The mass production of goods in China makes it an economically good choice for importers. While there are many legal requirements (for which we give you an easy solution) and tasks to set up and start running your import business, the resulting profit might be worth it.
The Indian e-commerce sector has been growing at an exponential rate in recent years. As a result, several online sellers and manufacturers have started importing goods from China.
Since China is a large-scale manufacturer of various goods, buying from China is an economically viable option for many. However, there are several terms and conditions that businesses have to meet to import goods from China.
Legal Requirements to Import Goods from China
The first step in learning how to import goods from China is to understand the legal requirements and documentation required for importing. Not only does this help entrepreneurs proceed without further delays, but it also ensures you stay on the right side of the law. Here’s a quick look at all the licenses and documents you need to buy products from China.
Business Registration
Before importing or exporting to China, you need to register your company as a legal entity in India. Any company that deals with exports and imports must have a valid registration with the Ministry of Corporate Affairs. Companies may register themselves as any of the following to be eligible to import goods from China:
- Sole Proprietorship Firm
- Partnership Firm
- Limited Liability Partnership
- Private Limited Company
- One Person Company
Business incorporation requires filing various forms and drafting legal documents. As a result, most entrepreneurs rely on trusted service providers to complete their registration process. Small errors made while filling forms or uploading supporting documents can lead to unnecessary delays and hassles.
Hence, it is best to take the help of professional legal experts to complete this integral part of starting a business. Our team at VakilSearch registers 1 company every 9 minutes and will be more than happy to help you register your company in India.
Tax Registration
Once you have registered your business, you should register with the Indian Income Tax Department. Doing so enables you to pay your Income taxes and file your returns on time annually. As per Indian laws, eligible businesses must sign up under the GST regime by applying for a GST Registration.
Once you register, you will receive a TIN which you can use to pay taxes on the goods you import/export. Certain states also require a Security Deposit from you to ensure that the business will commence and operate in the way mentioned.
If you need help with GST registration, reach out to us at Vakilsearch for expert guidance and support. Our representatives will also help you file your returns and clear your tax liabilities on time to maintain tax compliance.
IEC Code Registration
Once you have a GST registration, you can apply for an import/export license from the Director-General of Foreign Trade via an IEC Number. To obtain such a code, your company will need to open a valid Current Account in a bank within India. The entire process of applying for the IEC code is now online. Hence, you will need to acquire Digital Signature Certificates for your company directors. The 10-digit Importer Exporter Code issued by the DGFT enables Indian companies to import and export goods. Businesses will need to submit the following documents when applying for an IEC:
- Company PAN card
- ID and address proof of all partners/ directors
- Bank account statement
- Banker certificate
Best Products to Import from China?
Choosing the right products to import will decide the fate of your business, as your products define your company and brand. Therefore, make sure you select products you are proud of and genuinely think will sell well in India. Some of the most popular and best products to import from China are as follows.
- Clothes and textiles
- Motor vehicles, accessories, and spare parts
- Electronics
- Smartphone components
- Smart TVs
- Pharmaceutical products
- Plastics
- Heavy machinery
- Organic fertilizers
- Consumer products
Tips for Importing Goods from China
- Always expect delays and factor them into your processing timeline to avoid losing clients. Make a timeline or schedule that accounts for such delays to ensure that the entire process runs smoothly without delays and hiccups.
- Make sure you choose a trustworthy and credible freight forwarder partner. Rather than going for the cheapest option available, go for a service provider who guarantees smooth operations at economical prices.
- Keep tracking your cargo and make the necessary arrangements for its arrival well before time to prevent delays and mishaps.
Required Documents for IEC
Businesses that import and export goods need to maintain several documents to be compliant. Most companies rely on third-party accounting and legal service providers to help them with the documentation. Some of the documents you will need are as follows.
- List of items imported
- DGFT Approval and EIC Code
- Official invoice from the supplier
- Packing list / Arrival notice
- Bill of Entry
- Bill of lading / Airway Bill
- Certificate of Origin
- Letter of Credit
- Bill of Exchange
Steps to Import Goods from China
The best way to import goods from China would be to rely on trusted shipping and procurement companies, such as Alibaba or AliExpress. To import goods from China via online methods, here’s what you need to do.
- The first thing you need to do is find out what products to buy from China after careful research and planning.
- Once you have a product in mind, explore the market to find a reliable and credible manufacturer or supplier for it. You can use services and agencies such as Alibaba KKTDC, Canton Fair, and Made-in-China to verify suppliers.
- Next, contact the supplier and negotiate a deal with them by fixing a price, order quantity, and shipping frequency.
- Since you will be investing significant amounts in importing, always order a few samples to ensure product quality. These samples will also help you gauge shipment time, customs requirements, and delays to expect.
- Once you have a supplier, research the import laws and regulations to ensure you have all the documents and licenses required. Furthermore, go through the DGFT website to ensure products imported are legal in India. For instance, India has banned the import of wild animals, narcotics, obscene materials, counterfeits, pirated goods, and certain chemicals.
- Next, coordinate with a freight forwarder or NVOCC to manage your shipments. You might also need to hire customs agents to handle the legal documentation associated with importing, such as drafting a bill of entry, and so on.
- Once you have a list of products and suppliers, classify your goods and calculate their landed cost. To do this, add the shipping charge and customs duty to your product price. If your landed cost is higher than expected, look for other suppliers or carriers who offer cheaper rates.
How Vakilsearch Can Help?
As you can see, importing goods from China requires rigorous planning and research. Partnering with a professional legal service can help you focus on the more integral parts of running your business. Vakilsearch can help you with incorporation, tax registration, obtaining IEC, and filing of returns.
As a result, you will have the time and money required to focus on critical aspects of importing goods. Say goodbye to all your export and import-related woes with Vakilsearch by your side!
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