Importing goods from China to India has become a vital component of commerce for Indian businesses, given China’s status as a global hub for manufacturing a vast array of consumer products.
The process has been highly beneficial for traders and enterprises looking to leverage China’s manufacturing capabilities. However, navigating the complexities of international trade requires understanding the nuances of procedural requirements and documentation.
Businesses must pay attention to various regulations and ensure compliance with both Chinese and Indian laws.
This involves several key steps, such as registration with India’s Ministry of Corporate Affairs and the Indian Income Tax Department, as well as obtaining an Import Export Code (IEC).
Identifying the right products, engaging with wholesale markets, participating in trade exhibitions, employing sourcing agents, or finding online suppliers also play a crucial role in the importation process.
Each choice carries unique advantages and considerations that importers need to evaluate carefully.
PROCEDURE AND DOCUMENTATION REQUIRED TO IMPORT GOODS FROM CHINA TO INDIA
Business Registration with Ministry of Corporate Affairs
Before venturing into the import business, companies must register with the Ministry of Corporate Affairs (MCA). This is an indispensable step which legitimizes the entity in the eyes of the law.
Upon registration, the firm can opt to operate under one of the following structures:
- Sole Proprietorship Firm
- Partnership Firm
- Limited Liability Partnership
- Private Limited Company
- One Person Company
Each business structure comes with its own sets of advantages and compliances. Registering a firm paves the way for obtaining future permissions and licenses necessary for importing goods.
Registration with the Indian Income Tax Department
Subsequent to MCA registration, companies must register with the Indian Income Tax Department. This registration ensures that the company adheres to tax-related compliances including filing annual tax returns. Obtaining a GST Registration after incorporation is also a statutory requirement.
Post-registration, businesses receive a Tax Identification Number (TIN), which facilitates tax payments on imported or traded goods. A TIN is also mandatory for selling goods within India, and certain states may request a Security Deposit as a testament to the business’s commitment to operate as promised.
IEC Code Registration
The next significant step is the application for an Importer Exporter Code (IEC). After securing the GST, firms must seek this 10-digit code from the Directorate General of Foreign Trade (DGFT). Possession of an IEC is a clear indication of the company’s capability to engage in international trade.
To apply for an IEC, a company should hold a valid Current Account in its name with any recognized bank in India. Further, securing Digital Signature Certificates (DSC) for the business is a requisite for the IEC application.
The IEC application necessitates the following documents:
- Company PAN Card
- ID and Address Proof of all partners/directors
- Bank Account statement
- Banker certification
These documents must be provided in their prescribed format to avoid any processing delays. Upon successful verification of these documents, the DGFT issues the IEC, thereby authorizing the import of goods into India.
How to find goods for Import from China to India
1. Wholesale Markets in China
Exploring wholesale markets in major Chinese cities like Yiwu, Guangzhou, and Shenzhen can offer a variety of products for import.
Yiwu is notable for having the world’s largest wholesale market, and it operates throughout the year offering products like textiles, bags, and shoes. Buyers can negotiate with suppliers to customize orders according to their quality requirements.
In Guangzhou, businesses can find a vast array of clothing and luggage options, as it hosts the largest market for these items in China.
Shenzhen is a hub for electronic goods, where importers can source a wide selection of electronics directly from manufacturers.
2. Exhibitions in China
Trade shows and exhibitions are excellent arenas for businesses to source products and connect with suppliers.
Canton Fair is amongst the most significant trade fairs, held in three phases, each catering to different product categories from machinery to home decor, and textiles. Prospective buyers can preview products, evaluate quality firsthand, and arrange transactions. Details about participants can be checked online before visiting.
The East China Fair in Shanghai showcases a wide range of products and is well-known for its high turnover, representing many traders from across China.
3. China to India Sourcing Agents
Using sourcing agents can simplify the import process from China to India. These agents can provide critical services such as manufacturer verification, quality inspections, negotiating custom specifications, and facilitating communication overcoming any language barriers. Engaging a sourcing agent is especially useful for ensuring long-term supplier relationships and reliability.
4. Online Supplier
Identifying online suppliers involves careful research and verification.
Supplier directories like SaleHoo offer a vetted list of suppliers ensuring credibility and reliability. These directories often feature ratings and reviews that can help in making informed decisions.
Wholesale drop shippers can be found through a simple Google search using relevant keywords, although it is essential to conduct due diligence on the supplier’s credibility.
For wholesale purchasing, platforms like Alibaba, Made in China, Global Source, DHgate, and AliExpress connect buyers with a wide range of suppliers. They differ in terms of product specializations, with Alibaba being vast but requiring careful navigation to identify genuine suppliers. AliExpress, on the other hand, offers low wholesale prices but longer delivery times. For electronics, Global Source and Made in China are reputable sites with professional supplier networks. It is advisable to order samples to assess quality and shipment times before committing to bulk orders.
IMPORT AGENTS FROM CHINA TO INDIA
Sourcing agents play a crucial role in facilitating international trade between China and India. These agents act on behalf of companies to secure products at competitive prices, ensuring cost-saving and quality assurance in production. They fulfill several key responsibilities:
Finding Suppliers:
- Navigate China’s 17 specialized manufacturing cities to identify reliable manufacturers.
- Employ local knowledge to connect with experienced producers of specific goods.
Negotiation and Deal-making:
- Communicate with suppliers to strike deals at favorable prices.
- Use expertise to overcome language barriers and prevent misunderstandings in requirements.
Quality Inspection and Manufacturing Oversight:
- Conduct frequent factory visits to monitor production progress.
- Inspect individual products and manage quality control tests to reduce defects before shipping.
Logistics and Shipment Coordination:
- Arrange transportation of goods by collaborating with freight forwarders in China.
- Advise on shipping type and route selections based on delivery timelines.
Offering Expert and Local Insights:
- Provide recommendations on choosing apt manufacturers.
- Leverage local connections within wholesale markets and amongst suppliers.
Building Business Relationships:
- Utilize effective communication to establish long-standing connections with factories.
To secure a competent sourcing agent, consider their experience and specializations closely aligned with the company’s product interest. A visit to their website can reveal past performance and client reviews. It is prudent to engage in video calls to assess an agent’s confidence and understanding of the industry.
WHAT ARE SOME POPULAR PRODUCTS THAT ARE IMPORTED FROM CHINA TO INDIA?
Import Electronics from China to India
The electronics sector significantly contributes to trade between China and India. About 37% of India’s total electronic imports are sourced from China, including household items and higher-end electronics. TVs, refrigerators, and various kitchen appliances are prevalent imports. Additionally, a substantial percentage of automobile components are of Chinese origin. Import statistics illustrate that 87% of laptops in India’s market are imported from China, highlighting the technological dependency.
Import Furniture from China to India
China’s prominence as the world’s leading furniture exporter is underscored by its significant share in the Indian market. India’s penchant for ornate wooden furniture has fueled imports worth $311 million against a total furniture import figure of $603 million. Chinese furniture is sought after for its diverse styles and cost-effectiveness.
Import Machinery from China to India
Machinery forms a critical component of India’s imports from China. The extensive machinery imports, valued at around $13.6 billion out of a total of $20.6 billion, underscore the dependence of India’s industrial sectors on Chinese machinery. These imports range from electrical machinery to sewage treatment equipment, demonstrating China’s vital role in fulfilling India’s industrial machinery needs.
Import Toys from China to India
Toys imported from China occupy a substantial market share in India. Given the affordability that resonates with the majority of the Indian middle class, Chinese toys are ubiquitous. Though regulatory measures have occasionally disrupted this trade, approximately 80% of toys sold in India are produced in China, including popular items like electric cars for children.
Import Textile products from China to India
Textiles stand as another cornerstone of trade, with China exporting a significant volume of textile products worldwide. These exports not only contribute sizably to China’s GDP but also meet a major portion of demand within India’s booming textile market.
Import Mobile accessories from China to India
Mobile accessories are a key import category, with a high rate of technological adoption driving demand for Chinese-produced items such as chargers, earphones, and cases. India’s vast consumer base for mobile gadgets looks to Chinese imports for affordable and diverse accessory options.
Import Steel from China to India
Steel imports showcase the interweaved nature of the two giants’ economies. China’s advancement in the steel manufacturing industry has positioned it as a crucial supplier for India’s infrastructural growth, where large quantities of steel are imported for construction and manufacturing purposes.
Import Tyres from China to India
Lastly, tyres represent a specialized category of goods within this bilateral trade framework. With China producing a wide range of tyre types for vehicles, its output sufficiently caters to the automotive sector in India, bridging the gap between local production and market demand.
MANAGING PAYMENTS WHEN IMPORTING FROM CHINA TO INDIA
Managing payments is a crucial part of the import process from China to India.
When dealing with suppliers in China, various payment methods are available. Below are the most notable ones, along with their details and considerations for use.
Telegraphic Transfer (TT)
- Prevalence: Commonly used for paying Chinese manufacturers
- Duration: Typically 3 to 5 days
- Cost: Ranges from 25 to 50 USD
- Security: Lower safety as compared to other methods
Payment Process:
- Pre-Production Payment: Buyer pays 30% to the supplier to start production.
- Post-Production Payment: After product inspection and approval, the remaining 70% is paid for shipment.
Negotiation Points:
- Advance Payment: Buyers can negotiate to reduce the initial non-refundable payment.
- Balance Payment: The balance can be paid after shipment and verification of goods.
Utilizing TT efficiently means strategically ensuring the supplier delivers quality goods.
By paying the final amount after quality validation, buyers have leverage over the manufacturing process, leading to better outcomes.
Letter of Credit (LOC)
- Security: The Letter of Credit stands as the most secure method for buyers.
Conditions in the LOC may include:
- Bill of Lading
- Quality Inspection Report
- Laboratory Testing Reports
LOC Steps:
- Agreement signed between seller and buyer
- Buyer’s bank issues LOC
- Seller’s bank in China is contacted
- Production and quality inspection commences
- Upon completion, delivery is made, and bank transfers funds once conditions are met
LOC ensures funds transfer only after all agreed-upon conditions are fulfilled by the seller, making it a trustworthy method for both parties.
PayPal
- Transaction Size: Suitable for smaller transactions
- Fees: Charges between 3.4% to 4.4% per transaction
- Availability: Not all Chinese manufacturers accept PayPal
For smaller transactions, PayPal can be a viable solution due to its convenience and international reach. Still, the associated fees and limited acceptance by Chinese suppliers need consideration.
International Credit Cards
- Popularity: Lesser-used among traders
- Acceptance: Some Chinese suppliers may not accept payment through credit cards
- Fees: High transaction fees borne by the buyer
Despite being a familiar payment method globally, using international credit cards is less favored in trade between India and China due to higher costs and potential risks for the seller.
SHIPPING FROM CHINA TO INDIA
Sea Shipment to India
India’s extensive coastline spanning 7,517 kilometers facilitates the entry of international goods through numerous ports. Sea shipment remains the dominant mode of transport, handling 95% of trade volume and 70% of trade value.
Specifically, the country operates 176 Minor Ports and 13 Major Ports; with Major Ports managing the lion’s share of trade at 60%.
Sea shipment is optimal when:
- Vendors are proximate to major Indian ports.
- Cargo exceeds 2 CBM.
- Delivery urgency is low.
Major Ports on the East Coast:
- Chennai
- Kolkata
- Visakhapatnam
Major Ports on the West Coast:
- Kandla
- Jawaharlal Nehru (JNPT)
Sea transit times from Chinese ports such as Tianjin, Shanghai, and Hong Kong to Indian ports vary, typically ranging from 14 to 24 days, depending on the destination.
Rates for sea shipment are influenced by cargo size and urgency, with less pressing deliveries being more cost-effective.
Air Shipment to India
India boasts 30 international airports, with direct flights linking to China’s 60 international hubs.
The connectivity allows for swift cargo transport from China to India, with a normal flight duration of approximately 12 hours.
Air Transit time:
- Direct flight: Roughly 12 hours.
- From Indian airport to final destination: Up to one week, reduced to fewer than 4 days with express courier.
Air Shipment Rate Calculation Methods:
- Gross Weight: Sum of product and pallet weight, converted to kilograms.
- Volumetric Weight: Length x Width x Height (in CBM) multiplied by 167 (air cubic conversion factor), with 1 CBM equating to 200 kgs.
Air shipment is the prime choice for:
- Cargo less than 2 CBM.
- Situations requiring expedited delivery.
Rail Shipment to India
India’s railroad infrastructure, not as developed as it could be, makes rail a less common and more expensive option for shipment from China.
Rail transit time and rates:
The rail route between Chinese cities like Shenzhen, Ningbo, Shanghai, Beijing, and various Indian cities can take approximately 9 to 17 days, with costs for one container potentially reaching $4500 USD.
Rail shipment may be appropriate when:
- The supplier is situated close to the relevant train stations.
- The destination is in North-West India.
Cross-Border Trucking to India
Cross-border trucking exploits the shared border between China and India, often resulting in faster transit times compared to sea shipment but at a higher cost. The condition of Indian roads can sometimes introduce delays.
Road Transit Time:
Travel times are shorter than sea routes, but the specifics can vary significantly based on the exact locations in China and India.
Road Shipment Rates:
Due to longer distances traversed, rates range from $2500 to $9000 USD, positioning it as a more costly alternative.
IMPORT DUTIES FROM CHINA TO INDIA
Import duty on machinery from China to India
Importing machinery into India from China incurs a total duty of 26.85%.
This is comprised of a Basic custom duty (BCD) at 7.5% and an Integrated Goods and Service Taxes (IGST) at 18%.
Specialty equipment like stamping and punching tools are subject to a higher total duty of 29.8%, equating to 10% BCD and 18% IGST.
Import duty on furniture from China to India
Furniture imports from China are levied with approximately 40% duty.
The breakdown includes 10% for BCD and 28% for IGST.
Furthermore, the budget for 2020-2021 introduced a 5% increase in BCD on furniture and related items, bringing the BCD on seats, mattresses, and light fittings to 25%.
Import duty on mobile phones from China to India
The import duty imposed on smartphone displays and touch panels is 10%, which aligns with efforts to support domestic manufacturing initiatives.
Consequently, the total customs duty on mobile phones comes to 23.2%, including BCD at 10% and IGST at 12%.
This has resulted in an increase in the retail price of mobile phones by 1.5 to 3%.
Import duty on clothes from China to India
Clothing items imported from China are subject to a customs duty of 26.85%.
This is split into 7.5% for BCD and 18% for IGST.
The government is being urged to address the issue where Chinese garments are entering India duty-free through other countries.
Import duty on electronics from China to India
Electronic items face an import duty of 26.85%, including 7.5% BCD and 18% IGST.
Increased custom taxes on refrigerators, ACs, and compressors by about 2.5%, and a 10% hike on food grinders and beverage makers take their respective customs duties to 20%. For refrigerating machinery and freezers, it’s 15%, while colour TV picture tubes and chargers face a BCD of 10% and 20% respectively.
Import duty on garments from China to India
The duty on imported ready-made garments stands at 15.5%, with 10% accounting for BCD and 5% for IGST.
The persistent call for a revised textile policy echoes the industry’s concerns about competition from Chinese fabrics.
Import duty on fabric and textiles from China to India
The customs duty on a range of textile products has been increased from 10% to 20%.
This hike makes imported garments, fabrics, and certain textiles more expensive, impacting the price of shirts, pants, jackets, and other apparel, with the intent to bolster the domestic textile industry.
FAQs
What is the average shipment time from China to India?
Shipment Duration:
- Sea Shipment: 20 days
- Airport Shipment: 1 day
- Rail Shipment: 14 days
- Road Shipment: 8 days
Express couriers offer door-to-door service in 1 day for packages weighing 10kg.
What are the expected tax rates for import from China to India?
Value-Added Tax Rates:
- Agricultural and certain utilities: 13%
- Other goods: 17%
Do customs officials inspect every package upon arrival?
Customs Inspection:
- Standard protocol does not include opening every package.
- Packages are opened if they appear damaged or if the seal is broken.
How can one minimize customs charges?
Customs Charges Minimization:
- Declare the shipment’s value judiciously; overestimation leads to higher taxes, while underestimation can result in penalties.
What strategies can reduce shipping costs?
Strategies to Reduce Shipping Costs:
- Engage with various suppliers for competitive rates.
- Utilize your own shipping account number when available.
- Use carrier-provided packaging when possible.
- Opt for cargo insurance to safeguard against losses.
- Inquire about available discounts for frequent shipping.
How is shipment tracking managed?
Shipment Tracking:
- The seller provides a tracking number post-purchase.
- Utilize this number to monitor the package’s journey and location.