Table of Contents
Why HS Codes Matter
When you’ve identified the right products and markets for your import-export business, the next step is classifying your products correctly for customs.
HS Codes (Harmonized System Codes) are standardized codes used internationally to classify goods.
Correct classification ensures:
Smooth customs clearance
Correct calculation of duties and taxes
Eligibility for government incentives
Avoidance of fines or shipment delays
Incorrect HS code assignment is one of the most common mistakes SMEs make, especially when trading internationally.
Understanding HS Code Structure
HS Code Basics:
6-digit standard internationally
India uses 8-digit codes (first 6 = global, last 2 = national classification)
Code Segments:
Chapters (2 digits): Broad category (e.g., 09 = Coffee, Tea, Spices)
Headings (4 digits): More specific (e.g., 0909 = Tea)
Subheadings (6 digits): Even more detailed (e.g., 090930 = Green Tea, not fermented)
National Codes (8 digits): India-specific extensions for customs purposes
Actionable Tip: Always check both DGFT HS Code list and Customs Tariff Schedule before shipping.
How to Identify the Right HS Code
Refer to Official Resources:
Steps to Identify Code:
Describe your product precisely (material, form, use)
Search DGFT HS code portal for matching code
Cross-check with Customs Tariff Schedule
Confirm duty rates, export incentives, and import restrictions
Examples:
Textile SME: Cotton saree → HS Code 5208 22 00
Food SME: Organic spices → HS Code 0909 30 00
Product Classification Best Practices
Classify Based on Material & Function:
Example: Wooden furniture → 9403, not 4418 (wood logs)
Avoid Overgeneralization:
Do not use “miscellaneous” codes unless genuinely applicable
Keep Documentation Ready:
Product specifications, invoices, and technical sheets
Helps customs verify classification if questioned
Stay Updated:
HS codes and customs duties change annually
Subscribe to DGFT notifications for updates
Benefits of Correct Classification
Export Benefits:
Correct HS codes ensure eligibility for RoDTEP, Duty Drawback, and EPCG schemes
Import Benefits:
Correct HS code ensures accurate duty assessment and compliance
Faster Customs Clearance:
Reduces delays due to mismatched codes
Avoid Penalties:
Wrong HS code can lead to fines, confiscation, or shipment rejection
SME Examples
Example 1 – A textile exporter in Ludhiana:
Initially used a general “Textiles” HS code → customs queried shipment → delayed export 10 days
Corrected to specific cotton saree code → subsequent shipments cleared without issues
Example 2 – Agro SME exporting spices:
Used incorrect fermented tea code → duty calculation wrong → lost export incentive
Correct HS code enabled full rebate and faster processing
Takeaway: Investing time in accurate HS code classification pays off immediately in compliance and cost savings.
Tools & Resources for SMEs
DGFT HS Code Directory – Free, official lookup
Customs Tariff Search – Check duty rates and national code
Trade Map & ITC Data – Analyze which HS codes are most exported/imported for target markets
Professional Advisory – Optional for complex products (chemicals, electronics)
Pro Tip: Keep a product-HS code master sheet for all SKUs to streamline export and import operations.
Common Pitfalls to Avoid
Actionable Exercise
Take your shortlisted product from Post 5
Identify 2–3 possible HS codes using DGFT portal
Check customs duty and export incentives for each
Pick the most accurate HS code and document it
Update your product-HS code master sheet for future shipments
Now that your products are classified correctly, it’s time to identify the right markets for Exporting products and suppliers for Import opportunities, using real trade data.