Domestication of containers allows companies to use international shipping containers domestically within a country. Read this blog to find out all about the process, the main reasons, and alternatives to paying import duties on containers in India.
Apart from international shipping, many companies use containers for several other purposes. This includes using containers for storage or for transportation within the country. However, only domesticated containers are legally allowed for domestic use in some countries such as India.
In India, you can either source international containers and then domesticate them. Or, you can simply source domestic containers from Indian suppliers. Plus, with the current surplus of containers in the market, there’s an overall decrease in container prices in India. This makes it a perfect time to buy shipping containers for your business.
And one easy way to buy domestic containers is through Container xChange. On our trading platform, you get container offers from 1500+ vetted sellers in just a few easy and quick steps. You can then compare the offers, get price transparency and even negotiate for better prices.
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What is domestication of shipping containers?
Domestication of shipping containers is the process of nationalizing an international container into the internal market. Sometimes the container is considered an extension of the ship, sometimes a good itself. If a country considers containers as goods – you have to domesticate the containers after a period of time. That is, you have to pay import duties for their domestic use.
International containers in India have to be domesticated after six months. As per the Section 12 of the Indian Customs Act, 1962, all goods entering the Indian territorial waters are liable to be taxed, including shipping containers.
To save this import duty, the steamer agent, who brings in the ‘durable containers’, typically executes a bond with Customs. This bond undertakes a commitment to re-export the empty containers within six months from the date of arrival in India. This policy encourages a faster turnaround of empty containers from the country.
However, if the steamer agent or the importer needs to use containers beyond 6 months, they need to get an extension from the Customs. And if they want to use these containers for domestic purposes other than transporting cargo, they need to pay the import duty assessed on the containers. The containers can then be used for domestic purposes.
Reasons for domestication of shipping containers
Domestication of containers can have several reasons. Let’s take a look at some of the most common reasons.
- Warehousing unit:Some manufacturers store products in containers instead of warehouses. And subsequently move them to the final destination in those containers. Using containers directly for storage saves on warehousing costs.
- Site offices: Most steel shipping containers are quite sturdy and can withstand harsh environments and weather. As a result, many companies also use domestic containers as site offices.
- Domestic transportation:You can also use domestic containers for prolonged intermodal transportation of cargo within the country. As we mentioned above, many manufacturers store their products in containers and transport them domestically using the same boxes.
- Saving detention charges:You have to pay detention charges if the container isn’t returned empty to the shipping line within the free days. To save this charge, many companies unload the cargo from the containers owned by the shipping lines and load them into domestic containers. Another way to save detention charges is to simply lease SOC containers if you don’t want to purchase a container.
If your business requires domestic containers for any of these reasons, it’s better to source these containers from within India. This way you won’t have to pay any additional re-import duty. We’ll tell you more about this in the next section.
How local or domesticated containers are exempted from import duty in India
If used for international shipping, the locally or domesticated containers are exempted from import duty. Here’s how.
The entry of the container number in the Shipping Bill grants the local or domesticated containers permission to be exported for the purposes of Section 51 in the Customs Act, 1962. In the case of empty containers, the entry in Export General Manifest will be considered as the permission under the same act. Under these procedures, the domestic containers can be easily exported.
And for re-import, the duty will be exempted on these containers under notification No. 45/2017-Customs dated 30.06.2017. According to this circular, the re-import of goods exported from India under Section 51 are exempted from import customs duty.
And so, you can easily use the local or domesticated cargo-worthy containers for export and import of goods and use them for domestic use without having to worry about paying import duties. Just make sure that the shipping lines intimate the Customs the container number and identification specifications of these domestic containers when exporting and importing.
So now that you know one definite way to say on those hefty import duties on containers in India, you can go ahead and look for locally manufactured or domesticated shipping containers in India.
And one easy way to do this is through xChange trading platform. On our platform, you can connect directly with vetted suppliers in India and buy containers at best prices. Click here to check out sales offers for domestic containers in your city.
Difference between international and domestic shipping containers
The key difference between international and domestic containers is that international containers are used for shipping cargo globally. Whereas, domestic containers are used for storage or for shipping cargo within the country.
As a result, the shipping rates of international and domestic containers are also different. Let’s take a look at the factors that determine the shipping rates of these containers.
Factors that affect domestic container shipping rates
If you’re planning to use domestic containers for transporting your cargo within the country, here are a few factors that could affect the container rates.
-Ground distance: The distance between the pickup and drop-off location determines the cost of moving the container. The further the distance, the more transportation fee you’ll have to pay.
-Loading assistance: Loading and unloading of cargo in the containers requires machinery and manpower. This loading assistance increases your cost of transportation.
Factors that affect international shipping container rates
Now let’s look at the factors that affect international container shipping rates.
-Container size: Shipping containers come in different sizes. The size of the container determines the shipping cost. For example, shipping a 40ft container will cost you more than shipping a 20ft container.
-Season/ time of the year: International shipping rates are greatly influenced by season. For instance, August to September are generally the peak months. Thus, the shipping rates during peak seasons will be more than at other times of the year.
-Type of cargo: If your freight is difficult to ship, such as dangerous or oversized cargo, freight rates will be higher. This is because special goods require special containers. And you will be charged higher rates due to the need for special containers.
-Shipping route: Shipping costs for containers are also determined by the shipping route. If you choose a standard route, it will cost less. This is because containers on popular routes like The Panama Canal (Asia- US) are easily available.
Now that you know the differences between domestic and international containers, it’s time to see how you can source domestic containers at best prices.
Buy cargo-worthy domestic shipping containers from India
As we’ve already seen, companies in India have different reasons for domesticating shipping containers. However, instead of paying import duties on international containers, you can simply buy domestic containers from Indian suppliers.
And one easy way to connect with vetted suppliers in your location is through Container xChange. On our trading platform, you can connect with 1500+ vetted suppliers to buy containers in 2500+ locations globally, including several cities in India.
Once you fill in your container requirements on our platform, you’ll get multiple offers to choose from. To provide additional safety to our members, we’ve also developed the xChange wallet. This ensures all your transactions are running smoothly and that your money is safe and secure on the platform.
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Domestication of containers: Common FAQs
What is domestication of shipping containers?
Domestication of shipping containers is the process of nationalizing an international container by paying import duties. Only domestic containers are allowed to be used in India.
What are the reasons for container domestication?
Some common reasons for container domestication include using containers for storage, as site offices or for transportation within the country.
What is a domestic container?
A domestic container is a shipping container than can legally be used within the country. Countries like India consider international containers as goods, so import duties have to be paid for their domestic use.
