150%, with the average rate lying around 11.90%. Other fees related to customs duties include:
- Landing Charge (LC) – 1% CIF
- Countervailing Duty (CVD) – (0%, 6% or 12% (CIFD + LC))
- CEX (Education and Higher Education Cess) – 3% CVD
- CESS (Education + Higher Education) – 3% (Duty + CEX (Education and Higher Education Cess) + CVD)
- Additional CVD – 4% (CIFD + LC + CVD + CESS + CEX)
- 5% GST rate
- Renewable energy devices & spare parts
- Bio-gas plant
- Solar power based devices
- Solar power generating system
- Windmills and wind operated electricity generator
- Waste to energy plants/devices
- Solar lantern/solar lamp
- Ocean waves/tidal waves energy devices/plants
12% GST RATE;
Telephones for cellular networks or for other wireless networks  and parts for their manufacture.
18% GST RATE;
- Electric motors and generators (excluding generating sets) 
- Electric generating sets and rotary converters 
- Electromagnets; Permanent magnets and articles intended to become permanent magnets after magnetization; electromagnetic or permanent magnet chucks, clamps, and similar holding devices, etc.
- Clutches and brakes; electromagnetic lifting heads.
- Industrial or laboratory electric furnaces and ovens; other industrial or laboratory equipment for the heat treatment of materials by induction or dielectric loss 
- Telephone sets; other apparatus for the transmission or reception of voice, images or other data heading 8443, 8525, 8527 or 8528.
- Microphones and stands therefor.
- Electrical resistors.
- Printed Circuits, etc.
28% GST RATE;
- Static converters (for example, rectifiers) and inductors  Reduced to 18% as per GST council on 11th June 2017
- Primary cells and primary batteries
- Electric accumulators
- Vacuum cleaners 
- Electro-mechanical domestic appliances, with self-contained electric motor, other than vacuum cleaners of heading
- Shaver’s, hair clippers and hair-removing appliances
- Electrical lighting or signaling equipment, windscreen wipers, defrosters, and demisters, of a kind used for cycles or motor vehicles
- Portable electric lamps designed to function by their own source of energy (for example dry batteries, accumulators, magnetos), other than lighting equipment, etc.
HOW TO LOWER THE MOQ REQUIREMENT WHEN BUYING ELECTRONICS GOODS FROM CHINA TO INDIA
A major issue for most of the importers is the MOQ requirement. Many Chinese suppliers require a minimum order of 500 to 1000 pieces per product. However, 500 pieces per product times a few different products in various specifications and models equal a huge minimum order quantity.
There are a few workarounds that still allow the Chinese supplier to manufacture a certain quantity electronic products, while you can buy products in various specifications and models – without raising the MOQ requirement.
The MOQ requirement is not a matter of negotiation. The fact is that supplier will lose money if they produce less, so you need to come up with something else i.e. “streamlining usage of components and materials”. Basically, this means that you should reuse materials and electronic components on as many products as possible, and thereby create variation. And the other thing is “limit product customization”. In this, a product can be customized to a varying degree. Simple forms of product customization enable the Chinese supplier to still use standard components, while highly customized components require the supplier to step out of its ‘normal purchasing routines’ and subcontract an entirely new design.
Such OEM components and products may not be compatible with the manufacturers’ primary product line, therefore forcing the buyer to meet the entire MOQ alone.
Why can’t Indian importer rely on the Chinese supplier to manage the compliance process on the import of electronics from China?
The supplier is not at all responsible. At best, they can provide test reports from previous orders, but it’s always the importer that is responsible for ensuring that all imported electronics products comply with all applicable standards and regulations.
The supplier that does manage compliance on their own, or hire a consultant to do it for them, will definitely not satisfied with selling their products at a factory price. Instead, he will launch the product overseas on their own, rather than selling to importers, who take most of the profits.
Do Indian Importers Need to Pay any Taxes in China?
No, electronics importer doesn’t need to pay any “export tax” when importing from China. However, they need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these costs are included in the importer order shipping according to the following terms: FOB, CIF, DAT, and DAP.
CIF (Cost, Insurance, and Freight)
CIF or Cost, Insurance, and Freight are the trade term that requires the supplier to arrange for the transportation of the goods by sea to a port of destination and also provide the buyer with the necessary documents. CIF value is used for calculating the duty that must be paid on an import.
FOB (Free on Board)
FOB is an agreement that demonstrates whether the buyer or the seller has liability for goods that are damaged in transit. “FOB shipping point” refers to that the buyer will bear the risk if the goods are shipped while “FOB destination” implies that the seller will bear the risk of any loss until the buyer gets the goods.
DAT (Deliver at Terminal)
This term means that the seller covers all the costs of transport (export fees, carriage, insurance, and destination port charges) and assumes all risk until after the goods are unloaded at the terminal. “Terminal” can be any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The buyer covers the cost of transporting the goods from the terminal or port to final destination and pays the import duty/taxes/customs costs.
DAP (Deliver at Place)
This term means that the seller pays all the costs of transportation (export fees, carriage, insurance, and destination port charges) including the delivery of the goods to the final destination. The buyer is responsible to pay only the import duty/taxes/customs cost and to unload the goods from the vehicle at the final destination.
PAYMENT MODES WHILE IMPORT ELECTRONICS FROM CHINA TO INDIA IN BULK
Mail Transfer (MT): In this method of payment, in order to pay cash to a third party 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 any 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: it 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 which 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 China. 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.
BENEFITS TO IMPORT ELECTRONICS FROM CHINA TO INDIA
All Import/Export businesses should constantly be on the lookout for ways to improve supply chain management while cutting costs in the process. If your business wants to extend profit margins, then importing goods or raw materials is one potential path towards achieving this goal. Importing from China provides a host of benefits, including lower prices, higher quality goods, and the advantages associated with international trade agreements. While importing is a great idea for many businesses, it’s always important to perform careful research in order to avoid costly mistakes later on down the line. Here are four key benefits associated with importing from China:
Comparative advantage refers to lower-priced goods: Out of the many benefits of importing goods and raw materials from China, comparative advantage is the most common reason. Comparative advantage means that the conditions in a China’s market allow for much cheaper production costs, thanks to things like low labor costs, lower tax schemes, etc. If you want the electronic products or components at a considerably cheaper rate, importing is a quick and easy way to cut costs and boost your profit margins.
Higher-quality products: It’s no secret that each country has its own strengths and specialties so China. If the electronic goods or materials/components that you need have top quality sources in China than it is worth to be imported. This way you’re working with the best materials right from the start, ensuring the best quality and most marketable end products.
Governments support trade relations and make importing easy: In countries like China, governments encourage importing by helping local suppliers do business with offshore importers like yourself. Depending on the country you are importing from like India, there is a government agency available to assist you with any inquiries you might have and make the transaction easier for all parties involved.
Importing grants access to exclusive resources: Some of the resources you may need for your electronic manufacturing process can only be found in certain parts of the world like China. This includes everything from raw materials to special technologies. If these ingredients are vital to your electronic production process, importing grants you immediate access to primary sources.
SHIPPING METHODS TO IMPORT ELECTRONICS FROM CHINA TO INDIA
The shipping cost is a percentage of the importer’s total product cost, so it’s important to keep them as low as possible. Following are the 4 most popular shipping methods anyone can use to import electronics from China:
Regular Post: This is regular China Post which takes approximately 6 weeks to arrive. No online tracking is provided and can be used for parcels under 3kg. Importer generally uses the regular post for samples and again only if time is not that important and can wait a few weeks for a package to arrive. It is not the most reliable system.
Courier: Shipping with a courier company is the most suitable method for most importers starting out if it involves small, lightweight electronic items. With courier companies such as TNT, DHL, UPS or FedEx importer has to pay a premium price for each kilo and can get fast delivery times and an online tracking facility. These days most courier shipments take normally 3-5 business days.
Air Freight: This method lies between courier shipping and sea freight. Shipping times may vary from company to company, but in general, it takes 5 to 10 days which is not bad! Air Freight costs will be significantly lower than with courier companies, but the extra work is involved when the electronic goods arrive in India. Air Freight importer usually has to handle documentation and customs clearance on their own (unlike with courier companies). But the importer can always outsource these tasks to a freight forwarding company at an additional cost.
Sea Freight: This is the popular shipping method used by big companies/firms to import electronics from China. The cost per kilo is very low, but the downside is their lengthy delivery time. Depending on where the importer is located in India it will be in the vicinity of 30 to 40 days.
In Sea Freight also, the importer has to take care of the documentation, customs clearance, and delivery of goods from the port to home or office. So it’s always advisable to use a freight forwarding company that will take care of all the procedures and deliver goods right to the door.
In Sea Freight it’s very important to calculate all the EXTRA COSTS involved. The Chinese supplier will give the FOB price, which means that the goods are loaded onto the ship. But that’s not the end. Once your shipment arrives at the port there are other kinds of extra charges, such as: Unloading charge; Port fees; docking fees; Storage fees; Clearance fees, etc. In general, Sea Freight is better for bulky items.
Shipping Incoterms are international standard codes that decide when and where cargo shall be transferred between the supplier and the importer.
For example, FOB (Free on Board) includes transportation from the factory, to the port of destination/office/warehouse. FOB includes all export procedures, which are required to ensure that the cargo can be legally exported. But from the port of destination, the importer must arrange to forward the goods to final destination. On the other hand, the importer can book DAP (Delivered at Place), which includes shipping from the factory in China, to a specified address overseas, such as an importer’s warehouse.
FCL and LCL Shipping
If the importer buys by the container load, then FCL (Full Container Load) shipping is a good choice. FCL is also the cost-effective freight method if counted by cost per volumetric unit and weight unit.
However, many small volume buyers don’t buy full container loads. As already said, Air freight is then a viable solution for them. However, some shipments are stuck in the twilight zone between air freight and FCL cost viability.
Then the solution spells LCL, or Less (than) Container Load which is generally shared container freight. Cargo from multiple buyers gets stored in the same container.
Insurance is included, by default, when an importer selects the incoterm CIF, standing for Cost Freight (and) Insurance.
If the importer orders according to DAT (Delivered at Terminal) or DAP (Delivered at Place) then, the importer has to inform his shipping company that the cargo must be insured. Shipping insurance is cheaper and rarely costs more than US$50 to US$100. Shipping insurance covers the value of the cargo, in case of transportation damage. It will not cover lost sales or product development costs.
Electronic goods in Cargo must be sufficient and satisfactorily protected, from the dusty factory floor to a damp warehouse, and finally stacked in a container for up to a month.
To ensure, cargo is protected during transportation, the importer can use the following checklist:
- Inner cartons layers – 5
- Outer cartons layers – 5
- Plastic wrapping (on Outer carton)
- Pallets (ISPM 15 EU Standard)
- Freight remark (Printed on outer carton)
The importer must provide the Chinese supplier with explicit and clear export packaging specifications and do not leave anything to their interpretation.
But there is more to export packaging. There are various export packaging regulations to take into consideration, such as ISPM 15 and Lithium battery restrictions.
Before shipping from China, the importer has to confirm which shipping regulations apply in India, and to the product.
Arrange your cargo transport
There are other costs related to shipping electronic goods are container fees, packaging, terminal handling, and broker fees. And to get a complete picture of shipping costs, each of these prices should be taken into account. Now, once importer satisfied with the freight quote then he will need to send supplier’s contact details. They will take electronic goods from there and also make your transportation quick and safe.
Track your cargo: Shipping goods from China takes time. So, during that time, the importer must check his commercial invoice, packing list, the bill of lading, and other freight documents. If the problem arises, then he should know the steps from which the goods go through when being cleared by customs of his country.
Obtain your shipment: When the imported goods arrive, the importer needs to make arrangements for customs clearance agents to clear the goods and services through custom. And if everything goes, then, then it’s right to pick up the shipment.