Import-export business can be a lucrative venture for those who are willing to put in the time and effort to learn the ropes. However, the world of international trade can be complex and confusing, especially for beginners. In this article, we’ll go over some of the key terms you need to know if you’re starting an import-export business.

1. Tariff

A tariff is a tax that a government imposes on imported or exported goods. Tariffs are used to protect domestic industries and generate revenue for the government. When you’re importing or exporting goods, you’ll need to be aware of the tariffs that apply to your products in the countries you’re trading with.

2. Customs clearance

Customs clearance is the process of getting your goods through customs when they enter or leave a country. This involves submitting the necessary paperwork and paying any applicable fees, such as tariffs and taxes. Customs clearance can be a complex and time-consuming process, so it’s important to work with a reliable customs broker who can help you navigate the process.

3. Bill of lading

A bill of lading is a legal document that serves as proof of shipment and ownership of goods. It contains details such as the name of the buyer and seller, the description of the goods, and the shipping route. A bill of lading is required for most international shipments.

4. Certificate of origin

A certificate of origin is a document that certifies the country in which the goods were produced. This document is important for customs purposes, as it helps to determine the applicable tariffs and duties.

5. Free trade agreement

A free trade agreement is an agreement between two or more countries to eliminate or reduce trade barriers, such as tariffs and quotas. Free trade agreements can make it easier and less expensive to import and export goods between the participating countries.

6. Incoterms

Incoterms are a set of standardized trade terms that define the responsibilities of buyers and sellers in international transactions. They cover important aspects such as delivery, risk, and costs. It’s important to understand and use the correct Incoterms when conducting international trade.

7. Import duty

An import duty is a tax that a country imposes on imported goods. The amount of the duty can vary depending on the type of goods and the country of origin. Import duties can have a significant impact on the cost of goods and the profitability of an import-export business.

8. Export license

An export license is a document that authorizes the export of certain goods. Some goods require an export license due to their strategic or sensitive nature. It’s important to be aware of the export licensing requirements for the goods you’re exporting.

9. Harmonized System (HS) code

The Harmonized System (HS) code is a standardized system of numerical codes used to classify goods for customs purposes. The HS code is used to determine the applicable tariffs and duties for imported and exported goods.

10. Letter of credit

A letter of credit is a financial instrument that guarantees payment to the seller in a transaction. It provides assurance to the seller that they will be paid, and to the buyer that the goods will be delivered as agreed.

Conclusion

Starting an import-export business can be a challenging but rewarding venture. By understanding the key terms and concepts related to international trade, you can navigate the complex world of customs, tariffs, and regulations with more confidence. Whether you’re importing or exporting, it’s important to work with knowledgeable professionals who can help you avoid costly mistakes and ensure a successful transaction.

VRDA PRIME OVERSEAS PVT LTD helps Import/Export companies by providing onboarding services.

1. Company Registration
2. Digital Signature Certificate Class III
3. GST
4. Import Export Code Registration
5. Custom / ICE GATE portal Registration
6. AD Code Registration