Import of Edible Oil in India
Import of Edible Oil in India
The pricing difference of edible oil between India and some of the foreign countries make import of edible oil lucrative for many traders and merchants. Since edible oil is considered a food product, the import of edible oil is controlled by the Food Safety and Standards Authority of India. Further, any person wishing to start the import of edible oil in India must obtain various licenses and registrations as under.
In the case of the import-export business, there is often a requirement to accommodate foreign promoters and foreign investments. Hence, Private Limited Company is the best choice of entity for promoters who are NRIs or Foreign Nationals. Foreign Direct Investment (FDI) in Proprietorship / Partnership Firm / One Person Company is not allowed. On the other hand, foreign direct investment in Private Limited Company of upto 100% is allowed under the automatic route – i.e., only a notification of the investment must be submitted to the RBI within 60 days of the actual investment. Hence, its best for most businesses that are involved in extensive import or export business to register a private limited company.
A Private Limited Company can have upto 7 Directors and 200 shareholders. It recommends that at least one of the Director be both an Indian Citizen and an Indian Resident. An Indian Resident is someone who spends a minimum of 186 days in the past year in India. The other shareholders can all be foreign.
State of Incorporation
There is no requirement for the State of Registration to be the same as the place of residence of the Director. Hence, its best for those companies involved in extensive import or export to choose states like Maharashtra, Gujarat, Chennai or Kolkatta, where there are ports available along with FSSAI offices.
Setting up an import company a state like Maharashtra will also provide the entity with credibility among the Indian Traders – as Mumbai is a large trading city. Further, Mumbai has a very good port and plenty of good customs agents – who will be instrumental in clearing the goods through the port.
To register the Company in Mumbai, the following documents would be required:
- Utility Bill of the Premises (Electricity Bill / Water Bill / Property Tax Receipt)
- No-Objection Certificate from the Landlord – Its a simple letter from the Landlord of the premises to the Registrar of Companies declaring he has no-objections in having the registered office of the Company in his/her premises.
- Rental agreement between the Landlord & the Company [Under Incorporation]. After obtaining Name Approval for the Company, enter the rental agreement. Once, name approval is obtained the rental agreement can be entered into with the approved company name and the words “Under Incorporation” in brackets.
State of Registration – Operational Implication
It is important to have the operational aspects in mind while choosing the State of Registration. Consider the following questions:
- In which State will a majority of my customers be situated?
- Where will the goods be stored after import into India?
- What will be the cost of transportation between the place of import and end consumer?
- Availability of manpower or sales personnel?
Licenses & Registrations
To import and sell edible oil in India, the following license and registrations would be required for the business:
GST Registration: Required to sell goods in India. Sale of edible oil attracts GST and GST registration must be obtained from the State Government in which the business will be set up.
Import – Export Code: Required for any importer or exporter of goods from India. Obtain Import – Export Code on opening the bank account for the company.
FSSAI Importer License: Required to import food products into India. Obtain Importer License after the Import Export Code registration.
Procedure to Import Edible Oil
The Company must engage an experienced customs clearance agent who has experience dealing with edible oil in the past. The clearance agent will be responsible for arranging shipment, insurance, customs handling and clearance in India. The charges for the customs house will depend on the firm and the complexity involved. Usually, Customs Agents charge a fee of anywhere from 400 USD and above per container. The timeframe for customs clearance in India would be about 7-12 working days.
Once the product arrives in India, the customs clearance agent would be notified. The customs agent would then make customs duty payment and clear the goods through Customs. Once, clear of the Customs Department, the FSSAI department would be notified. An inspector from the FSSAI department would then ensure the product conforms to FSSAI Labelling & other FSSAI standards. If approved, the goods would be released to the importer in India.