Last update: October 2011
Importing to the UK from India
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India is a major, and growing import market and offers great possibilities for UK businesses looking for a new import market. Trade between Europe and India has increased rapidly in recent years, the UK is India's second largest trading partner after the US.
UK importers customarily handle all import procedures. This guide highlights some of the key features of the Indian market, and explains how you can start to win import business there. It also identifies sources of support to help you.
Assess the Opportunity to Trade with India
With a population of over one billion people, and a rapidly developing economy, India is a huge potential market; there are many opportunities to import from India. UK's imports from India are textiles and readymade garments, gems and jewellery, footwear, metal manufactures, power generating equipment, organic chemicals and vegetables and fruit.
While many Indian businesses remain small, there are a number of large, world-class companies. Key sectors include IT, healthcare, pharmaceuticals and support services such as call centres. In the future, continuing trade liberalisation and economic reforms are expected. This should ensure that India remains an attractive import market over coming years.
Within India, there are significant local differences in wealth and commercial activity. Agricultural areas tend to be relatively poor. Large, international businesses are concentrated in major cities. These commercial centres are the primary targets for import.
Wealthiest Cities in India(per capita):
Understanding Indian Customers
India is ethnically diverse, with a whole range of different languages and religions. Although Hindi is the official national language, less than half the population speak it. English is the key language for commerce. Most business people you deal with, when importing, are likely to speak good English.
Indian business culture tends to be polite and somewhat formal - for example, exchanging business cards, and using titles and surnames rather than first names. It's normal practice to start meetings with small talk rather than getting straight down to business. At the same time, India is very culturally diverse, with a whole range of different customs and religions. A good rule of thumb in meetings is to follow your host's lead.
Indian businesses are organised in a similar way to the UK, but decision-making power tends to be concentrated at the top. A personal introduction to a top-level individual can be very helpful.
Winning new business can take longer than you would like. You should be prepared to invest time and effort in building a long-term relationship.
Trade Visits to India
Successfully importing from India depends on building relationships, and often requires several face-to-face meetings. Trade visits can help you identify potential customers and key contacts, and find out what they think of your product. You can also use them to build relationships with local advisers and other key contacts.
Find out about trade visits and business opportunities on the events section of the website.
To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make importing decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.
UK Importing Procedures
When an importing ship or aircraft arrives at the UK location where goods are to be unloaded, the goods must be 'presented' to Customs (Her Majesty's Revenue and Customs or HMRC) by the person who brought them into the EC or the person who assumes responsibility for their onward carriage (this includes freight haulage companies, shipping and aircraft lines). Goods may be presented by:
- Using an approved computerised trade inventory system linked to customs; or
- Lodging Form C1600A at the designated Customs office
All goods must be presented within 3 hours of their arrival at the place of unloading.
After presentation the goods must be covered by a summary declaration containing the information needed to identify the goods. The summary declaration should normally be made at the same customs office as presentation. The summary declaration must be made by:
- The person who conveyed the goods into the EC; or
- The person who assumes responsibility for their onward carriage
- The shipping, airline or haulage company; or
- The representative of any of the above
In the UK the prescribed form of summary declaration is Form C1600. Customs may also accept commercial documents or computer records, if they contain the necessary details. Acceptable commercial documents include:
- Bills of lading
- Air way-bills
- Container manifests
- Load lists
- Consignment records (on computerised inventory systems)
An import declaration is required for goods from third countries. When goods are imported into the UK it is the responsibility of the importer or his authorised agent to declare them to Customs. In most cases a Single Administrative Document (SAD) is used for this purpose. Further information on the SAD can be obtained from HM Revenue and Customs web site: http://www.hmrc.gov.uk/index.htm
In addition to the above paperwork, some products may require import licenses or health certificates. Contact Her Majesty's Revenue and Customs (HMRC) for a detailed description on regulations and import precedures for specifc goods.
All imported goods are liable to be examined by Customs. If goods are selected for examination, the opening, unpacking and re-packing must normally be done by employees of the dock company or an agent of the importer. The examination of goods normally occurs at the place where they are being declared for importation.
Customs duties and other charges that are due must be paid, deferred or secured before the goods are cleared by Customs. It is advisable to show invoices with no freight costs incorporated, only the value of the imported goods, as import duty will be charged on the total amount presented for that shipment. Charges payable on imported goods may include:
- Import duties
- 'Additional duties' on flour and sugar
- 'Countervailing charges' on fruit and vegetables
- 'Variable charges' on processed goods
- 'Compensatory charges' on oils and fats
- 'Extra charges' on eggs, poultry or pig meat
- 'Sugar levies' on processed goods with sugar in them
- Value Added Tax (VAT)
- Excise duty on alcoholic beverages
The charges payable are linked to the Commodity Code (similar to an HS code, but more detailed) for a particular product. Exporters will need to find out what the Commodity Code for their product, and the associated import duty, is likely to be. This will be necessary in determining a pricing strategy for the product.
To obtain the Commodity Code for your product, contact HM Revenue and Customs, Tariff Classification Helpline on Tel: 01702 366077 This service gives a verbal reading on the appropriate code and respective import duty for a particular product. It is also possible to obtain a written ruling on the product's Commodity Code known as Binding Tariff Information (BTI). This service is advisable for more complex food products, as it involves closer consideration of the product's composite ingredients and is legally binding. This is available directly from Customs & Excise on the telephone number given above.
It is also possible to look up the Commodity Code and relevant import duty for your product on the Internet. However, as stated above, rather than making your own estimation of Commodity Code it is advisable to do a BTI for more complex food products.
Useful Links regarding Commodity Codes for Importing and Exporting:
European Commission-Online Customers Tariff Database
Business Link UK Trade Tariff
Value Added Tax
The UK standard rate of Value Added Tax (VAT) is 20%. While UK foodservice outlets must charge the standard rate of VAT on everything they serve, retail food products, in general, do not have VAT on them. However, some exceptions, which do incur VAT, are:
- Ice Cream and similar products and mixes for using them
- Alcoholic beverages
- Other beverages, and preparations for making them
- Potato chips (crisps), roasted or salted nuts and some other savoury snack products
- Food for catering
- Hot takeways
- Soft drinks and Mineral Water
- Products for home brewing and wine making
VAT can also be a value located somewhere between the Standard (S = 20%) and the Zero (Z = 0%) rates.
There are currently three rates of VAT:
Standard Rate = 20%
Reduced Rate = 5%
Zero Rate = 0%
For assistance when a case is less straightforward, contact: the VAT Helpline Tel: 011 44 20 7865 4419, Her Majesty's Revenue and Customs web site: http://www.hmrc.gov.uk/index.htm or write using the address in Useful Contacts.
Last update: October 2011
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