Practical Look Russia India
TecEx recently provided importer of records services to two leading global companies with a combined shipments to the value of over $3 million USD into Russia and India. Both are countries known for complex legislation relating to the import and export of data security hardware. This post shares some of the lessons and insights gained.
Some of the specific areas to which TecEx pays attention include these:
In this specific case, eight different manufacturers supplied our client with build materials, comprising up to 300 parts. Detailed analysis of each variable was required to assess the relevant license level and complete the mandated processes with multiple regulatory bodies. TecEx was also required to get Federal Security Service (FSB) certification per manufacturer for all encrypted hardware – or assist in sourcing this if it was lacking.
Complex valuation processes
The reality of hardware composed of many branded parts is that it can be difficult for Customs to evaluate from a valuation and intellectual property right standpoint. TecEx provided in depth analysis and in the end saved this client approximately $400,000 in duties and taxes across the rollout. TecEx has a full time VAT recovery and compliance team that deals with these types of issues.
Ownership & taxation
Ownership is a key concern in imports to Russia. Special licenses must be used to satisfy authorities as to the taxable party; in other words, an importer must prove that it is a ‘permanent establishment’ in the country.
In this respect, TecEx is able to represent foreign owners in Russia, taking full responsibility for the equipment as the importer of record. Or TecEx can act as the middleman, processing statutory documents to facilitate a commercial buy-sell transaction.
In India, one of the most onerous obligations is documentation, especially as original letters and identity documents are required to maintain an active IEC which is a prerequisite to acting as importer of record. This can prejudice foreign entities, which usually lack representatives on the ground. The documents to become a successful importer of record are very complex and this is often not available to foreign entities trying to do business in India.
The Bureau of Indian Standards (BIS) regulates import requirements for certain kinds of technological equipment, such that the entire process must be carefully managed. Additionally wireless products, even simple ones, are extremely complex to ship and permit times of up to 60 days can be problematic.
Jurisdiction and tax
Ports of entry into India are known to be fickle, necessitating the establishment by TecEx of a secure lane in Delhi. Every state and territory also has autonomous governance, which is why TecEx is registered in 14 separate Indian jurisdictions, to streamline the movement of imported goods. With the implementation of GST the movement of goods within India has become more expensive and complicated. TecEx’s vast footprint and on the ground knowledge is invaluable in this respect.
The Reserve Bank of India (RBI) is extremely strict about the movement of currency. All import transaction are closely monitored so each official filing must be done correctly to avoid costly fines and penalties. TecEx provides detailed advise on how to correctly structure shipments into India to ensure compliance.
As in Russia, ownership is a concern with respect to Indian IT imports – especially when it comes to the taxable party. TecEx can retain ownership of the goods, taking full responsibility for the equipment, or act as the intermediary for commercial buy-sell transaction, to mitigate tax risks.
TecEx is a facilitator of the building of international IT infrastructure on behalf of value-added resellers, global MNCs and blue-chip IT brands. TecEx achieves this by acting as an Importer of Record, handling all compliance issues and providing all required local support, focused on tech hardware.