India's chemical industry is the sixth largest globally, yet the country imports significant quantities of specialty chemicals, petrochemicals, and industrial raw materials. If you are planning to import chemicals in India, you must navigate a complex regulatory landscape involving the DGFT, Customs, the Ministry of Environment, and various product-specific safety authorities. The chemical import procedure requires careful attention to hazardous material handling, documentation, and safety compliance.
This guide covers the complete process including licensing, documentation, the role of Material Safety Data Sheets (MSDS), customs procedures, and compliance with environmental and safety regulations. Business professionals in manufacturing, pharmaceuticals, and industrial supply chains will find this resource essential.
Regulatory Framework
Chemical imports are regulated by multiple authorities. DGFT controls import licensing and policy. The Central Pollution Control Board and state pollution boards regulate environmental compliance. The Petroleum and Explosives Safety Organisation (PESO) oversees explosive and flammable chemicals. The Chemicals Division of the Department of Chemicals and Petrochemicals monitors policy for the sector.
Chemicals are classified under various chapters of the Customs Tariff Act, primarily Chapters 28 to 38. The HS code classification determines duty rates and whether any import restrictions or licensing requirements apply. Certain hazardous chemicals may be on the restricted list requiring specific DGFT authorization.
Licenses and Registrations
An IEC from DGFT is mandatory. Apply through Patron Accounting IEC registration. ICEGATE registration and GST registration are essential for customs processing. For hazardous chemicals, additional permits from the State Pollution Control Board and PESO may be required.
For chemicals on the DGFT restricted list, an import license or authorization must be obtained before placing orders. The application is submitted to the regional DGFT office with details of the chemical, quantity, end use, and storage arrangements.
MSDS Requirements
A Material Safety Data Sheet must accompany every chemical import consignment. The MSDS provides critical information about the chemical composition, hazard identification, first-aid measures, firefighting instructions, handling and storage requirements, exposure controls, and disposal considerations. Customs authorities verify the MSDS during clearance.
The MSDS must comply with the Globally Harmonized System (GHS) format. It should be in English and must accurately represent the chemical being imported. Discrepancies between the MSDS and the actual product can result in customs detention and penalties.
Step-by-Step Process
Step 1: Obtain Registrations and Permits
Secure IEC, ICEGATE registration, GST registration, and any chemical-specific permits required from DGFT, PESO, or state pollution boards.
Step 2: Verify Import Policy
Check whether the chemical is freely importable or restricted. Certain chemicals like ozone-depleting substances, hazardous waste chemicals, and precursor chemicals require special authorization.
Step 3: Prepare Documentation
Ensure complete documentation including MSDS, Certificate of Analysis, commercial invoice, packing list, bill of lading, certificate of origin, insurance, and any required import permits. For hazardous chemicals, emergency response information must also be available.
Step 4: Arrange Specialised Shipping
Hazardous chemicals require shipping in compliance with the International Maritime Dangerous Goods (IMDG) Code. Proper labelling, packaging, and documentation for dangerous goods are mandatory. Non-hazardous chemicals can be shipped in standard containers.
Step 5: Customs Clearance
Customs verifies all documentation including the MSDS, assesses duties based on HS code, and may conduct physical inspection. For hazardous materials, additional safety checks are conducted before release.
Documents Required
IEC, ICEGATE registration, commercial invoice, packing list, bill of lading, certificate of origin, MSDS in GHS format, Certificate of Analysis, DGFT authorization for restricted chemicals, PESO NOC for explosive chemicals, insurance certificate, and Bill of Entry.
Duty Structure
BCD on chemicals ranges from 0% to 25% depending on the type. Basic chemicals and intermediates often attract lower duties to support domestic manufacturing. Specialty chemicals may have higher BCD. IGST at 18% applies on most chemicals. Social Welfare Surcharge at 10% of BCD is also levied.
Anti-dumping duties may apply on certain chemicals imported from specific countries where dumping has been established by investigation. Importers should check for any anti-dumping notifications applicable to their products.
Safety and Environmental Compliance
Importers of hazardous chemicals must comply with the Manufacture, Storage, and Import of Hazardous Chemicals Rules, 1989. This includes maintaining safety data, emergency response plans, and proper storage facilities meeting fire safety and environmental standards.
The importer must also comply with the Chemical Accidents (Emergency Planning, Preparedness, and Response) Rules if dealing with major hazard chemicals. Regular inspections by pollution control authorities may be conducted.
Classification and HS Code Importance
Accurate HS code classification is especially critical for chemical imports because duty rates vary significantly between different chemical categories. Basic inorganic chemicals under Chapter 28 may attract different rates than organic chemicals under Chapter 29 or specialty chemicals under Chapters 32 to 38. Misclassification can lead to underpayment or overpayment of duties, customs disputes, and potential penalties.
Importers should work with customs brokers who have specific expertise in chemical classification. In cases of ambiguity, applying for an Advance Ruling from the Customs Authority for Advance Rulings provides certainty on the applicable HS code and duty rate before placing import orders.
Storage and Handling Regulations
Chemical storage facilities must comply with the Manufacture, Storage, and Import of Hazardous Chemicals Rules, 1989. This includes maintaining safety distances from residential areas, installing fire suppression systems, providing spill containment measures, and displaying safety signage. Regular safety audits and emergency preparedness drills are mandatory.
Workers handling imported chemicals must receive appropriate training on hazard identification, safe handling procedures, personal protective equipment usage, and emergency response protocols. Documentation of training records and safety compliance must be maintained for inspection by pollution control and labour authorities.
End-User Compliance Obligations
Chemical importers have ongoing compliance obligations beyond the point of customs clearance. If the imported chemicals are used as raw materials in manufacturing, the end-user must comply with environmental regulations regarding emissions, effluent discharge, and waste disposal. The factories using imported chemicals must hold valid Consent to Operate from the State Pollution Control Board.
For chemicals used in consumer products like paints, adhesives, or cleaning agents, the finished products must comply with product-specific safety and labelling standards. The traceability of imported chemical raw materials through the manufacturing process to the final consumer product must be documented and available for regulatory inspection.
Insurance for Chemical Shipments
Marine insurance for chemical shipments must specifically cover chemical-related risks including contamination, leakage, reaction during transit, and environmental liability. Standard cargo insurance may not adequately cover hazardous chemical shipments. Importers should work with insurance brokers experienced in chemical logistics to secure appropriate coverage that addresses the specific risks associated with their products.
Trade Finance for Chemical Imports
Chemical imports often involve large transaction values requiring robust trade finance arrangements. Letters of credit are the standard payment instrument, providing security to both the importer and the overseas supplier. Banks familiar with chemical trade can offer competitive LC terms, including usance LCs that provide deferred payment periods of 30 to 180 days.
For importers establishing new supplier relationships, confirmed LCs or bank guarantees may be required. As relationships mature, suppliers may offer open account terms or documentary collections that reduce banking costs. Maintaining strong credit profiles and banking relationships is essential for accessing competitive trade finance facilities for chemical imports.
