Importing from India

India is a natural and growing trading partner for the UK, with the UK government pushing for a full UK/India trade deal. But what steps should you take if you want to import from India right now?

Colourful. Vibrant. Chaotic. Anybody who has visited India realises that our shared history makes it an attractive trading partner at a time when some importers may have qualms about importing from its bigger rival in Asia, China.

Despite the downturn last year due to the pandemic, the OECD has projected India’s economy to grow by 9.9 per cent this year to become the fastest-growing economy in the G20.

Total UK imports from India amounted to £11.6bn in the four quarters to the end of Q1 2021. India was the UK’s 15th largest trading partner in the four quarters to the end of Q1 2021, accounting for 1.6 per cent of total UK trade.

Of all UK imports from India in the four quarters to the end of Q1 2021, £6bn (52 per cent) were goods and £5.6bn(48 per cent) were services.

In 2019, around 14,500 UK VAT-registered businesses imported goods from India, accounting for around £7.9bn of imports.

The top 5 goods imported to the UK from India in the four quarters to the end of Q1 2021 were:

  • Clothing (£681.6m or 11.4 per cent of all UK goods imported from India)
  • Medicinal and pharmaceutical products (£511.0m or 8.5 per cent)
  • Textile fabrics (£339.4m or 5.7 per cent)
  • Miscellaneous metal manufacturers (£280.6m or 4.7 per cent)
  • Organic chemicals (£269m or 4.5 per cent)

If you’re thinking of importing from India to grow your business, there are some things you need to know about the process, and costs involved. Importing can be complex, but don’t panic – this guide is here to help.

>See also: How to import from China to UK

Importing from India to UK

If you’re planning on importing from India to the UK, there are a few things you’ll need to prepare in advance, including:

  • Commodity codes – used by customs authorities to identify the goods you’re bringing into the country, to ensure the correct tax and duty is paid, and all legal and safety regulations are followed
  • Import licence – there are a lot of different types of goods which require an import licence. You’ll definitely need one if you’re importing anything which is hazardous, or could be used for military purposes, and usually if your shipment includes live animals or plants
  • EORI number– this is needed by any individual or business importing into the UK. You can get your EORI number within just a few days by registering online with the UK tax authorities
  • Customs declaration – if you’re using a customs broker or freight forwarder you might find that they complete some or all of the customs processes on your behalf. You’ll use a form called C88 or SAD – the single administrative document

India to UK import tax

When importing from India to the UK, you’ll need to pay duty and VAT on your goods. Exactly what you owe will depend on the type of products you’re importing. Because it’s a relatively complex system, many importers prefer to have a freight forwarder or customs broker help them calculate the costs of importing.

Duty on Indian imports

The duty payable varies depending on the goods you’re bringing into the UK. To know what duty rate is applied, you’ll need to get the commodity code for your goods. You can find these on the UK government website, which has a lookup tool to help you select the correct code.

When you declare your goods to customs in the UK, you’ll be asked to confirm the commodity code, which will be used to calculate the duty payable. Amounts vary quite significantly. If you’re importing women’s cotton shirts from India, for example, the duty is set at 12 per cent, while certain types of new cars come with zero per cent duty.

Your goods will be held at UK customs pending payment of duty and VAT. Once this has been paid – either by yourself or a freight forwarder or customs broker on your behalf – they’ll be released.

>See also: How to import from the EU

Paying VAT on goods from India

As well as duty, you’ll need to pay VAT on items imported to the UK. It’s important to remember that VAT is calculated on the cost of goods + the cost of transport + duty paid. It’s charged at the prevailing UK rate which is currently 20 per cent.

India to UK import tax examples

To calculate the amount of duty and tax payable, you’ll first need to convert the price paid to GBP, using the UK customs exchange rate, which is changed from time to time and can be found online.

Here’s a basic example of how duty and VAT might be calculated for an import to the UK.

For the purpose of this calculation, we have split out the cost of goods and transport. In some cases, however, the deal you strike with your supplier in India might include shipment to the UK. In that case, the duty is calculated on this cost, without needing to add in a separate shipment fee.

Sea or air freight from India to the UK?

Whether air or sea freight will be your best choice depends largely on what you’re shipping, and when you need it.

Typically, for large volume goods such as clothing or consumer goods, sea freight is a much cheaper option – but this mode of transport takes time.

Mumbai, or the port called Nhava Sheeva, has the only main direct service to the UK. All other ports in India need to ship the goods either via Nhava Sheva or via Columbo in Sri Lanka. This means that it takes a relatively long time to ship goods from India to the UK. From the main port of Nhava Sheva, it takes about 35-40 days, but if you must have the goods shipped from New Delhi, Calcutta or Channai, then you can easily add 10 days on top of that before your goods can reach the UK.

So, unless the shipping starts from Mumbai/Nhavs Sheema, you should probably expect to wait 50 days for your imports from India to arrive.

Air freight is much quicker, but the relative costs are high – it’s a better choice for smaller loads (under about 100kg), high value items, or things needed urgently.

>See also: Import from USA: tips and how-to guide

How to import from India

There are a few basic steps you’ll need to take to make sure your goods reach the UK smoothly. In many cases, importers choose to have a freight forwarder or customs broker help with these processes. Although there might be a fee for this service, it can offer peace of mind and help you avoid any delays or nasty surprises.

If you’re planning on importing from India to the UK, there are a few things you’ll need to prepare in advance, including:

  • Find the right commodity code for your goods. Commodity codes are used by customs authorities to identify the goods you’re bringing into the country, to ensure the correct tax and duty is paid, and all legal and safety regulations are followed
  • Get an EORI number – this is needed by any individual or business importing into the UK. You can get your EORI number within just a few days by registering online with the UK tax authorities
  • Check if you need an import licence for your goods. There are a lot of different types of goods which require an import licence. You’ll definitely need one if you’re importing anything which is hazardous, or could be used for military purposes, and usually if your shipment includes live animals or plants
  • Customs declaration – if you’re using a customs broker or freight forwarder you might find that they complete some or all of the customs processes on your behalf. You’ll use a form called C88 or SAD – the single administrative document
  • Pay duty and VAT to have your goods released by customs authorities

Find the right commodity code

You must find out the relevant UK commodity codes for your items. Commodity Codes are essential to your shipment as if your products are incorrectly labelled it could result in UK Customs delaying or halting your goods.

To find the correct commodity code for the products you need imported from India, go to the UK Government Trade Tariff. Here you can look up commodity codes as well as rates for VAT and duty. Commodity codes are vital in classifying your imported goods so that you can:

  • Check to see if there are any duty reliefs
  • Complete declarations as well as other paperwork
  • Find out if you have to pay for any VAT or duty fees

Find out your EORI number

In addition to your commodity code, you will need to obtain an Economic Operator Registration Identification number (EORI).

UK customs uses an EORI number as a means of record keeping for both imported and exported goods. When importing commercial cargo from India, all UK businesses are required to have an EORI. This is needed for a commercial invoice if you’re using the CHIEF system (see below) and you have to submit an electronic export declaration.

An EORI number is also needed if you’re using freight or courier forwarder. Applying for an EORI number is easy, you can apply it online here and will take you approximately three days to receive.

Check if you need a licence

Before you try to import your goods from India, check if you need to obtain a licence. This is not needed for most goods, but some do need licences. These include military goods, technology, art, plants, animals, medicines and chemicals. If you want to find out if you need a licence and how to get one, visit the Department for International Trade here.

►Are your Indian goods banned from being imported into the UK?

There are also goods that are subject to import controls. Therefore, it is essential to check if any of the import controls apply to the goods you need to ship. At present, these are the three types of controls:

  • Surveillance – ensures that the importation is monitored using licences
  • Bans – no imports allowed
  • Quotas – restriction in volume of goods

Paying VAT on goods from India

As well as duty, you’ll need to pay VAT on items imported to the UK. It’s important to remember that VAT is calculated on the cost of goods + the cost of transport + duty paid. It’s charged at the prevailing UK rate which is currently 20 per cent.

India to UK import tax examples

To calculate the amount of duty and tax payable, you’ll first need to convert the price paid to GBP, using the UK customs exchange rate, which is changed from time to time and can be found online.

Pay your VAT fee

If you import from India to the UK, you’re required to pay VAT together with the total sum of import duty and customs value. In this case, Customs Value equals the total cost of the imported products including any import duty fee, supplier cost and shipping from India to the UK cost.

Make sure that you pay any pending VAT fee that is due. Remember that you must pay VAT if you are VAT registered. However, you can claim it back through your standard VAT return.

Include full details on invoices and labels

Ensure that all of your item’s labels and invoices include the full, and correct, details of:

  • Sender and receiver
  • Quantity of your goods
  • Value of your goods
  • Detailed description of your items
  • Commodity Codes

How importing from India works in practice

For example, if you wanted to import a carpet from India, you would firstly need to determine the total value of the carpet and all costs associated with importing it into the UK (transport, insurance, etc.).

After you have calculated thee total costs, you need to determine the commodity code which would determine duty that would need to be paid. The duty for importing a carpet from India is 8 per cent.

Plus, you would need to add the value of the duty to the total value to determine the final amount VAT would be paid on. Then to determine the VAT amount, you need to find 20 per cent of the total value (cost plus transport), including the duty.

Top tip: Be aware when buying “FOB New Delhi”, says Dutch online freight platform Transporteca. Because New Delhi is situated in the centre of the country, the supplier must pay for your cargo to be shipped to warehouse in New Delhi. In India, there is an “interstate tax” to be paid when moving goods from one state to another, so be prepared to be charged when buying “FOB New Delhi”.

Further reading

Import guide: three essential tips and everything you need to know

 

Related Topics

Importing

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