PGDIEM- SEM I

Exim Policy & Export Procedure & Documentation

(102)

(I)
Preliminaries or Exports !e"istration IE#$ !#M#$ EP#$ #%Excise

Registration of Exporters/Importers
& All intending importers/ exporters are required to register themselves with the following authorities before commencing business; ' DG !" regional authorit#$ for obtaining Importer%Exporter &ode 'umber "IE& 'umber$ ' &oncerned Export (romotion &ouncils / ederation of Indian Export )rgani*ation$ for obtaining Registration% cum +embership &ertificates "R&+&$ ' Registration with ,alue added !ax Authorities ' Registration with &entral Excise Authorities

Registration of Exporters /Importers

& Importer Exporter &ode 'umber "IE&$ ' 'o person is allowed to export or import goods without obtaining an Importer%Exporter &ode 'umber- from the regional authorit#- unless specificall# exempted- under an# other provision of !(. ' Exporter of goods to 'epal or +#anmar through Indo%+#anmar border areas- are exemptedprovided that the &I value per consignment- is below Rs. /0-111.11.

Registration of Exporters /Importers "cont$

& Application or Grant )f IE& 'umber
' An application for grant of IE& number shall be made b# the Registered )ffice/ 2.).- of the applicant- to the Regional Authorit#- "DG !%Regional )ffice$- under whose 3urisdictionthe Registered )ffice in case of the compan#- or 2.). in case of others- falls in the A##at%'ir#at orm- and shall be accompanied b#4 & DD or 5an6 Receipt for Rs. 7111.11 & 8! registration certificate or passport cop# "for an individual$- or cop# of the legal authorit# letter when the application is signed b# an authori*ed signator#. & &ertificate from ban6er of the firm as required & A cop# of (A' card dul# attested- copies of passport si*e photographs etc

Registration of Exporters &ontd..7

& !he regional )ffice concerned- will grant an IE& number to the applicant- in the prescribed format. A cop# of such certificate- shall also be endorsed to the ban6er. & An IE& number allotted- shall be valid- for all its branches/ divisions / units/ factories- as indicated on the IE& number. & !o facilitate collection of license / other documentsidentit# cards are issued b# Regional Authorit#- to the authori*ed representative of the applicant.

Registration 9ith E(&s

& Registration with Export promotion Councils/ Commodity Boards/ Authorities ' !o enable exporters avail of benefits/ concessions given under the !(- the# are required to register with concerned E(&/ &.5 /or authorit# and obtain an registration :cum% membership certificate (RCMC) ' !he Exporter is required to appl# in the prescribed format to EPC relating to their main line of business ' 8tatus 2older can also obtain R&+& from F E!" ' Application for obtaining R&+&- to be made in prescribed manner ; accompanied b# IE& code number. If application is granted- E(& or IE) will grant status of the exporter as merchant exporter or manu#acturer exporter

Registration 9ith ,A! Authorities

& Registration with ,alue added !ax Authorities ",A!$ ' Goods which are to be shipped out of the countr# for exports are eligible for are eligible for exemption from both ,A! ; &8!. ' or this - the exporters are required to register themselves- with the ,A! authorities of the state- in which the# are located. ' !he registration has to be done in the manner prescribed b# the state ,A! authorities.

Registration 9ith &entral Excise ; (A'

& Registration with &entral Excise Authorities ' Goods meant for export are exempt from &ED. ' or this the manufacturer has two options 4
& either the# can deposit &ED at the time of clearance from factor# & or ta6e refund or avail procedure for export of goods without pa#ment at the time of clearance.

& )btaining (A' ' Exporters ; importers who obtain the IE& number are also required to obtain (A'. An application in form number <=A has to be submitted

)ther Registrations
& An# exporter who wants to export his goods needs to obtain (A' based 5usiness Identification 'umber "5I'$ from DG ! prior to filing of 8hipping 5ill for clearance of export goods. & !he exporter must also register themselves to the authori*ed foreign exchange dealer code ; open a current account in the designated ban6 for credit of an# drawbac6 incentive. & All exporters intending to export under export promotion schemes need to get their licenses- DEE& 5oo6s etc.

(II) #ate"ories () Exports

P*ysical Direct & Indirect Deemed Exports Merc*ant & Manu)acturer Exports

&ategories of Exporters
& Exporter ' +eans a person- who exports or intends to export and holds an importer%exporter code number- unless otherwise specificall# exempted & +anufacturer Exporter ' +anufacturer exporter means a person- who exports goods manufactured b# him- or intends to export such goods & +erchant Exporter ' +erchant exporter means a person- engaged in trading activit# and exporting or intending to export goods. ' A status holder means an exporter recogni*ed as Export 2ouse!rading 2ouse- (!2 etc b# DG!D/ Development &ommissioner%

&ategories of Exporters "&ont$

& 8upporting +anufacturer - means an# persons who manufactures an# product or part/ accessories/ components of that product. 'ame of supporting manufacturer as well as exporter must be endorsed on export documents. & !hird (art# exports means exports made b# an exporter or manufacturer on behalf of another exporter"s$. In such cases- export documents such as shipping bills shall include name of both manufacturer exporter/manufacturer ; third part# exporters. 5R&s- GR declaration- export order ; invoice should be in the name of third oart# exporter.

&ategories of Exporters "&ont$

& 8ervice Exporter means a person providing4 ' 8uppl# of service from India to an# other countr# ' 8uppl# of service to a service consumer of an# other countr# in India ' 8uppl# of service from India through commercial or ph#sical presence in the territor# of another countr#. ' 8uppl# of service in India relating to exports paid in E & 8ervices normall# means services recogni*ed b# GA!! / 9!)>8 Agreement ; includes 7?7 tradable services covered under GA!8 ; where pa#ment for services is received under E.

Deemed Exports
& Deemed Exports refers to those transactions in which goods supplied do not leave the countr# ; pa#ment for such supplies is received either in Indian Rupees or in E. & ollowing categories of supplies b# main/sub contractors shall be regarded as @deemed exportsA under !(- provided goods are manufactured in India4 ' 8uppl# of goods under advance authori*ation/ D IA ' 8uppl# of goods to E)Bs/ 8!(s/ E2!(s or 5!(s

Deemed Exports "cont$

' 8uppl# of capital goods to holders of authori*ation under E(&G scheme. ' 8uppl# of goods to pro3ects funded b# multilateral or bilateral agencies or funds as notified b# DEA. ' 8uppl# of capital goods to fertili*er plants. ' 8uppl# of goods to power pro3ects ; refineries. ' 8uppl# to pro3ects funded b# B' agencies ; nuclear power plants etc.

5enefits or Deemed Exports

& Deemed exports- shall be eligible for an#/ all of the following benefits- in respect of manufacture ; suppl# of goods- qualif#ing as deemed exports ' Advance authori*ation/ D IA ' Deemed export drawbac6. ' Exemption from terminal export dut# where supplies are made against I&5. In other cases refund of terminal excise dut# will be given.

5enefits or Deemed Exports "cont$

' In respect of supplies made against the 8upplier Authori*ation / D IA in terms of paragraph C./"a$ of !(- supplier shall be entitled to Advance Authori*ation / D IA- for intermediate supplies. ' If supplies are made against Advance Release )rder "AR)$ or 5ac6 to 5ac6 Detter of &redit issued against Advance Authori*ation / D IA- in terms of paragraphs <.7.77 and <.7.7/ of !(suppliers shall be entitled to benefits listed in paragraphs C.E"b$ and "c$ of !(- wherever is applicable.

Export ; !rading 2ouses

& Export ; !rading 2ouses4 +erchant as well as +anufacturer Exporters- 8ervice (roviders- E)Bs ; units located in 8EFs AEFs- Electronic 2ardware !echnolog# (ar6s "E2!(s$8oftware !echnolog# (ar6s "8!(s$ ; 5io%!echnolog# (ar6s "5!(s$ shall be eligible for status. & 8tatus is calculated on total )5 export performance during current plus previous three #ears "ta6en together$ upon exceeding limit given below4
' ' ' ' ' EG()R! 2)B8E "E2$4 Rs. /1 &rores 8!AR EG()R! 2)B8E "8E2$4 Rs. 711 &rores !RADI'G 2)B8E "!2$4 Rs. 011 &rores 8!AR !RADI'G 2)B8E "8!2$4 Rs. /011 &rores (RE+IBR !RADI'G 2)B8E "(!2$4 Rs. 71-111 &rores.

Export ; !rading 2ouses &ontd.

& 8tatus holder will be eligible for a number of facilities including 4 ' Authori*ation ; customs clearance for both imports ; exports- on self%declaration basis. ' ixation of input%output norms on priorit# within ?1 da#s ' Exemption from compulsor# negotiation of documents through ban6s ' 711H retention of foreign exchange on EE & account ' Enhancement of normal repatriation period from 7C1 da#s to E?1 da#s. ' Exemption of providing 5an6 guarantee in schemes under !(. ' 8E2 ; above to be permitted to establish export warehouses as per DoR guidelines ' &onferring A&( status within E1 da#s of application.

(III)
S*ippin" Documents & +erms ,sed In S*ippin"

III(a) S*ippin" Documents

Documents or Declaration )f Goods Bnder oreign Exchange Rules

& 8ection I of E+A 7===- la#s down the statutor# control concerning exports. & Bnder E+A regulations " number E$- ever# exporter of goods or software in ph#sical form or through an# other form- either directl# or indirectl#- to an#place outside India " other than 'epal ; 5hutan$ shall furnish to the specified authorit# a declaration in prescribed form ; supported b# such evidence as ma# be specified. & &ertain goods ; services li6e trade samples- personal effectspersonal gifts- goods being sent for testing- defective goods being sent outside for repair etc are exempted from the above%

Documents or Declaration )f Goods Bnder oreign Exchange Rules

& !he appropriate declaration forms are 4 ' GR orms 4 !o be completed in duplicate for all exports "other than b# post$ including export of software in ph#sical form. ' 8D orm 4 In duplicate and appended to the shipping 5ill for exports declared to customs offices notified b# &entral Government which have introduced EDI s#stem for processing 8hipping 5ill. ' (( orm 4 for exports b# post ' 8) !EG 4 !o be completed in triplicate for export of software otherwise than in ph#sical form ie. +agnetic tapes- dis6s ; paper media.

GR orm
& GR orm is an exchange control document required b# R5I. !he exporter through the GR orm has to assure to the R5I that the export proceeds will be reali*ed within 7C1 da#s. & It is submitted in duplicate- to the customs- at the port of shipment along with the 8hipping 5ill ; the customs certif# the value declared b# the exporter ; also record the assessable value. & &ustoms returns one cop# to exporter ; retains the original for transmission to R5I & !he exporter is required to negotiate the shipping documents- through his ban6ers "authori*ed dealers$- along with the GR orm- within /7 da#s of the shipment. & !he authori*ed dealer reports to the R5I after negotiation of documents ; has to retain the documents till the full exports proceeds have been reali*ed- ; thereafter send the documents to R5I.

Electronic Data Interchange "EDI$

& Electronic data Interchange can be used to electronicall# transmit documents such as purchase orders- invoices- shipping bills- receiving advices and other standard business correspondence. & &oping with the increasing imports/exports the Excise ; &ustoms has computeri*ed the manual process of assessment of 5ills of entr#clearing of shipping bills for export ; all documents relating to imports ; exports are being processed on%line & At present all t#pes of bills of entr# for import of goods under export related schemes- e.g.- 711H E)Bs- E(&G scheme- E(F- 8!(- E2!(DE(5- DEE&- ; imports for research purposes are being processed on EDI s#stem. & A new centrali*ed electronic data s#stem will be in place at ma3or ports- airports b# the end of the #ear "/11C$- for speed# and hassle% free clearance of exports and imports as well as to reduce dela#s in settling dut# drawbac6 claims.

8D

orms

& )n account of introduction of EDI s#stem at certain customs offices- where shipping bills are processed electronicall#- the existing declaration in orm GR- is replaced b# declaration in orm 8D " statutor# declaration form$ . & 8D form is to be submitted in duplicate- annexed to the relative shipping bill to the concerned commissioner of customs. & After verif#ing ; authenticating the declaration- the commissioner hands over to the exporter- exchange control cop# of the shipping bill ; the 8D form annexed thereto. & !his must be submitted to the authori*ed dealer- within /7 da#s from the date of export- along with other shipping documents for negotiation. & !he manner of disposal of the shipping bill ; the 8D form annexed thereto is the same as that of the GR form.

8) !EG orms
& !he exporter should submit declaration in orm 8) !EG in triplicate in respect of export of computer software ; audio/ video/ television software to the concerned designated official of G)I at 8!(I/ E(F/ !F/8EF for valuation/ certification not later than E1 da#s from the date of invoice. & !he designated official ma# also certif# the 8) !EG forms of E)Bs which are registered with them. & In respect of long duration contracts- where the exporter bills the client periodicall#- the exporter can submit a combined 8) !EG form of all invoices including advance remittance. & Disposal of 8) !EG forms is done as per prescribed procedure in Export )f Goods ; 8ervices Regulations- /111. Duplicate cop# of 8) !EG along with a cop# of the invoice ma# be retained -y authori*ed dealers.

Documents or !ransportation )f goods

& !he documents required for transportation of goods are4 ' Airwa# 5ill or Air consignment 'ote ' 5ill )f Dading ' +ate Receipt ' &ombined transport document 4 I&Ds have been set up at various centers within the countr# for convenience of exporters.!he movement of goods from I&Ds to the destination is covered b# the &ombined transport document.

Airwa# 5ill or Air &onsignment 'ote

& !he receipt issued b# an airline compan# or its agent for carriage of goods- is called airwa# bill "A95$ or air% consignment note. & It is not a document of title and it is not issued in a negotiable form. & !he goods are delivered to the consignee mentioned in the A95after identif#ing himself as the part# named in the A95 as the consignee / receiver- against pa#ment of charges if an#. & It is therefore desirable to cosign the goods in the name of the foreign corresponding ban6- as it will enable us to retain the control of the goods- till pa#ment is made/ documents are accepted for pa#ment.

+ate>s Receipt
& +ate>s receipt is a receipt issued b# the commanding officer of the ship when the cargo is loaded on the ship.!his receipt is a prima facie evidence that goods are loaded in the vessel. & +ate>s receipt is first handed over to the (ort !rust authorities ; on receipt of port dues- the (ort !rust authorities- hand the mate>s receipt to the exporter or his agent.

+ate>s Receipt "cont$

& !he mate>s receipt has to be handed over shipping compan# for obtaining the 5ill of Dading. & !he mate>s receipt is a transferable document ; can be of two t#pes
' &lean mate>s Receipt 4 !his signifies that the goods have been received well in order- properl# pac6ed ; without an# defect or damages ' Jualified +ate>s receipt4 !his signifies goods have not been pac6ed properl# or received damaged. In this case the shipping compan# does not ta6e an# responsibilit# for damage in transit.

5ill of Dading
& 5ill of Dading "5/D$ is a document issued b# the shipping compan# or its agent ac6nowledging the receipt of goods on board the vessel- and underta6ing to deliver the goods in the li6e order and condition as received- to the consignee or his order - provided the freight ; other charges as mentioned have been dul# paid. It is also a document of title to the goods ; as such is freel# transferable b# endorsement ; deliver#. & 5/D serves three main purposes 4 ' As a document of title to the goods ' As a receipt from the shipping compan# ' As a contract for the transportation of the goods.

!#pes )f 5ill of Dading

#lean ./0 5/D ac6nowledging receipt of goods apparentl# in good order ; condition ; without an# qualification is a clean 5/D. 8uch 5/D does not contain an# negative remar6 about condition of goods. 5/D with a remar6 such as @goods insufficientl# pac6edA is 6nown as claused 5/D. or multimode transportation- or when another shipping compan#>s vessel is used- this 5/D is issued. A 5/D held too long "normall# more than /7 da#s$$- before negotiations- is termed stale 5/D. 5/D issued when freight is paid at the time of shipment is a freight paid 5/D

#laused ./0 +ranss*ipment or t*rou"* ./0 Stale ./0 rei"*t paid ./0

rei"*t collect ./0 5/D issued when freight is not paid at the time of shipment; is to be collected from consignee is a freight collect 5/D

&ontents )f !he 5ill )f Dading

& & & & & & & & & & & 'ame ; logo of the 8hipping Dine 'ame ; address of the shipper 'ame ; number of vessel 'ame of the port of lading- port of discharge ; place of deliver# +ar6s ; container number- container seal number (ac6ing ; container description !otal number of pac6ages ; containers Description of goods- gross weight- volume Amount of freight paid or pa#able 8hipping 5ill number ; date 8ignature ; initials of the &hief )fficer

Documents or &ustoms &learance )f Goods

& !he 8hipping 5ill is the main document required b# customs for clearance of goods for shipment. & 9here the goods are to be cleared b# Dand &ustoms- 5ill )f Export is prepared instead of the 8hipping 5ill. & 5ill )f Exports are also of four t#pes ' 9hite for export of dut# free goods ' Green for export of goods under claim for dut# drawbac6 ' Kellow for export of dutiable goods ' (in6 for export of dut# free goods ex%bond.

8hipping 5ill
& 8hipping 5ill is an important document required b# the customs authorities for allowing shipment. & It is prepared b# the exporter ; it contains the name of the vessel- name of port of discharge- countr# of final destination- - exporter>s name ; addressdetails about pac6ages- number ; description of goods- mar6s ; numbers- quantit# ; details about each case- )5 price- total number of pac6ages with the weight ; value and the name ; address of the importer.

8hipping 5ill "cont$

& !he shipping 5ills are of following t#pes4 ' Dut# ree 8hipping 5ill 4 'o dut# or cess applicable ' Dutiable 8hipping 5ill 4 Goods sub3ect to export dut# / cess ' Drawbac6 8hipping 5ill 4 ' 8hipping 5ill for shipment Ex%bond.4 or goods imported for re%export.

Documents Required or (rocessing )f 8hipping 5ill4

& !he following documents are required for the processing of the 8hipping 5ill4 ' GR forms "in duplicate$ for shipment to all the countries. ' < copies of the pac6ing list mentioning the contents- quantit#- gross and net weight of each pac6age. ' < copies of invoices which contains all relevant particulars li6e number of pac6ages- quantit#- unit rate- total f.o.b./ c.i.f. value- correct ; full description of goods etc. ' &ontract- D/&- (urchase )rder of the overseas bu#er. ' AR< "both original and duplicate$ and invoice. ' Inspection/ Examination &ertificate.

)ther Documents

& )ther documents as shown in the following pages are also necessar# and required to carr# out various formalities for shipment ; negotiation of documents and for meeting the regulations in the importing countr#.

Aligned Documentation 8#stem

& Aligned Documentation 8#stem is based on the B' la#out 6e#. & Bnder this s#stem- different forms used in the international trade transactions are printed on paper of the same si*e ; in such a wa# that the common items of information are given in the same relative slots in the same piece of paper.

Aligned Documentation 8#stem "cont$

& &ommercial Documents
' !hese are required for effecting ph#sical transfer of goods ; their title from the exporter to the importer ; the reali*ation of export proceeds. )ut of the 7? commercial documents in the export documentation- as man# as 7<- have been standardi*ed and aligned to one another. !hese are proforma invoicecommercial invoice- pac6ing list- shipping instructionsintimation for inspection- certificate of inspection- insurance declaration- certificate of insurance- mate>s receipt- 5/Dapplication ; certificate of origin- shipment advice ; negotiation of documents. ' 8hipping order ; bill of exchange could not be brought under this s#stem%

Aligned Documentation 8#stem "&ont$

& Regulator# documents ' Regulator# pre%shipment export documents are prescribed b# different government department ; bodies in order to compl# with various rules ; regulations under the relevant laws governing export trade such as export inspection- etc. ' )ut of the nine regulator# documents- four have been standardi*ed and aligned. !hese are 8hipping 5ill- Exchange &ontrol Declaration "GR orm$port trust cop# of the 8hipping 5ill for pa#ment of (ort &harges.

(ac6ing Dist
& !he exporter prepares the pac6ing list to facilitate the bu#er to chec6 the shipment. It contains the detailed description of the goods- pac6ed in each case- their gross ; net weights etc. & !he pac6ing list also contains all basic information about the export order li6e name ; address of the bu#er ; the exporter- purchase order number ; date etc. & !he pac6ing order is the basic document used in the preparation of further documents li6e proforma invoice ; so on.

(roforma Invoice
& !he starting point of the export contract is in the form of offer made b# the exporter to the foreign customer. & !he offer made b# the customer is in the form of the (roforma Invoice. & It is a quotation given as a repl# to an enquir#. & It normall# forms the basis of all trade transactions ; enables importer to obtain import license- if required.

(roforma Invoice "cont$

& &ontents of (roforma Invoice are generall# the following4
' ' ' ' 'ame ; addresses of exporter ; importer +ode of transportation- port of discharge- final destination 5u#er>s ; sellerLs reference numbers / dates Description of the goods- mode of pac6ing- total number of pac6ages- expected total weight etc. ' )rigin of goods ' (rice offer on )5 ; &I 5asis ' 5asic terms ; conditions of sale.

&ommercial Invoice
& &ommercial invoice is the basic export document ; contains all information required for ma6ing other documents. & It is prepared b# the exporter after the execution of the export order giving details about the goods shipped & It should be addressed to the consignee as per the letter of credit. & It is the basic evidence of the Mcontract of sale> or purchase ; therefore must be prepared strictl# in accordance to the terms I conditions mutuall# agreed between the bu#er ; seller. & It should contain basic details as in the proforma invoice- the detailed description of goods- as well as the final pac6ing lists and the mar6ings on pac6ages plus details of shipment of goods- name ; number of vessel/ vo#age. & !his document is used for various export formalities- incentive claimsnegotiation of documents - accounting etc.

&ertificate )f )rigin
& !he importers in several countries require a &ertificate )f )rigin without which clearances to import is refused. & !he certificate of origin states that the goods exported are originall# manufactured in the countr# whose name is mentioned in the certificate. & &ertificates of origin are required when4
' Goods produced in a particular countr# are sub3ect to preferential tariff rates in the foreign mar6et at the time of importation ' !he goods produced in a particular countr# are banned for import in the foreign mar6et.

!#pes )f &ertificate )f )rigin 7

& "7$ &ertificate )f )rigin for Availing &oncessions under G8( 4
' Required b# countries li6e rance-German#- Ital#- 5enelux countries-BN- Australia- Oapan- B8A etc.- which extend G8( benefits ; are issued b# speciali*ed agencies li6e4 & Export inspection agencies & Ooint DG !- &ommodit# 5oards ; their regional offices & Development &ommissioner- 2andicrafts & !extile &ommittee for textiles & +arine product export development authorit# for marine products & Development &ommissioner for E(Fs

!#pes )f &ertificate )f )rigin "cont$

& "/$ 'on%preferential &ertificate )f )rigin4
' !hese are normall# required for clearance of goods b# all importers ; are issued b# the &hamber of &ommerce of the exporting countries or b# !rade Association of the importing countr#.

& "E$ &ertificate or availing concessions Bnder &ommonwealth (references4

' !his is also 6nown as @&ombined &ertificate )f origin ; valueA ; is required b# two commonwealth countries&anada ; 'ew Fealand for concessions under &ommonwealth preferences. ' !hese have to be obtained from the 2igh commission of the countr# concerned.

!#pes )f &ertificate )f )rigin "cont$

& "<$ &ertificate or Availing &oncessions Bnder )ther 8#stem )f (references ' &ertificates of )rigin are also required for tariff concessions under the Global s#stem )f !rade (references "G8!($- 5ang6o6 agreement "5A$8A(!A' Export Inspection &ouncils have the authorit# to print blan6 &ertificates of )rigin ; these are issued b# E(&s- D&s of E(Fs- EI&- IE) etc.

&onsular Invoice
& &onsular Invoice is a document required mainl# b# the African ; certain other countries li6e Nen#a- Bganda- !an*ania- +auritiusAustralia- 'ew Fealand 'igeria- Ghana etc. & !he exporter is required to submit E copies of the &ommercial invoice ; related documents for certification to the respective Embass# ; one cop# is returned to him after certification. & 5alance copies are sent b# the Embass# to the customs department of the importing countr# for verification upon arrival of goods ; calculation of the import dut# pa#able. & !he consular certified cop# is negotiated b# the exporter along with other documents.

&ustoms Invoice
& &ountries li6e B8A- &anada etc need customs invoice & It is generall# made out on a special form presented b# the customs authorities of the importing countr# ; helps for allowing entr# of goods in the importing countr# at preferential tariff rates. & !he invoice forms are generall# available at the consular office of the importing countr# and are required to be signed and witnessed after dul# filling the same.

5ill )f Exchange / Draft

& A 5ill )f Exchange also 6nown as Draft contains an order from the creditor to the debtor to pa# a specified amount to a person mentioned therein. & !he ma6er of the 5ill is 6nown as @DrawerA ; the person who is directed to pa# is called the @DraweeA & !he person who is entitled to receive the amount is called @(a#eeA & A 5ill )f Exchange is of two t#pes4 "i$ 8ight draft "immediate pa#ment$ ; "ii$ Bsance Draft " &redit : Bsance E1 da#s or usance ?1 da#s$ & Bnless ; until the draft is retired- the negotiating collecting ban6 does not hand over the shipping documents ; the bu#er can not ta6e deliver# of goods.

Degali*ation ; Attestation )f Documents

& Documents issued in one countr# "L8ource &ountr#L$ which need to be used in another countr# "LDestination &ountr#L$ must be LauthenticatedL or Llegali*edL before the# can be recogni*ed as valid in the foreign countr#. !his is a process in which various seals are placed on the document. & !he number and t#pe of authentication certificates depends on the nature of the document and whether or not the foreign countr# is a part# to the multilateral treat# on Plegali*ationP of documents. & PEmbass# "&onsular$ Degali*ationP of official documents is a procedure of confirmation of the validit# of originals of official documents or certification of authenticit# of signatures of the officialsauthori*ed signatures on documents- and also the validit# of prints of stamps- seals b# which the document is fastened.

III(-)
+erms ,sed In S*ippin" (I1#( +erms)

I'&) !erms
& ncoterms are internationall# accepted commercial terms- developed in 7=E? b# the International &hamber of &ommerce "I&&$- in (aris. & ncoterms $%%% define the respective roles of the bu#er and seller- in the agreement of transportation and other responsibilities and clarifies- when the ownership of the merchandise ta6es place. & ncoterms are used in union with a sales agreement or other methods of sales transactions and define the responsibilities and obligations of both- the exporter and importer- in oreign !rade !ransactions.

I'&) !erms
' ncoterms /111- is mainl# concerned with the loading- transport- insurance and deliver# transactions. ' Its main function is the distribution of goods and regulation of transport charges. ' Another significant role pla#ed b# ncoterms is to identif# and define the place of transfer and the transport ris6s involved. ' ncoterms ma6e international trade easier and help traders in different countries to understand one another ; are most widel# used international contracts

I'&) !erms% )b3ectives

& Incoterms safeguard the following issues in the oreign !rade contract or International !rade &ontract4 ' !o determine the critical point of the transfer of the ris6s of the seller to the bu#er- in the process of forwarding of the goods "ris6s of loss- deteriorationrobber# of the goods$. ' !o enable the person who supports these ris6s to ma6e arrangements in term of insurance ; other arrangements. ' !o specif# who is going to subscribe the contract of carriage; seller "exporter$ or the bu#er "importer$.

I'&) !erms% )b3ectives

& & !o distribute between the seller and the bu#er- the logistic and administrative expenses- at the various stages of the process It is important to define- who is responsible for pac6agingmar6ing- operations of handling- loading and unloadinginspection of the goods. 'eed !o confirm and fix respective obligations- for the achievement of the formalities of exportation and importationthe pa#ment of the rights and taxes of importation- as well as the sending of the documents. !here are 7E Incoterms- globall# adopted b# the International &hamber of &ommerce.

&

&

I'&) !erms% Groups

& Incoterms 7==1 / /111 % which defines all trade terms are divided into four basic groups. & &roup E comprise of Departure term. 9here the seller ma6es the goods available to the bu#er at the sellerLs own premises"EG9$ % Ex 9or6s & &roup F4 &omprise of 8hipment terms % +ain carriage unpaid. 9here the seller is called on to deliver the goods to a carrier named b# the bu#er- " &A- A8 and )5$. !hese are shipment contracts with the shipment point named- and carriage unpaid b# the seller. ' &A % ree &arrier ' A8 % ree Alongside 8hip ' )5 % ree )n 5oard

I'&) !erms% Groups

& &roup C4 &omprise of 8hipment terms % +ain carriage paid. 9here the seller has to contract for carriage- but without assuming the ris6 of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch- "& R- &I - &(! and &I($. & !hese are shipment contracts- with the destination point named- and carriage paid b# the seller. & !here are two critical division points- one for costs- the other for ris6. & &osts being assumed b# the seller until the destination point; ris6 being transferred to the bu#er at the point of shipment.

I'&) !erms% Groups

& In &I ; &I( terms- the seller arranges the contract of carriage and pa#ment of freight. ' & R % &ost and reight ' &I % &ost- Insurance and reight ' &(! % &arriage (aid !o ' &I( % &arriage and Insurance (aid !o

I'&) !erms% Groups

& Group D4 &omprise )f Arrival !erms. 9here the seller has to bear all costs and ris6 needed to bring the goods to the countr# of destination- "DA - DE8- DEJ- DDB and DD($. !hese are arrival contracts. ' DA % Delivered At rontier ' DE8 % Delivered Ex 8hip ' DEJ % Delivered Ex Jua# ' DDB % Delivered Dut# Bnpaid ' DD( % Delivered Dut# (aid

Ex%9or6s &ontract "EG9$

& !itle and ris6 pass to bu#er- "including liabilit# for pa#ment for all transportation and insurance costs$ from the sellerLs door. & Bsed for an# mode of transportation. & 8eller 4 In EG9 shipment terms the 8eller "Exporter$ provides the goods for collection b# the 5u#er "Importer$ on the seller>s or exporterLs premise. & Responsibilit# for the seller is to put the goods- in a good pac6age which is adaptable and disposable b# the transport.

Ex%9or6s &ontract "EG9$

& 5u#er 4 !he bu#er or Importer- arranges insurance for damage in transit goods ; have to bear all costs and ris6s involved in shipment transactions. & "2owever- if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the ris6s and all the costs of such loading- this should be made clear b# adding explicit wording to this effect in the contract of sale.

&A % ree &arrier "Q. 'amed place$

& P ree &arrierP means that the seller fulfils his obligation to deliver when he has handed over the goods- cleared for exportinto the charge of the carrier named b# the bu#er at the named place or point. & If no precise point is indicated b# the bu#er- the seller ma# choose within the place or range stipulated where the carrier shall ta6e the goods into his charge. & 9hen- according to commercial practice- the sellerLs assistance is required in ma6ing the contract with the carrier "such as in rail or air transport$- the seller ma# act at the bu#erLs ris6 and expense. & !his term ma# be used for- an# mode of transport- including multimodal transport.

&A % ree &arrier "Q. 'amed place$

& P&arrierP means an# person who- in a contract of carriageunderta6es to perform or to procure the performance of carriage b# rail- road- sea- air- inland waterwa# or b# a combination of such modes. & If the bu#er instructs the seller to deliver the cargo to a person- e.g. a freight forwarder who is not a PcarrierP- the seller is deemed to have fulfilled his obligation to deliver the goods when the# are in the custod# of that person. & P!ransport terminalP- means a railwa# terminal- a freight station- a container terminal or #ard- a multi%purpose cargo terminal or an# similar receiving point. & P&ontainerP includes an# equipment used to uniti*e cargo- e.g. all t#pes of containers and/or flats- trailers etc and applies to all modes of transport.

A8 % " ree Alongside 8hip$ &ontract

& & & A8% ree Alongside ship4 !itle and ris6 pass to bu#er- including pa#ment of all transportation and insurance cost- once delivered alongside ship b# the seller. Bsed for sea or inland waterwa# transportation. !he export clearance obligation rests with the seller. In A8 price includes all costs incurred in delivering the goods alongside the vessel- at the port or nominated place of the bu#er- but seller does not pa# charges for loading on board of vessel- as well as ocean freight charges and marine insurance. 8eller4 !he responsibilit# of the seller are fulfilled- when goods are placed cleared along the ship. 5u#er4 5u#er or Importer bears all expenses and ris6s of loss or damage of transit goods- delivered along the ship.

& &

ree )n 5oard " )5$ &ontract

& )5 is one of the most frequentl# used price quotation- in the international mar6et. & Bnder this quotation- the exporter underta6es to pa# all expenditure till the loading of goods- on board the ship- including documentation charges. & All expenditure thereafter- such as ocean freightmarine insurance- unloading charges etc are borne b# the importer.

ree )n 5oard " )5$ &ontract "cont$

& !he sellers obligations are 4 ' !o provide goods ; the commercial invoice - or its equivalent electronic message- in conformit# with the contract of sale. ' !o obtain an# export license or other official authori*ationand carr# out all customs formalities- necessar# for exportation of goods. ' !o deliver the goods on board of vessel- at the port of shipment- on the date- or within the period- stipulated. ' !o give the bu#er sufficient notice- that- the goods have been delivered on board the vessel ' !o pa# the costs of chec6ing qualit#- measuring- weighingcounting $ pac6ing and mar6ing of the goods.

ree )n 5oard " )5$ &ontract " &ont$

& !he bu#er>s obligations in a )5 contract are4 ' !o pa# the price as provided- in the contract of sale ' !o obtain import license or other official authori*ation ; carr# out all customs formalities- for the importation of goods ' !o ta6e deliver# of goods- when the goods have been delivered- in accordance with the terms of the contract. ' !o reserve the necessar# shipping space and give due notice of the same- to the exporter ; ; ' 'o (ear all costs and ris)s of the goods- from the time- when the# shall have effectivel# passed the ship>s rail-

&ost ; reight "& R$ &ontract

& In this term the exporter bears the cost of carriage or transport to the selected destination port- ; the ris) trans#era(le* to the bu#ers at the port of shipment. 8eller4 chooses the carrier- concludes and bears the expenses b# pa#ing freight to the agreed port of destination- unloading not included. !he loading of the dut#%paid goods on the ship falls on him as well as the formalities of forwarding. )n the other handthe transfer of ris6s is the same one as in )5. 5u#er4 !he bu#ers supports all the ris) o# transport. 9hen the goods are delivered aboard b# ship at the unloading port- bu#er receives it from the carrier and ta6es deliver# of the goods from nominated destination port.

&I &ontract
& &ost- insurance ; freight means- that- the seller has the same obligations as under the )5 contract- but with the addition- that- he has to organi*e the marine freight ; procure marine insurance- against the bu#er>s ris6 of loss or damage- to the goods during carriage. & !he seller contracts the insurance and pa#s the premium and also pa#s the ocean freight.

&I &ontract"cont$
& !he seller has the following additional obligations as compared to )5 &ontract 4
' !o arrange for the carriage of the goods to the named port of destination b# the usual route in a sea%going vessel ; to pa# its costs ; freights. ' !o obtain cargo insurance as agreed in the contract ; to provide the bu#er with the insurance polic# or other evidence of insurance cover.

& !he above obligations are excluded from the bu#er>s obligations. 5u#er still has the obligations- as indicated in the @ bu#ers> obligations- in )5 contracts.

&(!% &arriage (aid !oQ.

& P&arriage paid to... P means that the seller pa#s the freight for the carriage of the goods to the named destination. !he ris6 of loss of or damage to the goods- as well as an# additional costs- due to events occurring after the time the goods have been delivered to the carrier- is transferred from the seller to the bu#er- when the goods have been delivered into the custod# of the carrier. & P&arrierP means an# person who- in a contract of carriage- underta6es to perform or to procure the performance ofL carriage- b# rail- road- seaair- inland waterwa# or b# a combination of such modes. & If subsequent carriers are used for the carriage to the agreed destinationthe ris6 passes when the goods have been delivered to the first carrier. & !he &(! term requires the seller to clear the goods for export.

DA % Delivered At rontier"'amed (lace$

& PDelivered at rontierP means that the seller fulfils his obligation to deliver when the goods have been made availablecleared for export- at the named point and place at the frontierbut before the customs border of the ad3oining countr#. & !he term PfrontierP ma# be used for an# frontier including that of the countr# of export. !herefore- it is of vital importance that the frontier in question be defined precisel# b# alwa#s naming the point and place in the term. & !he term is primaril# intended to be used when goods are to be carried b# rail or road- but it ma# be used for an# mode of transport.

DE8 % DEDI,ERED EG 82I( "... named port of destination$

& @Ex 8hipP means that the seller fulfils his obligation to deliver- when the goods have been made available to the bu#er on board the ship- uncleared for import at the named port of destination. & !he seller has to bear all the costs and ris6s involved in bringing the goods to the named port of destination. !his term can onl# be used for sea or inland waterwa# transport.

DEJ %PDelivered Ex Jua# "dut# paid$P

& PDelivered Ex Jua# "dut# paid$P means that the seller fulfils his obligation to deliver when he has made the goods available to the bu#er on the qua# "wharf$ at the named port of destination. !he seller has to bear all ris6s and costs including duties- taxes and other charges of delivering the goods thereto. & !his term should not be used if the seller is unable directl# or indirectl# to obtain the import license. & 5u#er has to clear the goods for importation and pa# the dut#. & If the parties wish to exclude from the sellerLs obligations some of the costs pa#able upon importation of the goods "such as value added tax ",A!$$- this should be made clear b# adding words to this effect4 PDelivered ex qua#- ,A! unpaid "... named port of destination$P-. & !his term can onl# be used for sea or inland waterwa# transport.

DDB% PDelivered dut# unpaidP

& Delivered dut# unpaidP means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the countr# of importation. & !he seller has to bear the costs and ris)s in+ol+ed in bringing the goods thereto "excluding duties- taxes and other official charges pa#able upon importation$ as well as the costs and ris6s of carr#ing out customs formalities. & !he bu#er has to pa# an# additional costs and to bear an# ris6s caused b# his failure to clear the goods for import in time.

DDB% PDelivered dut# unpaid@"cont$

& If the parties wish the seller to carr# out customs formalities and bear the costs and ris6s resulting there from- this has to be made clear b# adding words to this effect. & If the parties wish to include in the sellerLs obligations some of the costs pa#able upon importation of the goods "such as value added tax ",A!$$- this should be made clear b# adding words to this effect4 Delivered dut# unpaid- ,A! paid- "... named place of destination$& !his term ma# be used irrespective of the mode of transport.

DD(% Delivered Dut# (aid

& PDelivered dut# paidP means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the countr# of importation. & !he seller has to bear the ris6s and costs- including duties- taxes and other charges of delivering the goods thereto- cleared for importation whilst the DDB should be used. & If the parties wish to exclude from the sellerLs obligations some of the costs pa#able upon importation of the goods "such as value added tax ",A!$$- this should be made clear b# adding words to this effect4 PDelivered dut# paid- ,A! unpaid "...named place of destination$P. & !his term ma# be used irrespective of the mode of transport.

(I2)
Export Procedures

I2(a)
Excise #learance or Exports

Excise &learance 5enefit/ Rebate

& Excise Dut# ' Excise dut# is a tax imposed b# the &entral government on goods manufactured in India. ' It is collected at source I.e. before removal of goods from the factor# premises ' Exporters are totall# exempted from pa#ment of &ED ' 2owever- necessar# clearances must be obtained b# the exporter in one of the following wa#s

Excise &learance 5enefit/ Rebate "cont$

& "i$ Export Bnder Rebate ' Bnder this s#stem- an exporter is required to pa# &ED initiall# ; then claim it from central excise department after shipment of goods. & "ii$ Export under 5ond ' Bnder this s#stem- an exporter is required to execute a bond- in favor of excise authorities- for a sum equivalent to the amount of excise chargeable on such goods. 8uch bond should be supported b# an appropriate ban6 guarantee.

Excise &learance Bnder Rule 7C ; Rule 7= of &entral Excise Rules

& Export (rocedures for Excise % !here are basicall# two procedures for dispatching the goods out of India. ' "a$ "Rule 7C of &entral Excise Rules$.
& In the first procedure- duties are paid and subsequentl# rebate "refund$ is claimed after exportation of such goods. Alternativel#- rebate is granted of dut# paid on inputs used in the exported final product. & Rebate claim had to be made to A.&. of &entral excise along with original of ARE%7 ; other prescribed documents.

Excise &learance Bnder Rule 7C ; Rule 7= of &entral Excise Rules "cont$

' "b$ "Rule 7= of &entral Excise Rules$.
& !he other procedure is to export goods under bond without pa#ment of excise dut#. & )n actual exportation of goods and on presentation of necessar# proofs regarding exports- the bond is released. Regular Exporters can have a running bond for this purpose. & A merchant exporter has to furnish bond in form 5%7 ; certificate in &!%7.

&onditions or &entral Excise &learance

& As a part of further simplifications and rationali*ation of excise rules announced b# the inance +inister a new set of &entral Excise Rules- /117- has come into effect from 7st +arch /11/. & !he procedure for export of excisable goods "except to 'epal ; 5hutan$ is sub3ect to certain conditions ; limitations.

&onditions ; Dimitations " Bnder pa#ment of &ED$

& !he excisable goods can be exported directl# from a factor# or a warehouse after the pa#ment of excise dut# & !he excisable goods must be exported within ? months from the date within which the# were cleared for export from the factor# of manufacture or his warehouse. & !he mar6et price of the excisable goods at the time of exportation is not less than the amount of rebate dut# claimed. & !he amount of rebate of dut# admissible is not less than Rs. 011.11

&onditions ; Dimitations " 9ithout pa#ment of &ED$

& !he exporter is required to submit a General 5ond " 8uret# or securit#$ to the Assistant &ommissioner of &entral Excise or the +aritime &ommissioner for a sum equivalent to the dut# chargeable on the goods. & !he excisable goods must be exported within ? months from the the date on which the# were cleared for exports from the factor# of manufacturer or his warehouse.

(rocedure or &entral Excise &learance

& !he following is the procedure for obtaining central excise clearance3 ' "i$ Application to the Assistant &ollector/ commissioner of &entral Excise "A&&E$ & !he exporter is required to ma6e an application to the 8uperintendent or the Inspector of &entral Excise- having 3urisdiction over the factor# of production or warehouse of the exporter- b# filling up < copies of ARE%I form- in five copies with distinctive colors. ' "ii$ Information to the Range 8uperintendent & !he A&&E informs the range superintendent- in whose area the exporter>s factor# or warehouse is located. )n receiving instructions from the A&&E- the range superintendent- deputes an inspector for clearance of goods for exports.

(rocedure or &entral Excise &learance "&ont$

& "iii$ 8ealing of goods 4 ' !he inspector of &entral Excise verifies the goods mentioned in the application and the particulars of the dut# paid or pa#able. ' If satisfied- he seals each pac6age or the container in the manner as ma# be specified b# the &ommissioner of &entral excise and endorses each cop# of the application.

"iv$(rocessing of ARE%I orms

ARE%I")riginal$ !he 8uperintendent or Inspector returns the original ARE%II"Duplicate$ ; the duplicate to the exporter ARE%I "!riplicate$ !he triplicate cop# of ARE%I is sent to the +aritime &ommissioner at the port of shipment or to the Excise Rebate Audit section in case the rebate is to be claimed b# EDI "Electronic Data Interchange$ s#stem of customs. ARE%I "Juadruplicate$ ARE%I "Juintuplicate$ !his cop# of ARE%I is retained b# the 8uperintendent or Inspector of &entral Excise. !his cop# is returned to the exporter for claiming an# other incentive.

(rocedure or &entral Excise &learance "&ont$

& (4) Examination of the goods at the place of exports ' At the port of shipment- the exporter presents goods together with original- duplicate ; quintuplicate copies of the ARE%I to the &ommissioner of &ustoms. ' !he &ommissioner of &ustoms examines the consignments and if satisfied- certifies the goods for exports- b# an endorsement on all the copies of ARE%I. ' !he original ; quintuplicate copies are returned to the exporter and the duplicate cop# is sent to the +aritime &ommissioner%

(rocedure or &entral Excise &learance "&ont$

& "vi$ 8ubmission of the claim3 or claiming rebate- the exporter is
required to submit the following documents along with the prescribed application in form @&A"in triplicate$ to Assistant &ommissioner of central excise / maritime collector ' )riginal cop# of ARE%I dul# endorsed b# customs officer ' Duplicate cop# of ARE%I received from customs officer in a sealed cover. ' Dul# attested cop# of shipping bill ' Dul# attested cop# of 5ill of Dading or airwa# bill ' Duplicate cop# of &entral Excise invoice under which &ED was paid

(rocedure or &entral Excise &learance "&ont$

& (4ii) ,erification of the application ' Assistant or Deput# &ommissioner of &entral Excise compares the details listed in the different copies of ARE%I ; if he is satisfied that the exports are not under claims for dut# drawbac6- he sanctions the rebate. & (4iii) Refund of dut# ' If an# refundable amount is not paid to the applicant within E months from the date of filing the claim- interest at the rate of /1H is paid for the period between the expir# of E moths ; the date of refund. & (ix) &ancellation of documents ' If the excisable goods are not exported- the Assistant &ommissioner of &entral Excise cancels the export documents on request of the exporter.

I2(-)
S*ipment () Goods (Sea S*ipment)

8hipping ; &ustoms ormalities

& According to 8ection <1 of &ustoms Act- the person in charge of conve#ance vessel- vehicle- aircraft etc.- can not permit loading of export cargo- at the customs station- until ; unless a formal approval to the export given b# the authori*ed customs officer is presented. & 5efore granting permission- the customs officer ensures that the goods being exported are in accordance with different regulationsparticularl# in terms of the following4 ' Goods must be as declared b# the exporter ' !he dut# or cess leviable thereon has been properl# declared ; paid. ' (rovision of Export &ontrol order- Export "Jualit# &ontrol ; Inspection Act$ ; E+A are complied with.

(rocedure or 8hipping ; &ustoms &learance

& "a$ (reparation ; 8ubmission of Export Documentation3
or clearance of cargo from customs- the exporter or his agent is required to submit the following documents along with 0 copies of 8hipping 5ill to the customs appraiser at the &ustoms 2ouse. ' Detter of &redit along with Export &ontract or Export )rder ' &ommercial Invoice "/ copies$ ' (ac6ing Dist or (ac6ing 'ote ' &ertificate of )rigin ' GR orm " original ; duplicate$ ' ARE%I orm ' )riginal cop# of &ertificate )f Inspection- wherever necessar#. ' +arine Insurance (olic#.

(rocedure or 8hipping ; &ustoms &learance " cont 7$

& "b$ ,erification )f Documents
' !he &ustoms appraiser verifies the details listed in each document ; ensures that all formalities relating to exchange control etc.have been properl# complied with b# the exporter. If satisfied- he issues a 8hipping 5ill 'umber.

& "c$ ,aluation )f Goods

' !he customs appraiser assesses the 8hipping 5ill and values the goods.!he value as determined b# the customs officer- holds good in future transactions- especiall# for the claim of incentives. All documents are then returned to the exporter- except the following4 & )riginal cop# of GR- to be forwarded to the R5I & )riginal &op# of 8hipping 5ill & )ne cop# of &ommercial Invoice.

(rocedure or 8hipping ; &ustoms &learance " cont /$

' !he validit# of the assessed 8hipping 5ill- is for one month onl#. If the exporter fails to deliver the goods in that period- he will have to undergo the above procedure again.

& "d$ )btaining &arting )rder

' !he &; Agent- then- approaches the 8uperintendent of the concerned (ort !rust- for obtaining the @&arting )rderA for moving the cargo inside the doc6s. After obtaining the carting order- the cargo is ph#sicall# moved into the port area ; stored in the appropriate shed.

(rocedure or 8hipping ; &ustoms &learance " cont E$

& (e) &ustoms Examination ; Issue of @Det Export )rderA4 ' !he customs examiner at the port of shipment ph#sicall# examines the goods and seals the pac6age in his presence. !he same can be arranged for at the factor# or the warehouse b# ma6ing an application to the Assistant &ollector of customs. !he customs examiner- if satisfied- issues a formal permission for loading of the cargo on the ship in the form of a @ let export orderA. !he above procedure is now processed through EDI s#stem. & "f$ )btaining @Det ship )rderA from customs preventive officer4 ' 5Det export orderA must be supplemented b# a @Det 8hip )rderA issued b# the &ustoms (reventive )fficer. !he &; agent submits the duplicate cop# of the 8hipping 5ill- dul# endorsed b# the customs examiner- to the preventive officer- who endorses it with the @Det 8hip )rderA

(rocedure or 8hipping ; &ustoms &learance " cont <$

& "g$ )btaining +ate>s receipt ; the 5ill of Dading4
' !he goods are then loaded on board of ship for which the +ate or the captain of the ship- issues +ate>s Receipt to the (ort 8uperintendent. !he (ort 8uperintendent on receipt of the port>s dues- hands over the mate>s receipt to the &; agent who surrenders the +ate>s receipt to the shipping compan# for obtaining the 5ill of Dading. ' !he shipping compan# issues two or three negotiable and two or three copies of non%negotiable copies of the 5/D.

Exports 5# Air
& !he exporter must have an IE& "Import Export &ode$ number issued b# DG ! "Director General of oreign !rade$. & 2e has to file a 8hipping 5ill which has to be assessed b# &ustoms and the goods are also sub3ect to examination b# &ustoms before DE) "Det Export )rder$ is given. & !his document can be filed with &ustoms up to 70 da#s before the goods are actuall# exported. & Di6e in case of imports- in exports too- the document for assessment and examination b# &ustoms 8hipping 5ill- is processed through the EDI.

Exports 5# Air "cont$

& !o encourage exports- the Government has introduced various export promotion schemes i.e. Drawbac6DEE&- D R&- DE(5- E(&G etc. and the exporter has a choice to avail an# of them. & 2owever- certain schemes cast an export obligation on the exporter for which he is required to execute 5ond and 5an6 Guarantee for certain period. & Exports are also governed b# the &ustoms Act- 7=?/the EGI+ (olic# and are sub3ect to prohibitions and restrictions imposed under various other Acts i.e. &I!E8- 'D(8 Act- Arms Act- Antiques Act- Drugs ; &osmetics Act- etc. .

(rocedure or Air% &argo as given b# AAI

8hipment (rocedure for Export General &argo & 7.Registration- (rocessing of shipping bill b# customs. & /.)btain carting order and A95 from the carrier or through EDI & E.(resent papers "shipping bill / A95 / &arting order$ to AAI counter and obtain terminal charges receipt. & <.(a# AAI &harges. & 0.Enter Export &argo along with relevant documents & ?.(resent !8( receipts to AAI staff at designated !) gate and off%load cargo. )btain AAI endorsement on !8( receipt.

(rocedure or Air% &argo as given b# AAI

& I.Get the pac6ages "as per the customs endorsement$ examined b# customs and complete the formalities & C.Det Export )rder / &ustoms )rders & =.(resent !8( receipt along with let Export )rder to AAI staff at bonded area gate along with cargo for binning ; for location slip for airlines handled b# AAI. & 71.2and over documents to airlines & 77.Bniti*ation % Airline submits &ustoms approved chec6list for uniti*ation or bul6 loading to AAI & 7/.Release of Export &argo for the flight against request from airlines dul# approved b# customs. 5asicall# the steps in clearance of air%cargo are the same as in sea% cargo. 2owever- suitable modifications as required are done.

I2(c)
Marine Insurance or Export #ar"o

Introduction
& +arine Insurance covers the loss or damage of ships- cargoterminals- and an# transport or propert# b# which cargo is transferred- acquired- or held between the points of origin and final destination. & &argo insurance is a sub%branch of marine insurance- though +arine also includes )nshore and )ffshore exposed propert# "container terminals- ports- oil platforms- pipelines$; 2ull; +arine &asualt#; and +arine Diabilit#. & In the 7=th. centur#- Dlo#dLs and the Institute of Dondon Bnderwriters "a grouping of Dondon compan# insurers$ developed between them standardi*ed clauses for the use of marine insurance- and these have been maintained since. !hese are 6nown as the Institute &lauses because the Institute covered the cost of their publication.

+arine &argo Insurance

& !ransport Insurance & Export and import in international trade- requires transportation of goods over a long distance. & 'o matter whichever transport has been used in international trade- necessar# insurance is must for ever# single good. & &argo insurance also 6nown as marine cargo insurance is a t#pe of insurance against ph#sical damage or loss of goods during transportation. & &argo insurance is effective in all the three cases whether the goods have been transported via sea- land or air. & Insurance polic# is not applicable if the goods have been found to be pac6aged or transported b# an# wrong means or methods. 8oit is advisable to use a bro6er for placing cargo ris6s.

Insurance% 8cope )f &overage

& !he following can be covered for the ris6 of loss or damage4 & &argo import/ export cross vo#age dispatched b# sea- river- roadrail post- personal courier- and including associated storage ris6s. & Good in transit "inland$. & reight service liabilit#. & Associated stoc6. & 2owever there are still a number of general exclusions such as loss b# dela#- war ris6- improper pac6aging and insolvenc# of carrier. &overs for some of these ma# be negotiated. & Regular exporters ma# negotiate open cover. It is an umbrella marine insurance polic# that is activated when eligible shipments are made. Individual insurance certificates are issued after shipment

Insurance% 8peciali*ed &overs

& 9hereas standard marine/transport cover is the answer for general cargo- some classes of business will have special requirements. & General insurer ma# have developed specialt# teams to cater for the needs of these business- and it is worth as6ing if this cover can be extended to export ris6s. & &over ma# be automaticall# available for the needs of the trade. & Examples of this are4 ' (ro3ect &onstructional wor6s4 cover the movement of goods for the pro3ect. ' ine art ' (recious stones 4 8pecial &over for of precious stones. ' 8toc6 through put cover4 extended be#ond the time goods are in transit until when the# are used at the destination.

Insurance% 8peciali*ed &overs

& 8ellerLs 5u#erLs &ontingent Interest Insurance ' An exporter selling on- for example )5 "I'&)!ER+8 /111$ deliver# terms would according to the contract and to I'&)!ER+8- have no responsibilit# for insurance- once the goods have passed the shipLs rail. ' 2owever- for peace of mind- he ma# wish to purchase extra cover- which will cover him for loss or will ma6e up cover where the other polic# is too restrictive . !his is 6nown as 8ellerLs Interest Insurance. ' 8imilarl#- cover is available to importers/bu#ers.

Insurance% 8peciali*ed &overs "cont$

& Doss of (rofits/ &onsequential Doss Insurance ' Importers bu#ing goods for a particular event ma# be interested in consequential loss cover in case the goods are received late and expensive replacements have to be found to replace them. ' n such cases- the insurer will pa# a claim and receive proceeds from the eventual sale of the dela#ed goods.

Insuring Goods Against +arine Ris6s

& A marine insurance polic# has to be obtained to cover various ris6s while goods are in transit. & +arine insurance polic# must normall# be ta6en from an Indian insurance compan# ; should be for &I value plus 71H for incidentals. & Bpon receipt of the cover- the insurer must stud# the various clauses carefull#.

Insuring Goods Against +arine Ris6s "cont$

& (olicies can broadl# be divided into E groups ' Individual shipment polic# ' )pen polic# : "automatic protection for all shipments. Each shipment must be declared to the insuring compan#$ ' loating (olic# " describes insurance in general terms ; leaves other particular to be stated subsequentl#$ & Ris6s covered b# marine insurance policies are represented b# special clauses li6e Institute &argo clause "&$- Institute &argo clause"5$ - Institute &argo clause"A$ etc. & !hese policies are freel# assignable

I2(d)
6uality & Pres*ipment Inspection

Introduction
& or sometime now- a number of importers have used the services of independent inspection companies- to certif# the qualit# ; quantit# of products - the# want to import. & !hese inspections- mostl# conducted prior to shipment ; in the countr# of exports- assure the importer that the goods conform to the technical specification ; qualit# standards laid down in the contract ; that the quantities exported are accurate. & Regulations in man# countries- require that goods imported b# government departments to be inspected ; certified for qualit# ; quantit# b# independent ; competent inspection authorities. & )ver E1 developing countries in the world use the services of preshipment inspection (P, ) agencies to control unfair or improper practices.

Introduction
& !he basic ob3ectives of (8I are4 ' !o carr# out ph#sical inspection of the goods to ensure that the# conform to the terms of the contract ' !o verif# their prices ; ' !o ensure that the# are classified b# the exporter under the correct tariff classification of the importing countr#. & GA!! Agreement recogni*es (8I b# several nations. & !he purpose is to safeguard national financial interests "prevention of capital flight and commercial fraud as well as customs dut# evasion- for instance$ and to compensate for inadequacies in administrative infrastructures.

Export Inspection &ouncil of India "EI&$

& !he Export Inspection &ouncil of India "EI&$ was set up b# the Government of India under the Export "Jualit# &ontrol ; Inspection$ Act- 7=?E- as an apex bod#- to provide for sound development of export trade- through qualit# control and pre% shipment inspection. & !he Act empowers the &entral Government- to notif# commodities and their minimum standards for exports and to set up suitable machiner# for inspection and qualit# control. & !he EI& is assisted in its functions b# the Export Inspection Agencies "EIAs$ located at &hennai- Nochi- Nol6ata- Delhi and +umbai- having a networ6 of EC sub%offices and laboratories- to bac6 up the pre%shipment inspection and certification activit#

Export Inspection Council

& +a3orit# of export commodities have been brought within the purview of this Act and are sub3ect to compulsor# pre%shipment inspection. & All commodities will be covered b# qualit# control and compulsor# pre%shipment inspection ultimatel#. & !he Export Inspection &ouncil- established under the Act administers qualit# control and pre%shipment inspection. & !he &ouncil is responsible for establishing laboratories/ test houses providing inspection facilities for the commodities notified & 2as established inspection agencies- under which qualit# inspection officials operate

I2(e) E#G# Ser4ices

E&G&
& Export contracts are open to ris6s which can generall# be categori*ed into two broad t#pes4 & ()DI!I&AD RI8N8 ' &an be caused b# outbrea6 of war or civil war- in the importer>s countr# or coup or an insurrection- which can result in dela# or non%receipt of pa#ments. 8ame problems ma# arise due to macro%economic or balance of pa#ments problems- in the importer>s countr#. & &)++ER&IAD RI8N8 ' !hese are insolvenc# or protracted default in pa#ment b# the bu#ers.

E&G&
& !he Government set up the Export Ris6s Insurance &orporation "ERI&$ in 7=0I to provide export credit insurance support to Indian exporters. & !his was transformed to Export &redit ; Guarantee &orporation Dtd. "E&G&$ in 7=?< ; then to Export &redit Guarantee &orporation of India Dtd. In 7=CE. & E&G& is wholl# owned b# G)I ; functions under the +inistr# of &ommerce. & E&G& is managed b# a 5oard of Directors comprising representatives of the Government- R5I- 5an6ing - Insurance ; Exporting communit#. & !he goal of E&G& is to provide cost effective insurance and trade related services to meet the needs ; expectations of the exporting communit#.

'eed or Export &redit Insurance

& (a#ments for exports are open to ris6s even at the best of times. & !he ris6s have assumed large proportions toda#-due to the far% reaching political and economic changes that are sweeping the world. & )utbrea6 of war or civil war or coup or an insurrection- ma# bloc6 or dela# pa#ment for goods exported. & Economic difficulties or balance of pa#ment problems ma# lead a countr# to impose restrictions on either import of certain goods or on transfer of pa#ments for goods imported. & In addition- the exporters have to face commercial ris6s of insolvenc# or protracted default of bu#ers. & Export credit insurance is designed to protect exporters from the consequences of the pa#ment ris6s- both political and commercial- to enable them to expand their overseas business

8ervices (rovided 5# E&G& !o Exporters

& !o provide political ; commercial ris6 cover to the exporters. & !o provide exporters information regarding credit worthiness of overseas bu#ers "Dun ; 5radstreet$ & (rovide information on approximatel# 7C1 countries with its own export ratings. & !o facilitate exporters in recovering bad debts.

8ervices (rovided 5# E&G& !o Exporters "cont$

& Assists exporters in obtaining financial assistance from commercial ban6s / financial institutions ; provides guarantees to ban6ers for4 ' (ac6ing &redit guarantee " pre%shipment credit on the basis of export order$ ' (ost shipment export credit guarantee ' Export performance guarantee " &ounter guarantee to protect ban6ers against guarantees given b# it on behalf of exporters$ ' Export inance )verseas &redit guarantee " to ban6s financing overseas pro3ects$

!#pes )f (olicies Issued 5# E&G&

& &onstruction 9or6s (olic# ' It is a comprehensive polic# covering credit ris6s faced b# Indian contractors executing civil contracts abroad. 'ature of these contracts differ from other normal suppl# contracts. & Insurance for 5u#er>s &redit ; Dines )f &redit ' 5u#er>s &redit is a credit extended b# 5an6s in India to an overseas bu#er in order to enable him to pa# for importing machiner# ; equipment for a specific pro3ect from India ' A Dine of &redit is a credit extended b# a 5an6 in India to an )verseas 5an6- institution or Government- for the purpose of facilitating import of goods from India to the overseas countr#. ' E&G& has evolved policies for ban6s which extend 5u#er>s &redit or Dine )f &redit to overseas bu#ers.

!#pes )f (olicies Issued 5# E&G& &ontinued

& 8hipment (olic# ' 8hipment " comprehensive ris6s$ (olic#- commonl# 6nown as the 8tandard (olic#- is ideall# suited to cover ris6s in respect of goods exported against maximum 7C1 da#s terms ; covering most ris6s I.e political ; commercial- from date of shipment. ' Issued to exporters whose export turnover is over Rs. 01 Da6hs ' &overs all shipments made b# the exporter on credit terms excepting shipments made to one>s own associates. ' 8hipments on consignment basis " where pa#ments are made b# the agent on stoc6 ; sale of the goods $ are normall# excluded. ' Air shipments are covered onl# when the exporter has been issued a cover against @open deliver#A ; has paid appropriate premiums.

E&G&>s (erformance "In Rs. &rores$

Item ,alue )f ris6s covered (remium Income &laims (aid Recoveries made /11I%1C =//-7CE ??C </1 70I /11?%1I </C-1<1 ?7C EI/ /71

I2())
GSP !ules () (ri"in

Generalised 8#stem )f (references "G8($

& G8( is a non contractual instrument b# which industriali*ed "developed$ countries unilaterall# ; on the basis of non% reciprocit# extend tariff concessions to developing countries. & !he following countries extend tariff preference under their G8( schemes4 ' B8A- 'ew Fealand- 5elarus- European Bnion Oapan - Russia- &anada- 'orwa#- Australia8wit*erland- 5ulgaria.

Generalised 8#stem )f (references "G8($" &ont$

& G8( schemes of these countries detail the sectors/ product ; tariff lines under which these benefits are available- besides the conditions ; the procedures governing these benefits. & !hese schemes are renewed ; modified from time to time. & 'ormall# customs of G8( offering countries require information in a prescribed form dul# filled b# exporters of beneficiar# countries ; certified b# authori*ed agencies.

Global 8#stem )f !rade (references "G8!($

& Bnder the agreement establishing global s#stem )f !rade (references "G8!($- tariff concessions are exchanged among developing countries- who have signed the Agreement. & (resentl# there are <? member countries of G8!( and India has exchanged tariff with 7/ countries on a limited number of products. & Export Inspection &ouncil "EI&$ is the sole agenc# authori*ed to issue @certificate of originA under G8!(.

8A(!A
& !he agreement establishing 8A(!A "8AAR& preferential !rading Agreement$ was signed b# I 8AAR& members namel# India- (a6istan- 'epal- 5hutan- 5angladesh- 8ri Dan6a- +aldives in 7==E ; came into operation in 7==0.

&

our rounds of trade negotiations have been completed and more than E111 tariff lines are under tariff concessions among the 8AAR& countries.

(4)
.ene)its () Exports (i) Excise #learance .ene)its/!e-ate Income +ax .ene)it

Excise &learance 5enefit/ Rebate

& Excise Dut#
' Excise dut# is a tax imposed b# the &entral government on goods manufactured in India. ' It is collected at source I.e. before removal of goods from the factor# premises ' Exporters are totall# exempted from pa#ment of &ED ' 2owever- necessar# clearances must be obtained b# the exporter in one of the following wa#s

& "i$ Export Bnder Rebate

' Bnder this s#stem- an exporter is required to pa# &ED initiall# ; then claim it from central excise department after shipment of goods.

& "ii$ Export under 5ond

' Bnder this s#stem- an exporter is required to execute a bond- in favor of excise authorities- for a sum equivalent to the amount of excise chargeable on such goods. 8uch bond should be supported b# an appropriate ban6 guarantee.

Excise &learance Bnder Rule 7C ; Rule 7= of &entral Excise Rules

& Export (rocedures for Excise % !here are basicall# two procedures for dispatching the goods out of India. ' "a$ "Rule 7C of &entral Excise Rules$.
& In the first procedure- duties are paid and subsequentl# rebate "refund$ is claimed after exportation of such goods. Alternativel#- rebate is granted of dut# paid on inputs used in the exported final product. & Rebate claim had to be made to A.&. of &entral excise along with original of ARE%7 ; other prescribed documents.

' "b$ "Rule 7= of &entral Excise Rules$.

& !he other procedure is to export goods under bond without pa#ment of excise dut#. & )n actual exportation of goods and on presentation of necessar# proofs regarding exports- the bond is released. Regular Exporters can have a running bond for this purpose. & A merchant exporter has to furnish bond in form 5%7 ; certificate in &!%7.

&onditions or &entral Excise &learance

& As a part of further simplifications and rationali*ation of excise rules announced b# the inance +inister a new set of &entral Excise Rules- /117- has come into effect from 7st +arch /11/. & !he procedure for export of excisable goods "except to 'epal ; 5hutan$ is sub3ect to certain conditions ; limitations.

&onditions ; Dimitations " Bnder pa#ment of &ED$

& !he excisable goods can be exported directl# from a factor# or a warehouse after the pa#ment of excise dut# & !he excisable goods must be exported within ? months from the date within which the# were cleared for export from the factor# of manufacture or his warehouse. & !he mar6et price of the excisable goods at the time of exportation is not less than the amount of rebate dut# claimed. & !he amount of rebate of dut# admissible is not less than Rs. 011.11

&onditions ; Dimitations " 9ithout pa#ment of &ED$ & !he exporter is required to submit a General 5ond " 8uret# or securit#$ to the Assistant &ommissioner of &entral Excise or the +aritime &ommissioner for a sum equivalent to the dut# chargeable on the goods. & !he excisable goods must be exported within ? months from the the date on which the# were cleared for exports from the factor# of manufacturer or his warehouse.

Income !ax 5enefits

7. Exemption from Income !ax4 In order to enable the exporters to plough bac6 their earnings and promote exports- the Government has given I! exemption to exporters under section C122& of the I.!ax Act /. 8imilarl# long term tax holida#s are allowed to 711H E)Bs in designated areas such as E(Fs- 8EFs etc.

2I
S*ipment & +ransport Sea$ 7ir$ !ail$ !oad$ Pipeline

2II
!ole () (4erseas 7"ents & !emittance () #ommission

)verseas Agents
& 8elling through overseas agents is a strategic entr# option open to exporters. & Di6e all options- it has certain advantages ; demerits. & )verseas Agents
' 8elling through an overseas agent is an effective strateg#. ' !he agents serve as a source of mar6et intelligence. ' !he agent is in a position to render his advice to exporter or new methods and strateg# for pushing up sales of #our products. 2e also provides #ou support in the matter of transportation- reservation of accommodation- appointment with the government as and when required b# #ou.

)verseas Agents "cont$

' In some countries it is compulsor# under their law to sell through local agents onl#. It is- thereforeessential that #ou should carefull# select #our overseas agent. ' 8ome source of information on agents are4 & Government Departments !rade Associations /&hambers of &ommerce /5an6s & Independent &onsultants/Export (romotion &ouncils/Advertisement Abroad.

Appointing )verseas Agents

& (oints to be considered before appointing Agents ' 8i*e ; age of the agentLs compan# ' &ompan#Ls ownership and control- capital ; financial details ' 'ame- age and experience of the compan#Ls senior executives/ salesmen ' )ther agencies that the compan# holds. ' Dength of compan#Ls association with other principal ' 'ew agencies that the compan# obtained or lost during the past #ear

Appointing )verseas Agents "cont$

' &ompan#Ls total annual sales and the trends in its sales in recent #ears ' &ompan#Ls sales coverage- overall and b# area ' An# ma3or obstacles expected in the compan#Ls sales growth ' AgentLs capabilit# to provide sales promotion and advertising services ' AgentLs transport facilities and warehousing capacit# ' AgentLs rate of commission; pa#ment terms required ' References on the agents from ban6s- trade associations and ma3or bu#ers

Demerits )f Appointing An Agent

& !here are certain disadvantages of appointing an overseas sales agent- which are as follows; ' After sales service can be difficult when selling through an intermediar# ' !here is some ris6 for the exporter to lose some control over mar6eting ; brand image.

(2III)
2arious Export Promotion Sc*emes

Export (romotion schemes ; Incentives Dut# Exemption 8chemes% Advance license

Ad+ance license (authori-ation$ issued to allow dut# free import of inputs- which are ph#sicall# incorporated in export product "ma6ing normal allowance for wastage$. Advance license holders are exempted from pa#ment of basic customs dut#- additional customs dut#- anti dumping dut#- education cess ; safeguard dut#. & &onsumables such as fuel- oil- energ#- catal#sts- etc are also allowed under this scheme. ' Available to a manufacturer exporter / merchant exporter ' Also available to manufacturer of intermediate products used b# the main exporter ; for deemed exports.

Dut# Exemption 8chemes% Advance Authorisation

& Advance license is issued sub3ect to actual user condition ; necessitate exports with a positive value addition. Exports to 8EF units are allowed. & Input%output norms are the description of inputs that are required for the production of particular products ; are published in 2andboo6 of (rocedures. & Export obligations for manufacturers using the scheme is normall# 7C months for the date of issue of license. & !his scheme is considered useful when a standard product is manufactured in large quantities ; standard raw materials are used for production. & Dut# free import of mandator# spares up to 71H of &I value of license are also allowed. & (resentl# a Juantit# 5ased Advance Dicensing 8cheme "JA5AD$ is allowed replacing the value based scheme in force earlier.

Export (romotion 8chemes ; Incentives Dut# Exemption ; Remission 8chemes

& .uty Exemption schemes enable dut# free import of inputs required for export production. !hese schemes are 4 ' Ad+ance Authori-ation ' .uty Free mport Authori-ation (.F A$ 4 salient features of Advance Dicensing 8cheme ; D R& have been clubbed to evolve a new scheme named as D IA. & !he new scheme offers the facilit# to import required inputs before the exports ; allows transferabilit# of scrip once the export obligation is fulfilled. & !his scheme allows dut# free import of specified inputs for export production as per standard Input% )utput norms. & D IA is allowed under actual user condition till export obligation is fulfilled & +inimum of /1H of value addition is required for such authori*ation.

Export (romotion 8chemes ; Incentives Dut# Exemption ; Remission 8chemes "cont$

& .uty Remission ,chemes enables post export replenishment/ remission of dut# on inputs used in export product. Dut# remission scheme consists of ' Dut# Entitlement (assboo6 8cheme (.EPB) ; ' Dut# Drawbac6 scheme (.B/)

Export (romotion 8chemes ; Incentives Dut# Remission 8chemes

& !he main Dut# Remission 8chemes are Dut# Entitlement (assboo6 8cheme "DE(5$ ; Dut# Drawbac6 "D5N$ & Entitlement Pass(oo) ,cheme (.EPB) ' Bnder this scheme- grant of customs dut# credit against the exported product- is provided on the import content of the product exported. ' !he credit is granted on post% export basis- as a percentage of )5 value. ' DE(5 is a full# transferable instrument- which can be availed of b# the manufacturer as well as the merchant exporter. ' Exports under the DE(5 scheme are allowed onl# in respect of items- for which standard input%output norms exist.

Dut# Remission 8chemes "cont$

' DE(5 is valid for a period of 7/ months from date of its issuance. ' &redit rates of DE(5 are generall# better than Drawbac6 rates and this scheme is ver# widel# used b# the exporting communit#.

& Dut# ree replenishment certificates " .FRC)

' D R& is an alternative to the advance license scheme where the benefits are provided on post export basis ' D R& scheme has been withdrawn with effect from 7st +a# /11?

Dut# Remission 8chemes Dut# drawbac6 8cheme "D5N$

& Dut# drawbac6 is defined as the rebate of dut# chargeable on an# imported or excisable material used in the manufacture of goods exported from India. & !his is a widel# used incentive around the world and provides a level pla#ing field to the countr#>s exporters. & !his scheme is widel# used exporters in India ; has wor6ed ver# well. & !he rates are notified b# Directorate of Drawbac6 under the +inistr# of inance- annuall#. & Drawbac6 rates are fixed for an# class of products manufactured6nown as all industr# rates- or for a product manufactured b# a particular manufacturer- 6nown as brand rates.

Dut# Remission 8chemes Dut# drawbac6 8cheme "D5N$ "&ont$

& All industr# rates are published ever# #ear ; are normall# valid for one #ear. !hese are calculated ' )n the basis of average consumption of inputs- duties ; taxes paid- quantit# of wastage ; export price of exported products. ' !hese are given either on quantit# basis "per 6g$ or on ad valorem basis "as H of )5 value$ ; are reviewed and revised periodicall#. & 5rand rates/ 8pecial 5rand rates are calculated if all industr# rates are unavailable or industr# rates provide inadequate compensation ' !hese are product and exporter specific ; require proof of pa#ment of duties- materials used ; irrevocable wastages incurred and other data.

Export (romotion 8chemes ; Incentives Export (romotion &apital Goods "E(&G$ 8cheme
& EPC& scheme4 introduced in 7==1 to enable the import of capital goods at concessional rate of dut# "EH at presentR$ sub3ect to an appropriate export obligation accepted b# the exporter. !he specified export obligation needed to be fulfilled over a specified period in a prescribed manner. & !he aim of the scheme is to reduce the incidence of high capital costs on export prices to ma6e export competitive in international mar6ets. & !he import dut# slab on capital goods was quite high when this scheme was introduced. 2owever- the import duties have been reduced in the succeeding #ears

Export (romotion 8chemes ; Incentives Export (romotion &apital Goods "E(&G$ 8cheme "cont$
& !he export obligation is required to be fulfilled b# the export of goods manufactured or produced b# the use of the capital goods imported under the scheme. & &apital goods including spares- 3igs- fixtures- dies ; moulds can also be imported. & !he export obligation of the user of this scheme is lin6ed to the amount of custom dut# saved "presentl# C times$ & !here are no restrictions on the quantum of domestic sales in case of imports under E(&G.

+ar6eting Development Assistance "+DA$

& Mar)eting .e+elopment Assistance (M.A)
' Bnder +DA- exporters with turnover upto Rs. 70.11 crores are eligible for financial assistance for a range of export promotions activities such as participation in !rade airs- bu#er%seller meets abroad or in India - export promotion seminars etc. ' inancial assistance with travel grants is available to exporters traveling to Datin America- Africa- &I8 region- A8EA' countriesAustralia ; 'ew Fealand. In other areas- financial assistance without travel grants is available

+ar6et Access Initiative "+AI$

& Mar)et Access nitiati+e (MA ) ' !his scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a countr# ; product. Export (romotion &ouncils "E(&$ Industr# ; !rade Associations- Agencies of 8tate governments- Indian &ommercial +issions abroad are eligible for assistance under this scheme. ' Range of activities can be funded b# +AI scheme. !hese include4 mar6et studies- setting up of showrooms/warehousessales promotion ; publicit# campaigns- participation in international trade fairs etc. ' inancial assistance ranging from /0H to 711H of total costs can be received

ocus +ar6et 8chemes " +8$

& )b3ective4 ' )b3ective is to offset high freight costs ; other externalities to select international mar6ets with a view to enhance our export competitiveness in these countries. & Entitlement ' Exporters of all products to notified countries shall be entitled for dut# credit scrip equivalent to /.0H of )5 value of exports for each licensing #ear commencing from 7st April- /11? ' Exports made b# E)Bs-/ E2!(/ 5!(- who do not avail direct tax benefits-/ exemptions shall be eligible- provided the same benefits are not availed otherwise.

ocus (roduct 8chemes " (8$

& )b3ective4 ' )b3ective is to incentivise exports of such products which have high emplo#ment intensit# in rural or semi%urban areas- so as to offset infrastructure inefficiencies ; other associated costs involved in mar6eting of such products. & Entitlements4 ' Export of notified products to all countries "including 8EF units$ shall be entitled for dut# credit scrips equivalent- to 7./0H of )5 value of exports for each licensing #ear commencing from 7st April- /11? ' Exports made b# E)Bs-/ E2!(/ 5!(- who do not avail direct tax benefits-/ exemptions shall be eligible- provided the same benefits are not availed otherwise.

Export ; !rading 2ouses

& Export ; !rading 2ouses4 +erchant as well as +anufacturer Exporters- 8ervice (roviders- E)Bs ; units located in 8EFs AEFs- Electronic 2ardware !echnolog# (ar6s "E2!(s$8oftware !echnolog# (ar6s "8!(s$ ; 5io%!echnolog# (ar6s "5!(s$ shall be eligible for status. & 8tatus is calculated on total )5 export performance during current plus previous three #ears "ta6en together$ upon exceeding limit given below4
' ' ' ' ' EG()R! 2)B8E "E2$4 Rs. /1 &rores 8!AR EG()R! 2)B8E "8E2$4 Rs. 711 &rores !RADI'G 2)B8E "!2$4 Rs. 011 &rores 8!AR !RADI'G 2)B8E "8!2$4 Rs. /011 &rores (RE+IBR !RDI'G 2)B8E "(!2$4 Rs. 71-111 &rores.

Export ; !rading 2ouses "&ont$

& 8tatus holder will be eligible for a number of facilities including 4 ' Authori*ation ; customs clearance for both imports ; exports- on self%declaration basis. ' ixation of input%output norms on priorit# within ?1 da#s ' Exemption from compulsor# negotiation of documents through ban6s ' 711H retention of foreign exchange on EE & account ' Enhancement of normal repatriation period from 7C1 da#s to E?1 da#s. ' Exemption of providing 5an6 guarantee in schemes under !(.

8pecial focus Initiatives

,ishesh Nrishi ; Gram Bd#og Ko3ana ",NGBK$

' A new scheme called @,ishesh Nrishi Bpa3 Ko3anaA" now ,ishesh Nrishi ; Gram Bd#og Ko3ana %,NGBK$ to boost exports of fruits- vegetables- flowers- minor forest produce and their value added products- has been initiated. ' &apital goods imported under Export (romotion &apital Goods "E(&G$ scheme shall be permitted to installed an#where in Agri%Export Fone "AEF$ ' unds shall be earmar6ed under the Assistance to 8tates for Infrastructure Development of Exports "A8IDE$ scheme for development of AEFs

8pecial focus Initiatives

,ishesh Nrishi ; Gram Bd#og Ko3ana ",NGBK$ "cont$

' Import of restricted items li6e panels shall be allowed under various export promotion schemes. ' 'ew towns of excellence with reduced threshold limit of /01 crores shall be notified. ' &ertain specific flowers- fruits and vegetables will be entitled to a special dut# credit scrip- in addition to the normal benefit under ,NGBK. ' Imports of inputs such as pesticides under Advance
Dicense.

8pecial focus Initiatives 2andloom ; 2andicrafts 8ector4

& 0andloom 1 0andicra#ts ,ector4
' 8pecific funds would be earmar6ed for +ar6et Access Initiatives"+AI$ +ar6et Development Assistance "+DA$ scheme for promoting handloom exports. ' &,D is exempted on dut# free imports of trimmings ; establishments for handlooms ; handicrafts. ' Exemption of samples from countervailing dut# "&,D$ ' Authori*ing 2andicraft Export (romotion &ouncil to import trimmings embellishments and samples for small manufactures

8pecial focus Initiatives 2andloom ; 2andicrafts 8ector4 "cont$

' Establishment of a new 2andicraft 8pecial Economic Fone. ' Dut# free import entitlement of tools- machiner# ;equipment- trimmings ; embellishments shall be 0H of )5 value of exports during the previous financial #ear. !his shall also extend to merchant exporter tied up to a supporting manufacturer. ' 2andicrafts E(& is authori*ed to import trimmings on behalf of exporters. ' 'ew towns of excellence with reduced threshold limit of /01 crores shall be notified.

8pecial focus Initiatives Gems ; Oeweller# 8ector

& Gems ; Oeweller# 8ector
' (ermission for dut# free import of consumables for metals other than gold ; platinum up to /H of )5 value of exports ' Dut# free re%import entitlement for re3ected 3eweller# allowed upto /H of )5 value of exports. ' Dut# free import of commercial samples of 3eweller# allowed upto Rs E Da6hs ' (ermission to import gold of 7C carat and above under the replenishment scheme ' &utting ; polishing of gems ; 3eweller# to be treated as manufacturing under the Income !ax for purposes of exemption.

8pecial focus Initiatives Deather ; ootwear 8ector

& Deather ; ootwear 8ector ' Increase in dut# free entitlement of import trimmings ; embellishments ; footwear components for leather industr# to EH of )5 value of exports ; dut# free imports of specified items for leather sector to 0H of )5 value of exports. ' Imports of machiner# for Effluent !reatment (lants exempted from basic customs dut# ' Re%exports of unsuitable material " raw hides ; s6ins ; wet blue$ permitted. ' &,D is exempted on lining ; interlining material ; rawtanned ; dressed fur s6ins.

8pecial focus Initiatives "&ont$

8pecial ocus initiatives have also been extended to & +arine 8ector ' Dut# free entitlement of specified speciali*ed inputs/ chemicals and flavoring oils is allowed to the extent of )5 value of preceding financial #ear>s export. & Electronic ; I! 2ardware ' Exporters/ associations would be entitled to utili*e +AI ; +DA schemes for promoting their exports & 8ports Goods ; !o#s ' !his sector will be treated as a priorit# sector under +DA/+AI schemes wherein specific sums would be earmar6ed for this sector. ' DG ! will issue ast !rac6 clearances to their applications.

8erved from India 8cheme "8 I8$ 8ervice Exports

& 8erved from India 8cheme "8 I8$ ' )b3ective is to accelerate growth in exports of services so as to create a powerful ; unique @8erved rom IndiaA brand- instantl# recogni*ed and respected ' All service providers of services listed- who have a total free foreign exchange earning of at least Rs. 71 Da6hs in preceding #ear will qualif# for dut# credit scrip equivalent to 71H of free .E. earned

8erved from India 8cheme "8 I8$ 8ervice Exports "cont$

& 8ervice Exports
' E(&s set up in order to map opportunities for 6e# services in 6e# mar6ets and develop strategic mar6et access programmesincluding brand building in coordination with sectoral pla#ers ; nodal bodies of the service industr#. ' 8ervices include all 7?7 tradable services covered under General Agreement on !rade in 8ervices "GA!8$ where pa#ment for such services is received in free foreign exchange. ' 8ervice exporters are required to register themselves with respective E(& or IE).

(I8)
SE9$ E:+P$S+P & E(,s

Export (rocessing Fones "E(Fs$

& In order to encourage exports- G)I- has provided special incentives for units set up primaril# for manufacturing goods for export. 8uch units can be set up in designated Export processing Fones "E(Fs$ & !hese E(Fs are designed to provide an internationall# competitive dut# free environment at low cost for export production. Each of the *ones provide basic infrastructure facilities li6e developed landstandard design factor# buildings- roads- power- water suppl#drainage and customs clearance facilities. & !he first E(F set up in India was in 7=?0 % the Nandla ree !rade Fone. 8ubsequentl#- six more E(Fs have been set up at 4 8anta &ru* "5omba#$ - alta "95$ - +adras "!amil 'adu$- 'oida "B.($- &ochin "Nerala$- and ,isa6hapatnam "A($. & E(Fs have now been merged into 8EFs.

E)B 8cheme
& !he Export )riented Bnit "E)B$ 8cheme- which had been introduced in the earl# 7=C1s remains in the forefront of countr#>s export production schemes. & !he scheme has witnessed man# changes over the last twent#%six #ears in the context of ever changing economic realities. & 2owever- the basic premise remains the same. !his premise is that the exporters are treated as a special class and given the required tariff- non%tariff and polic# support to facilitate their export efforts. & !hus- toda# the E)B 8cheme has emerged as a d#namic polic# initiative facilitating the exporting communit# in the tas6 of increased exports

E)B 8cheme
& !here is a separate Export (romotion &ouncil for E)B ; 8EF units. & 711H E)Bs fall into E categories ' "a$ E)Bs established an#where in India and exporting 711H products except certain fixed percentage of sales in the Domestic !ariff Area "D!A$ as ma# be permissible under the (olic#. ' "b$ Bnits in ree !rade Fones or 8pecial Economic Fones "8EFs$ and exporting 711H of their products. ' "c$ E)Bs set up in 8oftware !echnolog# (ar6s "8!(s$ and Electronic 2ardware !echnolog# (ar6s "E2!(s$ of India5io%technolog# (ar6s "5!($- for development of 8oftware ; Electronic 2ardware ; 5io%technolog# respectivel#.

Export )riented Bnits "E)B$- Electronic 2ardware !echnolog#

(ar6s"E2!(s$- 8oftware !echnolog# (ar6s"8!(s$ 5io%technolog# (ar6s "5!(s$ & Eligibilit# 3 Bnits underta6ing to export their entire production of goods ; services "except permissible sales in D!A$- ma# be set up under the above schemes. !rading units are not covered under these schemes. ' !hese units ma# import and/or procure from D!A or bonded warehouses in D!A/ international exhibitions held in Indiawithout pa#ment of dut#- all t#pes of goods including capital goods. Import of capital goods will be on self certification basis ; will be sub3ect to actual user condition. ' !he# ma# procure from D!A- without pa#ment of dut#- certain specified goods for creating a central facilit#.

Export )riented Bnits "E)B$- Electronic 2ardware !echnolog#

(ar6s"E2!(s$- 8oftware !echnolog# (ar6s "8!(s$ 5io%technolog# (ar6s "5!(s$ ' !hese units -other than service units- ma# export to Russian ederation in Indian Rupees against repa#ment of 8tate &redit/ Escrow Rupee account - sub3ect to R5I approval. ' !hese units- ma# also source capital goods from a domestic/ foreign leasing compan# without pa#ment of customs/ excise duties ' !he# will be entitled for reimbursement of &8! on goods manufactured in India ; exemption from pa#ment of &ED on goods procured from D!A. ' !he# will be exempted from Income !ax as per section 71A ; 715 of I.!. Act ' !he# will be allowed to retain 711H of export earnings in EE & account.

8pecial Economic Fones "8EF$

& 8pecial Economic *ones "8EF$ is a specificall# designated dut# free enclave which shall be deemed to be a foreign territor# for the purpose of trade operations ; duties ; tariffs. & !he polic# provides for setting up of 8EF in the public- private ; 3oint sectors or b# state governments. & !he Government has alread# converted a number of Export (rocessing Fones "E(F$ to 8EF. Amongst them is the 8anta &ru* 8EF at +umbai.

8pecial Economic Fones "8EF$ "cont$

& 8EF Act /110- was passed b# the (arliament in +a# /110 ; came into effect on 71th eb /11?. !he Act is supported b# 8EF rules. & As on =th Oan- /11C- number of notified 8EFs were 7=E. At the end of December /11I- there were /77 8EFs with formal valid approvals. & In /11?%1I- total exports from all 7C 8EFs "Government ; private together$ were S I.?C 5- indicating an increase of <C.CH over the exports in /110%1?. & 5# the end of 'ovember- /11I- total investments in all 8EFs were Rs. 0=-?E7 &rores and /I?-E1I persons were emplo#ed b# all 8EFs.
(8tatistical )utline of India$

8pecial Economic Fones"8EF$ "&ont7$

& 8ome of the features of 8EF are4 ' Export ; Import 4 Goods ; services going into the 8EF area from D!A shall be treated as deemed exports and the domestic suppliers are eligible for deemed export benefits. 8imilarl#- goods ; services coming from 8EF area into D!A shall be treated as if the goods are being imported. !he entire production of 8EF must be exported ; D!A sales are permitted onl# after pa#ment of full applicable customs duties.

8pecial Economic Fones"8EF$ "&ont/$

' Activities permissible 4 8EF units ma# be set up for manufacture- servicesproduction- processing- assembling- trading- repair- rema6ingreconditioning etc. Bnits for generation of power ma# also be permitted at 8EFs. ' oreign direct Investments4 " DI$ 4 DI up to 711H is allowed through automatic route for all manufacturing activities- except prohibited items. ' (romotional (ac6age4 & Exemption from pa#ment of &ED on procurement of capital goods- raw materials- consumable spares etc. from the domestic mar6et.

8pecial Economic Fones"8EF$ "&ont/$

& Reimbursement of &8! paid on domestic purchases. & Income !ax exemptions as notified in 8ection 71A and 8ection C1%DA of the I.!. Act. & 8upport services li6e ban6ing- post offices- clearing agents etc. are available within the *one. & Exemption from pa#ment of 8ervice !ax. & 'o license required for imports. Exemption from customs dut# on imports of capital goods- raw materials- consumablesspares etc. & 8EF units can retain 711H of their export proceeds in Exchange Earner>s oreign &urrenc# "EE &$ account. & Reali*ation of export proceeds allowed up to 7/ months from the date of exports.

2ighlights% E)Bs ,s 8EFs

Export Oriented Units Special Economic Zones Establishme E)B can be set up at an# place declared 8EF unit has to be located within as warehousing station under &ustom>s the specified *one developed nt
Act. !here are over E11 such places in India.

Import Procedure

&an import capital goods- R.+. 8A+E A8 E)Bs consumables- pac6ing material-etc without pa#ment of customs dut#. 8imilarl#- these can be procured indigenousl# without pa#ment of &ED 8econd hand capital goods can also be imported. !he# have to achieve positive ' E." 'et foreign Exchange Earnings$ 8A+E A8 E)Bs

Net Forex Earnings

Minimum +in investment in plant ; machiner# ; !here is no such limit for 8EFs. Investment building is Rs.711D before stating prodn.

2ighlights% E)Bs ,s 8EFs

Export Oriented Units Procedure Special Economic Zones A bond in prescribed format has to A bond in prescribed format has be executed " 5%7I in case of E)B$ to be executed " A form prescribed under 8EF Rules /11E$ !here is no ph#sical supervision of 8A+E A8 E)Bs customs/excise authorities over production ; clearances but proper records to be maintained. ast trac6 clearance scheme for In case of 8EFs - customs clearance of imported consignments clearance for exports ; imports for E)Bs is obtained within 8EF 8A+E As E)Bs

reen channel

!ustoms !learance

Export O" Generall# all final prodn to be Final Prod. exported except re3ects up to prescribed limit.

2ighlights% E)Bs ,s 8EFs

E(,s
!S# &8! paid on purchases is refundable

SE9s
In case of 8EFs- suppliers do not have to pa# &8!.

Supplies made b$ Indian Suppliers In"rastructure

8upplies made b# Indian suppliers 8upplies to 8EFs are are @deemed exportsA ; suppliers exports and all export are entitled to benefits of @deemed benefits are available. exportsA General infrastructure available to 8EF infrastructure is E)B units are not as good as those normall# much better. available to 8EFs.