As more and more manufacturers have set up their manufacturing plants in India, it is expected to see an increase in the local production volume as many of the manufacturers from China have expanded to India. With this trend, we will see an increase of India exports to global destinations. As India has a complex procedure to set up a manufacturing plant and import rules, exports will also have hurdles to overcome. This article will share with you what to look out for when shipping from India.
Exports from India
As multinational companies establish manufacturing operations in India, both export destinations and volumes have increased. In 2023, India’s export volume reached USD 437 billion, with the top five destinations being the USA, UAE, Netherlands, China, and Singapore. Key export commodities include electrical machinery, equipment, and mineral fuels, along with mineral oil products.
Logistical Challenges of Shipping from India
India’s customs regulations are strict when shipping from India, especially when it comes to export documentation. To avoid delays or fines, make sure all paperwork – like the commercial invoice, packing list, bill of lading, and certificate of origin –is accurate and complete. If there’s a mismatch between your declaration and the actual goods, customs can impose fines starting at USD 100, with higher penalties for larger errors.
Navigating these regulations becomes even more challenging when considering the import rules of the destination country. It’s important to understand duties and tariffs, which is why having a local logistics expert can be a big help. Not only do you need to meet India’s requirements, but you also need to ensure compliance with the destination country’s rules. Mistakes in tariff classifications or duty payments can lead to delays and extra costs. For example, if you’re shipping to the U.S., you’ll need to follow the rules set by agencies like the Food and Drug Administration (FDA) for food or medical products and the Consumer Product Safety Commission (CPSC) for consumer goods.
Export Challenges When Shipping from India
With India’s vast geography, including 24 international airports and 13 major seaports, it’s important to plan the most efficient route for your shipments. For instance, if your cargo is shipping from India by ocean and the pickup point is inland, you’ll need to find the nearest Inland Container Depot (ICD) and check the rail schedule to the seaport.
Another common challenge with ocean freight in India is securing the right type of containers, especially during peak seasons or when supply chains are disrupted. Typically, India’s peak season falls in the third quarter, often resulting in equipment shortages. However, in 2024, the rerouting via the Cape of Good Hope, combined with port congestion at major Asian ports, has already led to equipment shortages as early as the second quarter. In such cases, it’s necessary to work with shipping lines to locate available containers, whether at an ICD or seaport, and plan accordingly for container pickup from those locations.
Navigating India Shipping Challenges
To navigate these challenges, it’s helpful to maintain a checklist that can help prevent delays and penalties. Here are key factors to consider when shipping from India:
- Understand Regulations: Stay informed on export regulations, including documentation requirements, export licenses, and tariffs. The Directorate General of Foreign Trade (DGFT) and other relevant authorities provide comprehensive guidelines.
- Verify Documents: Ensure all required documents – such as the commercial invoice, packing list, bill of lading, and certificate of origin – are accurately prepared and submitted.
- Know the Tariffs: Familiarize yourself with customs duties and tariffs for your products, both in India and the destination country.
- Classify Goods Correctly: Use the correct Harmonized System (HS) codes for your goods to avoid disputes and delays at customs when shipping from India.
- Consult an Expert: If you’re unsure about any part of the process, seek advice from an experienced consultant, like Dimerco India, to avoid compliance issues and potential delays.
For more insights on the Indian market, check out our eBook, Manufacturing in India: Opportunities and Challenges.
Ideas for Optimizing Your Supply Chain
- Leverage Digital Platforms: Use digital tools to manage documents, track shipments, and monitor inventory levels. For instance, the MyDimerco Supply Chain Portal allows customers to track shipments and generate detailed reports.
- Safe Packaging: Ensure packaging meets international standards and is suitable for the chosen shipping mode to protect goods and prevent damage during transit. For example, instead of shipping 10 individual boxes, use one bigger box that fits all items.
- Coordinate with Suppliers: Maintain clear and timely communication with suppliers regarding schedules and delivery requirements. Consider integrating your suppliers into your supply chain management system to improve synchronization and efficiency. With MyDimerco, both suppliers and buyers can monitor shipment status in real time.
Ideas for Optimizing Shipping Costs
- Leverage Free Trade Agreements (FTAs): Take advantage of FTAs between India and other countries to reduce or eliminate tariffs and taxes, cutting overall shipping costs. Currently, India has 13 FTA’s that encompasses an economic partnership with more than 50 countries. Use these FTAs to your advantage when shipping form India.
- Choose the Right Shipping Mode: Evaluate the cost and time trade-offs between sea freight and air freight. For heavy, bulky goods, sea freight is often more cost-effective than air freight.
- Consolidate Shipments: Combine smaller shipments into larger ones to benefit from bulk rates, reducing the per-unit cost. For example, Full Container Load (FCL) rates are typically more economical than Less than Container Load (LCL) rates.
- Optimize Container Utilization: Use efficient packaging that minimizes weight and volume without compromising product safety. Optimizing packaging can help lower dimensional weight charges and improve space utilization. That way you can maximize the use of container space by carefully packing goods, which can reduce the number of containers required and lower shipping costs.
For more tips on reducing international freight costs, explore our eBooks: How to Reduce Container Shipping Costs and How to Reduce International Air Freight Costs.
Do you Need Help Shipping from India?
The logistics landscape in India is complex, especially when managing exports. If you’re a foreign company operating in India, partnering with a local logistics advisor can simplify the process and help you navigate every step. Need expert guidance? Reach out to us today to start a discussion!
