Licenses required, prohibited goods- Here’s all you need to know about Indian imports

In layman's terms, when an organisation based in one country purchases a product/service provided by a business based in another country, it is called an import.

Import & Export
 Min read
June 22, 2022

India is well-known as an import-friendly country. As per the Ministry of Commerce and Industry, in India, imports have increased to $63.22 Billion in May from $60.30 Billion in April of 2022.

In layman's terms, when an organisation based in one country purchases a product/service provided by a business based in another country, it is called an import. The most popular modes of transportation in international trade are either by sea or by air.  If a shipment is being delivered by sea, importers can book a full container load (FCL) or less than a full container load (LCL). Any consignment that takes up an entire container is called an FCL shipment while one that occupies just a part of a shared container is called an LCL shipment. Goods can also be delivered by air but the consignment costs are much higher than LCL or FCL.

Can all goods be imported?

While the majority of the goods are freely importable, the Export-Import (EXIM) Policy (2007) of India prohibits the import of certain categories of products as well as the conditional import of certain items. Most items fall within the scope of India’s EXIM Policy regulation of Open General License (OGL).  This means that they are deemed to be freely importable without restrictions and without a license unless they are regulated by the provisions of the policy or any other law.  Items which are not covered by OGL are regulated and fall into three categories:

- Banned or prohibited items- include, tallow fat, animal rennet, wild animals and unprocessed ivory.

- Restricted items- These items require an import license and include several broad product groups that are classified as consumer goods,  precious and semi-precious stones, products related to safety and security, some insecticides, pharmaceuticals and chemicals.

- Canalized items- These are importable only by government trading monopolies and subject to Cabinet approval regarding timing and quantity.  The category includes petroleum products (to be imported only by the Indian Oil Corporation), nitrogenous phosphatic, potassic and complex chemical fertilizers (by the Minerals and Metals Trading Corporation), vitamin- A drugs (by the State Trading Corporation), oils and seeds (by the State Trading Corporation and Hindustan Vegetable Oils).

Import license and validity

In India, an import license is issued by the Director-General of Foreign Trade (DGFT). Once issued, the license is valid for 24 months for capital goods and 18 months for raw materials components, consumables and spares, with the license term renewable.

In a typical import license, there are two copies- the Foreign Exchange Control Copy which is utilised for effecting remittance to the foreign seller or for opening a letter of credit. And second is the customs Copy which is utilised for presenting to Customs authorities, enabling them to clear the goods.

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