A

FIELD VISIT REPORT ON

“A STUDY OF IMPORT LICENCING POLICY”

SUBMITTED BY
“NEHA VARMA”

SUBMITTED TO
“SAVITRIBAI PHULE PUNE UNIVERSITY”

SUBMITTED IN PARTIAL FULFILLMENT OF

“POST GRADUATE DIPLOMA IN INTERNATIONAL BUSINESS”

INDIRA COLLEGE OF COMMERCE & SCIENCE

(2019-2020)

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 INDEX

Topic Page No.

Executive Summary 3

Organization Profile 4

Problem/ question raised at WTO 5

Research Methodology & Sample of Import License 7

Import Licensing Policy 9

Import Licensing Policy in India 12

Conclusion & Learning through the project 15

Reference 15

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 EXECUTIVE SUMMARY

The World Trade Organization (WTO) is the only global international organization dealing with the rules
of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the
world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and
services, exporters, and importers conduct their business.

Import licensing can be defined as administrative procedures requiring the submission of an application
or other documentation (other than those required for customs purposes) to the relevant administrative
body as a prior condition for importation of goods.

Problems highlighted at WTO:

1. Myanmar queried on import licensing requirements for agricultural products.
2. United States initiates WTO dispute against Indian duties on US imports.
3. Viet Nam’s measures on cyber security products questioned at import licensing meeting.

Basic Obligation on policy:

1. Members recognize the need for minimizing the incidence and complexity of import and export
formalities and for decreasing and simplifying import and export documentation requirements.
2. Each Member “to review the operation of its laws and regulations in the light of the provisions of
this Article” upon request by another Member.
3. Prohibits Members from imposing “substantial penalties for minor breaches of customs
regulations or procedural requirements.”

In India:

 Exim Policy (2007) of India, prohibits import of certain categories of products as well as
conditional import of certain items.
 Imported good are described under 4 categories:
i. Freely Importable Items.
ii. Licensed Import.
iii. Canalized Items.
iv. Prohibited Items.
 Custom official has right to charge fines and penalties. If any violation in the import license is
found to be done by the importer.

WTO PROFILE
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Created in 1995, World Trade Organization (WTO) is an international institution that oversees the global
trade rules among nations. It superseded the 1947 General Agreement on Tariffs & Trade (GATT) created
in the wake of World War II.

The World Trade Organization (WTO) is the only global international organization dealing with the rules
of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the
world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and
services, exporters, and importers conduct their business.

WTO has 164 member countries, with Liberia and Afghanistan the most recent members, having joined
in July 2016, and 23 observer countries.

WTO primary purpose is to open trade for the benefit of all.

WTO Areas of Activity:

 Trade Negotiation.
 Dispute Settlement.
 Implementation & Monitoring.
 Building Trade capacity.

Problems / Question Highlighted at WTO:

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Few questions are explained below:

Myanmar was questioned about its import licensing requirements on agricultural products at the
meeting of the Committee on Import Licensing on 4 October:

 The United States said it has received reports that indicate Myanmar restricts the
importation of certain agricultural products, operating its licensing regime at its discretion
in a non-transparent manner.
 These include reports of unofficial and unpublished quotas, bans and other restrictions on
various agricultural product imports.
 The US also requested greater transparency regarding a list of products that Myanmar
deems to be "sensitive" and therefore not eligible for import permits. Myanmar said it will
convey these questions back to capital.

In addition to this new trade concern, WTO members reiterated concerns over several issues
previously raised, such as China’s import ban on solid waste, India’s quantitative restrictions
on pulses, Brazil’s import licensing on nitrocellulose and Thailand’s import restriction on
feed wheat.

The United States has requested WTO dispute consultations with India concerning additional
duties applied by India on certain imports of US goods. The request was circulated to WTO
members on 4 July.

 The United States claims that the additional duties, which India imposed through a series
of notifications issued between June 2018 and June 2019, are inconsistent with provisions
of the WTO's General Agreement on Tariffs and Trade (GATT 1994) by unfairly
discriminating against US imports vis-à-vis those from other WTO members and by
according less favorable treatment to US goods than that provided for in India's schedule
of concessions.

The United States and Japan asked Viet Nam to clarify its measures covering cyber security
products at the 22 October meeting of the Committee on Import Licensing. WTO members also
discussed previously raised issues concerning import restrictions on scrap materials, pulses and
other goods.

 The United States expressed concern over Viet Nam's Decree No. 58 of 2016 involving
the sale and provision of civil cryptographic products. The US said import licensing has
been required for products where encryption is an important but not a core function.

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  The US asked Viet Nam to clarify the rationale behind the measure and said it could stifle
trade without producing clear benefits to Viet Nam.

 Japan said it had a strong interest in the issue and requested Viet Nam to clarify the import
licensing requirements and procedures for cryptographic products. Japan said it would
closely monitor the situation.

 Viet Nam, in response, said it would relay these concerns to its capital-based authorities

China's import restrictions on recoverable materials:

 Five delegations (United States, European Union, Canada, Korea and Australia) reiterated
their request for more information about China's import restrictions covering scrap
materials.
 The United States, which requested that the issue be included again in the meeting agenda,
said recent changes in China's policies have resulted in the disposal of recyclable materials
into landfills instead of being further recycled in China.
 The US also said that Chinese manufacturers have been forced to use "virgin" materials
and that there could be a heightened threat of increased marine litter.

The committee also discusses any other issues arising from the Import Licensing Agreement’s
implementation.

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 Research Methodology

Secondary data Analysis/ Archival study.

SAMPLE OF IMPORT LICENSE

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8
 IMPORT LICENCING POLICY

The Agreement on Import Licensing Procedures says import licensing should be simple, transparent and
predictable so as not to become an obstacle to trade.

For example, the agreement requires governments to publish enough information for traders to know how
and why the licenses are granted. It also describes how countries should notify the WTO when they
introduce new import licensing procedures or change existing procedures.

BASIC OBLIGATION:

GATT Article VIII:

Article VIII of GATT (entitled Fees and Formalities Connected with Importation and Exportation) deals
with import licensing procedures in a non-specific manner.

 Members recognize the need for minimizing the incidence and complexity of import and export
formalities and for decreasing and simplifying import and export documentation requirements.

 Each Member - “to review the operation of its laws and regulations in the light of the provisions
of this Article” upon request by another Member.

 Prohibits Members from imposing “substantial penalties for minor breaches of customs
regulations or procedural requirements.”
  

GATT Article X:

Article X requires Members to publish promptly laws, regulations, judicial decisions and administrative
rulings of general application, including those pertaining to requirements on imports or exports and to
administer them in a uniform, impartial and reasonable manner.

TYPES OF IMPORT LICENSING:

There are 2 types of Import licensing policy. They are:

1. Automatic import licensing.

2. Non- Automatic import licensing.

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AUTOMATIC IMPORT LICENSING: -

Automatic import licensing (licensing maintained to collect statistical and other factual
information on imports) is defined as import licensing where the approval of the application is
granted in all cases. (Article 2.1)

Automatic licensing procedures are not to be administered in such a way as to have restrictive
effects on imports; there should be no discrimination among those applying for automatic licenses.
Any person fulfilling the legal requirements should be equally eligible to apply for and obtain
import licenses.

License applications may be submitted on any working day before customs clearance; they shall
be approved immediately on receipt but in any case, within 10 working days.

NON- AUTOMATIC IMPORT LICENSING: -

Non-automatic import licensing is defined as licensing not falling within the definition of
automatic import licensing (Article 3.1).

Non-automatic licensing is used to administer trade restrictions such as quantitative restrictions

which are justified within the WTO legal framework.

Non-automatic import licensing must not have restrictive or distortive effects on imports
additional to those caused by the imposition of the restriction and is to correspond in scope and
duration to the measure it is used to implement.

Provisions of Non-automatic import licensing:

i. All relevant information to be published:

Members are to publish all relevant information, including purposes other than the
implementation of quantitative restrictions, exceptions or derogations, quota amounts,
opening and closing dates of quotas and country-specific quota allocations.

ii. No discrimination among applicants:

There may be no discrimination among applicants. If a license is refused, the applicant, on

request, shall be given the reason for refusal, and shall have a right of appeal or review of
the decision.

iii. Time limits for processing applications:

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 The period for processing applications shall not be longer than 30 days if applications are
considered as and when received, and not longer than 60 days if applications are
considered simultaneously.

iv. Validity of a license:

 The validity of a license is to be of reasonable duration and not be so short as to

preclude imports, including those from distant sources.
 Full utilization of quotas is not to be discouraged.
 Licenses are to be issued in economic quantities.

v. Members are to provide, upon the request of any Member having an interest in the trade in
the product concerned, all relevant information.

vi. In allocating licenses, Members should consider the import performance of an applicant
and are to ensure a reasonable distribution of licenses to new importers, particularly to
those importers importing products originating in developing and least-developed country
Members.

vii. If quotas are not allocated by country, license holders are to be free to choose the sources
of imports; if they are allocated among supplying countries, the license must clearly
stipulate the countries.

viii. Compensating adjustments may be made in future license allocations, under Article 1.8,
where imports exceeded a previous license level.

Import licenses are permits granted before a product is imported. The administrative procedures for
obtaining the licenses should be simple, neutral, equitable and transparent. Where possible they should be
given automatically and quickly, and even if they are non-automatic, they should not obstruct trade
unnecessarily.

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 IMPORT LICENSING POLICY IN INDIA

Majority of the goods are freely importable. However, the Exim Policy (2007) of India prohibits import
of certain categories of products as well as conditional import of certain items. In such a situation it
becomes important for the importer to have an import license issued by the issuing authorities of the
Government of India.

Sample of Import License:

A sample of import license consists of two copies:

1. ForeignExchange Control Copy:

To be utilized for effecting remittance to foreign seller or for opening letter of credit.

2. Customs Copy:
To be utilized for presenting to Customs authority enabling them to clear the goods. In the
absence of custom copy, import will be declared as an unauthorized import, liable for
confiscation and or penalty.

Categories of Import:

All types of imported goods come under the following four categories:

Freely importable items:

Most capital goods fall into this category. Any product declared as Freely Importable Item does
not require import licenses.

Licensed Imports:

There are number of goods, which can only be importer under an import license. This category
includes several broad product groups that are classified as consumer goods; precious and semi-
precious stones; products related to safety and security; seeds, plants and animals; some
insecticides, pharmaceuticals and chemicals; some electronically items; several items reserved for
production by the small-scale sector; and 17 miscellaneous or special-category items.

Canalized Items:

There are certain canalized items that can only be importer in India through specified channels or
government agencies.
These include petroleum products (to be imported only by the Indian Oil Corporation);
nitrogenous phosphatic, potassic and complex chemical fertilizers (by the Minerals and Metals
Trading Corporation) vitamin- A drugs (by the State Trading Corporation); oils and seeds (by the

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 State Trading Corporation and Hindustan Vegetable Oils); and cereals (by the Food Corporation of
India). 

Prohibited items:

Only four items-tallow fat, animal rennet, wild animals and unprocessed ivory-are completely
banned from importation.

Category of Importer:

Based on product to be imported and its target buyer, importers categories are divided into three groups
for the purpose of obtaining import licensing:

1. Actual Users:
An actual user applies for and receives a license to import of any item for personal use rather than
for business or trade purpose.

The two types of actual user license are:

 General Licenses: This license can be used for the imports of goods from all countries,
except those countries from which imports are prohibited.

 Specific Licenses: This license can only be used for imports from a specific country

2. Registered exporters:
Registered exporter defined as those who have a valid registration certificate issued by an export
promotion council, commodity board or other registered authority designated by the Government
for purposes of export-promotion.

3. Others.

CUSTOM INSPECTION:

Any violation in the import license is usually scanned by the custom officials of the custom department.
Custom inspector and other custom officials have authority to inspect and evaluate the goods to be
imported. It’s a part of their job to determine whether imports confirm to the description in the import
License or not.

Custom official has right to charge fines and penalties.If any violation in the import license is found to be
done by the importer.

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Import License Issuing Authority in India:

In India, Import License is issued by the Director General of Foreign Trade. DGFT Delhi office is
situated in Udyog Bhawan, New Delhi 110011.

Validity of Import License:

Import Licenses are valid for 24 months for capital goods and 18 months for raw materials components,
consumable and spares, with the license term renewable.

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 CONCLUSION

Import licenses are permits granted before a product is imported. The administrative procedures for
obtaining the licenses should be simple, neutral, equitable and transparent. Where possible they should be
given automatically and quickly, and even if they are non-automatic, they should not obstruct trade
unnecessarily.

Transparency is largely achieved through information supplied in three types:

 Notifications,

 Questions and

 Answers

Circulated in written, some of these discussed in the committee’s meetings.

LEARNING
Mentioned only few points:

 For better International trade- transparency, simplicity is essential factor in policy.

 WTO helps in negotiation between Countries and gives chance to settle dispute between countries
without any major harm caused.

 Import shouldn’t be mean of dumping.

 Equality is essential in each aspect.

REFERENCE

www.wto.org/english/tratop_e/implic_e/implic_info_e.htm - Import Licensing.

https://en.wikipedia.org/wiki/Import_license - Import License

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