What Is An Import License?

If the balance of payments of a country is unfavorable in perpetuity, the government of a country imposes quantitative restrictions on the import trade so that equilibrium is restored in the balance of payments. The drastic steps which are taken to control import trade are the tariff quota, the unilateral import quotas, bilateral quota, the mixing quota and the import license.

Import license are another type of artificial restraint on the import trade of a country. The individual and firms who desire to import goods from the foreign countries are required to submit applications to the licensing authority. The importers can only get their merchandise cleared from the customs authorities. If they have the import licenses duly issued in their names, the government thus limits the demand for foreign exchange and also prevents a scramble for exports among different competing firms. The exporter of each country before exporting goods must ascertain whether the importer have necessary import permits. In case the goods must ascertain whether the importers have necessary import permits. In case the goods are shipped and the license is denied to the importer the exporter may lose money on a declining market. In United Kingdom and other countries all the commodities which are imported are subject to license.