“Summer Training Project Report”

Name of the organization

Submitted By: Vinay Pratap Singh Project Guide: Mr. Satendra Bhardwaj

The Mangalayatan University Beswan, Aligarh


This report bears the imprint of many persons, who have helped me in numerous ways in writing this report. It gives me great pleasure in presenting this report to the Mangalayatan University, Beswan, Aligarh. I would like to take this opportunity to extend my hurtful gratitude to all those who helped me in presenting this report. Their contribution no matter big or small has contributed report. I fall short of words to express my gratitude to TRANSPARENT OVERSEAS for giving me the opportunity to work in this prestigious organization. I acknowledge my deep sense of gratitude to Mr. Satendra Bhardwaj for his generous guidance & advice before & during the course of this work & also in analyzing the work. I have also received valuable guidance and help from the entire Teaching staff, especially from Mr. Rajeev Sir and Mr. Adesh Bhatela Sir and others who all are members of Department of Management, Mangalayatan University, Aligarh. My overriding debt is to my parents who provide me with the moral support & inspiration to prepare this report. immensely towards completion of this

Vinay Pratap Singh


I, VINAY PRATAP SINGH here by declare that this project report entitled “EXPORT POLICIES AND

PROCESS”, has been completed based on actual study
carried out by me in TRANSPARENT OVERSEAS, FIROZABAD. I am presenting an authentic report of my work, carried out under the guidance of Mr. SATENDRA BHARDWAJ, which is required in the partial fulfillment for degree of M.B.A. MANGALAYATAN UNIVERSITY, ALIGARH. This research report is original & the information, data & fact furnished their in are actual, based on study carried out by me.





1. INTRODUCTION  General introduction  Export Country  Turnover of the Group  Certificates of T.O.  Other Sister Companies  T.O. Process Flow Chart 2. INTRODUCTION TO THE COMPANY      Company Profile An ISO 9001: 2000 Certified Company Integrated management system IMS core group Planning for product realization


Glass Factory Pot Furnace, Tank Furnace Machines Come in use of Manufacturing of Glass Articles Sand Frost Machine, Cutting Machine Magnet Separator, Press & Blowing Machine Automatic Neumatic Press Machine Annealing Leather Machine Heating Furnace, Annealing Room Melting Room Tank Furnace & Draw out the melted Glass Melted Glass drawed out Blowing, Mouth Blowing Annealing , After Annealing


4. PRODUCTS  Lantern


 Wall scone  Vase  Christmas Hanging Ornament 5. INTRODUCTION OF EXPORT IN INDIA & ITS PROCEDURE                Types of Exporters How to set up an Export Organisation Choosing appropriate mode of operations Naming the Business Structure of an export Organisation Registration with export Promotion Council Registration with Sales Tax Authorities How to Begin to do Export Finding a Customs Negotiating Contracts Export Sales & Contract Terms & Conditions Nature of International Trade Contracts Terms of Shipments –Incoterms Processing an export order Financial risks involved in Foreign Trade

6. EXPORT DOCUMENTS  Commercial Documents  Auxiliary Document  Pre- Shipment Documents 7. EXPORT PROCUDURES & POLICIES          Marine Insurance Policy Quality Control and Pre- Shipment Inspection Shipping and Customs Formalities Factory Stuffing of Cargo Sales Tax exemption Procedure Method of receiving payment against export Cover risk by T.O. & register this EU in ECGC Foreign Exchange Fluctuation risks Transfer risk to Third Parties


8. IMPORT- EXPORT POLICY IN INDIA  Why do we need export?  Brief History  Exim Policy- Objectives  Export Promotion Measures  Import Control in India  Pre 90’s Exim Policy of India  Post 90’s Exim Policy of India 9. LIMITATION OF THE STUDY 10. RESEARCH METHODOLOGY 11. CONCLUSION 12. DATA ANANLYSIS & INTERPRETATION 13. BIBLIOGRAPHY 14. APPENDIX




1.TRANSPARENT OVERSEAS:We are pleased to introduce ourselves as a Transparent Group of industries. Transparent Overseas is the parent company of the group. Established in 1997 & engaged in import, manufacture & export of its products i.e. glass artware, Brassware, Ironware & all other handicrafts items worldwide. It has ONE STAR EXPORT HOUSE status & a ISO 9001, ISO 14001 and OSHAS 18001 certified. It has got several states & national award for excellence export performance during the past years , these award was sponsored by Export Promotion Bureau, Lucknow (State Export Award), Export Promotion Council for handicrafts, New Delhi (Certificate of Merit Award), Capexil formerly known as Chemical Allied Products Export Promotion Council , Kolkata (Certificate of Merit Award) etc. etc.. Name of worldwide high profile buyers are- U.S.A. - Target Corporation - U.S.A. - Walmart - U.S.A. - Marmaxx - U.S.A.- Straight Trade Corporation - U.K. - J.R.C. - U.S.A- Hoff Interior, - Germany- Hudsenbay - Canada - France Gift - France - Dunnes - Ireland - Bonton - U.S.A. - Zodax


Registered Office: Opp. Pradeep Nagar, Dholpura Crossing, Agra Road, Firozabad-283203 Noida Office – Corporate Office: B-101, Sector 2 Noida 201301(UP) CONTACT PERSONS: MR. AKASH JOSEPH (MERCHANDISING MANAGER) Phone nos. (Factory) - 91-9971842590 - 91-9310551366 Fax no. - 91-5612-243800 Factory:Agra Road, Firozabad-283203 Showroom:B-102, Sector-2, NOIDA- 201 301

$ 4.15 Million (U.S.D.) $ 9.5 Million (U.S.D.) $ 2.6 Million (U.S.D.) $ 1.8 Million (U.S.D.) $ 0.2 Million (U.S.D.)







$ 18.25 Million (U.S.D.)


Certificate of Merit by Capexil 2000-01 State Export Award by U.P. Export Promotion Council 2001-02 Certificate of Merit by Capexil 2001-02 Excellence Award by U.P.Export Promotion 2002-03 Council Certificate of Merit by Capexil 2002-03 Arch of Excellence Award (Business) 2003-04 Certificate of Merit by Capexil 2003-04 National Excellence Award by National Awarness Forum 2003-04 Bhartiya Udhyog Ratna Award by IEDRA 2003-04 Certificate of Merit by Capexil 2004-05 Certificate of Merit by EPCH 2004-05 Certificate of Merit by Capexil 2005-06 Certificate of Merit by Capexil 2006-07


Other Sister companies As earlier we mentioned that we are importer and manufacturer also for the domestic market so these two fields are organize through our flagship company sister concerns. Those are as follows.

In this unit we produce tumblers, Bowls, Cups, Saucer and Empty wine bottles for wine bottles. FM Glass Works is an ISO 9001 certified company. It covers domestic market, our esteemed buyers are Shawallace, U.B. Group, Mohan Meikens, Redico Khetan and other corporate clients for tumbler and bowls are Hindustan Liver, Nessle India and Heings India Ltd.

This unit was established in 2001. In this unit we manufacture & export our products of glassware, Ironware, Brassware & other handicraft items.





This unit was established in 2004 and it’s a high quality color glass producing unit having a pot furnace & it is engage to export its products abroad.

Evera Auto India Private Limited is an automobile company engaged in manufacturing of battery operated two wheelers & three wheeler vehicle, incorporated in 2007.This is sister company of Transparent Overseas. Directly or indirectly we are associated with the glass industries for last 30 years. Battery operated two wheelers & three wheelers come under new project name “EVERA”. Transparent Group is a ISO 9001, ISO 14001 and OSHAS 18001 certified. This year Evera Auto India Private Limited has taken initiative arrangement to manufacture battery operated two wheelers bikes & three wheeler auto rickshaw? It is expected by the company to market its products in domestic & international market. CONTACTS ADDRESS: EVERA AUTO INDIA PVT. LTD., OPP. PRADEEP NAGAR, AGRA ROAD, FIROZABAD -283 203 (U.P.) INDIA



Process Flow Chart














COMPANY PROFILE M/s Transparent Overseas is an ambitious industrial venture of Firozabad. The company has the manufacturing unit at Opp. Pradeep Nagar, Agra Road, Firozabad. It is one of the leading Manufacturer and Supplier of Glassware and Glass decorative items etc. All the activities are carried out by well-qualified and experienced personnel. Imbibing technical innovations/creations and using the most sophisticated machinery, we provide value-added, quality products to meet the ever-changing needs of our customer and their customers. Company has achieved a unique place among the products being manufactured for sales promotions of National and International Companies. We are known for our concern and efforts for optimum uses of resources, solid waste management & providing safe workplace for our employees. The Company believes that continual improvement in the quality management system is essential to achieve maximum customer satisfaction & improvement in environment and health & safety


management system will help in arresting the decoration in quality of the environment & health of our employees.

In continuation of the efforts to improve our quality management, environment and health & safety performance, we have established a Quality Management System (QMS) ISO 9001: 2000, Environmental Management System (EMS) – ISO 14001: 2004 and Occupational Health & Safety Assessment (OHSAS) – 18001 The company’s top management has authorized Mr. Vinay Pratap Singh as it Management Representative having full authority & responsibility for development, implementation and maintenance of QMS, EMS, and OHSAS. The Company has well trained and experienced staff of about 23 people. The languages understood by the employees are Hindi & English. SCOPER OF QMS: “Manufacture and supply of Glass wares and glass decorative items’


EXCLUSIONS: 1. Design and development. At present Design & Development is not under scope of the organization. All the products manufactured at Transparent Overseas are based on customer’s specifications only.
4.1 GENERAL REQUIREMENTS The Management of M/s Transparent Overseas is motivated to establish, implement and maintain a documented Integrated Management System (QMS, EMS & OHSAS) and continually improve its effectiveness in accordance with the requirements of the International Standards ISO 9001 : 2000, ISO 14001 : 2004, OHSAS 18001 : 1999.

Customer’s requirement Review 4.1 .1 Process needed for IMS and their interaction and acceptance Production Planning Purchas Purchased Stores Material e
Verification By QC

Monitoring of objectives and management programs for EMS & OHSAS Manufacturing & In Process Monitoring

Internal Audit
Management Review of IMS

Final Product monitoring
Packing Delivery Customer Feedback

Initiation of Required corrective/ Preventive Action Act & Implement


4.1 .2 APPLICATION OF PROCESSES FOR IMS : a) Our integrated management system follows the requirements of QMS, EMS & OHSAS. b) Criteria and methods, to ensure effectiveness of the operation and control of the processes, are determined & defined in the relevant work instructions or As per Quality Plans. c) The management ensures availability of required resources and information to support and monitoring of the process. d) The management monitors and analyses the processes. e) Necessary action is taken to achieve the planned goals for their continual improvement. 4.2 DOCUMENTATION REQUIREMENT FOR IMS 4.2.1 General The Company has documented its Policy, objectives and manual including procedure, required by the International standards and by the Company for effective implementation and control of IMS. 4.2.2. Manual The Company has established and maintained Integrated Management System (QMS, EMS & OHSAS) manual which includes scope of the QMS, EMS & OHSAS, details & justification for exclusions under element 7, documented procedures for QMS and description & interaction of the processes. 4.2.3. Control of documents – Procedure a) Documents are reviewed for adequacy and approved by the Mr, prior to release. b) Whenever required documents are reviewed, updated and re-approved by MR. Also record of such authorized changes is maintained by MR. c) Drawing a vertical line on right hand side of the changed portion to identifies changes to a document. Current revision status is also identified on the document. d) MR issues the authorized/ approved documents, wherever required and ensures availability of the relevant version of the applicable document. e) It is ensured that documents remain legible and readily identifiable. IMS manual is controlled, as defined in section 2.0 of this IMS manual.


f) Other documents are controlled by giving a document no. as follows: Document Code / Functions code (Format/Record) – Sr. no. g) A specimen copy of each format is approved and issued by MR. And a set of blank formats is maintained by the MR. h) Revision status of all the existing formats (without bearing any revision status) is issue.1. i) In case of any change to a document, fresh document (bearing next revision no..) is issued. Fresh issue is issued, whenever required. j) MR maintains master copy & master list of all documents, identifying their current revision status. k) Documents of external origin, if any, are controlled by marking ‘CONTROLLED COPY’. MR maintains their master list and updated it once in a year. l) Unintended use of obsolete documents is prevented. They are identified by stamping ‘OBSOLETE’, and kept separately, if they are to be retained. 4.2.4 Control of records-procedure a) Records are maintained to provide evidence of conformity to the requirements and of the effective operation of the Integrated Management System. b) Records are indexed identifying their type and year/period. c) The person, responsible for their control, is also responsible for their review to maintain effectiveness of the Integrated Management System. d) MR maintains a master list of records, identifying their location, retention period. e) Records are stored and maintained to ensure their easy & readily access/retrievability, whenever required, and to prevent damage/loss. f) Records are retained for a defined period or to fulfill the contractual obligation, whichever is later. Records, required to be retained after expiry of their retention period, are suitably identified and kept separately. g) Obsolete records, which need not to be retained after expiry of their retention period, are disposed off in consultation with the GM. h) MR ensures that the records are made available to the customers, where this is agreed requirement and to the internal/external auditors during audit.


A multifunctional team called IMS Core Group was set up to establish the integrated management system. S.No. 1. 2. 3. 4. 5. Name Mr. Mukesh Kumar Bansal Mr. Sunil Prakash Sharma Mr. Kamal Verma Mr Harendra Singh Department/ Function Managing Partner/ HOD Marketing Manager Export Account Officer Executive Computer Operations


Sr. No. 1.

Process/ Activity
Review customer’s requirement Marketing Customer satisfaction of

Quality Objectives
Within 07 days after receipt Increase sales by 10% w.r.t last financial year To increase customer satisfaction level by 15% of present level within next six months Within 04 days after order conformation Within 02 days of receipt of material/ components Reduce rejection/ wastage during production in all stages by 2% with in next six months Within one day of production Within 07 days of receipt. Once in months 06

In Put
Customer enquiry/ orders More orders Feedback from customers

Out Put
Reviewed/Acc epted enquiry/ order Increased sales Analysis feedback % level of and

Monitoring Criteria
At the end of week First week of each month. After months. six

Effectiveness Criteria
In 100% cases customer requirements should be reviewed within 07 days Sales targets should be achieved within specified time period At least 50% of the decided target should be achieved

2. 3.




Purchase Order of required raw material, from approved suppliers Verification of purchased material/ Components for its conformance Manufacturing Process

Material requireme nt Purchased Material

Purchased material

After every two days

Raw Material

Verified material (Either it is confirmed or not) Finish product

After every three days.

At least in 60% cases order should be send to the suppliers within four days after order conformation In 100% cases, defined objective should be achieved. Rejection/ Wastage should be reduce, at least by 1%

First week of Month


Testing of Various Product Review & analysis of customer complaints Internal audits

Untested material Customer Complain ts Requirem ents of ISO 9001:140 01 & OHSAS 18001:19 99 and reports of previous audits Data for review

Tested material Result review/ analysis International audit reports of

First week of month First week of Month After one year


After production at each stages product should be tested within one day. Complaints should not be repetitive nature Proposed corrective and preventive actions given be auditee should be implemented



Management review

At planned interval (Once in 06 months)

Decisions taken

After one year

Out put of the MRM master be implemented






Sand Frosted Machine Drill Machine Hand Cut Grinder Magnate Separator Press & Blowing Machine Automatic Neumatic Press Machine Annealing Lehr Machine. Rusa Furnace Machine Mouth blowing item’s melting machine Pressed glass item’s melting machine Dania Machine Hand Press Machine Spinning Machine Grinding Machine Edge Smoothing machine Mixing Machine Conveyer Lethe Machine




































Introduction of Export in India India has a mission to capture 2% of the global share of trade by 2010, up from the present level of less than 1%. Export is one of the lucrative business activities in India. The government also provides various promotional schemes to the exporters for earning valuable foreign exchange for the country and for meeting their requirements for importing modern technology and essential inputs. Besides, the income from export business is also exempted to the specified extent under the Income Tax Act, 1961, Refund of Central Excise and Custom Duty on export is also made under the Duty Drawback Scheme and other export promotion schemes of the Government. Exports can be of goods or services which can be moved physically from one country to another or can be rendered. Physical Exports: If the goods physically go out of the country or services are rendered outside the country then it is called as physical export. The Foreign Trade defines exports as taking out of India any goods by land, sea, air. Although the act does not term them as “Physical Exports”, we have to put phrase to distinguish it from “Deemed Exports” which is sales in India but considered as exports for limited purpose. TYPES OF EXPORTERS: Exporters can be basically classified into two groups 1. Manufacturer Exporter: As the exporter has the facility to manufacturer the product he intends to export and hence he exports the products manufactured by him. 2. Merchant Exporter: An exporter who does not have the facility to manufacture an item. But, he procures the same from other manufacturers or from the market and exports the same. An exporter can be both a manufacturer exporter as well as a merchant exporter, he can export product manufactured by him or he can export items bought from the market. Once it is decided to export, it is mandatory on your part to follow certain procedures, rules and regulations as prescribed by various regulatory authorities such as DGFT, RBI, and Customs. These procedures, rules and regulations are laid down in the Exim Policy 2004-09, Exchange Control Manual, Customs Act etc. Accordingly Export documents are required to be prepared keeping in view of the requirement of the foreign buyers and our regulatory authorities.


HOW TO SET UP AN EXPORT ORGANISATION The proper selection of organization depends upon 1. Ability to raise finance. 2. Capacity to bear the risk 3. Desire to exercise control over the business. 4. Nature of regulatory framework applicable to anyone. On close evaluation of once capacity with regard to above four variables, export organization cam is set up as proprietorship business, partnership firm, private limited company or public limited company. CHOOSING APPROPRIATE MODE OF OPERATIONS: You can choose any of the following modes of operations 1. Merchant Exporter i.e. buying the goods from the market or from the manufacturer and then selling it to foreign buyers 2. Manufacturer Exporter i.e. manufacturing the goods yourself for export. 3. Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of the seller and charging the Commission. 4. Buying Agent i.e. acting on behalf of the buyer and charging Commission. 5. Service provider i.e. providing service from India to another country . NAMING THE BUSINESS Whatever form of business organization has been finally decided, naming the business is an essential task for every exporter. The name and style should be soft, attractive, short and meaningful. Open a current account in the name of the organisation in whose name you intend to export. It is advisable to open the account with a bank which is authorised to deal in Foreign Exchange.


STRUCTURE OF AN EXPORT ORGANISATION 1. Marketing manager for generating sales 2. Commercial manager for looking activities of the execution of the orders 3. Staff personnel for carrying out the day-to-day activities namely • Preparation of pre - shipment documents. • Co-ordinating with clearing agents on the progress of the shipment to be made. • Co-ordinating with the ware house\C. excise department regarding packing and clearance of the goods for export. • Preparation of post shipment documents foe banks. • Follow-up with the bank on dispatch of documents, receipt of payment, a ailment of bank loans etc.
4. To look into the requirement of licenses, claiming of export benefits filing of

documents with the Government Authorities in Discharge of Export Obligations, if any, filing of returns to the various Government Agencies which are mandatory, prepare and keep an information bank of various transaction of the company, their domestic as well as international competitors. 5. An office boy for doing leg work. 6. A clearing and forwarding agent to handle the documents and the goods in the customs premises\ in the ports of lading. Depending upon the size of the business the numbers of personnel under each category may increase. For example if a company is transacting substantial volume of business in more than one product. Then it is necessary to have marketing manager for each product so that the person can concentrate on a particular trade to enhance the business.


REGISTRATION WITH REGIONAL LICENCING AUTHORITIES OBTAINING IMPORTER EXPORTER CODE (IEC) NUMBER. The Customs Authorities will now allow the exporter to export or import goods into or from India unless he holds a valid IEC number. Before applying for IEC number it is necessary to open a bank account in the name of the company with any commercial bank authorized to deal in foreign exchange. The duly signed application form should be supported by the following documents. • Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs. 1000/• Certificate from the banker of the applicant firm as per Annexure1to the form given. • One copy of PAN number issued by Income Tax Authorities duty attested by the applicant. • One copy of Passport Size photographs of the applicant duly attested by the banker to the applicant. Declaration by the applicant that the proprietor/ partners/ directors as the case may be of the applicant company, are not associated as proprietor/ partners/ directors in any other firm, which has been caution, listed by the RBI. Where the applicant declares that they are associated as proprietor/ partners/ directors in any other firm, which has been caution, listed by the RBI, they will be allotted IEC No. but with an additional condition that they can export only with RBI’s prior approval and they should approach RBI for the purpose. Each importer/exporter shall be required to file importer/ exporter profile once with the licensing authority shall enter the information furnished in Appendix 2 in their database so as to dispense with changes in the information given in Appendix-2, importer/ exporter shall intimate the same to the licensing authority. APPLICATION FOR OBTAINING AN IEC NUMBER For obtaining IEC number apply in the prescribe form along with the documents listed above to Regional Licensing Authority (Office of the Regional DGFT). The registered office or the head office may apply for allotment of IEC No. Whenever, there is a change in the name, address or constitution of the holder of IEC No., such change should be intimated within 30 days to the concern authorities. IEC certificate will be issued in the form (copy enclosed). A copy of IEC No. is also endorsed to the concerned banker.


VALIDITY: The IEC No allotted to a individual/firm/company will be valid for all its branches/divisions units/factories as indicated in the IEC No. Import/Export of any commodity by that firm/company. There being no date of expiry, the IEC once allotted is valid till it is revoked. But, if no import or export is affected in the previous financial year, the same will be made inoperative. However, this can be made operative by a formal request to the DGFT. IDENTITY CARD (For conducting transactions with the office of DGFT): As it is not always possible for the top man or directors, promoters of the company to visit DGFT frequently. There is a provision of issuance of identity cards to the proprietors/partners/directors and their authorized representatives. An application of Issuance of an identity card may be made in the form (Appendix-5) The document/ License/Certificate/Permissions may be delivered to the identity card holder and officials of the Licensing Authority (DGFT)shall not be responsible for any loss etc. In case of loss of an identity card a duplicate card may be issued on the basis of an FIR & affidavit. In addition to obtaining the IEC No. the exporter is also required to obtain Business Identification No(BIN). For this exporter is required to contact DGFT online on web site. The licensing authority issues BIN in coordination with customs authorities. This BIN is required to be mentioned on the shipping bills at the time of customs clearance of the export cargo. RCMC (Registration-Cum-Membership Certificate)– REGISTRATION WITH EXPORT PROMOTION COUNCILS – In order to enable the exporter to obtain benefits/concessions under the Foreign Trade Policy, the exporter is required to register himself with an appropriate export promotion agency by obtaining registration-cum-membership certificate. (RCMC). If the export product is that it is not covered by any EPC, RCMC in respect thereof may be issued by FIEO. An application for registration should be accompanied by a self certified copy of the Importer-Exporter Code number issued by the regional licensing authority concerned and bank certificate in support of the applicants financial soundness. The RCMC shall be valid for 5 years ending 31st March of the licensing year. REGISTRATION WITH SALES TAX AUTHORITIES: Goods that are to be shipped out of the country for export are eligible for exemptions from both Sales Tax and Central Sales Tax. For this purpose, exporter should get himself registered with the Sale Tax Authority of is state after following the procedures prescribed under the Sales Tax Act applicable to his state.


HOW ONE BEGINS TO DO EXPORT Before entering into the venture of exports, one must look for the product to be exported and the market where he intends to export. In case of a manufacturer, obviously he would like to export the product he manufactures as is or with possible modification as may be required by the market. However, in case of a merchant exporter or a trader, one has to identity the product to export. If the exporter is already in the trade in the domestic market and is familiar with the product it would be an advantage to export the said product of which he has reasonable knowledge. Before selecting a product, one must simultaneously made a study and find out the prospective market. For finding out the market for the selected product, the following methods will help. • Get statistical information as to imports of the product by various countries and their growth prospects in the respective countries • Approach the chamber of commerce for their guidance to find out the market. • Approach the Export Promotion Council dealing in the product of selection to get more information. The Preliminary Once you are ready with the product you wish to export and have found the market for the same, you are ready to proceed further. Following sequences can be followed: 1. Any one, who wishes to export, must first of all get an Importer Exporter Code Number (IE Code).This can be obtained by making a formal application to the office of the Regional Directorate General of Foreign Trade (DGFT). • Get yourself registered with the related Export Promotion Council and become a member. Also arrange to obtain Registration-Cum-Membership Certificate (RCMC) from the council. This has twin objectives: • Under the Foreign Trade Policy, it is mandatory that an exporter gets him registered with the Export Promotion Council to avail of various export facilities. • Being a member, you will have access to all the information relating to the product that could be made available by the council • Many foreign buyers send their enquiries for the imports to the Export Promotion Council. Hence you will have few customers interested in your product.


2. If you are a manufacturer, find out the provisions under the EXIM Policy of getting the raw materials duty free. 3. Get familiar with the excise formalities as goods meant for export can be cleared without payment of C. Excise duty on the finished product subject to compliance of certain formalities. 4. Understand the local government regulations in relations to the export of the product. 5. Get information of the government’s regulations of the importing country as to restrictions on the quantity, product specification, packing regulations, customs regulations, requirement of specific documents/information etc. 6. Availability of Vessels/Airlines, the transport charges, frequency of operation etc., 7. To look for a Custom House Agent (CHA) (also know as freight forwarders or clearing agents) for handling the documents/cargo in the customs. 8. If the product is covered under any quota regulation, find out the agency/council who is handling the quota distribution for the product and the availability of quota for exports.

FINDING A CUSTOMS Once you have selected the market, the next step is to find a prospective customer. This you can get 1. From the directory of importers of the country you intend to export to 2. By writing to the Embassy of India in that country for assistance 3. By writing to the chamber of commerce of that country 4. By means of participation in a Fair/Exhibition abroad either directly or through the Export Promotion Council 5. By participating in international fair if organized locally Through the personal contacts in that country. By these processes one can only have the list of customers. One has to dialogue or correspond with these customers by sending samples, getting feedback from the customers etc. to ultimately select the customer with whom to deal with. It is necessary to know the financial standing of the company which can be obtained through the bank channel or through the office of ECGC. NEGOTIATING CONTRACT: Once the prospective customer is found, the business deal has to be concluded. The following aspects may be considered before entering into a final contract with the buyer.


1. Credit Worthiness of the Customer. 2. Availability of the Steamer/Airlines and the frequency 3. The freight charges 4. The full product specification 5. The quantity, Price 6. Terms of Payment 7. Type of packing and markings on the packages 8. Mode of shipment & Shipment schedule 9. Tolerance of quantity to be shipped 10.Documentation requirement for the customer 11.Documentation requirement of the government of importing country 12.Compliance of the local governmental rules and regulations Before entering into contract one should take note of the above factors. While these are indicative, the requirements will vary from country to country, product to product and buyer to buyer. EXPORT SALES & CONTRACT TERMS & CONDITIONS Very often exporters do not enter into any formal contract and finalize the trade deal through the exchange of letters, cable, telex etc. It is, however, expedient that the parties (exporters & importers) incorporate all important terms & conditions of their trade deal in a separate document or contract that will avoid disputes arising out of uncertainty or ambiguity. Export contract may be sent in duplicate along with the Proforma Invoice to the overseas buyer.

NATURE OF INTERNATIONAL TRADE CONTRACTS: There are certain, peculiar characteristics of international trade contract which are not present in those for sales of goods in the domestic market Whereas the parties to a domestic trace contract normally needs only agree on the elements which are necessary for their particular trade transactions like price, description, quality and quantity of goods, delivery terms etc the situation will be quite different when the buyer and the seller to sale/purchase contract belong to different countries. The parties to all international trade contracts provide all their relative rights and obligations in several ways For example, they may agree to adopt either the Law of the country of the buyer or that of the seller. The traders are normally reluctant to leave the determination of the rights and obligations by implications under the legal system of either’s country. They


prefer to make explicit provisions regarding the rights and obligations by including a set of detailed and precise terms and conditions in their contract. EXPORT OF SAMPLES\GIFTS: Exports of bonafide trade and technical samples of freely exportable items shall be allowed without any limit. Goods including edible items of value not exceeding Rs. 100000/- in a licensing year, may be exported as a gift. However items mentioned as restricted for exports in ITC (HS) shall not be exported as a gift without a licence/certificate/permission, except in the case of edible items. STANDARD CONTRACT FORMS: Notwithstanding the efforts made by various national/international organizations like the United Nations Commission on the International Trade Law, there is still no perfection or a device which would give the parties an accurate and complete idea of each others understanding of various trade terms, the commercial practices and the rights and the obligations vis-à-vis each other so that the misunderstandings are practically eliminated. Nevertheless, the Indian Council of Arbitration published in 1966 a booklet on “Standard Contract Forms and Model Arbitration Clause for use in Foreign Trade Contracts”. It was revised and reprinted in 1969 and 1977. It can be referred to by exporter for various clause to be incorporated in the Export Contract. ENTERING INTO AN EXPORT CONTRACT In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of goods and terms of sale including export price, mode of payment, storage and distribution methods, type of packaging, port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under: • Product, Standards and Specifications • Quantity • Inspection • Total Value of Contract • Terms of Delivery • Taxes, Duties and Charges


• Period of Delivery/Shipment • Packing, Labeling and Marking • Terms of Payment-- Amount/Mode & Currency • Discounts and Commissions • Licenses and Permits • Insurance • Documentary Requirements • Guarantee • Force Majeure of Excuse for Non-performance of contract • Remedies • Arbitration clause It will not be out of place to mention here the importance of arbitration clause in an export contract Court proceedings do not offer a satisfactory method for settlement of commercial disputes, as they involve inevitable delays, costs and technicalities. On the other hand, arbitration provides an economic, expeditious and informal remedy for settlement of commercial disputes. Arbitration proceedings are conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the subject matter of the dispute. The dates for arbitration meetings are fixed with the convenience of all concerned. Thus, arbitration is the most suitable way for settlements of commercial disputes and it may invariably be used by businessmen in their commercial dealings. ARBITRATION: Arbitration clause recommended by the Indian Council of Arbitration:”All disputes or differences whatsoever arising between the parties out of / relating to the meaning, construction and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties” (or any other arbitration clause that may be agreed upon between the parties). TERMS OF SHIPMENTS – INCOTERMS The INCOTERMS (International Commercial Terms) is a universally recognized set of definition of international trade terms, such as FOB, CFR & CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial terms like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance and other costs and risks.


The INCOTERMS was first published in 1936 --- INCOTERMS 1936 --- and it is revised periodically to keep with changes in the international trade needs. The complete definition of each term is available from the current publication --INCOTERMS 2000. Under INCOTERMS 2000, the international commercial terms are grouped into E, F, C and D, designated by the first letter of the term, relating to the final letter of the term. E.g. EXW—exworks comes under grouped ‘E’. The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree. The scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods. Incoterms deal with the number of identified obligations imposed on the parties and the distribution of risk between the parties. In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer’s end, for example the trade terms DEO (Delivery Ex Quay) and DDP (Delivered Duty Paid) Quite often, the charges and expenses at the buyer’s end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines. Similarly, it would be best for importers not to deal in EXW (Ex Works) which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller’s end MORE CLARIFICATION ON INCOTERMSEXW {The named place}Ex Works: Ex means from. Works means factory, mill or warehouse, which are the seller’s premises. EXW applies to goods available only at the seller’s premises. Buyer is responsible for loading the goods on truck or container at the sellers premises and for the subsequent costs and risks. In practice, it is not uncommon that the seller loads sthe goods on truck or container at the sellers pre4mises without charging loading fee. N the quotation, indicate the named place (sellers premises) after the acronym EXW for example EXW Kobe and EXW San Antonio. The term EXW is commonly used between the manufacturer (seller) and exporttrader(buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works. FCA {The named point of departure} Free Carrier: The delivery of goods on truck, rail car or container at the specified point(depot) of departure, which is usually the sellers premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at sellers expense. The point(depot) at origin may or may not be


a customs clearance centre. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks. In the air shipment, technically speaking, goods placed in the custody of an air carrier are considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment. The term FCA is also used in the RO/RO (roll on/roll off) services In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle. Some manufacturers may use the former terms FOT (Free on Trucks) and FOR (Free on Rail) in selling to export-traders. FAS (The named port of origin) Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller’s expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks In the export quotation, indicate the port of origin(loading)after the acronym FAS, for example FAS New York and FAS Bremen. The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels. FOB {The named port of origin) Free on Board: The delivery of goods on the board the vessel at the named port of origin (Loading) at seller’s expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks. In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai. Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in practice, many importers and exporters still use the term FOB in the air freight. In North America, the term FOB has other applications. Many buyers and sellers in Canada and the USA dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB destination. FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer’s premises which may include the import custom clearance and payment of import customs duties and taxes at the buyer’s country, depending on the agreement between the buyer and seller. In international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part of the


INCOTERMS (International Commercial Terms). CFR {The named port of destination} Cost and Freight: The delivery of goods to the named port of destination (discharge) at the sellers expenses. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F. In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example CFR Karachi and CFR Alexandria. Under the rules of the INCOTERMS 1990, the term Cost and Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used in the air freight.

CIF {Named port of destination} Cost, Insurance and Freight: The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller’s expense. Buyer is responsible for the import customs clearance and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example CIF Pusan and CIF Singapore. Under the rules of the INCOTERMS 1990, the term CIFI is used for ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air freight. CPT {The named place of destination} Carriage Paid To: The delivery of goods to the named port of destination (discharge) at the sellers expenses. Buyer assumes the cargo insurance, import custom clearance, payment of custom duties and taxes, and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka. CIP {The named place of destination) Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller’s expense. Buyer assumes the importer customs clearance, payment of customs duties and texes, and other costs and risks. In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.


DAF {The names point at frontier} Delivered At Frontier: The delivery of goods to the specified point at the frontier at sellers expense. Buyer is responsible for the import custom clearance, payment of custom duties and taxes, and other costs and risks. In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland. DES {Named port of destination} Delivered Ex Ship: The delivery of goods on board the vessel at the named port of destination (discharge) at sellers expense. Buyer assumes the unloading free, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks. In the export quotation, indicate the Port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm. DEQ {The named port of destination Delivered Ex Quay: The delivery of goods to the Quay (the port) at the destination at buyers expense. Seller is responsible for the importer customs clearance, payment of customs duties and taxes, at the buyers end. Buyer assumes the cargo insurance and other costs and risks. In the export quotation, indicate the Port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo.

DDU {The named point of destination} Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the final point at destination, which are often the project site or buyers premises at seller’s expense. Buyer assumes the import customs clearance, payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks. In the export quotation, indicate the point of destination (discharge) after the acronym DDU for example DDU La Paz and DDU N’djamena. DDP {The named point of destination)Delivered Duty Paid: The seller is responsible for most of the expenses which include the cargo insurance, import custom clearance, and payment of custom duties, and taxes at the buyers end, and the delivery of goods to the final point of destination, which is often the project site or buyers premise. The seller may opt not to insure the goods at his/her own risk. In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.“E”-term,”F”-term, “C”-term


&”D”-term: Incoterms 2000, like its immediate predecessor, groups the term in four categories denoted by the first letter in the three-letter abbreviation. 1. Under the “E”-TERM (EXW), the seller only makes the goods available to the buyer at the seller’s own premises. It is the only one of that category. 2. Under the “F”-TERM (FCA, FAS, &FOB), the seller is called upon to deliver the goods to a carrier appointed by the buyer. 3. Under the “C”-TERM (CFR, CIF, CPT, & CIP), the seller has to contract for carriage, but without assuming the risk of loss or damage to the goods or additional cost due to events occurring after shipment or discharge. 4. Under the “D”-TERM (DAF, DEQ, DES, DDU & DDP), the seller has to bear all costs and risks needed to bring the goods to the place of destination. All terms list the seller’s and buyer’s obligations. The respective obligations of both parties have been grouped under up to 10 headings where each heading on the seller’s side “mirrors” the equivalent position of the buyer. Examples are Delivery, Transfer of risks, and Division of costs. This layout helps the user to compare the parties respective obligations under each Incoterms.

PROCESSING AN EXPORT ORDER You should not be happy merely on receiving an export order. You should first acknowledge the export order, and then proceed to examine carefully in respect of 1. Items 2. Specification 3. Pre-shipment inspection 4. Payment conditions 5. Special packaging 6. Labeling and marketing requirements 7. Shipment and delivery date 8. Marine insurance 9. Documentation requirement etc. If you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise clarification should be sought from the buyer before confirming the order. After confirmation of the export order immediate steps should be taken for procurement/manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.


Before accepting any order necessary homework should have been done as to availability of the production capacity, raw material e.t.c. It would be in the interest of the exporter to look into entering into forward contract to safeguard against exchange rate fluctuations. Ensure that the mode of payment is also agreed upon. In case of shipment against letter of credit, the buyer should be advised to open the credit well in advance before effecting the shipment. FINANCIAL RISKS INVOLVED IN FOREIGN TRADE As an exporter while selling goods abroad, you encounter various types of risks. The major risks which you have to undergo are as follows: 1. Credit Risk 2. Currency Risk 3. Carriage Risk 4. Country Risk You can protect yourself against the above risks by initiating appropriate steps. Credit Risks: You can cover your credit risk against the foreign buyer by insisting upon opening a letter of credit in your favour. Alternatively one can avail of the facility offered by various credit risk agencies. A specific insurance cover can also be obtained from ECGC (Exports Credit & Guarantee Corporation) to cover your country risk besides covering credit risk. Currency Risks: As regards covering the currency risk, due to the exchange rate fluctuations, you can request your banker to book a forward contract. Carriage Risk: The carriage risk can be covered by taking an appropriate general insurance policy. Country Risk: ECGC provides cover to protect the exporter from country risks. A detailed procedure how an exporter can get himself protected against the above risks are given in separate chapters later. EXPORT DOCUMENTS Any export shipment involved various documents required by various authorities such as customs, excise, RBI, Inspection and according depending upon the requirements,


there are categorized into 2 categories, namely commercial documents and regulatory documents. A. Commercial Documents. : Commercial documents are required for effecting physical transfer of goods and their title from the exporter to the importer and the realisation of export sale proceeds. Out of the 16 commercial documents in the export documentation framework as many as 14 have been standardised and aligned to one another. These are performa invoice, commercial invoice, packing list, shipping instructions, intimation for inspection, certificate, of inspection of quality control, insurance declaration, certificate' of insurance, mate's receipt, bill of lading or combined transport document, application for certificate origin, certificate of origin, shipment advice and letter to the bank for collection or negotiation of documents. However, shipping order and bill of exchange could not be brought within the fold of the Aligned Documentation System, 1. Commercial Invoice: Commercial invoice is an important and basic export document. It is also known as a 'Document of Contents' as it contains all the information required for the preparation of other documents. It is actually a seller's bill of merchandise. It is prepared by the exporter after the execution of export order giving details about the goods shipped. It is essential that the invoice is prepared in the name of the buyer or the consignee mentioned in the letter of credit. It is a prima facie evidence of the contract of sale or purchase and therefore, must be prepared strictly in accordance with the contract of sale. Contents of Commercial Invoice 1. Name and address of the exporter. 2. Name and address of the consignee. 3. Name and the number of Vessel or Flight. 4. Name of the port of loading. 5. Name of the port of discharge and final destination. 6. Invoice number and date. 7. Exporter's reference number. 8. Buyer's reference number and date. 9. Name of the country of origin of goods. 10.Name of the country of final destination. 11.Terms of delivery and payment. 12.Marks and container number. 13.Number and packing description.


14.Description of goods giving details of quantity, rate and total amount in terms of internationally accepted price quotation. 15.Signature of the exporter with date. Significance of Commercial Invoice 1. It is the basic document useful in preparation of various other shipping documents. 2. It is used in various export formalities such as quality and pre-Shipment inspection excise and customs procedures etc. 3. It is also useful in negotiation of documents for collection and claim of incentives. 4. It is useful for accounting purposes to both exporters as well as importers. Inspection Certificate:The certificate is issued by the inspection authority such as the export inspection agency. This certificate states that the goods have been inspected before shipment, and that they confirm to accepted quality standards. Marine insurance policy:Goods in transit are subject to risk of loss of goods arising due to fire on ship, perils of sea, theft etc. marine insurance protects losses incidental to voyages and in land transportation. Marine insurance policy is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at the request of the importer, but the premium payment will be made by the exporter. There are different types of policies such as SPECIFIC POLICY: This policy is taken to cover different risks for a single shipment. For a regular exporter, this policy is not advisable as he will have to take a separate policy every time a shipment is made, so this policy is taken when exports are in frequent. • Floating Policy: This is taken to cover all shipments for some months. There is no time limit, but there is a limit on the value of goods and once this value is crossed by several shipments, then it has to be renewed. • Open Policy: This policy remains in force until cancelled by either party i.e. insurance company or the exporter. •Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or more destinations. The open cover may specify the maximum


value of consignment that may be sent per ship and if the value exceeded, the insurance company must be informed by the exporter. • Insurance Premium: Differs upon product to product and a number of such other factors, such as, distance of voyage, type and condition of packing, etc. Premium for air consignments are lowered as compared to consignments by sea. Consular Invoice: Consular invoice is a document required mainly by the Latin American countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Guinea, Zanzibar, etc. This invoice is the most important document, which needs to be submitted for certification to the Embassy of the importing country concerned. The main purpose of the consular invoice is to enable the authorities of the importing country to collect accurate information about the volume, value, quality, grade, source, etc., of the goods imported for the purpose of assessing import duties and also for statistical purposes. In order to obtain consular invoice, the exporter is required to submit three copies of invoice to the Consulate of the importing country concerned. The Consulate of the importing country certifies them in return for fees. One copy of the invoice is given to the exporter while the other two are dispatched to the customs office of the importer's country for the calculation of the import duty. The exporter negotiates a copy of the consular invoice to the importer along with other shipping documents. Significance of Consular Invoice for the Exporter 1. It facilitates quick clearance of goods from the customs in exporter's as well as importer's country. 2. Certification' of goods by the Consulate of the importing country indicarer that the importer has fulfilled all procedural and licensing formalities for import of goods. 3. It also assures the exporter of the payment from the importing country. Significance of Consular Invoice for the Importer 1. It facilitates quick clearance of goods from the customs at the port destination and therefore, the importer gets quick delivery of goods. 2. The importer is assured that the goods imported are not banned for imported in his country. Significance of Consular Invoice for the Customs Office 1. It makes the task of the customs authorities easy. 2. It facilitates quick calculation of duties as the value of goods as determine by the Consulate is considered for the purpose.


Certificate of Origin: The importers in several countries require a certificate of origin without which clearance to import is refused. The certificate of origin states that the goods exported are originally manufactured in the country whose name is mentioned in the certificate. Certificate of origin is required when:1. The goods produced in a particular country are subject to’ preferential tariff rates in the foreign market at the time importation. 2.The goods produced in a particular country are banned for import in the foreign market. Types of the Certificate of Origin (a) Non-preferential Certificate of Origin: - Non-preferential certificate of origin is required in general by all countries for clearance of goods by the importer, on which no preferential tariff is given. It is issued by: 1. The authorised Chamber of Commerce of the exporting country. 2. Trade Association. Of the exporting country. (b) Certificate of Origin for availing Concessions under GSP Certificate of origin required for availing of concessions under Generalised System of Preferences (GSP) extended by certain, countries such as France, Germany, Italy, BENELUX countries, UK, Australia; Japan, USA, etc. This certificate can be obtained from specialised agencies, namely; 1. Export Inspection Agencies 2. Jt. Director General of Foreign Trade.. 3. Commodity Boards and their regional offices. 4. Development Commissioner, Handicrafts. 5. Textile Committees for textile products. 6. Marine Products Export Development Authority for marine products. 7. Development Commissioners of EPZs Certificate for availing Concessions under Commonwealth Preferences (CWP): Certificate of origin for the purpose of Commonwealth Preference is also known as 'Combined Certificate of Origin and Value'. It is required by two member countries, i.e. Canada and New Zealand of the Commonwealth. For concession under Commonwealth preferences, the certificates or origin have to be submitted in special forms obtainable,


from the High Commission of the country concerned. Certificate for availing Concessions under other Systems of Preference:Certificate of origin is also required for tariff concessions. under the Global System of Trade Preferences (GSTP), Bangkok Agreement(BA) and SAARC Preferential Trading Arrangement (SAPTA) under which India grants and receives tariff concessions On imports and exports. Export Inspection Council (EIC) is the sole authority to print blank Certificates of Origin under BA, SAARC and SAPTA which can be issued by such agencies as EPCs, DCs of EPZs, EIC, APEDA, MPEDA, FIEO, etc... Contents of Certificate of Origin 1. Name and logo of chamber of commerce. 2. Name and address of the exporter. 3. Name and address of the consignee. 4. Name and the number of Vessel of Flight 5. Name of the port of loading. 6. Name of the port of discharge and place of delivery. 7. Marks and container number. 8. Packing and container description. 9. Total number of containers and packages. 10.Description of goods in terms of quantity. 11.Signature and initials of the concerned officer of the issuing authority. 12.Seal of the issuing authority. Significance of the Certificate of Origin Certificate of origin is required for availing of concessions under Generalised System of Preferences (GSP) as well as under Commonwealth Preferences (CWP). • It is to be submitted to the customs for the assessment of duty clearance of goods with concessional duty. • It is required when the goods produced in a particular country are banned for import in the foreign market. • It helps the buyer in adhering to the import regulations of the country.


• Sometimes, in order to ensures that goods bought from some other country have not been reshipped by a seller, a certificate of origin IS required. Bill of Lading: The bill of lading is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order, provided the freight and other charges as specified in the bill have been duly paid. It is also a document of title to the goods and as such, is freely transferable by endorsement and delivery. Bill of Lading serves three main purposes: i. ii. iii. As a document of title to the goods. As a receipt from the shipping company; and As a contract for the transportation of goods.

Types of Bill of Lading 1. Clean Bill of Lading: - A bill of lading acknowledging receipt of the goods apparently in good order and condition and without any qualification is termed as a clean bill of lading. 2.Claused Bill of Lading: - A bill of lading qualified with certain adversere marks such as, "goods insufficiently packed in accordance with the Carriage of Goods by Sea Act," is termed as a claused bill of lading. 3.Transhipment or Through Bill of Lading: - When the carrier uses other transport facilities, such as rail, road, or another steamship company in addition to his own, the carrier issues a through or transhipment bill of lading. 4.Stale Bill of Lading: - A bill of lading that has been held too long before it is passed on to a bank for negotiation or to the consignee is called a stale bill of lading. 5.Freight Paid Bill of Lading: - When freight is paid at the time of shipment or in advance, the bill of landing is marked, freight paid. Such bill of lading is known as freight bill of lading. 6.Freight Collect Bill of lading :- When the freight is not paid and is to be collected from the consignee on the arrival of the goods, the bill of lading is marked, freight collect and is known as freight collect bill of lading


Contents of Bill of Lading 1. Name and logo of the shipping line. 2. Name and address of the shipper. 3. Name and the number of vessel. 4. Name of the port of loading. 5. Name of the port of discharge and place of delivery. 6. Marks and container number. 7. Packing and container description. 8. Total number of containers and packages, 9. Description of goods in terms of quantity. 10.Container status and seal number. 11.Gross weight in kg. and volume in terms of cubic meters. 12.Amount of freight paid or payable. 13.Shipping bill number and date. 14.Signature and initials of the Chief Officer. Significance of Bill of Lading for Exporters 1. It is a contract between the shipper and the shipping company for carriage of the goods to the port of destination. 2. It is an acknowledgement indicating that the goods mentioned in the document have been received on board for the Purpose of shipment. 3. A clean bill of lading certifies that the goods received on board the ship are in order and good condition. 4. It is useful for claiming incentives offered by the government to exporters. 5.The exporter can claim damages from the shipping company if the goods are lost or damaged after the issue of a clean bill of lading.


Significance of Bill of Lading for Importers 1. It acts as a document of title to goods, which is transferable endorsement and delivery. 2. The exporter sends the bill of lading to the bank of the importer so as to enable him to take the delivery of goods.
3. The exporter can give an advance intimation to the foreign buyer about the

shipment of goods by sending him a non-negotiable copy of bill of lading. Significance of Bill of Lading for Shipping Company It is useful to the shipping company for collection of transport charges from the importer, if not collected from the exporter. Airway Bill: An airway bill, also called an air consignment note, is a receipt issued by an airline for the carriage of goods. As each shipping company has its own bill of lading, so each airline has its own airway bill. Airway Bill or Air Consignment Note is not treated as a document of title and is not issued in negotiable form. Contents of Airway Bill 1. Name of the airport of departure and destination. 2. The names and addresses of the consignor, consignee and the first carrier. 3. Marks and container number. 4. Packing and container description. 5. Total number of containers and packages. 6. Description of goods in terms of quantity. 7. Container status and seal number. 8. Amount of freight paid or payable. 9. Signature and initials of the issuing carrier or his agent. Importance of Airway Bill: It is a contract between the airlines or his agent to carry goods to the destination. It is the document of instructions for the airline handling staff. It acts as a customs declaration form. Since, it contains details about freight it also represents freight bill. Shipment Advice to Importer:- After the shipment of goods, the exporter intimates the importer about the shipment of goods giving him details about the date of


shipment, the name of the vessel, the destination, etc. He should also send one copy of non-negotiable bill of lading to the importer. Packing List: The exporter prepares the packing list to facilitate the buyer to check the shipment. It contains the detailed description of the goods packed in each case, their gross and net weight, etc. The difference between a packing note and a packing list is that the packing note contains the particulars of the contents of an individual pack, while the packing list is a consolidated statement of the contents of a number of cases or packs. Bill of Exchange: The instrument is used in receiving payment from the importer. The importer may prefer bill of exchange to LC as it does not involve blocking of funds. A bill of exchange is drawn by the exporter on the importer, to make payment on demand at sight or after a certain period of time. • B/E is a means to collect payment. • B/E is a means to demand payment. • B/E is a means to extent the credit. • B/E is a means to promise the payment. • B/E is an official acknowledgement of receipt of payment. • Financial documents perform the function of obtaining the finance collection of payment etc. • 2 sets. Each one bearing the exclusion clause making the other part of the draft invalid. • Sight B/E. • Usance B/E. • It is known as draft. • Immediate payment – Sight draft. • There are two copies of draft. Each one bears reference to the other part A&B. when any one of the draft is paid, the second draft becomes null and void. Parties to bill of exchange. 1. The drawer: The exporter / person who draws the bill. 2. The drawee: The importer / person on whom the bill is drawn for payment. 3. The payee: The person to whom payment is made, generally, the exporter / supplier of the goods. B Auxiliary Documents: These documents generally form the basic documents based on which the commercial and or regulatory documents are prepared. These documents also do not have any fixed formats and the number of such documents will wary according to individual requirements.


1. Proforma Invoice: The starting point of the export contract is in the form of offer made by the exporter to the foreign customer. The offer made by the exporter is in the form of a proforma invoice. It is a quotation given as a reply to an inquiry. It normally forms the basis of all trade transactions. Contents of Proforma Invoice • Name and address of the exporter. • Name and address of the importer. • Mode of transportation, such as Sea or Air or Multimodal transport. • Name of the port of loading. • Name of the port of discharge and final destination. • Provisional invoice number and date. • Exporter's reference number. • Buyer's reference number and date. • Name of the country of origin of goods. • Name of the country of final destination. • Marks and container number. . • Number and packing description. • Description of goods giving details of quantity, rate and total amount in terms of internationally accepted price quotation. • Signature of the exporter with date. Importance of Proforma Invoice • It forms the basis of all trade transactions. • It may be useful for the importer in obtaining import licence or foreign exchange. 2. Intimation for Inspection: Whenever the consignment requires the pre-shipment inspection, necessary application is to be made to the concerned inspection agency for conducting the inspection and issue of certificate thereof. 3. Declaration of Insurance: Where the contract terms require that the insurance to be covered by the exporter, the shipper has to give details of the shipment to the insurance company for necessary insurance cover. The detailed declaration will cover: • Name of the shipper \ exporter. • Name & address of buyer. • Details of goods such as packages, quantity, value in foreign currency as well as in Indian Rs. Etc. • Name of the Vessel \ Aircraft. • Value for which insurance to be covered.


4. Application of the Certificate Origin: In case the exporter has to obtain Certificate of Origin from the concerned authorities, an application has to be made to the concerned authority with required documents. While the simple invoice copy will do for getting C\O from the chamber of commerce, in respect of obtained the same from the office of the Textile Committee or Export Promotion Council, the documents requirement are different. 5. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo is loaded on the ship. The mate's receipt is a prima facie evidence that goods are loaded in the vessel. The mate's receipt is first handed over to the Port Trust Authorities. After making payment of all port dues, the exporter or his agent collects the mate's receipt from the Port Trust Authorities. The mate's receipt is freely transferable. It must be handed over to the shipping company in order to get the bill of lading. Bill of lading is prepared on the basis of the mate's receipt. Types of Mate's Receipts • Clean Mate's Receipt: - The Commanding Officer of the ship issues a clean mate's receipt, if he is satisfied that the goods are packed properly and there is no defect in the packing of the cargo or package. • Qualified Mate's Receipt: - The Commanding Officer of the ship issues qualified mate's receipt, when the goods are not packed properly and the shipping company does not take any responsibility of damage. to the goods during transit. Contents of Mate's Receipt 1. Name and logo of the shipping line. 2.Name and address of the shipper. 3.Name and the number of vessel. 4.Name of the port of loading. 5.Name of the port of discharge and place of delivery. 6.Marks and container number. 7.Packing and container description. 8.Total number of containers and packages. 9.Description of goods in terms of quantity. 10.Container status and seal number. 11.Gross weight in kg. and volume in terms of cubic meters. 12.Shipping bill number and date. 13. Signature and initials of the Chief Officer. Significance of Mate's Receipt It is an acknowledgement of goods received for export on board the ship.


It is a transferable document. It must be handed over to the shipping company in order to get the bill of lading. Bill of lading, which is the title of goods, is prepared on the basis of the mate's receipt. It enables the exporter to clear port trust dues to the Port Trust Authorities. Obtaining Mate's Receipt 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. Shipping order: it is issued by the Shipping/Conference Line intimating the exporter about the reservation of space for shipment of cargo which the exporter intends to ship. Details of the vessel, poet of the shipment, and the date on which the goods are to be shipped are mentioned. This order enables the exporter to make necessary arrangements for customs clearance and loading of the goods. Shipping Instructions: at the pre-shipment stage, when the documents are to sent to the CHA for customs clearance, necessary instructions are to be give with relevance to 1. The export promotion scheme under which goods are to be exported. 2. Name of the specific vessel on which the goods are to be loaded. 3. If goods are to be FCL or LCL. 4. If freight amount are to be paid / collected. 5. If shipment are covered under A.R.E.-1 procedure. 6. Instructions for obtaining Bill of Lading etc. Bank letter for negotiation of documents: at the post shipment stage, the exporter has to submit the documents to a bank for negotiation or discounting or collection for forwarding the same to the customer and also for realization of export proceeds. The bank letter is the set of instruction for the bank as to how to handle the documents by them and by the bank at the buyer’s country which may include 1. Name and address of the buyer. 2. Details of various documents being sent and the number of the copies thereof. 3. Name and address of the buyer’s bank if available. 4. If the documents are sent L/C or on open terms. 5. If the proceeds are to adjusted against any pre-shipment packing credit loan. 6. If the bill amount is to be adjusted against any forward exchange cover. 7. In case of credit bill who has to bear the interest, either exporter or if the same is to be collected from the buyer. 8. Instructions in case non-acceptance/non-payment by the buyer.


C. Regulatory Document: Regulatory pre-shipment export documents are prescribed by the different government departments and bodies in order to comply with various rules and regulations under the relevant laws governing export trade such as export inspection, foreign exchange regulation, ex port trade control, customs, etc. Out of 9 regulatory documents four have been standardised and aligned. These are shipping bill or bill of export, exchange control declaration (GR from), export application dock challan or port trust copy of shipping bill and receipt for payment of port charges. 1. Shipping Bill: Shipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods. The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e. certified by the customs. Shipping bill is normally prepared in five copies :1. Customs copy. 2. Drawback copy. 3. Export promotion copy. 4. Port trust copy. 5.Exporter's copy. Types of Shipping Bill Based on the incentives offered by the government, customs authorities have introduced three types of shipping bills:1. Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the customs drawback against goods exported. 2. Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are subject to export duty. 3. Duty-free Shipping Bill: - Duty-free shipping bill is useful for exporting goods on which there is no export duty. In order to facilitate easy recognition and quick processing, following colours have been provided to different kinds of shipping bills : Types of goods By Sea By Air • Drawback shipping bill Green • Dutiable shipping bill Yellow Pink • Duty-Free shipping bill White Pink

Contents of Shipping Bill


1. Name and address of the exporter. 2. Name and address of the importer. 3. Name of the vessel, master or agents and flag. 4. Name of the port at which goods are to be discharged. 5. Country of final destination. 6. Details about packages, description of goods, marks and numbers, quantity and details of each case. 7. FOB price and real value of goods as defined in the Sea Customs Act. 8. Whether Indian or foreign merchandise to be re-exported 9. Total number of packages with total weight and value. Significance of Shipping Bill a) Shipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods. b) The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e. certified by the customs. c) Duly endorsed shipping bill is also necessary for the collection of export incentives offered by the government. d) It is useful to the Customs Appraiser while determining the actual value of goods exported. 2. A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central Excise rules for export of goods. In case goods meant for export are cleared directly from the premises of a manufacturer, the exporter can avail the facility of exemption from payment of terminal excise duty. The goods may be cleared for export either under claim for rebate of duty paid or under bond without payment of duty. In both the events the goods are to be cleared under form A.R.E-1 which will show the details of the goods being exported, the relevant duty involved and if the duty is paid or goods being cleared under bond, details of goods being sealed either by the exporter or Central Excise officials etc. 3. Exchange Control declaration Form (GR/PP/SOFTEX): under the exchange control regulations all exporters must declare the details of shipment for monitoring by the Reserve Bank of India. For this purpose, RBI has prescribed different forms for different types of shipments like GRI, PP forms etc. These declaration forms must be presented to the customs officials at the time of passing of export documentation. Under the EDI processing of shipping bill in the customs, these forms have been dispensed with and a new form SDF has to be submitted to the customs in the place of




4. Export Application: this is the application to be made to the customs officials before shipment of goods. The prescribed form of the application is the Shipping Bill/Bill of Export. Different types are required for shipment like ex-bond, duty free goods, and dutiable goods and for export under different export promotion schemes such as claims for duty drawback etc. 5. Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken inside the port for loading, necessary permission has to be obtained for moving the vehicle into the customs area. This permission is granted by the Port Trust Authority. This document will contain the detail of the export cargo, name and address of the shippers, lorry number, marks and number of the packages, driver’s license details etc. 6. Bank Certificate of Realisation: this is the form prescribed under the Foreign Trade Policy, wherein the negotiating bank declares the fob value of exports and for the date of realization of the export proceeds. This certificate is required fore obtaining the benefit under various schemes and this value of fob is reckoned as fob value of exports. D. Other Document: 1 Black List Certificate: it certifies that the ship/aircraft carrying the cargo has not touched the particular country on its journey or that the goods are not from the particular country. This is required by certain nations who have strained political and economical relations with the so called “Black Listed Countries”. 2 Language Certificate: Importers in the European Community require a language certificate along with the GSP certificate in respect of handloom cotton fabrics classifiable under NAMEX code 55.09. Generally four copies of language certificate are prepared by the concerned authority who issues GSP certificate. Three copies are handed over to the exporter. A copy is sent along with the other documents for realisation of export proceeds. 3 Freight Payment Certificate: in most of the cases, the B/L or AWB will mention the transportation and other related charges. However if the exporter does not want these details to be disclosed to the buyer, the shipping company may issue a separate certificate for payment of the freight charges instead of declaring on the main transport documents. This document showing the freight payment is called the freight certificate.


4 Insurance Premium Certificate: this is the certificate issued by the Insurance Company as acknowledgement of the amount of premium paid for the insurance cover. This certificate is required by the bank for arriving at the fob value of the goods to be declared in the bank certificate of realization. 5 Combined Certificate of Origin and Value: this certificate is required by the Commonwealth Countries. This certificate is printed in a special way by the Commonwealth Countries. This certificate should contain special details as to the origin and value of goods, which are useful for determining import duty. All other details are generally the same as that of Commercial Invoice, such as name of the exporter and the importer, quality and quantity of the goods etc. Customs Invoice: this is required by the countries like Canada, USA for imposing preferential tariff rates. Legalized Invoice: this is required by the certain Latin American Countries like Mexico. It is just like consular invoice, which requires certification from Consulate or authorised mission, stationed in the exporter’s country. Special Provision under Uniform Customs and practice for Documentary Credit UCP500, for Commercial Invoice: 1 Article-37: Commercial Invoice 2 Must appear on their face to be issued by the beneficiary named in the credit. 3 Must be made out in the name of the applicant. 4 Need not be signed 5 Banks may refuse Commercial Invoice issued for amounts in excess of the amount permitted by the credit except otherwise stated. 6 The description of the goods in the commercial invoice must correspond with the description of the credit. In all other documents the goods may be described in the General in general terms not inconsistent with description in the credit. In all documents goods may be described in general terms not inconsistent with the Description of the goods in the credit. Pre-Shipment Documents: 1 Shipping bill. 2 Export order/Sales contract/Purchase order. 3 Letter of Credit 4 Commercial invoice. 5 Packing list. 6 Certificate of origin. 7 Guaranteed Remittance (G.R/SDF/PP/SOFTEX),or SDF. 8 Certificate of Inspection.


9 Various declarations required as per custom procedure. Exchange Control Declaration Form: all exports to which the requirement of declaration apply must be declared on appropriate forms as indicated below unless the consignment is of samples and of ‘No Commercial Value’ 1 GR FORM: to be completed in duplicate for exports otherwise than by post including export of software in physical form i.e. magnetic tape/discs and paper media. 2 SDF FORM: to be completed in duplicate and appended to the Shipping Bill for export declare to the customs offices notified by the Central Government which have introduced EDI system for processing Shipping Bill. 3 PP FORM: to be completed in duplicate for export by post. 4 SOFTX: to be completed in triplicate for export of software otherwise than in the physical form i.e. magnetic tapes/discs and paper media. These forms are available for sale in Reserve Bank of India Export declaration forms have utmost importance and are binding on the exporters. It is, therefore, necessary that enough care is taken while declaring exports on these forms, with special reference on the following points. 1 Name and address of the authorised dealer through whom proceeds of exports have been or will be realized should be specified in the relevant column of the form. 2 Details of commission and discount due to foreign agent or buyer should be correctly declared otherwise difficulties may arise at the time of remittance of such commission. 3 It should be clearly indicated in the form whether the export is on ‘outright sale basis’ or ‘on consignment basis’ and irrelevant clauses must be stuck out 4 Under the term ‘analysis of full export value’ a break up of full export value of goods under F.O.B value, freight and insurance should be furnished in all cases, irrespective of the terms of contract. 5 All documents relating to the export of goods from India must pass through the medium of an authorised dealer in foreign exchange in India within 21 days of shipment.


6 The amount representing the full export value of goods must be realized within six months from date of shipment. Disposal of Copies of Export Documentation Form 1 GR forms covering export of goods other than jewellery should be completed by the exporter in duplicate and both the copies should be submitted to customs at the port of Shipment. Customs will give their running serial number on both the copies of the GR forms after verifying the particulars and admitting the corresponding shipping bill. The value declared by the exporter will also be verified by the customs and they will also record the assessed value. Duplicate copy will be returned to the exporter and the original will be remained by the customs for onward submission to the Reserve Bank. Duplicate form of the GR form will again be presented to the customs at the time of actual shipment. After examination of goods and certifying the quantity passed for shipment the duplicate copy will again be returned to exporter for submission to an authorised dealer. However, an exception to submission of GR forms to the Customs authorities have been made in case of deep sea fishing. (a) PP forms are to be first presented to an authorised dealer for countersignature. The form will be countersigned by the authorised dealer only if the post parcel is addressed to his branch or correspondent bank in the country or import. The concerned overseas branch or correspondent is to be instructed to deliver the post parcel against payment or acceptance of relevant bill, as the case may be. (b) For post parcel addressed directly to the consignee, the authorised dealer will countersign the form, provided — (i) an irrevocable letter of credit for the full value of export has been opened in favour of exporter and has been advised through authorised dealer concerned; or (ii) the full value of shipment has been received in advance by the exporter through an authorised dealer; or (iii) On receipt of full value of shipment declared on this form the authorised dealer will forward to RBI the duplicate copy along with the certified copy of shipper’s invoice. (iv) The authorised is satisfied on the basis of standing and track record of the exporter and arrangements made for realisation of the export proceed that he cold do so. If the authorised dealer is not satisfied about standing etc. of the exporter, the application is rejected. No reference is entertained by the Reserve Bank in such cases.



The original PP form countersignature will be returned to the exporter by the authorised dealer and the duplicate will be retained by him. Original PP form should then be submitted to the post office along with the parcel. The post office through the goods have been dispatched will forward the original to RBI. The export of computer software may be undertaken in physical form i.e. software prepared on magnetic tape and paper media as well as in non-physical form by direct data transmission through dedicated earth stations/satellite links. The export of computer software in physical form is subject to normal declaration on GR/PP form and regulations applicable there to will also be applicable to such exports. However, export of non-physical form should be declared on SOFTEX Form. Besides computer software, export of video / T.V. Software and all other types of software products / packages should also be declared on the SOFTEX forms. Since export of software is fraught with many risks and special guidelines have been framed for handling such exports. OCTROI Octroi is the local tax levied by the civic body on goods entering into the city. There are three procedures for clearing goods which are meant for export.

MARINE INSURANCE POLICY Goods in transit are subject to risks of loss of goods arising due to fire on the ship, perils of sea, thefts etc. Marine insurance protects losses incidental to voyages and in land transportation. Marine Insurance Policy is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at the request of the importer, but the premium payment will be made by the exporter. There are different types of policies such as Specific Policy: This policy is taken to cover different risks for a single shipment. For a regular exporter, this policy is not advisable as he will have to take a separate policy every time the shipment is made, so this policy is taken when exports are infrequent. Floating Policy: This policy is taken to cover all shipments for same months. There is no time limit, but there is a limit on the value of goods and once this value is crossed by several shipments, then it has to be renewed.


Open Policy: This policy remains in force until cancelled by either party, i.e. insurance company or the exporter. Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or all destinations. The open cover may specify the maximum value of consignment that may be sent pre ship and if the value exceeded, the insurance company must be informed by the exporter. Insurance Premium: Differs upon from product to product and a number of other such factors, such as, distance of voyage, type and condition of packing etc. Premium for air consignments are lower as compared to consignments by sea. The Insurance Policy Normally Contains: The name and address of the insurance company. 1. 2. 3. The name of the assured & description of the risk covered. A description of the consignment. The sum insured & the date of issue.

4. The place where claims are payable together with details of the agent to whom claims may be directed & Any other details, as applicable. QUALITY CONTROL AND PRE-SHIPMENT INSPECTION Realizing the importance of the need for supplying quality goods as per international standards, the Government of India has introduced Compulsory Quality Control and Pre-Shipment Inspection of over 1050 items of export under Export (Quality Control and Pre-Shipment Inspection) Act 1963. At present, the export items that are subjected to compulsory inspection includes food and agricultural products, chemicals, engineering, coir, jute and footwear. Compulsory Pre-shipment Inspection: 1.Foods and Agriculture & Fishery 2.Mineral & Ore 3.Organic & Inorganic Chemicals 4.Refectories & Rubber Products 5.Foot wear & Foot wear components 6.Ceramic Products & Pesticides 7.Light Eng. Products 8.Steel ;Products 9.Jute Products 10.Coir & Coir Products


Exemption from compulsory Pre-shipment Inspection: 1.Status Houses 2.Certification by Units IPQC – approved by EIA 3.EUO/EPZ/SEZ 4. Firm Letter from the overseas buyer 5.Specified products such as Eng/Fishery average level of Rs.1.5 Cr.for the last three years no compliant. For monitoring pre-shipment inspection, Govt. of India has set up Export Inspection Council (EIO) The EIC has set up 5 Export Inspection Agencies (EIA). The EIAs are located one each at Mumbai, Calcutta, Cochin, Delhi and Chennai. The EIAs has a network of nearly 60 offices throughout India. Each EIA is given certain jurisdiction for inspection purpose. For instance, EIA of Mumbai has jurisdiction over Maharashtra, Gujarat and Goa. Systems of Quality Control: For the purpose of pre-shipment inspection, EIC has recognized three systems of inspection namely: 1.Self-Certification 2.In-Process Quality Control 3.Consignment Wise Inspection Self-Certification: Under this system, complete authority is given to the manufacturing units to certify their own products and issue certificates for export. The manufacturing units which have been recognized under this scheme have to pay a nominal yearly fee at the rate of 0.1% of FOB price subject to minimum of Rs.2,500/- and maximum of Rs.1 lakh in a year to the concerned EIA In-Process Quality Control (IPQC): In this system, companies/units adjusted as having adequate level of quality control right from raw material stage to the finished product stage including packaging are eligible to get the inspection certificate on a formal request by the exporter. Over 800 units all over India are operating under this system. Constant vigil and surveillance are kept on units approved under IPQC and selfcertification system. Units approved under the above two systems are often known as “Export worth Units”, because of their consistent standards of quality. Consignment wise Inspection: Under this system, each and every consignment is subject to compulsory inspection. The exporter has to follow a certain procedure such as:


1. He has to make an application to Export Inspection Agency with certain documents. 2. The EIA deputes inspector to inspect the goods 3. After the inspection, the goods are repacked with EIA seal 4. The inspector then makes a report to Deputy Director of EIA 5. The Dy. Director of EIA then issues Inspection Certificate in triplicate if the inspection report is favorable 6. If the inspection report is not favorable, a rejection note is issued. It is to be noted that goods marked with ISI/AGMARK/BIS14000/ISO 9000 are not required to be inspected by any agency Overseas buyer may depute his own inspection team to inspect the goods Inspection of textile goods is conducted by Textile Committee in respect of those exporters who are registered with the textile committee. Norms: 1.Adequate Testing Facility 2.Raw Material Testing & Process Control 3.After Sales Services & Maintaining Product Quality 4.Control on bought out components 5.Meteorological Control & PKG. 6.Independent Quality Audit & Houses. Fumigation: For ensuring that no insects or bacteria are carried with the export certain types of export products are fumigated before shipment. The fumigation is carried out in the port of shipment. SHIPPING AND CUSTOMS FORMALITIES (As per the Prevailing Law i.e., ICA 62) The shipment of export cargo has to be made with prior permission of, and under the close supervision of the custom authorities. The goods cannot be loaded on board the ship unless a formal permission is obtained from the custom authorities. The custom authorities grant this permission only when it is being satisfied that the goods being exported are of the same type and value as have been declared by the exporter or his C&F agent, and that the duty has been properly determined and paid, if any. The custom procedure can be briefly explained as follows: 1. Submission of Documents: The exporter or his agent submits the necessary documents along with the shipping bill to the Custom House. The documents include: 2. ARE-1 (Original and duplicate)


3.Excise gate pass (Original and duplicate transporters’ copy 4. Proforma Invoice 5. Packing List 6. GRI form (Original and duplicate) 7. Customs Invoice (where required in the importing country) 8. Original letter of credit/contract 9. Declaration form in triplicate 10. Quality Certificate 11.Purchase memo 12. Labels 13.Licence (if any required) including advance licence copy 14.Railway receipt/lorry way bill 15.Inspection Certificate by Export Inspection Agency Verification of Documents: The Customs Appraiser verifies the documents and appraises the value of goods. He then makes an endorsement of “Examination Order” on the duplicate copy of shipping bill regarding the extent of physical examination of the goods at the docks. All documents are returned back to the agent or exporter, except • • • Original Copy of GR to be forwarded to RBI Original copy of shipping bill One copy of commercial invoice

Carting Order: The exporter’s agent has to obtain the carting order from the Port Trust Authorities. Carting Order is the permission to bring the goods inside the docks. The carting order is issued by the superintendent of Port Trust. Carting Order is issued only after verifying the endorsement on the duplicate copy of shipping bill. The Carting Order enables the exporter’s agent to cart goods inside the docks and store them in proper sheds. Storing the Goods in the Sheds: After securing the carting order, the goods are moved inside the docks. The goods are then stored in the sheds at the docks. Examination of Goods: The exporter’s agent then approaches the customs examiner to examine the goods. The customs examiner examines the cargo and records his report on the duplicate copy of the shipping bill. The customs examiner then sings the “Let Export Order” Let Export Order: The Let Export Order is then shown to the Customs Preventive Officer, along with other documents. The CPO is in charge of supervision of loading operations on the vessel. If CPO finds everything in order, he endorses the duplicate copy of shipping bill with the “Let Ship Order” This order helps the exporter/shipper









Loading Goods: The goods are then loaded on the ship. The CPO supervises the loading operations. After loading is completed, the Chief Mate (Cargo Officer) of the ship issues the “Mate’s Receipt”. The Mate’s Receipt is sent to the Port Trust Office. The C&F agent pays the port trust dues and collects the mate’s receipt. The C&F agent then approaches the CPO and gets the certification of shipment of goods on AR Forms and other documents Obtaining Bill of Lading: The Mate’s Receipt is then handed over to the shipping company (on whose vessel the goods are loaded). The shipping company issues bill of lading. The Bill of Lading is issued in: • • 3 negotiable copies of Bill of Lading 10 to 12 Non-negotiable copies of Bill of Lading.

The negotiable copies have title to goods; whereas non-negotiable copies do not have title to goods but are used for record purpose. PROCEDURE OF EXCISE CLEARANCE: The common procedure of excise clearance under “bond” and under “rebate” is discussed as follows: Preparing of Invoice: The export goods have to be cleared from the factory under invoice. The invoice contains details like name of the exporter, value of goods, excise duty chargeable, etc. The invoice is to be prepared in triplicate. In case of export under Bond, the invoice should be marked as “For Export without payment of duty”. In addition to the invoice, a prescribed for ARE 1 has to be filed in by exporter. Filling up of ARE-1 form (Annexure-20): The ARE-1 form needs to be filled in four copies. A fifth (Optional) may be filled in by the exporter, which can be used at the time of claiming other export incentives. The ARE-1 copies have distinct color for the purpose of verification and processing. Application to Assistant Commissioner of Central Excise (ACCE): The exporter has to make an application to ACCE regarding the removal of goods from the factory/warehouse for export purpose.


Information to Range Superintendent of Central Excise (RSCE): The ACCE will inform the RSCE under whose jurisdiction the goods are intended to be cleared for export Deputation of Inspector: The RSCE will then depute an inspector to clear the goods, either at the factory or warehouse, and in certain cases at the port. Processing of ARE-1 Form: The Excise Officer/Inspector will make endorsement on all copies of ARE-1. The handling of ARE-1 Form is done as follows: • The inspector returns the original and duplicate copies to the exporter • The triplicate copy is sent to officer (ACCE or Maritime Commissioner (MCCE) to whom bond was executed or letter of undertaking (LUT) was given. This copy can also be handed over to the exporter in a tamper proof sealed cover to be submitted to ACCE/MCCE. • The 4th copy will be retained by the excise inspector. • The 5th copy is also handed over to the exporter. • At the time of export, original, duplicate and the 5th copy (optional) will be submitted to customs officer. The customs officer will examine these copies and then export will be allowed. • The customs officer will then make endorsement of export on all copies of ARE-1. He will cite shipping bill number and date and other particulars of export on ARE-1.

The original copy and quintuplicate (optional) will be returned to the exporter. The duplicate copy will be sent directly to the ACCE\MCCE i.e. excise officer with whom bond was executed will get 2 copies, one from RSCE (or excise inspector) when goods are cleared from factory and other Custom Officer after export. This will enable him to keep track to ensure that all goods cleared from factory or warehouse without payment of duty are actually exported. In case of export after payment of duty, under claim of rebate, the basic procedure is same as above, except that the triplicate copy (by excise inspector) and duplicate copy(by customs officer)will be sent to the officer to whom rebate claim is filed. If claim of rebate is by electronic submission, these copies well be sent to excise rebate audit section at the place of export.

7 Refund or Release of Bond: The exporter should make an application to the excise officer for refund or release of bond. The application must be supported by original copy of ARE-1 form. The excise officer crosschecks the original copy of ARE-1 form and the duplicate and triplicate copies of ARE-1 form, which he had received earlier. If the copies match, then refund is given or the bond is released.


FACTORY STUFFING OF CARGO Clearance of goods to docks: If the goods meant for export is of a small quantity which may not be sufficient to make one full container, the cargo is said to be less than container load (LCL) cargo. Such cargo has to be taken to the docks where the goods will be consolidated (combining the cargo of other exporters to make up quantity for a full container) by the agent and loaded into a container. Here the examination of the cargo is done at the docks.(There are also inland container depots approved by the customs where the goods can be consolidated and stuffed into the container by the agent under the supervision of the customs officer) If the goods meant for export is of sufficient quantity to make up a full container, the exporter has the option to take the goods to the docks and get them examined and stuffed into a separate container. An exporter gets the benefit on the freight amount for a full container. (Generally called box rate) Alternatively, he can have a container allotted to him and get the same to his Mills Premises. The goods meant for exports can be stuffed into the container under the supervision of the regional Central Excise Authority. Here the exporter has to 1. Obtain permission from the Customs for getting the container to his mills premises for stuffing (House Stuffing) 2. Inform the C.Excise Authorities at least 24 hours before bringing the container for loading. The C.Excise Authority will supervise the loading, seal the container and certify the invoice as directed in the permission given by the custom authorities. A special Lock is used to lock the doors of the container. Samples from the goods will be drawn, if necessary, as required under the customs permission. Such samples will be sealed and forwarded along with the container. The examiner in the docks may arrange to send the sample for testing. Then the container is moved to the dock for loading. Generally, such containerized goods are not subject to further examination in the customs. They will be directly taken for loading.

SALES TAX EXEMPTION PROCEDURE Export good are exempted from the payment of sales tax. The exporter can claim exemption from sales tax (on purchases or sales for export purpose), provide the exporter is registered with the Sales-Tax Department. If the exporter is not registered with the sales tax department, he cannot utilize the facility of sales tax exemption. Therefore, it is necessary for the exporter to get his organization registered with sales tax department. I Registration Procedure


1. Application: The exporter must apply to the Sales Tax Officer (STO) under whose jurisdiction the head/ registered office of the exporter is located. 2. Deputation of Inspector: The STO may depute an inspector to visit the office of the exporter and inspect: • Relevant books showing sales/ purchases. • Partnership Deed or Memorandum and Articles of Association along with Incorporation Certificate. • Other Relevant documents. 3 Inspection: The inspector visits the office of the exporter and inspects the necessary books and other documents. 4 Report by Inspector: The Sales Tax Inspector makes a report to the STO for registration or otherwise. The STO verifies the inspector report. The STO, before granting the ST Reg. Number may cal the exporter for necessary clarifications, if required. 5 Security Bond: The STO normally requires the exporter to provide a security bond from another firm which is registered with the Sales Tax Department. 6 Granting of Sales Tax Reg. Number: After completing necessary formalities, the STO grants Sales Tax Reg. Number to the exporter. II. Exemption Procedure 1.Obtaining Form ‘H’: the registered exporters need to apply to the concerned STO for obtaining Form ’H’. the exporter should submit: • A copy of Letter of Credit • A copy of Letter of Credit /Export Order. • Copy of the Invoice , where goods are already purchased for export purchase. • A copy of shipping bill duty certified by customs. The exporter has to affix the prescribed court fee stamp on each of the Form ‘H’ issued. The STO then affixes the exporter’s company stamp on the Form ’H’. Filling the details in Form ‘H’: After export of goods, the exporter fills the relevant details in ‘Form H’. The Form ‘H’ needs to be prepared in triplicate. The exporter retains one copy, and other two copies are sent to the seller from whom the exporter purchased the goods for export purpose. The seller than sends on copy of


Form ‘H’ to STO along with the Return of Sales Tax. The other copy is retained by seller. The STO may issue refund order to the exporter. METHODS OF RECEIVING PAYMENT AGAINST EXPORTS Before we proceed to understand the concept of Letter of Credit, let us understand the various types of payment methods available against export. METHODS OF PAYMENT There are three methods of payment depending upon the terms of payment, and each method of payment involves varying degrees of risks for the exporter. The methods are: 1. Payment in advance 2. Documentary Bills 3. Letter of Credit 4. Open Account 5. Counter Trade PAYMENT IN ADVANCE This method does not involve any risk of bad debts, provided entire amount has been received in advance. At times, a certain per cent is paid in advance, say 50% and the rest on delivery. This method of payment is desirable when: 1.The financial position of the buyer is weak or credit worthiness of the buyer is not known. 2. The economic/ political conditions in the buyer’s country are unstable. 3. The seller is not willing to assume credit risk, as un the case of open account method. However, this is the most unpopular methods as a foreign buyer would not be willing to pay advance of shipment unless: 1. The goods are specifically designed for the customer, and 2. There is heavy demand for the goods (a seller’s market situation). DOCUMENTARY BILLS: Under this method, the exporter agrees to submit the documents to his bank along with the bill of exchange. The minimum documents required are


1. Full set of bill of lading 2. Commercial Invoice 3. Marine Insurance policy and other document, if required. There are two main types of documentary bills: 1. Documents against Payment, 2. Documents against Acceptance. Documents against payment (D/P): The documents are released to the importer against payment. This method indicates that the payment is made against Sight Draft. Necessary arrangements will have to be made to store the goods, if a delay in payment occurs. The risk involved that the importer may refuse to accept the documents and to pay against them. The reason for non-acceptance may be political or commercial ones. In India, ECGC covers losses arising out of such risks. Under this system, as compared to D/A, the exporter has certain advantages: 1 The document remain in the hands of the bank and the exporter does not lose possession or the ownership of goods till payment is made. 2 Other reason may include that the exporter may not be able to allow credit and wait for payment. Documents Against acceptance (D/A): The document are released against acceptance of the Time Draft i.e. credit allowed for a certain period, say 90 days. However, the exporter need not wait for payment till bill is met on due date, as he can discount the bill with the negotiating bank and can avail of funds immediately after shipment of goods. In case of D/A as compared to D/P bills, the risk involved is much grater, as the importer has already taken possession of goods which may or may not be in his custody on the maturity date of the bill. If the importer fails to pay on due date, the exporter, will have to start civil proceedings to receive his payment, if all other alternatives fails. The risk involved can be insured with ECGC.

LETTER OF CREDIT (L/C): This method of payment has become the most popular form in recent times, it is more secured as company to other methods of payment (other than advance payment). A letter of credit can be defined as “ an undertaking by importer’s bank stating that payment will be made to the exporter if the required documents are presented to the


bank within the variety of the L/C”. THE LETTER OF CREDIT Introduction The cycle of a business transaction can be said to be complete prima facie when the buyer has received the product he desires to buy and the seller gets his payment in due consideration of the product supplied. While the seller is keen to receive the payment for his supplies, the buyer is equally keen that he gets what he wants by the paying for the same. Tough there are many merit and demerits in each of the different mode of payments we have discussed earlier, in relation either to the buyer or to the seller, we shall now deal in detail about the mode of payment under the Documentary Credit. Generally, though exporters are complacent once they get the letter of Credit on hand feeling that their payment is secured, let me say it is as much a dubious instrument as is a safe instrument. If one does not understand the implications of the terms and condition of a letter of credit, the provisions under UCP 500, how co-operative are the exporter’s bank and how good are the L/C opening bank and the reimbursement bank, he is sure to land in trouble at once stage or another. There are ample cases of frauds under the Letter of Credit. More and more ingenious methods are adopted to circumvent the provisions of UPC 500 by fair or foul means. Hence, even the safety and security under the Letters of Credit may prove to be no better than a mirage for a man in the desert. Hence, sufficient care is to be taken by the exporter to ensure that instrument is received in order and the conditions of the L/C can be well complied with, and there are no clauses of ambiguity. What is a Documentary Credit? To say in simple language, this is an Undertaking by a Bank associated with the buyer to make the payment for the supply of goods by a seller subject to compliance of various requirements that may be specified in the document of undertaking by the Bank. This document is known as Documentary Credit. A Documentary Credit is also called a Letter of Credit (L/C). CONTENTS OF A LETTER OF CREDIT A letter of credit is an important instrument in realizing the payment against exports. So, needless to mention that the letter of credit when established by the importer must contain all necessary details which should take care of the interest of Importer as well as Exporter. Let us see shat a letter of credit should contain in the interest of the exporter. This is only an illustrative list. 1 name and address of the bank establishing the letter of credit 2 letter of credit number and date 3 The letter of credit is irrevocable


4 Date of expiry and place of expiry 5 Value of the credit 6 Product details to be shipped 7 Port of loading and discharge 8 Mode of transport 9 Final date of shipment 10 Details of goods to be exported like description of the product, quantity, unit rate, terms of shipment like CIF, FOB etc. 11 Type of packing 12 Documents to be submitted to the bank upon shipment 13 Tolerance level for both quantity and value 14 If L/C is restricted for negotiation 15 Reimbursement clause PROCEDURE INVOLVED IN THE LETTER OF CREDIT The following are the step in the process of opening a letter of credit: 1 Exporter’s Request: The exporter requests the importer to issue LC in his favor. LC is the most secured form of payment in foreign trade. 2 Importer’s Request to his Bank: The importer requests his bank to open a L/C. He May either pay the amount of credit in his current account with the bank. 3 Issue of LC: The issuing bank issues the L/C and forwards it to its correspondent bank with also request to inform the beneficiary that the L/C has been opened. The issuing bank may also request the advising bank to add its confirmation to the L/C, if so required by the beneficiary. 4 Receipt of LC: the exporter takes in his possession the L/C. He should see it that the L/C is confirmed. 5 Shipment of Goods: Then exporter supplies the goods and presents the full set of documents along with the draft to the negotiating bank. 6 Scrutiny of Documents: The negotiating bank then scrutinizes the documents and if they are in order makes the payment to the exporter. 7 Negotiation: The exporter’s bank negotiates the document against the letter of credit and forwards the export documents to the L/C opening bank or as per their instructions. 8 Realization of payment: The issuing bank will reimburse the amount (which is paid to the exporter) to the negotiating bank.


9 Document to Importer: the issuing in turn presents the documents to the importer and debits his account for the corresponding amount. In order to have uniformity and to avoid disputes, the ICC Paris has evolved uniform customs and practices of documentary credit (UCPDC), in short known as UCP 500 effective from 1-1-96. These are rules have been adopted by more than 150 countries. They provide the comprehensive and practical working aid to banker, lawyer, importers, exporters, Exporters, transporters, executives involved in international trade. Note: as soon as an L/C is received ensure that the same is authenticated. Meaning that the genuineness of the L/C is certified by the Advising Bank by an endorsement with the marking ‘AUTHENTICATED’ OR ELSE THE L/C IS OF NO USE. Different Type of Documentary Credits. There are various types of Documentary Credit opened by a bank in favour of it’s customer depending upon the requirement. Let us talk about few types of Documentary Credit which are in common use. 1 Revocable / Irrevocable Documentary Credit :A Revocable Documentary Credit can be revoked (cancelled) by the buyer at his own discretion and this does not require the consent of the seller. The risk factor here is that the L/C may be cancelled even after the shipment is done and before the beneficiary present the documents to the bank for claiming the reimbursement. Hence, a revocable L/C is as goods as no L/C. obviously, no seller will entertain a revocable L/C. Contrary to this, an Irrevocable Documentary Credit once established and advised to the beneficiary, cannot be revoked or cancelled unilaterally by the buyer without the consent of the beneficiary (Seller).A Seller must always ask for an Irrevocable Letter of Credit. 2 Restricted/ Unrestricted Documentary Credit: A Documentary Credit stipulates the name of the bank who is authorized to negotiate the document for claming the reimbursement. In this case the beneficiary is obliged to negotiate the documents only through the specified bank i.e. Negotiation of document is restricted to that particular bank. On the contrary if no specific bank is nominated for negotiation, it may say ‘Negotiation by any bank’ which means the beneficiary is free no negotiate the document through the bank of his choice. This is beneficial because he can negotiate the documents through his own bank where he is having an account. Since the bank is not alien to him, he will not face any practical/procedural difficulty in negotiating the document. It is suggested to have an unrestricted L/C or L/C which may be restricted to the bank of the beneficiary’s choice. 3. Confirmed/Unconfirmed Documentary Credit: Confirmed Documentary Credit is one in which the beneficiary has the option to have the L/C confirmed by a bank in the beneficiary country i.e. the bank who confirms the L/C takes the responsibility of


making the final payment to the beneficiary upon negotiation of the document in strict compliance with the terms and conditions of the Letter of Credit. By this process the final payment will be made in the beneficiary’s country by the bank which confirms the L/C immediately upon negotiation of the documents. The beneficiary do not stand the risk of waiting for the document to reach the opening bank who will have the final say so to the compliance under the L/C before making the payment. Further, the payment is also made immediately after negotiation and without recourse to the beneficiary i.e. the payment once made by the confirmed bank cannot be revoked. Moreover, if the importing country’s regulation changes and the money is not allowed to be repatriated, this will eliminate the risk. On the contrary, in an unconfirmed L/C, the negotiating bank only accepts the documents and pays for the same with recourse i.e. if as and when the documents reach the opening bank, and the opening find some discrepancy in the documents it may refuse to make the payment or seek clarification for the applicant before reimbursement. The beneficiary is fully at the mercy of the opening bank for payment. It is suggested to ask for a Confirmed L/C. 4.With Resource and Without (Sans) Resource Letter of Credit: The revocable or irrevocable LC can further be classified as with resource and without resource LC. With resource LC: In this type the exporter is held liable to the paying/ negotiating bank, if the draft drawn against LC is not honored by the importer/issuing bank. The negotiating bank can make the exporter to pay the amount along with the interest, which it has already paid to the beneficiary. Without (Sans) Resource LC: In the case of sans (without) resource letter of credit, the negotiating bank has no recourse to the exporter, but only to the issuing bank or to the confirming bank. Normally, the negotiating bank makes advance payment to the exporter in resource of letter of credit either by discounting bills against letter of credit or by purchasing the bills of exchange. In such an instance, if the issuing bank fails to make payment or dishonor the letter of credit, then the negotiating bank cannot get the money back from the exporter or hold him liable to pay the amount. However, in the case of with resource letter of credit, the negotiating bank can ask the exporter to pay back the money along with certain other expenses. For the exporter, sans Resource letter of credit is more safe as compared to With Resource letter of credit. 5.Transferable/Non-transferable Documentary Credit: In a transferable L/C, the beneficiary can transfer the L/C opened in his name in favor of a third party who may effect the shipment and negotiate the documents and claim payment under the said L/C.


6. Revolving Documentary Credit: Where an exporter is having a regular shipment for a particular customer and the value of each shipment may also be of more or less equal value, and then one can call for a Revolving Documentary Credit. The salient feature of this L/C is that the buyer opens an L/C which can take care of shipments, say, may be for a period of one year on a monthly basis. For e.g. an exporter enters into a contract for supply of 5000 pairs of Trousers valued approx.US.$.75,000/- to be shipped every month. The buyer can open an L/C for a value of US.$.75000/- with validity for 12 months stipulating shipment every month for a value of US$. 75000/-and by adding a clause to make 12 shipment of like value the L/C stands replenished for the full value of the L/C after each shipment is made the documents are negotiated for which payment are also made immediately for the value of the shipment. The main benefit in this L/C is that the buyer, the bank and the exporter are saved from the routine of opening one L/C every month, the anxiety of non-receipt of the L/C on time, the amendments that may be warranted every time, the bank charges for opening number of L/Cs etc.,. A revolving Documentary Credit may have cumulative effect i.e. if a particular shipment is not made, then the value is added to the value for future utilization. In an automatic Revolving Credit, the bank is liable for the total amount covering the entire shipment and where it is non-automatic its responsibility is restricted to the value of one shipment. In automatic Revolving Credit the value of the credit is automatically replenished by an amendment. Where there are continuous shipments like the one stated above one can call for a Revolving Letter of Credit. 7.Stand by Letter of Credit: This is aimed at providing a security to a seller in case the buyer fails to perform his part. Thus this L/C is used in case of non-performance while the other types of L/Cs are generally for some performance. Such credits are paying on first presentation and the only document required therein is a simple declaration of non-performance along with the statement of claim. This type of L/C is mainly common in U.S.A. A standby Documentary Credit is generally common on open account trading where the seller may expect some security for getting his payment. This is not permitted in India. 8.Red Clause LC: The red clause LC is the usual irrevocable LC with further authorities the negotiating bank to make advance to the beneficiary for the purpose of processing the export goods. Thus, the red LC enables the exporter to obtain packing credit facility for the purpose of processing the goods. It is called a red-cause LC because it is generally printed/ typed in red ink. 9.Green Clause LC: The Green LC in addition to permitting packing credit advance also provides for the storing facilities at the port of shipment. Green LCs is








10.Back-to-Back LC: Back-to Back LC is a domestic letter of credit. It is a ancillary credit created by a bank based on a confirmed export LC received by the direct exporters. The direct exporter keep the original LC (received from issuing bank) with the negotiating or some other bank in India, as a security, and obtains another LC in favour of domestic supplier. Through this route the domestic supplier gains direct access to a pre-shipment loan based on the receipt of domestic or back-to-back LC. Documentary LC: Most of the L\C is documentary L\C. Payment is being made by the bank against delivery of the full set of documents as laid down by the terms of credit. The important documents required to be submitted by the exporter under documentary LC includes the following: Bill of Lading /Airway Bill or any other transport document Commercial Invoice Insurance Policy Shipping Bill Certificate of Origin Combined Invoice and Certificate of Value and Origin GSP/CWP certificate Packing List Certificate of Quality Inspection Bill of Exchange Any other document if required. A letter of credit may call for some or most of the above documents and may also call for some other documents specific to the shipment. Feature of a Documentary Credit A documentary credit is a document in writing issue by the bank on behalf of its customer (The Buyer). Documentary Credit must stipulate the Type of Credit as detailed above and inter alia will also stipulate the Following details : 1 the name of the Bank issuing the Documentary Credit.(The L/C OpeningBank) 2 the name and address of the buyer on whose behalf the credit is Issued.(The Applicant) 3 the name and address of a bank in the country of the seller the credit through Whom the L/C is to be advised to the seller. 4 The name and address of the Seller (Beneficiary)


5 The Maximum Value the opening bank undertakes to pay to the Beneficiary. 6 The date of issue of the credit. 7 The Expiry Date of the L/C 8 The Validity Date for shipment. 9 The Details of the product to be shipped.(Description) 10 Details of document required for claiming the payment from the Opening bank. 11 The name and address of the bank authorized to negotiate the documents. 12 The Reimbursement Clause.

Cover Credit Risk by Transparent Overseas and register this export unit in ECGC- There is more than 40 organizations covering the credit risk, all the
world over. In India, we have Export Credit Guarantee Corporation of India Limited to cover export credit risks. This is a government of India enterprise, with its Head office located in Mumbai, under the administrative control of the Ministry of Commerce. Board of Directors representing Government, Banking, Insurance, Trade and Industry manages this organization Transparent Overseas registered in the ECGC (Export Credit Guarantee Corporation of India Limited).

Types of Cover issued by ECGC: They are broadly divided into four groups:

Standard Policies: They are ideally suitable to exporters to cover payment risks involved in exports exports on short-term credit basis. Specific Policies: these policies are specifically designed to protect Indian exporters from the risks involved in a) Exports on deferred payment contracts. b) Services rendered to foreign parties and c) Construction works and turnkey projects undertaken abroad.


Special Policies, beside the risks covered under Standard policies, are issued by ECGC to meet the specific requirements of export transactions.

Financial Guarantee: They are the policies issued to banks for covering risks in extending- credit at pre-shipment as well as post shipment stages.



Special Schemes: They are meant to cover risks involved in confirmation to letters of credit opened by foreign banks, insurance cover for Buyers Credit, Line of credit and exchange fluctuations risks.

Foreign Exchange Fluctuations Risks: If the exporter has invoiced in the
buyer’s currency, He will be subjected to risk of foreign exchange fluctuations. If the foreign currency depreciates in terms of rupees, exporter will receive lesser amount in terms of rupees or vice versa. In the same circumstances, If the Indian currency depreciates, exporter stands to gain. If the export bill is purchased or negotiated under letter of credit and the foreign currency undergoes fluctuation, the bank will be bearing the risk. However, if the exporter has sent the bill for collection, the exchange rate on the date of receipt of foreign currency in India will be given to the exporters. If there is intervening difference in the exchange rate between the date of given the bill for collection and date of realization, exporter stands to lose or gain, depending on the trend in fluctuation. There will be no foreign exchange risk in case invoice is made in Indian rupees. In such a case, the importer will be subjected to foreign exchange fluctuation risk.

Transfer risk to third parties
The exporter can manage to transfer some of the risks to third parties that specialize in managing the risks of exports. These parties are known as insurance agencies. The various agencies and the type of risk they cover are as under: Category of risk 1. Credit Risk

Agency ECGC General General Commercial Bank

Physical Risk Insurance Company

3. Product Liability Risk Insurance Company 4. Exchange Fluctuation Risk Commercial Risks

1 Insolvency of the buyer 2 Failure of the buyer to make payment within a specified period. 3 Buyer’s failure to accept the goods subject to certain conditions.


Political Risks 1 Imposition of restrictions by the Govt. of the buyer’s country or any government action which may block or delay the transfer of payment made by the buyer. 2 War, civil war, revolution or civil disturbances in the buyer’s country 3 New import restrictions or cancellation of a valid import licence 4 Interruption or diversion of voyage outside India resulting in payment of additional freight or insurance charges which cannot be recovered from the buyer. 5 Any other cause of loss neither occurring outside India nor normally insured by general insurers and beyond the control of both the e porters and the buyer. Risks not covered under the Policy The Standard Policy does not cover losses on account of following risks: 1 Commercial disputes including quality disputes raised by the buyer unless the exporter obtains a decree from a competent court of law in the buyer’s country in his favour 2 Causes inherent in the nature of the goods 3 Buyer’s failure to obtain necessary import or exchange control clearance from authorities concerned 4 Insolvency or default of the agent of the exporter or of the collecting bank 5 Loss or damage to goods which can be covered by general insurers. 6 Exchange rate fluctuations 7 Failure of the exporter to fulfill the terms of the export contract or negligence on his part. Shipments Covered The Standard Policy is meant to cover all the shipments that may be made by an exporter during a period of 24 months ahead. The policy cannot be issued for selected shipments, selected buyer or selected markets. For specific requirements an exporter can opt for different policy from the various services offered by the corporation Exclusions: Shipments made against advance payments received or shipments against confirmed letters of credit which has the confirmation from the bank in India may be excluded. However, shipments against confirmed L/C may be covered for political risks only. The premium for cover under political risks will be less than that under the comprehensive policy. ECGC may also agree to exclude certain items if the exporter is dealing in different distinct products.


Import - Export Policy of India
Contents • Why do we need export,brief history • Exim policy ,objectives • Export Promotion Measures • Import Control in India • Pre 90’s Exim Policy of India • Post 90’s Exim Policy of India Why do we need export • Export means trade across the political boundaries of different nation. No Nation is self sufficient and had all the goods that it needs. This happens because of climatic variation & unequal distribution of natural resources. As a result, countries all over the world have become interdependent, which necessitated foreign trade. A developing country like India with its fast growing agricultural production to keep pace with the population to keep pace with the population growth and growing Industrial infrastructure Needs high-import and this can be sustained only with fast export growth. To meet the oil import bill, export is unavoidable. Thus, it is evident that export promotion continues to be a major thrust area for the government. Several measures have been under taken in the past for improving export performance of the country. In India, Govt. has come out from time to time with various policies on foreign trade to promote export thereby increasing the “Foreign Exchange Reserve”. These policies are termed as “Exim Policy” Brief history • Import export act was introduced by gov . during second world war and it lasted for around 45 yrs and in June 1992 this act was superceded by the Foreign Trade (Development & Regulation Act), 1992. . The basic objective of this new act was to give effect to the new liberalized export and import policy of the Govt. till 1985 annual policies were made but from 1985-92, three yr policy was made and then 5 yr policy was made coinciding with 5 yr plans 1992-97, 1997-02, 2002-07. What is Exim Policy? • It contains policies in the sphere of Foreign trade i.e. with respect to import & export from the country and more especially export promotion measures, policies and procedure related there to. • Export means selling abroad and import as bringing into India, any goods and services Objective of Exim Policy


• Accelerating the country’s transition to a globally oriented vibrant economy with a view to derive maximum benefits from expanding global market opportunities; • Stimulating sustained economic growth • Enhancing the technological strength and efficiency • Encouraging the attainment of internationally accepted standards of quality • Providing consumers with good quality products and services at reasonable prices. General provisions regarding export import • Exports and Imports free unless regulated • Compliance with Laws • Interpretation of Policy • Procedure • Exemption from Policy/ Procedure • Principles of Restriction • Restricted Goods • Terms and Conditions of a Licence • Importer-Exporter Code Number • Exemption from Bank Guarantee • Clearance of Goods from Customs EXPORT PROMOTION MEASURES • Policy measures • Institutional set up. • Import Facilitation for Export Production. • Cash subsidies. • Fiscal Incentives. • Foreign Exchange Facilities. • Export incentives • Export production units Import Facilitation for Export Production • Export Promotion Capital Goods Scheme • Special Import Licences • Duty Free Licences under Duty Exemption Scheme • Duty free licences are issued as : (1) Advance licence (2) Advance Intermediate licence. (3) Special Imprest licence.


(4) Licence for jobbing, repairing etc. for re- export. (5) Licence under export production programme. (6) Advance Release Order. (7) Back to Back Inland Letter of Credit. Export Incentives • Duty Exemption • Duty Drawback Scheme • DFRC (Duty free replenishment certificate) • DEPB( Duty entitlement pass book) • Deemed Exports Export Production Units • Export Oriented Unit (EOU) • Special Economic Zones (SEZ) • Software Technology Parks (STP) • Electronic Hardware Technology Parks (EHTP) Cash subsidies • Marketing development assistance • Air freight subsidy • Spices export promotion scheme • Jute externel marketing assistance • Financial assistance scheme agriculture &meat exports • Financial assistance to marine products exports Fiscal incentives • Exemption from payment of central excise duty & simplified procedure for clearance. • Exemption from sales tax • Exemptions & deductions under income tax act,1961. • Duty draw back Scheme (DDS) • Cash Compensatory Support ( CCS ) • International Price Reimbursement Scheme (IPRS) Import control regime • 1956-57, restrictions on imports started as lot of imports were there as such gov even had to import food grains for self fulfillment • Imports were classified into


• Banned items , Canalized items ,Restricted items, OGL • In 1966 Rupee was devalued by 36.5% By devaluation gov expressed the hope that the devaluation would lead to expansion in export earnings as Indian goods will become cheaper in internatinal market on the other hands import would decline as price of imported goods would increase. • Because of a rigid itemization of permissible imports, an element of inflexibility in the pattern of utilization of imports was introduced. The transferability of licenses among same and different industries was not permissible. This gave rise to an expanding black market in import licenses. Therefore, the import allocation system was so designed as to eliminate the possibility of all competition, either domestic or foreign. The Govt of India has liberalized the import regime from time to time. At present, practically all controls on import have been lifted. Under the new EXIM policy 2002-07. Comparison of Pre 90’s & Post 90’s Exim Policy Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Excess of Import due to- 1948-51 650 647 -3 •Pent-up demand of war. •Shortage of food & raw material due to partition. •Import of capital goods due to starting of hydro-electric & other projects. Trade deficit was largely due to 1951-56 730 622 -108 programmes of industrialization which gathered momentum and pushed up the imports of capital goods. No improvement in exports. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Excess of import due to setting of steel 1956-61 1080 613 -467 plants,heavy expansion & renovation on railways & modernization of many industries. Export lower than occur in second plan which shows that export promotion drive did not materialize. Excess of import due to- 196166 1224 747 -477 •Rapid industrialization needs capital goods as raw material. •Defence needs had increased due to aggression by China & Pakistan. •Need of foodgrains due to failure of crops in 1965-66. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Devaluation was resorted to essentially- 1966-69 5775 3708 -2067 •To reduce volume of import. •To boost export. •Create favorable balance of trade and plans) balance of payment. As a consequence of import restriction 1969-74 1972 1810 -162 policies with vigorous export promotion measures ,during 1972-73 the country had favorable balance of trade for first time


since independence. But several international factors pushed up the price of petroleum product, steel, fertilizers etc. results low magnitude of trade balance. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Significant increase in export during 1974-79 5540 4730 -810 every year of this period.Export of coffee,tea,cotton fabrics etc.recorded substantial increase in this period. But,Janta Government followed policy of haphazard import liberalization results decline trade balance from 1977-78. Decline in POL imports was more than 1980-85 14,986 9051 -5935 by a big hike in non-POL imports as a consequence of import liberalization. Consequently, huge trade balance. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Huge trade balance compelled the 1985-90 28,874 18,033 -10,841 government to approach the World Bank/IMF for loan. The government was also forced to apply brakes on the licensing policy of imports. In 1990-91,push was given to 1990-92 45,522 38,300 -7222 export,but as a consequence of Gulf war government failed to curb imports. In1991-92, government introduced number of measures in trade policy allowing exim scripts,abolishing cash compensatory support(CCS) schemes as also a two-step devaluation of the rupee,but fail to boost up export. Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) In 1992-01,slow down in exports due to- 1992-01 140740 118252 -22,488 •Depressed nature of world markets. •Saturation of developed countries market for electronic goods which are dynamic export sectors. •Increased protectionism by industrialised countries in area of textile and clothing. •Increasing competition from China & Taiwan. •India underestimated the impact South- East Asian crisis •Non-Tarrif barriers have been created by developed counties to slow down Indian exports. •In 2000-01 export was largely due to rupee depreciation along with further trade liberalization,more openness to foreign investment in EOU sectors ike IT. Year Import Export Trade (US (US Bal.(US $million) $million) $million) Rise in imports in 2002-03 was broadly 2002 –03 65422 52512 -12910 based on oil imports,food &allied products(edible oil),capital goods. Exim policy 2003-04gave massive thrust to exports by 2003-04 80177 64723 -15454 •Duty free import facility for service sector upto earning 10lakh foreign exchange. •Liberalization of Duty Exemption scheme. Besides, all


It is said, “Nothing is perfect” and if the quite is true, I am sure that there would be few shortcoming in this project also. Sincere efforts have been made to eliminate discrepancies as far as possible but few would have reminded due to limitation of the study. These are:

1. Limited scope
The survey was conducted in Firozabad thus the respondents belonged to only region of the country. This could have brought bias into the study.

2. Nature of the study
The survey concentrated on personal information about income, saving and investment. All these issues are highly sensitive and of secretive nature therefore there could have been untrue answers to some of the questions.

3. Ambiguous replies
Some of the respondents gave ambiguous replies for certain questions or omitted the responses to some of them. The interpretation of such responses becomes difficult and could generate wrong results.

4. Unrepresentative sample size
The sample size taken for the purpose of the study does not very significantly represent the whole society and their saving investment patterns may not clearly bring out the average trends existing in the market.


Research Methodology
The Research and Methodology adopted for the present study has been systematic and was done in accordance to the objectives set which has been detailed as below. Research Definition Research is a process in which the researcher wishers to find out the end result for a given problem and thus the solution helps in future course of action. According to Redman & Mory research is defined as a “Systemized effort to gain new knowledge”. Research Design: According to “Claire Seltiz”, a research design is the arrangement of condition and analysis of data in manner that aims to combine relevance to the research purpose with economy in procedure. Nature of Research: Research is basically of two types. 1. Descriptive research 2. Explorative research 1. Descriptive Research: These studies are concerned with describing the characteristic of a particular individual or a group. Determining sources of Data: There are two main sources of data 1. Primary data 2. Secondary data


Primary Data: It consists of original information collected for specific research. Primary data for this research study was collected through a direct survey to obtain this primary data a well structured questionnaire was prepared by the researcher.

Secondary Data: It consists of information that already exists somewhere and has been collected for some specific purpose in the study. The secondary data for this study is collected from various Japanese Management books.

Questionnaire: A set of questions containing a few Technical questions and more number of opinionated questions are prepared for the employees of both Centralized and Decentralized sections of HR Department. Sample Size: Total sample size is 90 Questionnaire Development: Questionnaire is the most common instrument in collecting primary data. In order to gather primary data from viewers. The present questionnaire consists of following type of questions. Open ended questions Closed ended questions Dichotomous questions Multiple choice questions Ranking question. Open ended questions: It has no fixed alternatives to which the answer must conform. Thus, respondent answer in his/her own words at any length they choose.


Closed ended questions: Closed ended questions have no other options other than the selecting the one that close matches the respondent’s opinion or attitude. Dichotomous questions: A dichotomous questions refers to one, which offers the respondents a choice between only two alternatives. Multiple Questions: A multiple choice question refers to one, which provides several sets of alternatives for the respondents’ choice. Ranking questions: These questions are given when there are many points to be considered and to be ranked in priority.


After analyzing all the aspects of the data available and giving some important recommendations a suitable conclusion which should be derived for this study. However, before starting the conclusion part, the objective of the research must be kept in mind so that we can arrive at a befitting conclusion for the research problem. The primary objective of this research was to develop a complete understanding of the overall functioning of Transparent Overseas including the sales and distribution network and marketing. The data collected provided a sound base for understanding the overall organizational set up of Transparent Overseas. By analyzing the data and the literature review, following conclusion was inferred:

The Sales and Distribution Network of Transparent Overseas is very strong and almost flawless.

Transparent Overseas had the first mover advantage when it entered the market and it capitalized on that advantage to grab the market.

Good Quality based operations combined with the Company’s operations add strength to the overall presence of the Company in the International market.

• Promotional activities within every territory are under the territory office and the officials of that office are responsible for the effectiveness and successful implementation of these campaigns.

Because of fierce competition Transparent Overseas has spend heavily on Ads in order to increase the brand recall and successfully face the competition.


Transparent Overseas has good brand image and recall in the buyer’s mind but the most surprising thing is that when compared with other company, Transparent Overseas lags behind in terms of brand image.

Although the overall functioning of Transparent Overseas is very efficient, there are certain areas that can be improved.

Transparent Overseas is finding it difficult to counter the competition from other export company in Handicraft Glass, Iron, Brass Artware Decorative Items Segment but it has distinct advantage and upper in almost all the other handicrafts items segments etc.





% Percentage 65% 15% 10% 5% 5%

Transparent Overseas Performance

Very Good Good Average Poor Very Poor

From the above graph it is clear that majority (65%) of the respondents said that the performance is very good while the (15 %) of the respondents said that the performance is good and (10%) it is average while the 5% said that it is poor & 5% said that it is very poor.




% Percentage 50% 30% 20% 25%


Transparent Overseas Pooja Glass Tiger Glass Gopal Glass Indu.




% Percentage 25% 10% 15% 35% 15%


From the above graph it is clear that majority (65%) of the respondents said that the performance is very good while the (15 %) of the respondents said that the performance is good and (10%) it is average while the 5% said that it is poor & 5% said that it is very poor.




% Percentage 95% 5%





% Percentage 70% 20% 8% 2%






% Percentage 95% 5%




BIBLIOGRAPHY Transparent Overseas Company Profile. IMS Manual of Transparent Overseas.

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