INTRODUCTION

Export procedure is a system or method by which export trade transaction is completed. It involves the study of different steps that are to be taken by the two parties, namely the exporter and the importer. The export procedure is lengthyand time-consuming. It involves a number of steps right from the time an export order is received and it is completed with the realisation of export proceeds. In between, there are many formalities which are required to be completed. The various steps canbe classified into four stages:

EXPORT PROCEDURE

STAGE 1 Preliminary Stage

STAGE 2 Pre-Shipment Stage

STAGE 3 Shipment Stage

STAGE 4 Post-Shipment Stage

STAGE 1: Preliminary Stage Registration Stage
The exporter is required -to register his organisation with a number of institutions and authorities, which directly or indirectly help him in the smooth conduct of export, trade. The registration stage includes: a. Registration of the Organisation: - The form of organisation selected by the exporter must. Be registered under the appropriate Act of the country. · A joint stock company under the Companies Act, 1956.; · A partnership firm under the Indian Partnership Act, 1932.; · A sale trader should seek permission from the local authorities, as required.

Prior to 1. Registration with ECGC: .e e porter s ould ope a curre t account in the name of the firm or company with a commercial bank which is authorised by the Reserve Bank of India (RBI) to deal in foreign e change. Indian Trade Promotion Organisation (ITPO). f. h. 1000. such as: -Federation of Indian Export Organisation (FIEO). Registration with. the exporter is re uired to make an application in the prescribed form to the Sales Tax Office (STO) in whose jurisdiction his {exporter s) Office is situated. Registration with other Authorities: . Chambers of Commerce (COC).1.The exporter should also register with various other authorities.Exportable goods are exempted from sales tax. Productivity Councils. IEC number issued by the Director General for Foreign Trade (DGFT) has replaced the CNX number. the exporter or his firm is registered with the Sales Tax Authorities. d. Obtaining Permanent Account Number.): . Export Promotion Council (EPC) :: It is obligatory for every exporter to . . For this purpose.register with the appropriate Export Promotion Council (EPC) and obtain the Registration -cumMembership Certificate (RCMC).The exporter should also register with the Export Credit and Guarantee Corporation of India (ECGC) in order to secure overseas payments against political and commercial risks. Ope -B cc .(PAN): Export income is subject to a number of exemptions and deductions under different sections of the Income Tax Act. For claiming such exemptions and deductions. etc. However. It also helps the exporters in obtaining the financial assistance from commercial banks and other financial institutions.porter Code Number (lEC No. c.            © ¨ §¦ ¥ ¤ £ ¢    ¡    . Such bank also serves as a source of pre shipment and post-shipment finance for the e porter. The application form for obtaining IEC number should be accompanied by fee of Rs. Obtaining Sales Tax Number: . the exporter should register his organisation with the Income Tax Authorities and obtain the Permanent Account Number (PAN). Obtaining Importer.1997 it was obligatory for every e porter to obtain CNX number from the RBI. The benefits provided in the current EXIM Policy are extended only to the registered exp orters having valid RCMC. g. provided.b. since then. e.

Even the EXIM policy imposes certain restrictions on import and exports. mode of payment and rate of exchange. Befor e actually confirming the order he scrutinizes the order in all respects. EPC. the exporter has to secure necessary permission (export license) from the government for exporting goods. issue export license. If the terms and conditions laid down in the indent are agreeable to him. 1968. he has to appoint agents or distributors for collection of orders from foreign countries. insuring. OBTAINING LICEN E AND QUOTA: After obtaining indent or order from the foreign buyer. If the commodity for which order has been received happens to be a controlled commodity. This application for export license has to be accompanied by Export License Application Fee and the relevant documents. The indent not only contains information about goods to be sent but also gives complete instructions regarding packing. Actual export procedure starts with the receipt of an indent or order from the importer or his agent. then only the order is finally accepted for execution. In order to obtain the valid license. This is necessary as export of goods to overseas market is controlled by Import and Export Control Order. Quota is the total quantity of goods that is permitted for exports. Income Tax Authorities and JCCI & E. Indent is an order for the supply of certain goods placed by the overseas buye r (importer).RECEIPT OF AN INDENT OR ORDER: Every exporter has his organisation to look after exports. Applicat ion for the export license has to be made in the form prescribed by the government. Quota is determined o the basis of past performance of the expo rter and his current needs. Even direct approach to foreign buyers is also possible. STAGE 2 Pre-Shipment Stage Pre-shipment stage consists of the following steps: . Along with export license. the exporter has to procure necessary export license. These preliminaries are necessary in order to export goods officially and conveniently to foreign countries. exporter has to apply to the export trade council authority. The licensing policy in respect of controlled commodities is announced by the Ministry of Commerce. The authorities then scrutinise the application an d is satisfied. Such exporter has to get him registered with various authorities such as RBI. The exporter is supposed to acknowledge the indent received. the problem of obtaining export licensing does not arise on case of uncontrolled commodities. quota certificate is also issued in favour of the exporter. In addition. making.

publicity andparticipation in trade fairs and exhibitions. The documentary credit or letter of credit is the most appropriate and secured method of payment adopted to settle international transactions. such as. the importer opens a letter of credit in favour of the exporter. c.An inquiry is a request from a prospective importer about description of goods. Normally exporter insists on opening of a letter of credit in the case of all overseas purchases though it may not be necessary in the case of old customers or customers with high reputation. In fact. e. country of origin. If required. etc. letter of credit is a document through which bank undertakes to pay to the exporter within the prescribed time limit.Then the goods should be properly packed and JXl8. On getting an inquiry.  . it is but natural for the exporters to demand a letter of credt. Opening Letter of Credit:-Since the purchaser is in the foreign country and since both parties are unknown to each other. This document is issued by the importers bank in favour of the exporter. Confirmation of Order: . public relation. processing and packing of goods and transfer of goods to the port of shipment. Approaching Foreign Buyers: . d. f. Letter of credit gives more safety and security to the exporter as regards payment for goods to be exported. On finalization of the export contract. etc. gross and net weight.a.On securing the pre-shipment finance from the bank. personal selling. Production or Procurement of Goods: . In many cases. Arrangement of Pre-shipment Finance: On securing the letter of credit. Inquiry and Offer: . sales promotion. if agreed upon in the contract. terms of payments. the importer himself sends the letter of credit along with his order. g.Once the negotiations are completed and the terms and conditions are finalised. assuring him the payment of export proceeds. size. a new exporter can make use of one or more . b. Or procures them from the domestic market as per the specifications of the importer. the exporter sendsthree copies of Performa Invoice to the importer for the confirmation of order.rkedwith necessary details such as port ofshipment and destination. The importer signs these copies and sends backtwo copies to the exporter. weight or quantity. Packing and Marking: .In order to secure an export order. advertising in international media. the exporter must process it immediately by making an offer in the form of a Performa invoice. the exporter either arranges for the production of the required goods. their standard or grade.of thetechniques. Some export houses treat the export order as confirmed only when the letter of credit is opened. assistance can be taken from the IndianInstitute of Packing (IIP). the exporter procures a pre-shipment finance from his bank for procuring raw materials and other components.

the shipping company issues a Shipping Order. b. The original copy of the shipping order as given to the exporter and the duplicate instruction by the shipping company to the commanding officer of the ship that the goods as per the details given should be received on board. The shipment stage includes the following steps: a. etc. the railway authorities issue a Railway Receipt .Since exporting is a complex and time.Once the export contract is finalised.consuming process. gold. Nevertheless.Central Excise Clearance: . On accepting the exporter s request. the exporter has to undergo certain foreign exchange formalities Stage 3 Shipment Stage Export. air or land. if the price quotation agreed upon is CIF. Besides. as it is comparatively cheaper. · Export under bond. j. the I exporter reserves the required space in the vessel for shipment. i. cargo can be exported to the overseas buyer by sea. the ship s capacity is far greater than other modes of transportation. It serves as a title to . Appointment of C&F Agent: . On loading goods into the railway wagon. Arrangement of Internal Transportation up to the Port of Shipment :-The exporter makes necessary arrangements for transportation of goods to the port either by road or railways.The exporters are totally exempted from the payment of central excise duty. Reservation of Shipping Space: .h. Pre-shipment Inspection . Marine policy. diamonds. which may be either freight paid or freight to pay . shipment by sea is the most popular and generally resorted to.If the goods to be exported are subject to compulsory quality control and pre-shipment inspection then the exporter should contact the Export Inspection Agency (EIA) for obtaining an inspection certificate.Obtaining Insurance Cover: . C mpl ti F r i Exch F rm liti s: In this stage.The exporter must take appropriate policies in order to insure risks: ECGE policy in order to over credit risks. However. However. the exemption should be* claimed in one of the following ways: · Export under Rebate. the exporter should appoint a Clearing and Forwarding (C&F) agent for the smooth clearance of goods from the customs and preparation and submission of various export documents. transportation by air is utilized for export of expensive items like.

Customs Examination and Issue of Let Export Order : . d. c. The same can be arranged for at the factory or warehouse of the exporter by making an application to the Assistant Collector of Customs. Obtaining Carting Order from the Port Trust Authorities: .As the goods reaches the port of shipment. · GR Form (original and duplicate) · ARE-I Form.The cargo must be cleared from the Customs before it is loaded on the ship. quality control. except the original GR. are to be submitted to the Customs Appraiser at the Customs House. along with five copies of shipping bill. the above mentioned documents. The Customs Examiner. The exporter doses the railway receipt in favour of his agent to enable him to take delivery of the goods at the port of shipment. issues a formal permission I for the loading of cargo on the ship in the form of a Let Export Order . original copy of Shipping Bill and one copy of Commercial Invoice. approaches the Superintendent of the concerned Port Trust for obtaining the Carting Order for moving the cargo inside the dock. For this. f. are returned to the C&F agent. the exporter should issue detailed instructions to the C&F agent for the shipment of cargo along with a complete set of the documents listed below:· Letter of Credit along with the export contract or export order. all documents. · Commercial Invoice (2 copies) · Packing List or Packing Note · Certificate of Origin. if satisfied. Preparation and Processing of Shipping Documents :. · Certificate of Inspection. e. The Customs Appraiser ensures that all the formalities relating to exchange control. Customs Clearance: .The C&F agent. pre-shipment inspection and licensing have been complied with by the exporter. then.The Customs Examiner at the port of shipment physically examines the goods and seals the packages in his presence. the cargo is physically moved into the port area and stored in the appropriate shed. .the goods. After obtaining the Carting Order. where necessary (original copy) · Marine Insurance Policy. After verification.

On the completion of the shipping procedure. Obtaining Let Ship Order from the Customs Preventive Officer: . · A full set of negotiable and non-negotiable copies of bill of lading. · The original L/C. The C&F Agent surrenders the Mate s Receipt to the Shipping Company for obtaining the Bill of Lading. the exporter intimates the importer about the shipment of goodsgiving him details about the date of shipment. the destination. h. the name of the vessel. Stage 4 Post-Shipment Stage The post-shipment stage consists of the following steps: a. · Drawback copy of the shipping bill.g. export order or contract. He should also send one copy of non-negotiable bill of lading to the importer.Let Export Order must be supplemented by a Let Ship Order issued by the Customs Preventive Officer. · Original Letter of Credit. · Duplicate copy of the ARE-I form. Shipment Advice to Importer: .Submission of relevant documents to the bank and the process of getting the payment from the bank is called Negotiation of the Documents and tile documents are called Negotiable Set of Documents . etc. b. to the Customs Preventive Officer who endorses it with the Let Ship Order . on receipt of port dues. The set normally contains: · Bill of Exchange.The goods are then loaded on board the ship for which the Mate or the Captain of the ship issues Mate s Receipt to the Port Superintendent The Port Superintendent. The Shipping Company issues two to three negotiable and two to three non-negotiable copies of Bill of Lading. . · Customs Invoice. the C&F agent submits the following documents to the exporter:· A copy of invoice duly attested by the Customs.After the shipment of goods. Obtaining Mate s Receipt and Bill of Lading: . duly endorsed by the Customs Examiner. Submission of Documents by the C&F Agent to the Exporter: . · Full set of Bill of Lading or Airway Bill. · Commercial Invoice including one copy duly certified by the Customs. The C&F agent submits the duplicate copy of Shipping Bill. c. Presentation of Documents to Bank for Negotiation: . hands over the Mate s Receipt to the C&F Agent. Sight Draft or Usance Draft. · Export promotion copy of the shipping bill.

· Marine Insurance Policy. Processing of GR Form: . Before negotiating documents.The bank -negotiates these documents to the importer s bank in the manner as specified in the L/C.In case of sight draft. If the details are found to be I in order then the export transaction is treated to be completed. -Documents against Acceptance (Usance Draft): . the exporter s bank scrutinises them in order to ensure that all formalities have been complied with and all documents are in order. original copy of GR receivedfrom the Customs. f. the drawer instructs the bank to hand over the relevant documents to the importer only against payment. etc. · Exchange control copy of the Shipping Bill. . e.On receiving the documentary bill of exchange. g.In case of usance draft. · Certificate of Origin. then he should submit claim for the same accompanied by the bank certificate to the appropriate authority.The exporter can get immediate payment from his bank on the submission of documents by signing a letter of indemnity. · Foreign exchange declaration forms. The bank then sends the Bank Certificate and attested copies of commercial invoice to the exporter. GR/SOFTEX/PP forms in duplicate. the exporter s bank intimates the same to the RBI by recordingthe fact on the duplicate copy of GR. Realisation of Export Incentives: . Acceptance of the bill of exchange: . the drawer instructs the bank to hand over the relevant documents to the importer against his acceptance of the bill of exchange.If the exporter is eligible for export incentives. The exporter s bank receives the payment through importer s bank and is credited to exporter s account. d.· Packing List. in duplicate.Bill of Exchange accompanied by the above documents is known as the Documentary Bill of Exchange.Realisation of Export Proceeds :. . . It is of two types: -Documents against Payment (Sight Drafts): . By signing the letter of indemnity the exporter undertakes to indemnify the bank in the event of non-receipt of payment from the importer along with accrued interests. Dispatch of Documents:. the. GSP or APR Certificate.Letter of Indemnity: .On receiving the export proceeds. The RBI verifies the details in duplicate copy of GR with. the importer releases payment in case of sight draft or accepts the usance draft undertaking to pay on maturity of the bill of exchange.

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