Coal is one of the most important sources of energy in India, accounting for about 75% of the country’s electricity generation. India is also the second-largest importer of coal in the world, importing about 248 million tonnes of coal in 2020-21. As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs based on their commercial prudence.
There are mainly three types of coal that are imported by India: Coking coal, non-coking coal, and coke. Here is a brief comparison of these types of coal:
Steel Authority of India Limited (SAIL) and other steel producing facilities import coking coal primarily to close the supply and demand gap and to raise the quality. Non-coking coal is imported by industrial users, cement factories, captive power plants, sponge iron plants, coal based power stations, and coal traders. Most users in the Iron & Steel sector and makers of Pig-Iron import coke for use in mini-blast furnaces.
You must adhere to specific procedures and laws if you intend to import coal into India. We’ll give you a quick rundown of the import paperwork specifications for coal in India in this blog post.
Import Export Code (IEC)
In order to import or export goods in India, companies or individuals must have an Importer Exporter Code (IEC). The Directorate General of Foreign Trade (DGFT), which is a division of India’s Ministry of Commerce and Industry, created the IEC, a 10-digit code.
You must submit the necessary paperwork and finish the application process as specified by the DGFT on their website, https://www.dgft.gov.in, in order to apply for an IEC for importing coal into India.
Import Policy of Coal
According to current import policy, coal can be freely imported (under Open General Licence) by customers depending on their commercial prudence. Steam coal import policy, as stated in Annexure to DGFT Notification No 17 dated 5th September 2019, has been altered from ‘free’ to ‘free subject to compulsory registration’ under Coal Import Monitoring System (CIMS).
Coal Import Monitoring System (CIMS)
Importers must submit advance information to the CIMS, an online system, in order to import steam coal. When data or information is submitted online, the system will automatically produce a unique Registration Number. No manual documents are to be submitted for this purpose to any governmental authority.
The CIMS has the following features and requirements:
Importers must apply for online registration not less than 60 days and no later than 15 days before the estimated arrival date of the import cargo.
For each registration number, a registration cost of Rs 1 per thousand Metric Ton, subject to a minimum of Rs 500/- and a maximum of Rs 1 Lakh on the aggregate CIF value of imports, must be paid electronically through the online system.
A Unique Registration Number (URN) that begins with the letters “COA” will be delivered upon registration to the IEC holder’s mobile no. or email address (as listed in the IEC database).
The automatic Registration Number thus granted shall remain valid for a period of 90 days.
Importers who fail to register their information/data on notified coal items in advance or are found to furnish incorrect data in the Online CIMS module will attract penal action including action under THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992.
You can access the CIMS portal through https://imports.gov.in/
Other Documents Required for Coal Import
Apart from the CIMS registration, you will also need to submit the following documents for importing coal in India:
1. Bill of Lading:
A bill of lading is essential when transporting cargo or freight from one location or distribution centre to another. On the one hand, it is a contract for the transportation of goods between a carrier and a shipper, and on the other, it functions as a receipt provided by a carrier to the shipper.
2. Commercial Invoice
A commercial invoice serves as an official document dispatched by the seller to the buyer, enumerating the merchandise, quantities, and mutually established charges associated with the products or services. In scenarios where the financial support for the shipment is orchestrated through bank credits, the invoice is obligated to encompass all the prerequisites outlined by the respective bank. One crucial illustration of this necessity is the inclusion of precise details from the Bill of Lading, essentially aligning the invoice with the corresponding contractual agreement. Notably, the specifics to be incorporated entail the Letter of Credit number, the identifying particulars of the involved financial institution, and comprehensive beneficiary information.
3. Test Certificates
- Certificate of Origin: A document that certifies the country where the goods originated.
- Certificate of Sampling and Analysis: The systematic collection and evaluation of coal sample data is provided in the sampling and analysis report of coal in order to comprehend its qualities, composition, and attributes.
- Draft Survey Report –
- For ship operators, owners, and engineers, draft surveys provide an effective way to compute critical parameters without spending too much time on minute computations. This effectiveness not only saves crucial time but also lowers costs, which is a consideration that matters equally for ships that carry both cargo and passengers.
- Certificate of Weight: A certificate of coal weight is a legal document that attests to the measured weight of a certain amount of coal. This certificate is often given out following a formal weighing procedure by a qualified weighing authority, such as a government organisation or an accredited weighing business.
4. Marine Insurance
Marine insurance for coal is a type of insurance that protects the interests of parties involved in coal transportation by sea. It offers financial protection against a variety of risks and potential losses that may arise during the transportation of coal from one area to another. The marine insurance policy helps to reduce the financial effect of unforeseeable incidents that may damage or influence the coal cargo while it is in route.
5. Form A-I
Certificate from Indonesian Government stating the coal is of Indonesian Origin.
Form A-I should consist of an original and three copies. The original copy must be presented to the Customs authority at the designated port of import. The duplicate copy is to be retained by the issuing authority within the exporting country. The triplicate copy should be retained by the importer, while the quadruplicate copy is to be held onto by the exporter.
6. Protection and Indemnity insurance
“Protection and Indemnity” insurance is known as P&I insurance. It is a specific type of maritime insurance that offers protection against a variety of obligations and dangers that shipowners, operators, and charterers could encounter in their maritime activities. P&I insurance focuses on third-party liabilities and some non-physical damage risks such as Third-Party Liability, Pollution Coverage, Cargo Liabilities, Wreck Removal, Collision Liability, Legal Costs and Expenses, Crew Welfare, etc. instead of the typical hull and machinery insurance that covers physical damage to the ship.
7. Bill of Entry
A Bill of Entry is a legal document that is required by customs authorities when goods are imported into a country.
In order to facilitate customs clearance, it acts as a formal statement by the importer or their designated agent and contains crucial information about the imported products like importer information, goods description, origin and country of export, value of goods, Invoice and shipping details. To make it easier for tariffs, taxes, and other import-related rules to be assessed, the Bill of Entry is delivered to the customs authorities.
The customs officials examine the Bill of Entry to ascertain the proper customs charges, taxes, and any other regulatory requirements that apply to the imported goods. The products can be lawfully brought into the nation when the evaluation is finished and all required fees have been made.
These documents may vary depending on the type and source of coal imported. You should consult your customs broker or agent for more details.
Custom Duty on Coal
Coal is retained under Open General License (OGL), as indicated above, and customers are allowed to import coal from the source of their choosing in accordance with their contractual rates with payment of relevant duty. For imports of coal, the current customs tax is 2.5% ((1% Basic Custom Duty (BCD) + 1.5% Agriculture Infrastructure and Development Cess (AIDC)). A number of variables, including a decline in coal consumption during the COVID-9 pandemic and increased coal production and dispatch during the post-COVID era, may be responsible for the decrease in coal imports.
Conclusion
In India, importing coal is not an arduous procedure, but it does require some planning and adherence to the applicable laws and standards. You can make sure that your import process runs smoothly and without any interruptions by following this guide.
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