A. Import Licences are incentives given to exporters by the Government of India for promotion of exports. The Import Licences are issued by the DGFT and verified by the Customs after completion of the requisite export formalities.
A. Import Licences can be used by anyone/ everyone liable to pay Customs Duty on imports of goods in India.
Obviously, anyone interested in saving Customs Duties may use import Licences for clearances of their goods instead of paying Cash Duty / Duty under merit.
A. Yes, the Licence Raj is over. Most of the items now fall under OGL category (Open General List Category), i.e. they can be imported by anyone having a valid IEC (Import-Export-Code) Number.
However, inspite of the items being under OGL, they are subject to payment of applicable Customs Duties prior to clearance at Customs. Thus, in lieu of paying the Customs Duty the importer/ final buyer can use Import Licences, which are available at a discount and thus save on the Customs Duties payable.
A. Transferable Licences
▸ DEPB (Duty Entitlement Pass Book Scheme)
▸ DFRC (Duty Free Replenishment Certificate)
▸ DFIA (Duty Free Import Authorisation)
▸ VKGUY (Vishesh Krishi Gram Upaj Yojana)
▸ FMS (Focus Market Scheme)
▸ FPS (Focus Product Scheme)
▸ SHIS (Status Holder Incentives Scrip)
Non-Transferable Licences
▸ Advance Licences
▸ EPCG (Export Promotion Capital Goods)
▸ SFIS (Served from India Scheme) Licences
A. In general, the savings under Import Licences are anywhere in the range of 1%-25% on the Total Duty payable.
However, the savings differ on product to product basis and on the type of Licence being used. Again the savings on the same product may change from time to time, depending upon the supply/demand situation prevailing at the time of import.
In any case, using any type of Import Licence would definitely be more advantageous than paying Duty under merit.
In short, use of Import Licences ensures guaranteed savings and thereby guaranteed profits.
A. The price of Import Licences is determined by various factors. We have listed a few of them as under:
Demand/Supply Situation
Times when imports are comparatively higher, demand for licences is higher too and so the price.
Period when Licences are not being issued/ registered at Customs demand for Licences already registered increases as so the price.
Due to sudden increase in exchange rate or anticipation of increase in exchange rate, demand for Licences increases in the prior month and so the price.
Introduction of new schemes/ export incentives by the Government, suddenly pumps in a lot of inflow of Licences which temporarily increases the supply and may result in decrease in prices for a while.
Period when there is an anticipation of reduction in Customs Duties, demand for licences is lesser and supply is more thus reducing the prices temporarily.
Value of Licence
The discount on requirement of Licences for higher values would definitely be more than for Licence requirements of smaller values.
Port of Licence
Prices of Licences at major ports would definitely be higher than prices at comparatively minor ports. Also expenses at odd ports may be higher at times that expenses incurred at major ports.
Lead Time provided
Prices for Licences supplied at ready notice say in 24-48hrs could at times be slightly higher than licences provided over a notice of a week in advance.
Exporter/ Importer
Prices for Licences of known organizations would definitely be higher as they would be purchased against stiff competition and obviously would be preferred by importers of repute.
A. Fears on Licence Usage
Lengthy procedure at Customs
Clearance under DEPB Licences takes exactly the same time as for clearance under Cash Duty. Many times CHAS dissuade importers from use of Licences at it does not give them any additional monetary benefit. However, with changing times, many CHAs have become proactive and also convince the importers for use of Licences as an additional service to retain the customer and convert them into a life long client.
Cost at Customs
The cost for usage of Licences is miniscule compared to the Savings under the Licence. On an average the importer would save 1% minimum on the Total Duty payable. Again these costs vary from port to port, time to time and on the type of Licence being used. But in any case the costs for use of Licence is very minimum when compared to the total savings.
Liability of the importer for use of Bogus/ Forged Licences
Importer would be liable to pay the complete duty alongwith interest in case he is found guilty of using a Licence which was bogus/ forged at an earlier date.
Measures to counter fears of buyers/ users of Licences
To counter such claims and fears of importers, we ensure supply of Licences only of well known Exporters, MNCs, Government/ Semi-Government Organisations, Government Recognised Export Houses etc.
Not only that, we also enter into agreements for a minimum period of one year (on duly signed stamp paper; enforceable in the Court of Law) with our regular clients indemnifying them from any losses from supply of ingenuine licences which assures them of peaceful dealings and complete satisfaction at all times on licences bought from us.