Import/Export Policies and Procedures for SELECTED PRODUCT

(w.r.t. Gujarat and selected country)

IMPORT NORMS OF SOUTH AFRICA

South Africa is a member of the South African Customs Union (SACU), along with Botswana,
Lesotho, Namibia, and Swaziland. Under the SACU agreement, all members apply import
duties and related measures set by South Africa. Applied customs tariffs, excise duties,
valuation methods, origin rules, and contingency trade remedies are harmonized through
SCAU.

South Africa applies the SACU common external tariff (CET). The dutiable value of goods
imported into South Africa is calculated on the f.o.b. price in the country of export and
duties are collected at the place of entry into the common customs area. As the external
trade of land-locked Botswana, Lesotho, and Swaziland is directed through South Africa, as
well as much of Namibia's international trade, South Africa collects virtually all customs
duties and excise taxes.

South Africa (SACU): Tariffs (percent ad valorem) for Textiles, Apparel, Footwear and Travel
Goods.

Product HS Chapter/Subheading Tariff Rate Range (%)

Yarn

silk 5003-5006 0

wool 5105-5110 0 – 15

cotton 5204-5207 15

other vegetable fiber 5306-5308 0

man - made fiber 5401-5406/5501-5511 0 – 15

Woven Fabric

silk 5007 0
wool 5111-5113 22

cotton 5208-5212 22

other vegetable fiber 5309-5311 0 – 22

man - made fiber 5407-5408/5512-5516 20 – 22

........................

Knit Fabric 60 0 – 22

........................

Non Woven Fabric 5603 10 - 20

........................

Industrial Fabric 59 0 - 25

........................

Apparel 61-62 0 - 45

Home Furnishings 63 0 - 30*

Including: bed, bath, kitchen

linens, etc.

Used or worn clothing and textile products are subject to 60-percent duty or 2500c/kg.
Some products may be subject to duties applied on a per unit basis.

Additional Taxes and Other Import Fees

Each SACU country sets its own VAT (value-added tax) or sales tax. In practice, when goods
are exported from one SACU country to another, the shipper applies for VAT refunds from
the exporting country, and then pays the relevant tax to the importing country.

South Africa imposes a VAT of 14 percent on the "domestic open-market value" for goods
and services produced in South Africa. On imports, it is levied on the f.o.b. customs value
plus the amount of any non-rebated customs duty, uplifted by 10%. The additional 10% is
included to adjust for the customs valuation on the f.o.b. value rather than the c.i.f.
value. Donated goods are exempt from VAT.

In addition to customs tariffs and VAT, certain products are also subject to excise duties, and
levies. A 7 percent ad valorem excise duty is levied on articles of apparel and clothing
accessories. The value for ad valorem excise duty purposes of imports includes an uplift of
15 percent of the transaction value and any non-rebated customs duties.

Tariff Rebates

Various provisions for rebate of duty exist for specific materials used in domestic
manufacturing. The importer must consult the relevant schedules to the Customs and Excise
Act to determine whether the potential imports are eligible for rebate duty. Information can
be found on the International Trade Administration Commission of South Africa's website.

The Department of Trade and Industry instituted an export promotion scheme specifically
for the textile industry whereby an exporter is permitted to import duty free an amount of
textile products equivalent to 25 percent of its exports of clothing, 12.5 percent of fabrics
and 8 percent of yarns.

Temporary Entry/Samples
South Africa is a member of the ATA Carnet Convention, which allows goods such as
commercial samples and goods for international fairs and exhibitions to be entered
temporarily without paying duties or posting bonds. The exporter must provide a letter
stating that the exporter/carnet holder authorizes the customs clearance agent to clear the
shipment on its behalf and may deliver to the consignee addressed therein. This letter from
the carnet holder is to accompany the carnet document. SARS will not process carnet
clearance without this letter. No duty or VAT is payable on carnet shipments.
Typically, the following goods are eligible to qualify for carnet entry:

 Commercial samples
 Goods for international fairs and exhibitions
 Professional equipment (including tools and instruments, but not goods for
processing or repair)

ATA Carnet--An ATA Carnet or "Merchandise Passport" is a document that facilitates the
temporary importation of products into foreign countries by eliminating tariffs and other
import taxes or charges normally required at the time of importation.

Import custom procedure in South Africa:

Customs Procedures:

Import Procedures Customs and excise duties are administered by SARS (South African
Revenue Service)

Companies can register manually or use the electronic data entry and clearance system.
Import documents required for customs clearance:

1. Copies of the Bill of Lading

2. A declaration of Origin Form DA59.

3. Bill of Entry (DA500)

4. Four copies and one original of the Commercial Invoice

5. One copy of the insurance certificate for sea freight

6. Three copies of the Packing List.

SARS offers a Single Administrative Document (SAD) to facilitate customs procedures. For
restricted items, import licenses are necessary. There are certain restricted items which
required Import licenses. A license (permit) is only valid in respect of the goods of the class
and country specified. It is non-transferable and may only be used by the person to whom it
was issued.

Import permits are valid only for the calendar year in which they are issued. Import permits
required for specific categories of restricted goods are obtainable from the Director of
Import and Export Control at the Department of Trade and Industry.
Importing Samples for the entry of commercial samples, advertising materials and
professional equipment, South Africa applies the ATA (Temporary Admission) Carnet
system. Goods should be adequately marked for identification purposes so as to facilitate
their passage through customs. South Africa is a member of the ATA Convention (ATA
Carnet). Goods with an ATA Carnet are exempt from duty fees and VAT.

Customs Duties and Taxes on Import:

Customs threshold (from which tariffs are required) Import goods with a value up to 500
ZAR are exempt of duty and VAT. Average Customs Duty (Excluding Agricultural Products)
5.8%. Products having a Higher Customs Tariff Apparel industry, automobile industry and
some agriculture products. South Africa is working towards lowering the custom tariff rate
on these products. Preferential Rates Average Most Favored Nations (MFN) rate: 8.22% In
addition, South Africa has free-trade agreements with a number of countries. The country
also belongs to the Customs Union of COMESA. Customs Classification South Africa uses a
Harmonized System (HS). Method of Calculation of Duties Ad Valorem on the FOB price in
the country of export, in accordance with the GATT Customs Valuation Code. Method of
Payment of Customs Duties FNB, ABSA, Standard Bank and Ned bank are the banks through
which payments can be made.
 EXPORT NORMS OF GUJARAT

1) Registration Stage
2) Pre-Shipment Stage
3) Shipment Stage
4) Post-Shipment Stage

(1) Registration Stage

The exporter is required to register his organization with a number of institutions and
authorities, which directly or indirectly help him in the smooth conduct of export trade.
Registration stage includes:

(a) Registration of the Organization

Joint stock company, Partnership firm, Sole proprietorship.

(b) Opening Bank Account

Company should open a current account in the name of the firm or company with a
commercial bank which is authorized by the Reserve Bank of India (RBI) to deal in foreign
exchange.

(c)Registration for IEC Number

Any person in India who wants to do any imports or exports for business is required to
obtain from the Director General of Foreign Trade (DGFT), the importer exporter code
number, popularly known as IEC number. Company registered at DGFT and obtains IEC
number.

(d) Obtaining Permanent Account Number (PAN)

Your permanent account number (PAN) is a 10-digit alphanumeric number, which is used as
your identity proof. It is used mainly for tax related purposes. A copy of any one of these
documents is acceptable as ID proof for a PAN card:
 Adhaar Card issued by the Unique Identification Authority of India.
  Elector's photo identity card.
 Driving license.
 Passport.
 Ration card having photograph of the applicant.
 Arms license.
 PAN applications are made through forms, designated separately for individuals and
foreign nationals. Form 49A is for Indian citizens and Form 49AA is for foreign
nationals. Importers, exporters and those intending to get themselves registered as
manufacturers, traders or service providers in India are required to obtain a PAN.
 If your income exceeds the basic exemption limit of US$2,937 (Rs 200,000)
 Sale or purchase of immovable property valued at US$14,685 (Rs 10,00,000) or
more, the PAN should be disclosed in the document pertaining to the purchase or
sale of the property.
 Purchase/sale of any goods or services (including jewelry) exceeding US$2,937 per
transaction.
(e) Obtaining Sales Tax Number
Goods sold within the country are subject to sales tax. If the exporter procures goods locally
for exports, he can get them free of sales tax if he is registered as an exporter with the sales
tax authorities.

(f) Registration with Export Promotion Council (EPC)

It is compulsory to register as it provides ‘Registration Cum Membership Certificate’ (RCMC).
Benefits provided in new EXIM Policy are extended only to exporters having RCMC.

(2) Pre-Shipment Stage

(a) Approaching Foreign Buyers

Advertising in international media, sales promotion, public relation, personal selling,
publicity and participation in trade fairs and exhibitions, etc are various techniques for
approaching foreign buyers.
(b) Inquiry and Offer
An inquiry is a request from a prospective importer about description of goods, their
standard or grade, size, weight or quantity, terms of payments, etc. On getting an inquiry,
company must process making an offer in the form of Performa invoice.

(c) Confirmation of order

Once the negotiations are completed and the terms and conditions are finalized, company
sends three copies of Performa invoice to the importer for the confirmation of order. The
importer signs these copies and sends back two copies to the company.

(d) Opening Letter of Credit

The documentary or letter of credit is the most appropriate and secured method of
payment adopted to settle international transactions. On finalization of the export contract,
the importer opens a letter of credit in favor of the exporter, if agreed upon in the contract.

(e) Arrangement of pre-shipment finance

On securing the letter of credit, company procures a pre-shipment finance from his bank for
procuring raw materials and other components, processing and packing of goods and
transfer of goods to the port of shipment.

(f) Production or Procurement of Goods

On securing the pre-shipment finance from the bank, the exporter either arranges for the
production of the required goods or procures them from the domestic market as per the
specifications of the importer.

(g) Packing and Marking

Then the goods should be properly packed and marked with necessary details such as port
of shipment and destination, country of origin, gross and net weight, etc. If required,
assistance can be taken from the Indian Institute of Packaging (IIP).
(h) Pre-shipment Inspection
If the goods to be exported are subject to compulsory quality control and pre-shipment
inspection then a company should contact the Export Inspection Agency (EIA) for obtaining
an inspection certificate.

(i) Obtaining Insurance Cover

 Company must take appropriate policies in order to insure risks –
 ECGC policy in order to cover credit risks.
 Marine Policy is the price quotation agreed upon is CIF.

(j) Appointment of C&F Agent

Since exporting is a complex and time – consuming process, the exporter should appoint a
Clearing and Forwarding (C&F) agent for the smooth clearance of goods from the Customs
and preparation and submission of various export documents.

(3) Shipment Stage

Export Cargo can be exported to the overseas buyer by sea, air or land. However, shipment
by sea is the most popular and generally resorted to, as it is comparatively cheaper. Besides,
the ship’s capacity is far greater than other modes of transportation. Nevertheless,
transportation by air is utilized for export of expensive items like, diamonds, gold, etc. The
shipment stage includes the following steps:

(a) Reservation of Shipping Space

Once the export contract is finalized, the exporter reserves the required space in the vessel
for shipment. On accepting the exporter’s request, the shipping company issues a Shipping
Order. The original copy of the shipping order is given to the exporter and the duplicate is
sent to the commanding officer of the ship.

(b) Arrangement of Internal Transportation up to the Port of Shipment

The exporter makes necessary arrangements for transportation of goods to the port either
by road or railways. Company using railways for transportation of goods to the port.

(c) Preparation and Processing of Shipment Documents

As the goods reach the port of shipment, the exporter should along with a complete set of
the documents listed below

1) Letter of Credit along with export contract or export order

2) Commercial Invoice (2 copies)
3) Packing List or Packing Note
4) Certificate of Origin
5) GR Form (original and duplicate)
6) ARE – I form
7) Certificate of Inspection, where necessary (original copy)
8) Marine Insurance Policy

(d) Customs Clearance

The cargo must be cleared from the Customs before it is loaded on the ship. For this, the
above mentioned documents, along with five copies of shipping bill, are to be submitted to
the Customs Appraiser at the Customs House.

(e) Obtaining ‘Carting Order’ from the Port Trust Authorities

Customs clearance then, approaches the Superintendent of the concerned Port Trust for
obtaining the ‘Carting Order’ for moving the cargo inside the dock.

(f) Obtaining Mate’s Receipt and Bill of Lading

The goods are then loaded on board the ship for which the Mate or the Captain of the ship
issues Mate’s Receipt to the C&F Agent. The C&F Agent surrenders the Mate’s Receipt to
the Shipping Company for obtaining Bill of Lading.

(4) Post-Shipment Stage

(a) Submission of Documents by the C&F Agent to the Exporter
On the completion of the shipping procedure, the C&F Agent submits the following
documents to the exporter:
A copy of invoice duly attested by the Customs.
Drawback copy of the shipping bill.
Export promotion copy of the shipping bill.
The original L/C, export order or contract.
Duplicate copy of the ARE – I form.

(b) Shipment Advice to Importer

After the shipment of goods, the exporter intimates the importer about the shipment of
goods giving him details about the date of shipment, the name of the vessel, the
destination, etc. He should also send copy of non-negotiable bill of lading to the importer.

(c) Presentation of Documents to Bank for Negotiation

Submission of relevant documents to the bank and the process of getting the payment from
the bank is called “Negotiation of the Documents” and the documents are called
“Negotiable Set of Documents”.
The set normally contains: bill of exchange, Original Letter of Credit, Customs Invoice,
Commercial Invoice, Packing List, Foreign Exchange Declaration Forms, Shipping Bill,
Certificate of Origin, and Marine Insurance Policy.

(d) Dispatch of Documents

The bank negotiates these documents to the importer’s bank in the manner as specified in
the L/C. Before negotiating documents, the exporter’s bank scrutinizes them in order to
ensure that all formalities have been complied with and all documents are in order. The
bank then sends the Bank Certificate and attested copies of commercial invoice to the
exporter.
 National Policy & Schemes
Textile Park Scheme for Integrated Textile Park US $39.81 million has been
Developer (SITP) allocated for integrated parks
in Union Budget 2016-17.

Establish 4-6 Brownfield &

Integrated Processing 3-5 Greenfield projects
Development addressing the needs of
Scheme (IPDS) existing Textile Clusters

Textile Technology Up-gradation Fund Scheme Loans at low interest rate for
Manufacturer (TUFS) Textile Firms for technological
up-gradation

Export Promotion Zero duty scheme for import

Capital Goods of capital goods for pre-
Scheme (EPCG) production, production &
post-production of export
items
FDI Norms Single Brand Product Retail
Trading
WholesaleTrading/Cash&
Carry
WholesaleTrading
Schemes for Growth Technology Mission on
 and Development Technical Textiles (TMTT),
Technical Textiles Focus Product Scheme,
(SGDTP) Concessional Customs Duty on
Machinery, FDI, etc.
Jute Technology Modernizing plant and
Mission (JTM) machinery in jute industry,
adopting international
standards and upgrading skills
Other Exemption from Basic Customs
Incentives Duty & Countervailing Duty,
Incentives for companies
engaged in manufacturing
having an in–house R&D
centre

Policy Support- Government of Gujarat

Gujarat Policy –Support
 Textile exports from India were valued at USD40 billion in 2015-16.
 To improve technical skills in apparel industry government established 75 apparel
training & design centres across India.
 National Institute of Fashion Technologies played pioneering role in growth of
apparel industry & exports.
 To promote apparel exports 12 locations have been approved by the government to
set up apparel parks for exports.
 The government is planning to conduct road shows to promote the country's textiles
in non-traditional markets such as South America, Russia & select countries in West
Asia.
 As of November 2016, the Central Board of Excise and Customs has extended draw
back facility for textiles industries
  From 7.3 per cent to 7.5 per cent. This would improve the competitiveness of textile
exporters based in India.

OBJECTIVES
 Take integrated approach to strengthen the value chain -“Farm to Fiber to Fabric to
Fashion to Foreign”.
 Attract investments of ~INR 20000 Crore, create new employment opportunities for
2.5+ million people (50% of which being rural women).
 Promote Technical textiles, synthetic & non-cotton textile internationally and make
it competitive by way of value addition and technology up gradation.
 Enhance the growth of cotton farmer by way of better price realization
 Provide assistance and necessary support to strengthen the whole value chain of
textile industry.
 Encourage cotton spinning and weaving parks around cotton growing areas.

Gujarat Policy –Interventions

 Exports have been a core feature of India’s textile and apparel sector, a fact
corroborated by trade figures.
 Exports in textile and apparel sector stood at US$ 36.63 billion in FY17. Exports of
textiles from India reached Rs US$ 24.24 billion during April – November 2017.
 As of November 2016, the government has extended the duty drawback facility on
all textile products and increased the rates in some cases for 1 year to boost exports
in the sector.
 The Goods and Services Tax that rolled out in July 2017 is expected to make
imported garments cheaper by 5-6 per cent, as the GST regime will levy 5 per cent
tax for both domestic textile manufacturers and importers.
 India took the top spot in market share in the men/boys knitwear shirts cotton'
category with respect to garment exports to the US between January-June 2017.