Mon, Jan 28, 2013 at 20:23
Learn about the intricacies of importing gadgets, the red tape, duty structures, and how to go about it the smart way.
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The Ultimate Guide to Importing Gadgets Online
Learn about the intricacies of importing gadgets, the red tape, duty structures, and how to go about it the smart way.
Like this story, share it with millions of investors on M3
The Ultimate Guide to Importing Gadgets Online
Learn about the intricacies of importing gadgets, the red tape, duty structures, and how to go about it the smart way.
It's a matter of great shame that despite 66 years of independence, anything imported is still regarded as the benchmark of quality. The Indian manufacturing sector isn't entirely to blame, though. The protectionist policies adopted by the Indian Government after Independence have mollycoddled the industry, much to the detriment of the consumer. It's hard to deny that when your average Indian buyer has to put up with poor manufacturing quality, rampant cartelisation, lack of choice, dismal after-sales service, and ridiculously high prices when compared to the same goods sold elsewhere in the First World.Seeking out means to import goods is a natural tendency, especially given the convenience of electronic transactions and the online shopping. However, helping yourself to a smorgasbord of quality imported goods available at fraction of the price you'd otherwise pay here—that too right from the comfort of home—sounds too good to be true. That's actually the case too. If it really were this easy, not only would the local manufacturers and supply chain have met their (rightful) demise, but that would also have driven the country into the worst forex deficit.What's the Catch?To prevent a total and utter meltdown of the nation's economy, there's a limit to how much you can spend importing goods. Technically, you are only allowed to import Rs 2,000 worth of swag duty free. If you thought that was meagre, you probably will not be chuffed to hear that the amount includes shipping charges as well. There is, however, a means to import goods worth more.You are allowed to import items worth up to Rs 10,000 provided they are marked as gift or commercial samples and their price is marked as zero in the invoice. This doesn't apply to online retail purchases, as they neither are gifts nor commercial samples. Virtually all online websites based in Europe, America, and rest of the civilised world will squarely refuse to honour any requests to wrongly declare commercial goods as gift for obvious reasons. Hong Kong-based websites, however, are open to such practices. Just remember that you'll essentially be committing an economic crime if you take that route.Online duty calculators such as this are the best means to gauge what sort of damage will your shipment cause to your wallet.Penalties and Import-Export CodeHaving said that, it's impossible to stay within the Rs 2000 limit in this day and age. What's the damage if one decides to brave the import duties, you ask? For starters, you may attract customs duty of up to 40%, and an additional duty of 2%. Non-electronic items such as music and movie media are levied a duty of about 25%, where as electronics and toys attract a 35-40% duty. We're just getting warmed up here, because in addition to the import duties, you are also liable to be charged with a maximum penalty of 25%.That's the government essentially penalising you for overshooting the permissible import limit without possessing an Import-Export Code (IEC). If you're about to ask how to go about getting one, don't bother because "persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture" or, in other words, an average Joe who wants to import gadgets off Amazon.com isn't allowed to bear an IEC. This means, technically, you cannot import anything worth more than Rs 2000 (shipping included) unless you get it done through a government-authorised importer or a Clearing and Forwarding Agent bearing an IEC.Choosing the Right Shipping MethodChoice of shipping method solely depends on the urgency and the cost of the items being imported. If you're importing something expensive, or if you want it delivered quickly, you're better off opting for courier services from FedEx and UPS. You may end up paying through your nose, but this shouldn't be a concern if receiving the parcel safe is your prime objective.What's more, since these services have dedicated customs liaisons, the probability of your shipment getting stuck in red tape is next to nothing. Just hand over the duty charges to the courier guy and forget about the headaches of wrestling with the Indian bureaucracy. Although cheaper shipment options neither guarantee the security of your shipment, nor do they ensure timeliness of delivery, they still make good sense if you want to try and dodge the duty net. Speaking of which, let's see how you can go about saving money without breaking any rules.Beating the System (Legally)Does that mean there's no way I can import stuff without facing a hefty fine and penalty? Unfortunately, that is the case for very expensive and/or large goods, but those shipping smaller, cheaper items can minimise the damage. You see, while the Rs 2,000 import limit holds true, it is applied on a shipment to shipment basis.In simple terms, nothing can stop you from breaking your order down into multiple shipments of value under the import limit. Yes, you may end up spending more on shipping charges that way, but it's still significantly cheaper than paying the duties and penalties you'd have to bear otherwise. If you plan to order say Blu-ray movies worth Rs 10,000 from Amazon, it's better to split them into multiple shipments amounting lower than Rs 2,000 each.Your choice of shipping and the appearance of goods also has a great bearing on the probability of being levied a hefty duty fee. Ideally, avoid expensive shipping modes as that will proportionately raise the duty. Moreover, the Indian customs works in arbitrary fashion. I have personally found that expensive goods shipped with expensive shipping options invariably get slapped with a heavy duty/penalty. However, when I shipped the same through a cheapest shipping option, the whole package just slipped under the radar unmolested.The size of the package also affects the chances of attracting duties. Ideally, opt for individual sellers on Ebay.com or websites where you can deal with small-time sellers, who can entertain requests to strip the original factory packaging off your goods. While this may make them liable to damage, you can strip sturdier items of fancy packaging and make them look smaller and reduce the chances of being slapped with heavy import duties. Just remember that all inbound shipments are scanned manually in an X-ray machine before they are flagged for further inspection. By making your package look innocuous and cheap, you simply reduce the chances of it being considered dutiable.How to Pay the Duty?This generally depends upon the hipping mode you have chosen. If you opt for regular mail, your friendy neighbourhood postman doubles up as the duty collection agent. After the Customs department has appraised your shipment for duty, the postman shows up at your doorstep with the delivery and a receipt bearing the breakdown of the duties and penalties (if any) levied. Just pay off the guy and you can claim your parcel.It's the same affair with commercial courier entities such as UPS (not to be confused with USPS: The US Postal Service) and FedEx. The only difference is that you are informed in advance of the duty estimates and delivery dates. Oh, and I also forgot to mention that there's a considerably lower chance of your package getting lost and/or destroyed in transit.Certain online websites such as Amazon.com and Ebay India (through the Global Easy Buy provision) have an agreement with Indian Customs allowing them to collect the duty in advance. By paying the duty at checkout itself, takes away all the hassles of post payment in addition to many delays and heartburn caused by the Customs appraisal department sitting on your package for what's usually an inordinately long time.
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