You are on page 1of 49





India has a mission to capture 2 oI the global share oI trade by 20010, up
Irom the present level oI less than 1. Export is one oI the lucrative business
activities in India. The government also provides various promotional schemes to the
exporters Ior earning valuable Ioreign exchange Ior the country and Ior meeting their
requirements Ior importing modern technology and essential inputs. Besides, the
income Irom export business is also exempted to the speciIied extent under the
Income Tax Act, 1961, ReIund oI Central Excise and Custom Duty on export is also
made under the Duty Drawback Scheme oI the Government. There is no Sales Tax
on products meant Ior exports.

Exports can be oI goods which can be moved physically Irom one country to another
or can be oI service rendered. Detailed list oI services are given in the Foreign Trade
Policy covering more than 160 items e.g. Insurance, Hospital, Postal and
Telecommunication etc.


Physical Exports:
II the goods physically go out oI the country or services are rendered outside the
country then it is called as physical export.

Deemed Exports:
Where the goods do not go out oI the country physically they can be termed as
deemed exports. This will be subject to certain conditions as prescribed by the
DGFT. Under Deemed Exports, the goods may be supplied to the manuIacturer
exporter who ultimately export a Iinished product oI which this supply Iorms a part
and ultimately go out oI the country. E.g. Supply oI Iabrics to the garment exporter
who exports the garments made out oI the said Iabric.

The government may announce Irom time to time the types oI supplies
that may be considered as deemed export. The Foreign Trade Policy gives the list oI
supplies considered under the Deemed Export Category. The policies and procedures


are diIIerent Ior Physical Exports and Deemed Exports as also the beneIits available.
In a nutshell, Deemed Exports do not enjoy all the beneIits that are available under
Physical Export. The Foreign Trade deIines exports as taking out oI 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 Irom 'Deemed Exports which is sales in India
but considered as exports Ior limited purpose.





HCL InIosystems is India`s premier inIormation enabling company. Leveraging its 3
decades oI expertise in total technology solutions, HCL InIosystems oIIers value-
added services in key areas such as system integration, networking consultancy and
a wide range oI support services.
HCL InIosystems is among the leading players in all the segments comprising the
domestic IT products, solutions and related services, which include PCs, Servers,
Imaging, Voice & video solutions, Networking Products, TV and FM Broadcasting
solutions, Communication solutions, System Integration, ICT education & training,
Digital liIestyle Solutions and Peripherals.

HCL has a direct sales, channel sales and retail sales network pan India.
Continuously meeting the ever increasing customer expectations and applications, its
Iocus on integrated enterprise solutions has strengthened the HCL InIosystems`
capabilities in supporting installation types ranging Irom single to large, multi-
location, multi-vendor & multi-platIorm spread across India. HCL InIosystems,
today has a direct support Iorce oI over 3000 members, is operational
at 360 locations across the country and is the largest such human resource oI its
kind in the IT business in India. HCL InIosystems has pan India presence across
metros and non-metros.

HCL InIosystems' manuIacturing Iacilities are ISO 9001 & ISO 14001 certiIied and
adhere to stringent quality standards and global processes. With the largest installed
PC base in the country, Iour indigenously developed and manuIactured PC brands -
'InIiniti', 'Busybee' 'Beanstalk' and Ezeebee` - and its robust manuIacturing
Iacilities, HCL InIosystems aims to Iurther leverage its dominance in the PC market.
It has been consistently rated as Top player in PC industry by IDC.

The 'InIiniti' line oI business computing products is incorporated with leading edge
products Irom world leaders such as Intel. Constant innovation to meet the
customized requirements oI its customers has enabled HCL to create the trusted ICT
inIrastructure platIorms, powerIul value adds like HCL Embedded Control &
Continuity (HCL EC2) technology and the Iuture generation oI digital liIestyle



The Imaging, Voice & video solutions segment has strategic alliances with industry
leaders to provide services in various domains which include Audio Video system
integration solutions, broadcasting solutions, imaging products and solutions. The
company has strategic alliances with world leaders Ior voice and video conIerencing
solutions, TV and FM Broadcasting solutions and Ior Imaging products and
solutions to provide documentation products like copiers, MFDs, Duprinters, laser
printers and large Iormat printers.

The Channel Business oI HCL InIosystems has an extensive network oI
over 3000 resellers across 900 locations. It has actively promoted the penetration oI
PCs in the home and the small oIIice/home oIIice (SOHO) segments.

HCL InIinet Ltd, 100 owned subsidiary oI HCL InIosystems Ltd. is a class A ISP
Iocusing on providing the corporate networking services like Virtual Private
Network, Broadband Internet Access, Internet Telephony Hosting & Co-location
services, designing & deploying Disaster Recovery Solutions & Business Continuity
solution, Application Services, Managed Security Services & NOC Services over its
state-oI-the-art IP / MPLS network and end-to-end contact center solutions.


Evolution of HCL Infosystems Ltd.
1976 HCL Infosystems Ltd is one oI the pioneers in the
Indian IT market, with its origins in 1976. For over
quarter oI a century, we have developed and implemented
solutions Ior multiple market segments, across a range oI
technologies in India. We have been in the IoreIront in


introducing new technologies and solutions.
Shiv Nadar is chairman and CEO oI HCL Technologies,
a subsidiary oI Hindustan Computers Limited (HCL), a
Iirm he co-Iounded in August 1976 and which
includes HCL Infosystems. Shiv Nadar was 22 when he
saw his Iirst city. Now, as chairman and CEO oI
HCL Technologies, he is worth some US$ 3 billion,
according to a Forbes magazine estimate last year.
1998 This oIIice was Iinally converted into a wholly owned
subsidiary on 1uly 1, 1998. Year aIter year we have been
consistently rated number one in India in UNIX systems
revenue and unit market share (IDC). Sun India has been
growing at twice the industry average Ior the last 5 years.
Sun has adopted a business model oI working in
partnership with key Indian partners to deliver all
products and services such as hardware platIorms,
services, certiIication training etc.
2003 The company acquired the soItware business
oI HCL Infosystems Limited, a Iellow subsidiary, with
eIIect Irom 1anuary 1, 2003. Subsidiary: The company
Iormed a subsidiary called 'HCL Technologies (Mumbai)
Ltd.', Ior soItware delivery related to its operations in the
US. Change in accounting policy: Nil.
2004 HCL Infosystems Ltd (HCL Insys), India's premier
InIormation enabling company, today announced its un-
audited results Ior the quarter ended December 31, 2004.

2006 New Delhi, May 29, 2006 -- With an aim to make the
most compelling digital music phenomenon more
accessible to Indian consumers across the country, HCL
Infosystems Ltd. - nation's premier inIormation enabling
and integration company - and Apple today Iormed a
strategic alliance to develop a joint go to market and


An engineer by training, Ajai Chowdhry is one oI
the six Iounder members oI HCL and took over
the reins oI HCL InIosystems, the Ilagship
company oI the group, as President and CEO in
1994. He was appointed the Chairman oI HCL
InIosystems in November 1999. In recognition oI
his contribution in championing the cause oI the
domestic Indian IT industry, Ajai has been
conIerred the DATAQUEST IT Man oI the Year
2007` Award amongst other awards.
HARSH CHITALE CEO Harsh Chitale joined HCL InIosystems as ChieI
Executive OIIicer in 2010 and heads the overall
support strategy Ior Apple iPods in India.
2007 HCL InIosystems Limited announced that it has
recommended 100 Iinal dividend on the paid up share
capital oI the Company Ior the Iinancial year ended 1une
30, 2007. HCL InIosystems Limited Announces
Allotment OI Equity Shares Under ESOS.
2008 About HCL Securities Ltd HCL Security is a 100
subsidiary oI HCL InIosystems Ltd. Incorporated
in March 2008. The company provides end to end
integrated security solutions.
2009 In August 2009, the Madras high court admitted two
separate winding up petitions by Kotak Mahindra Bank
Ltd and HCL InIosystems Ltd to recover their dues Irom
Subhiksha. Subhiksha owes at least Rs750 crore to ICICI
Bank, HDFC Bank Ltd, Yes Bank Ltd and other lenders.
A consortium oI lenders tried to revive Subhiksha with a
debt restructuring plan, but Iailed to Iile a proposal to the
CDR oIIice by a July deadline.


business strategy and operations oI HCL
InIosystems. He brings a wealth oI experience as
a senior business leader with rich business
management experience in both Indian and
global companies. Harsh is a recipient oI the
Director`s Gold Medal at IIT Delhi, Irom where
he completed his Electrical Engineering.
President and ChieI Operating

J V Ramamurthy is President and ChieI
Operating OIIicer, HCL InIosystems Ltd. He
brings 3 decades oI diverse Industry experience
and leadership to the company. A technocrat and
a man oI broad vision, he has spearheaded
company`s entry into number oI new verticals
and partnerships.

Sandeep Kanwar joined HCL in 1988 and in a
span oI eight years progressed to the position oI
ChieI Financial OIIicer at the young age oI 35.
He is well respected amongst colleagues &
customers Ior his Iinancial acumen and
management skills.

Hari, a BE graduate and alumni oI IIM -
Bangalore, has been instrumental in building up
the largest retail network Ior digital liIe style
products in the country. He heads
the Distribution and Marketing Services and
Retail business division Ior HCL.

George Paul, a graduate in Electronics &
Telecommunications joined HCL in 1983.
He heads the Marketing Function along with
Rajeev, an engineering graduate, joined HCL in
1983,. With two decades oI industry experience,
he heads the Enterprise Solutions & services


Sr. VP

M Chandrasekaran joined HCL in 1984. With
over two decades oI industry experience in sales,
support and marketing, he heads the oIIice
automation products business Ior HCL.


Vivek joined HCL in 1986. An engineer by
proIession with over two decades oI industry
experience in various Iunctions, he heads the HR
Iunction Ior the company. Credited with
innovative HR initiatives that have made HCL
among the best companies to work Ior.

Relationship Programme

HCL strongly believes in the power of relationships and partnership

No matter the size oI your business, partnering with HCL InIosystems will help you
succeed. Leveraging over three decades oI experience in total technology solutions,
it`s our commitment to help you be as successIul as possible.

We provide you access to HCL`s innovative technologies, marketing strategies and
value added services. By working on every aspect oI the ICT industry, we have the
experience to create world class products and services to help you give the best to
your customers.
Advantage HCL
O HCL's labs - Pioneers in design, development and building ICT products
O India's largest Hardware, System Integration, Networking Solutions &
Distribution Company
O 3 decades oI expertise in technology solutions
O Partners with leading global players to provide the best oI solutions to end
O The largest manuIacturer oI PCs and Laptops in India
O Largest direct sales, digital liIestyle product distribution and retail network
O Extensive service network that reach out to 4,000 towns


Benefits from a Proven Commitment from HCL Infosystems

At HCL InIosystems, partnerships are liIelong relationships that mutually beneIit
each other. We can help to enhance your business and reap the rewards oI our
mutual success.

We oIIer diIIerentiated technology and dedicated service support inIrastructure as
per the needs and requirements oI your customers. We provide technology
specializations that map to areas oI signiIicant business growth Ior your business and
your customers.

Reliable IT Backbone

In a world where the right technology inIrastructure is a prerequisite, we oIIer a
reliable IT backbone to our partners. HCL combines technical innovation with built-
in reliability to keep your business running. We provide a one stop shop Ior meeting
end-to-end IT requirements, thus oIIering a smooth ICT management.

Additionally, we oIIer industry leading technology, designed to deliver a price to
perIormance advantage to help you provide increased beneIits to your customers.
Our high-quality products and services give you means to work in a smarter way and
be more productive and competitive.

Differentiated Product Access

At HCL we understand that diIIerent customers have diIIerent needs. We have
constantly innovated to oIIer a range oI products to cater to diIIerent requirements oI
the customers.

We have pioneered the home PC market oI India - we designed India`s Iirst
Multimedia-enabled Beanstalk Media Centre PC Ior home users; we have developed
Ezeebee and Busybee PCs and ME Laptops Ior personal productivity. Whether
gaming, enjoying music or movies or connecting to the Internet, these systems oIIer
ease oI use that transcends to greater perIormance and more satisIaction Ior the


individual user be Ior work or home.

We bring this exciting range oI Desktops and Laptops through our vast network oI
neighborhood partner outlets Ior buying convenience oI the customers. Further these
products are backed by HCL`s 24X7 Consumer Support Helpline.

Enterprises have unique needs Ior their computing platIorms and HCL`s range oI
business Desktops and Laptops come with unique Ieatures that enhance productivity
while reducing TCO. For our Enterprise & SMB customers who buy directly Irom
us, or through Enterprise Rate Contracts or through our vast network oI Strategic
Business Partners we oIIer customized built to order range oI ME Business Laptops
and InIiniti Desktops.

Leveraging on three decades oI expertise in total technology solutions, HCL
business Desktops and Laptops oIIers increased security, ultra-eIIicient
manageability and maximum productivity Ior a smart business landscape.

HCL's manuIacturing Iacilities are ISO 9001 - 2000 & ISO 14001 certiIied and
adhere to stringent quality standards and global processes. HCL Desktops and
Laptops are manuIactured and marketed specially to withstand unique Indian terrain
and conditions. HCL commits to manuIacture 'Green PCs and Laptops that are
RoHS compliant and adhere to stringent environment management standards. As
market leaders in ICT arena we oIIer our partners the best oI options.


A global corporation enriching lives
and enabling business
transformation for our customers,
with leadership in chosen
technologies and markets. Be the
first choice for employees and
partners, with commitment to
We enable business transformation and
enrichment of lives by delivering
sustainable world class technology
Products, Solutions & Services in our
chosen markets thereby creating
superior shareholder value.

We shall deliver defect free products,
services and solutions to meet the
requirements of our external and
internal customers the first time, every


Alliance & Partnership

To provide world-class solutions and services to all our customers, we have Iormed
Alliances and Partnerships with leading IT companies worldwide.

HCL InIosystems has alliances with global technology leaders like Intel, AMD,
MicrosoIt, IBM, Bull, Toshiba, Nokia, Sun Microsystems, Ericsson, NVIDIA, SAP,
ScansoIt, SCO, EMC, Veritas, Citrix, CISCO, Oracle, CA, RedHat, InIocus, Duplo,
Samsung and Novell.
These alliances on one hand give us access to best technology & products as well
enhancing our understanding oI the latest in technology. On the other hand they
enhance our product portIolio, and enable us to be one stop shop Ior our customers.
Technology Leadership

HCL InIosystems is known to be the harbinger oI technology in the country. Right
Irom our inception we have attempted to pioneer the technology introductions in the
country either through our R&D or through partnerships with the world technology

Using our own R&D we have:
O Created our own UNIX & RDBMS capability (in 80s).
O Developed Iirewalls Ior enterprise & personal system security.
O Launched our own range oI enterprise storage products.
O Launched our own range oI networking products.
We strive to understand the technology Irom the view oI supporting it post
installation as well. This is one oI the key ingredients that go into our strategic


HCL InIosystems has to its claim several technology pioneering initiatives. Some oI
them are:
O Country's Iirst DeskTop PC - BusyBee in 1985.
O Country's Iirst branded home PC - Beanstalk in 1995.
O Country's Iirst Pentium 4 based PC at sub 40k price point.
O Country's Iirst Media Center PC.
Philosophy of Quality

We shall deliver defect-free products, services and solutions to meet the
requirements of our external and internal customers, the first time, every time.

To exist as a market leader in a globally competitive marketplace, organizations
need to adopt and implement a continuous improvement-based quality policy.One oI
the key elements to HCL's success is its never-ending pursuit oI superior quality in
all its endeavors.

HCL INFOSYSTEMS believes in the Total Quality Management philosophy as a
means Ior continuous improvement, total employee participation in quality
improvement and customer satisIaction. Its concept oI quality addresses people,
processes and products.

Over the last 32 years, we have adapted to newer and better Quality standards that
helped us eIIectively tie Quality with Business Goals, leading to customer and
employee satisIaction.


HCL's computer hardware manuIacturing plants include 4 Iacilities, 2 at Puducherry,
1 at Chennai & 1 at Uttranchal.

The plant located in Puducherry are situated 165 kms south oI Chennai on the coast
oI the Bay oI Bengal with proximity to Chennai Air/Sea port, special policies Ior
Industries oI local Govt, , Inland Container Depots, attractive power and labour rates
- makes Puducherry an ideal place Ior business.


Started in 1996 - with only Unit 1 - it now has 4 Units with a built up area oI
4,19,000 sq. It The inIrastructure is state oI the art, one oI the best & largest in

All 3 Iactories are ISO 9001:2000 and ISO 14001, ISO 13485:2003, TS 16949-2002
TUV-Accredited certiIied. PMO was also Awarded MAIT Level 2 - by European
Foundation Ior Quality Management in the year 2001. HCL was also awarded
ELCINA's (Electronic Component Industries Association) Quality Award Ior the
year 2002- 2003.

HCL Infosystems Ltd. Puducherry, Uttarakhand, and Noida Manufacturing
Units now ISO 9001:2008 Certified

State oI the art IT systems in MRP, ERP, Online conIigurations enables this latest
unit oI HCL (Rudrapur) to leverage the power oI IT in delivering optimum
eIIiciency. The plant is networked & online with HCL branch and head oIIices. The
Pondicherry plant has its own Product Engineering Group (PEG) and R&D teams
constantly engaged in developing new products and solutions. Driven by a strong
manuIacturing objective, HCL promises to deliver deIect Iree products, services and
solutions to meet the requirements oI its external and internal customers, right Irom
the commencement oI the relationship.
Driven by a strong Manufacturing Objective


Computing Products

Offering an entire range of Computing
Products for Corporate, Businesses
and Small to Large Setups.
Display Products

Introducing great display products
that you would love setting your eyes
Networking Products

Enjoy fast data transfer with our
exclusive range of Networking
Storage Solutions

Offering an entire range of storage
Software Licenses Enjoy benefits of genuine software
licenses through HCL Infosystems.
Digital Lifestyle Products & Solutions

Offering an entire range of Digital
Lifestyle Products and Solutions for
entertainment and business.
Office Automation Imaging &

Introducing world class imaging
products and solutions to meet
business requirements.
Office Automation Telecom & AVSI

Introducing world class telecom
products and AVSI solutions to meet
business requirements.
POS, KIOSK, Customer Service
Counter Products

Offering an entire range of POS
products and solutions.
Software Solutions

Bringing to you world class software
solutions that you can depend on




2 Exports Management
Export management involves all the activities relating to procedures, Iormalities and
payment modes oI particular export. MCC is a cottage industry and Iormalities required to
cross at the time oI shipment are comparatively less than Ior other goods. MCC is a small
scale industry and is receiving many tax exemptions and duty draw backs Irom the
government oI India. I limited my study to export documentation and export Iinance at
Mother`s Commerce Company (P) Ltd. The Iormalities relating to export and export Iinance
are explained below.
2.1 Export documentation
Mother`s Commerce Company mainly trades with UK, Netherlands, USA, UAE, Austria
and Israel. As it is maintaining strong relationship with all its buyers, the payment problems
have been ruled out. So it mainly trades with terms oI Documents against goods or
Documents against sight or Documents against payment. So I have gone through all the
procedures and documentation system mainly what company is Iollowing. Many oI the
buyers oI the company preIer shipment through sea than air except to UAE.
Some oI the most used and most important documents oI exports are as Iollows:
Bill of Exchange
The Documentary Letter oI Credit will stipulate when payment is to be made and the bill oI
exchange must be drawn up accordingly. The bill oI exchange must conIorm exactly to the
terms oI the Letter oI Credit, with the sum speciIied not exceeding the amount oI the LC.
Unless the Documentary Letter oI Credit stipulates that Bills oI Exchange are required to be
in duplicate, a single Bill oI Exchange will be acceptable.
Bill oI Exchange Iorms may be purchased Irom printers or stationers, or they may be drawn
on a company`s notepaper or even a blank sheet oI paper. When being presented Ior
payment, the Bill oI exchange must be correctly endorsed by the payee.
DeIined by Bills oI Exchange Act 1882, sec 1 as an unconditional order in writing,
addressed by one person (the drawer) to another (the drawee and aIterwards acceptor),
signed by the person giving it, requiring the person to whom it is addressed to pay on
demand, or at a Iixed or determined Iuture time, a sum certain in money to, or to the order
oI, a speciIied person or to bearer (payee).


Certificate of inspection
A document issued by a grading agency that assures the buyer that the shipment oI lumber
has been examined by a qualiIied inspector and that the lumber in the shipment is oI the
grade indicated. OIten used Ior selects and timbers where a grade mark would not show, or
where one would aIIect the use oI the piece.
Commercial Invoice
A commercial invoice is a bill oI goods Irom the seller to the buyer. Commercial invoices
are utilized by customs oIIicials to determine the value oI the goods in order to assess
customs duties and taxes.
In general there is no standard Iorm Ior a commercial invoice although they tend to contain
many oI the Iollowing Ieatures:
Seller`s contact inIormation
Buyer`s contact inIormation
Consignee`s contact inIormation (iI it is diIIerent Irom the buyers)
Invoice date
A unique invoice number
Sales terms (usually in incoterm Iormat)
Payment terms
Currency oI sale
Full quantities and description oI merchandise (Generally this includes unit
price and total price. Product descriptions should be consistent with the buyer`s
purchase order. Including the Harmonized System commodity codes can be
helpIul, especially in countries that are WTO members.)
CertiIication that the invoice is correct (Standard language is 'We certiIy that
this invoice is true and correct.
Packing List
A Packing List gives details oI the contents oI all the packages making up the consignments
and is required by Custom`s authorities iI the packing inIormation is not shown on the
invoice. The Packing List is usually attached to the invoice. Par Value the oIIicial Iixed
exchange rate between two currencies or between a currency and a speciIic weight oI gold
or a basket oI currencies.


Certificate of origin
A certiIicate, which identiIies the country oI origin, is typically required Ior international
shipments. Certain countries may entirely bar shipments Irom certain other countries. In
select countries, a notarized certiIicate oI the country oI origin may signiIicantly lower the
taxes levied.
Certificate of inspection
A document issued by a grading agency that assures the buyer that the shipment has been
examined by a qualiIied inspector, and that the goods in the shipment are oI the grade
indicated. OIten used Ior selects and timbers where a grade mark would not show, or where
one would aIIect the use oI the piece.
Performa invoice
An invoice received beIore a sale is consummated, inIormation the buyer oI the terms oI
sale. Pro Iorma invoices are oIten used in Ioreign trade as the buyer`s prooI oI Iuture sale
when applying Ior import licenses and Ioreign exchange through government agencies.
Certificate of insurance
A certiIicate issued by an insurance company or its agent. It veriIies that a certain insurance
policy is in eIIect Ior stated amounts and coverage and names those insured.
Combined Transport Document
When goods are transported using more than one mode oI transport, the issuer oI the
Collection takes responsibility Ior the whole oI the journey through a combined transport
Documentary Letters of Credit
A Documentary Letter oI Credit (LC) is a written undertaking given by a bank on behalI oI
an Importer to pay the Exporter a given sum oI money within a speciIied time, providing
that the Exporter presents documents, which comply with the terms laid down in the Letter
oI Credit.
Letters oI Credit can be Ior any amount, in any Ireely traded currency, and, subject to the
presentation oI compliant documents, may be payable: at sight, which means as soon as a
compliant set oI documents are presented to the paying bank; or, aIter a speciIied term, e.g.
at 30, 60, 90 or 180 days oI sight or Bill oI Lading date.


II the documents are not presented exactly as speciIied in the Letter oI Credit, payment will
not be made unless the Importer gives their authority to waive or amend the speciIied
A Iundamental principle oI Letters oI Credit is that banks deal with documents and not with
the goods to which the documents reIer.
For example, iI the Importer is not happy with the quality oI the goods but the documents
comply with the terms and conditions oI the letter oI credit, the Importer`s bank is obliged to
pay the Exporter.
Parties involved in a Letter oI Credit transaction
Types oI Letter oI Credit
Parties involved in a Letter of Credit transaction
In the process oI a Letter oI Credit transaction, there are essentially Iour parties involved.
These parties can be reIerred to by a number oI terms, outlined below.
Buyer meaning Importer, Applicant, Accountee or Accreditor.
Seller meaning Exporter or BeneIiciary
The Issuing or Opening Bank (Importers Bank)
The Advising/ConIirming Bank usually a bank in the Exporters country, which
may or may not be the Exporters Bank.
Types of Letter of Credit
This is an LC that can be cancelled or amended by the applicant or the Opening Bank
without prior notice to the Exporter.
With an irrevocable Letter oI Credit the Issuing Bank gives its irrevocable undertaking to
pay iI all the terms oI the LC are met. The Issuing Bank can only amend or cancel its
undertaking iI all parties to the LC consent to the change.
Although there are two types oI Letter oI Credit: revocable, under UCP600 (UniIorm
Customs and Practice Ior Documentary Credits), LCs are assumed to be irrevocable.


A ConIirmed LC is one to which a second bank, usually in the Exporter`s country and at the
Exporter`s request, adds its own commitment (conIirmation) that payment will be made.
ConIirmation is generally used when there is perceived to be some risk that the bank issuing
the Letter oI Credit may not be able to IulIill its obligation to pay. This could be due to bank
Iailure or instability in the country oI the Issuing Bank.
II the LC is unconIirmed, the Advising Bank merely inIorms the Exporter oI the terms and
conditions oI the LC without adding its own undertaking to pay or accept under the terms oI
the LC.
A TransIerable Letter oI Credit is one that can be transIerred Irom the Iirst BeneIiciary to
one or more additional BeneIiciaries by the TransIerring Bank.
It is normally used in situations where a supplier sells through an intermediary or
middleman` to the ultimate Importer and is in a strong enough bargaining position to insist
upon payment by Letter oI Credit. By using a TransIerable Letter oI Credit, the intermediary
is able to provide payment by LC to their supplier without the need Ior their own credit line
with the transIerring bank. An LC is only transIerable iI the Issuing Bank expressly states it
to be so.
Documentary Collections
A Documentary Collection would normally comprise a set oI commercial documents
relating to the goods being exported, which are sent to the Importer`s bank along with a
Collection Schedule and usually a bill oI exchange. A set oI documents containing a Bill oI
Lading would normally allow the holder to take possession oI the goods. A Collection takes
one oI the Iollowing Iorms:
Documents against Payment: the Collection documents are presented to the Importer and
released in exchange Ior immediate payment (payment at sight`).
Documents against Acceptance: this applies with a Tenor Bill oI Exchange and describes
the situation where the Collection documents are released aIter the Importer has accepted`
them. Acceptance is signiIied by the Importer`s signature on the bill oI exchange or other


payment authority enclosed in the Collection. Payment will be made at a Iixed or
determinable Iuture date.
Bill of Lading
A Bill oI Lading is a receipt given by the shipping company upon shipment oI the goods and
is evidence oI a contract oI carriage. It is a document oI title to the goods, and as such is
required to enable them to clear the goods at the port oI destination. Two or three signed sets
oI the original copies oI the Bill oI Lading are usually made out. These are known as
negotiable copies`, any one oI which can give title to the goods. Unsigned, non-negotiable
copies also exist, which are not documents oI title, but are used Ior record purposes.
The goods will only be released to Consignee. Normally Bills oI Lading are made out to
order, unless the documents are made out to the Importer as the Consignee oI the goods.
Types of Bills of Lading:
Shipped` or shipped on board`. (Indicates that the goods have been received on
Received Ior shipment`, (SigniIies that the ship owner has taken delivery oI the
goods, but they have not been placed on board the vessel).
Combined Transport`. (Issued to cover all stages oI the journey iI both ocean and
overland transport is used).
The Letter oI Credit will indicate what insurance cover is required, and will state whether an
insurance policy or a certiIicate is needed. An insurance policy may only be issued by the
insurer and is usually in standard Iorm covering the customary risks Ior any method oI
transport (Lloyd`s MAR policy is normally used). Regular Exporters can organize an open
policy to cover all exports during a speciIic period. Individual insurance certiIicates are
issued Ior each shipment by either the insurers and/or the Exporter. This certiIicate must
contain the same details as the policy, with a shortened version oI the provisions oI the
policy under which it is issued.
An invoice gives details oI the goods involved in the transaction between the Importer and
the Exporter. Several copies oI the document are produced as are required by customs,
excise authorities overseas etc. All details in the invoice need to be exactly the same as
speciIied in the LC or in other documents.


Freight Forwarders
An international Ireight Iorwarder is an agent Ior the exporter in moving cargo to an
overseas destination. These agents are Iamiliar with the import rules and regulations oI
Ioreign countries, the methods oI shipping, and the documents related to Ioreign trade.
Export Ireight Iorwarders are licensed by the International Air Transport Association
(IATA) to handle air Ireight and the Federal Maritime Commission to handle ocean Ireight.
Freight Iorwarders assist exporters in preparing price quotations by advising on Ireight costs,
port charges, consular Iees, costs oI special documentation, insurance costs, and their
handling Iees. They recommend the packing methods that will protect the merchandise
during transit or can arrange to have the merchandise packed at the port or containerized. II
the exporter preIers, Ireight Iorwarders can reserve the necessary space on a vessel, aircraIt,
train, or truck.
Once the order is ready Ior shipment, Ireight Iorwarders should be reviewing all documents
to ensure that everything is in order. They may also prepare the bill oI lading and any special
required documentation. AIter shipment, they can route the documents to the seller, the
buyer, or to a paying bank. Freight Iorwarders can also make arrangements with customs
brokers overseas to ensure that the goods comply with customs export documentation
regulations. A customs broker is an individual or company that is licensed to transact
customs business on behalI oI others.
Incoterms - International Commercial Terms
These are the terms seller and buyer negotiate Ior cost, insurance, Ireight etc. these terms
decides who have to bear the risk or whom to transIer the risk.
a. Ex-Works: 'Ex-works' means that responsibility is to make goods available to the
buyer at works or Iactory. The Iull cost and risk involved in bringing the goods Irom
port oI shipment to the desired destination will be borne by the buyer. This term thus
represents the minimum obligation Ior seller.
b. Free on Rail (FOR): Free on Truck (FOT): These terms are used when the goods
are to be carried by rail, but they are also used Ior road transport. Sellers`
obligations are IulIilled when the goods are delivered to the carrier.
c. Free Alongside Ship (FAS): Once the goods have been placed alongside the ship,
seller obligations are IulIilled and the buyer notiIied. The buyer has to contract with
the sea carrier Ior the carriage oI the goods to the destination and pay the Ireight.
The buyer has to bear all costs and risks oI loss or damage to the goods hereaIter.


d. Free on Board (FOB): Exporters` responsibility ends the moment the contracted
goods are placed on board the ship, Iree oI cost to the buyer at a port oI shipment
named in the sales contract. 'On board' means that a 'Received Ior Shipment' B/L
(Bill oI Lading) is not suIIicient. Such B/L iI issued must be converted into 'Shipped
on Board B/L' by using the stamp 'Shipped on Board' and must bear signature oI the
carrier or his authorized representative together with date on which the goods were
e. Cost and Freight (C&F): sellers` own risk and not as an agent oI the buyer,
contract Ior the carriage oI the goods to the port oI destination named in the sale
contract and has to pay the Ireight. This being a shipment contract, the point oI
delivery is Iixed to the ship's rail and the risk oI loss or oI damage to the goods is
transIerred Irom the seller to the buyer at that very point.
I. Cost Insurance Freight (CIF): The term is basically the same as C&F, but with the
addition that you have to obtain insurance at your cost against the risks oI loss or
damage to the goods during the carriage.
g. Freight or Carriage Paid (DCP): While C&F is used Ior goods which are to be
carried by sea, the term "DCP" is used Ior land transport only, including national
and international transport by road, rail and inland waterways. Seller have to
contract Ior the carriage oI the goods to the agreed destination named in the contract
oI the sale and pay Ireight. Seller`s obligations are IulIilled when the goods are
delivered to the Iirst carrier and not beyond. In case the buyer desires to insure the
goods till the destination, he would add 'including insurance' beIore the word 'paid
in Freight' or 'Carriage Paid to'.
h. EXS/EX-Ship: This is an arrival contract and means that make the goods available
to the buyer in the ship at the named port oI destination as per sales contract. Seller
has to bear the Iull cost and risk involved in bringing the goods there. Seller`s
obligation is IulIilled beIore the customs border oI the Ioreign country and it is Ior
the buyer to obtain necessary import license at his own risk and expense.
i. EXQ/Ex-Quay: Ex-Quay means that make the goods available to the buyer at a
named quay. As in the term 'Ex-Ship' the points oI division oI costs and risks
coincide, but they have now been moved one step Iurther -- Irom the ship into the
quay or wharI i.e. aIter crossing the customs border at destination. ThereIore, in
addition to arranging Ior carriage and paying Ireight and insurance seller have to
bear the cost oI unloading the goods Irom the ship.
j. Delivered at Frontier (DAF): Exporter`s obligations are IulIilled when the goods
have arrived at the Irontier, but beIore the 'Customs border' oI the country named in
the sales contract.


k. Delivery Duty Paid (DDP): This term may be used irrespective oI the type oI
transport involved and denotes your maximum obligation as opposed to 'Ex-Works'.
seller have not IulIilled his obligation till such time that the goods are made
available at his risk and cost to the buyer at his premises or any other named
destination. In the latter case necessary documents (e.g. transport document or
Warehouse Warrant) will have to be made available to the buyer to enable him to
take delivery oI goods. The term 'duty' includes taxes, Iees and charges.
l. FAO/FOB Airport: 'FOB Airport' is based on the same main principle as the
ordinary FOB term. Seller IulIills his obligation by delivering the goods to the air
carrier at the airport oI departure. Without the buyer's approval delivery at a town
terminal outside the airport is not suIIicient, seller`s obligations with respect to costs
and risks do not extend to the arrival oI the goods at the destination.
m. Free Carrier (Named Point) FRC: The principle on which the term is based is
same as applicable to FOB except that the seller or the exporter IulIills his
obligations when he delivers the goods into the custody oI the carrier at the named
n. Freight Carriage and Insurance Paid (CIP): The term is similar to 'Freight or
Carriage Paid to'. However, in case oI CIP seller have additionally to procure
transport insurance against the risk oI loss or damage to the goods during the
Duty Drawback Formalities
II the exporter intends to claim duty drawback on his exports, he has to Iollow prescribed
procedures and submit necessary papers. He has to make endorsement oI shipping bill that
claim Ior duty drawback is being made. II he Iails to do so due to genuine reasons,
Commissioner oI Customs can grant exemption Irom this provision. |Proviso to rule 12(1)
(a) oI Duty Drawback Rules|.
G R / SDF / SOFTEX Form under FEMA
Reserve Bank oI India has prescribed GR / SDF Iorm under FEMA. 'G R stands Ior
Guaranteed Receipt` Iorm, while SDF stands Ior 'Statutory Declaration Form`. SDF Iorm is
to be used where shipping bills are processed electronically in customs house, while GR
Iorm is used when shipping bills are processed manually in customs house.


2.2 Export Finance
Financial assistance to the exporters is generally provided by Commercial Banks, beIore
shipment as well as aIter shipment oI the said goods. The assistance provided beIore
shipment oI goods is known as pre-shipment Iinance or packing credit and that provided
aIter the shipment oI goods is known as post-shipment Iinance. Pre-shipment Iinance is
given Ior working capital Ior purchase oI raw-material, processing, packing, transportation,
ware-housing etc. oI the goods meant Ior export. Post-shipment Iinance is provided Ior
bridging the gap between the shipment oI goods and realization oI export proceeds. The later
is done by the Banks by purchasing or negotiating the export documents or by extending
advance against export bills accepted on collection basis. While doing so, the Banks adjust
the pre-shipment advance, iI any, already granted to the exporter. MCC preIers largely Post
shipment credit and so I learnt the procedure and mechanism oI it. Explanation Ior post and
pre shipment Iinances are given below -
The Iollowing diagram depicts the export business cycle:

Financing at two stages initially, to process the order and then to bridge the gap between
the time you ship the goods to the time you actually receive the payment. Export Iinancing
has been designed to take care oI these needs.
Export Iinance can be broadly classiIied into two categories, depending upon the stage oI
export activity` at which the Iinance is availed. The two types oI export Iinancing are:
Pre-Shipment Finance.
Post-Shipment Finance.
I. Post Shipment Finance
Post-shipment Iinance is the Iinance provided against shipping documents. It is also
provided against duty drawback claims. It is provided in the Iollowing Iorms:


Purchase of Export Documents drawn under Export Order
Purchase or discount Iacilities in respect oI export bills drawn under conIirmed export order
are generally granted to the customers who are enjoying Bill Purchase/Discounting limits
Irom the Bank. As in case oI purchase or discounting oI export documents drawn under
export order, the security oIIered under L/C by way oI substitution oI credit-worthiness oI
the buyer by the issuing bank is not available, the bank Iinancing is totally dependent upon
the credit worthiness oI the buyer, i.e. the importer, as well as that oI the exporter or the
beneIiciary. The documents dawn on DP basis are parted with through Ioreign
correspondent only when payment is received while in case oI DA bills documents
(including that oI title to the goods) are passed on to the overseas importer against the
acceptance oI the draIt to make payment on maturity. DA bills are thus unsecured. The bank
Iinancing against export bills is open to the risk oI non-payment. Banks, in order to enhance
security, generally opt Ior ECGC policies and guarantees which are issued in Iavor oI the
exporter/banks to protect their interest on percentage basis in case oI non-payment or
delayed payment which is not on account oI mischieI, mistake or negligence on the part oI
exporter. Within the total limit oI policy issued to the customer, drawee-wise limits are
generally Iixed Ior individual customers. At the time oI purchasing the bill bank has to
ascertain that this drawee limit is not exceeded so as to make the bank ineligible Ior claim in
case oI non-payment.
Advances against Export Bills Sent on Collection
It may sometimes be possible to avail advance against export bills sent on collection. In
such cases the export bills are sent by the bank on collection basis as against their
purchase/discounting by the bank. Advance against such bills is granted by way oI a
'separate loan' usually termed as 'post-shipment loan'. This Iacility is, in Iact, another Iorm oI
post- shipment advance and is sanctioned by the bank on the same terms and conditions as
applicable to the Iacility oI Negotiation/Purchase/Discount oI export bills. A margin oI 10 to
25 is, however, stipulated in such cases. The rates oI interest etc., chargeable on this
Iacility are also governed by the same rules. This type oI Iacility is, however, not very
popular and most oI the advances against export bills are made by the bank by way oI


Advance against Goods Sent on Consignment Basis
When the goods are exported on consignment basis at the risk oI the exporter Ior sale and
eventual remittance oI sale proceeds to him by the agent/consignee, bank may Iinance
against such transaction subject to the customer enjoying speciIic limit to that eIIect.
However, the bank should ensure while Iorwarding shipping documents to its overseas
branch/correspondent to instruct the latter to deliver the document only against Trust
Receipt/Undertaking to deliver the sale proceeds by speciIied date, which should be within
the prescribed date even iI according to the practice in certain trades a bill Ior part oI the
estimated value is drawn in advance against the exports.
Advance against Undrawn Balance
In certain lines oI export it is the trade practice that bills are not to be drawn Ior the Iull
invoice value oI the goods but to leave small part undrawn Ior payment aIter adjustment due
to diIIerence in rates, weight, quality etc. to be ascertained aIter approval and inspection oI
the goods. Banks do Iinance against the undrawn balance iI undrawn balance is in
conIormity with the normal level oI balance leIt undrawn in the particular line oI export
subject to a maximum oI 10 oI the value oI export and an undertaking is obtained Irom the
exporter that he will, within 6 months Irom due date oI payment or the date oI shipment oI
the goods, whichever is earlier surrender balance proceeds oI the shipment. Against the
speciIic prior approval Irom Reserve Bank oI India the percentage oI undrawn balance can
be enhanced by the exporter and the Iinance can be made available accordingly at higher
rate. Since the actual amount to be realized out oI the undrawn balance, may be less than the
undrawn balance, it is necessary to keep a margin on such advance.
Advance against Retention Money
Banks also grant advances against retention money, which is payable within one year Irom
the date oI shipment, at a concessional rate oI interest up to 90 days. II such advances extend
beyond one year, they are treated as deIerred payment advances which are also eligible Ior
concessional rate oI interest.
Advances against Claims of Duty Drawback
Duty Drawback is permitted against exports oI diIIerent categories oI goods under the
'Customs and Central Excise Duty Drawback Rules, 1995'. Drawback in relation to goods
manuIactured in India and exported means a rebate oI duties chargeable on any imported
materials or excisable materials used in manuIacture oI such goods in India or rebate on
excise duty chargeable under Central Excises Act, 1944 on certain speciIied goods. The


Duty Drawback Scheme is administered by Directorate oI Duty Drawback in the Ministry oI
Finance. The claims oI duty drawback are settled by Custom House at the rates determined
and notiIied by the Directorate. As per the present procedure, no separate claim oI duty
drawback is to be Iiled by the exporter. A copy oI the shipping bill presented by the exporter
at the time oI making shipment oI goods serves the purpose oI claim oI duty drawback as
well. This claim is provisionally accepted by the customs at the time oI shipment and the
shipping bill is duly veriIied. The claim is settled by customs oIIice later. As a Iurther
incentive to exporters, Customs Houses at Delhi, Mumbai, Calcutta, Chennai, Chandigarh,
and Hyderabad have evolved a simpliIied procedure under which claims oI duty drawback
are settled immediately aIter shipment and no Iunds oI exporter are blocked.
However, where settlement is not possible under the simpliIied procedure exporters may
obtain advances against claims oI duty drawback as provisionally certiIied by customs.
Rates of Interest -
The rate oI interest depends on the nature oI the Bills, i.e., whether it is a demand bill or
usance bill. Like pre-shipment, post-shipment Iinance is also available at concessional rate
oI interest. Present Rates oI interest are as under:
Demand Bills Ior transit period Not exceeding (as speciIied by FEDAI) 10 p.a.
Usance Bills (Ior total period comprising usance period oI ex-port bills, transit period as
speciIied by FEDAI and grace period, wherever applicable:
a. Up to 90 days 10 p.a.
b. Beyond 90 days and up to six 12 p.a.months Irom the date oI shipment.
c. Beyond six months Irom the 20 date oI Shipment (Minimum)
Against duty drawback etc., receivable- Not receivable Irom Government covered by adding
10ECGC guarantees (up to 90 days) p.a. , Against undrawn balance (up to 90 days) and
Against retention money payable within one year Irom the date oI shipment (upto90 days)
Normal Transit Period
Foreign Exchange Dealers Association oI India (FEDAI) has Iixed transit period Ior export
bills drawn on diIIerent countries in the world. The concept oI this transit period is that an
export bill should normally be realized within that period. The transit period so Iixed by
FEDAI is known as 'Normal Transit Period' and mainly depends on geographical location oI
a particular country.


Direct and Indirect Bill
II the currency oI the bill is the same as the currency oI the country on which it is drawn, it
is termed as direct bill, e.g. an export bill in US $ drawn on a place in U.S.A. However, iI
the currency oI the bill in which it is drawn is diIIerent than the currency oI the country on
which it is drawn, it is termed as indirect bill, e.g. an export bill in US $ drawn on a place in
Japan. The normal transit period Iixed Ior indirect bill is on higher side as compared to
transit period Iixed Ior direct bills.
Notional Due Date
To determine the due date oI an export bill we have to consider the Iollowing 3
components: (1) Normal transit period as Iixed by FEDAI (2) Usance period oI the bill (3)
Grace period iI applicable in the country on which the bill is drawn. Grace period is
applicable only in the case oI usance bills. The notional due date oI an export bill may thus
be calculated aIter adding all the above 3 components. The concessional rate oI interest is
chargeable up to the notional due date subject to a maximum oI 90 days.
II . Pre-Shipment Finance
An application Ior pre-shipment advance should be made by exporter to his banker along
with the Iollowing documents:
ConIirmed export order/contract or L/C etc. in original. Where it is not available, an
undertaking to the eIIect that the same will be produced to the bank within a reasonable time
Ior veriIication and endorsement should be given. An undertaking that the advance will be
utilized Ior the speciIic purpose oI procuring/manuIacturing/shipping etc., oI the goods
meant Ior export only, as stated in the relative conIirmed export order or the L/C. II you are
a sub-supplier and want to supply the goods to the Export/Trading/Star Trading House or
Merchant Exporter, an undertaking Irom the Merchant Exporter or Export/Trading/Star
Trading House stating that they have not/will not avail themselves oI packing credit Iacility
against the same transaction Ior the same purpose till the original packing credit is
liquidated. Copies oI Income Tax/Wealth Tax assessment Order Ior the last 2-3 years in the
case oI sole proprietary and partnership Iirm. Copy oI Exporter's Code Number (CNX).
Copy oI a valid RCMC (Registration-cum-Membership CertiIicate) held by you and/or the
Export/Trading/Star Trading House CertiIicate. Appropriate policy/guarantee oI the ECGC.
Any other document required by the Bank. For encouraging exports, R.B.I. has instructed
the banks to grant pre-shipment advance at a concessional rate oI interest. The present rate
oI interest is 10 p.a. Ior pre-shipment advance upto an initial period oI 180 days. Pre-


shipment advance Ior a Iurther period oI 90 days is given at the concessional rate oI 13
p.a. Banks are Iree to determine the interest rate Ior advances beyond 270 days and upto 360
III. EXIM Bank Finance
Besides commercial banks, export Iinance is also made available by the EXIM bank. The
EXIM bank provides Iinancial assistance to promote Indian exports through direct Iinancial
assistance, overseas investment Iinance, term Iinance Ior export production and export
development, pre-shipment credit, lines oI credit, re-lending Iacility, export bills re-
discounting, reIinance to commercial banks, Iinance Ior computer soItware exports, Iinance
Ior export marketing and bulk import Iinance to commercial banks. The EXIM Bank also
extends non-Iunded Iacility to Indian exports in the Iorm oI guarantees. The diversiIied
lending programme oI the EXIM Bank now covers various stages oI exports, i.e. Irom the
development export markets to expansion oI production capacity Ior exports, production Ior
export and post shipment Iinancing. The EXIM Bank's Iocus is on export oI manuIactured
goods, project exports, exports oI technology, services and export oI computer soItware.
IV. SIDBI Finance
The Small Industries Development Bank oI India (established under Small Industries
Development Bank oI India Act, 1989 (39 oI 1989)) is oIIering the International Finance
schemes whose main objective is to enable small-scale industries to raise Iinance at
internationally competitive rates to IulIil their export commitments.
The Iinancial assistance is being oIIered in USD and Euro currencies. Assistance in Rupees
is also considered, independent oI Ioreign currency limits.

Post-Shipment Credit on Foreign Currency (EBF)/Rupee (PSCR)

To provide post-shipment credit in Ioreign currency at internationally competitive
rates oI interest by discounting oI usance export bills / purchase oI sight/demand
export bills and negotiation oI bills under LCs.
All SSI units and Export / Trading houses sourcing their requirements Irom SSIs
a. proIit making units with proven track record in exports Ior last three years
and sound Iinancial position


b. requirement oI export Iinance assistance oI at least Rs.100 lakh
Need based limit, depending on the normal trade terms and credit period given to
overseas buyers by exporters not exceeding 180 days. Assistance in rupees is also
considered independent oI FC limits.

Rate oI interest-

For EBF - Not exceeding 0.75 over 6 Month LIBOR.

For PSCR - As per RBI guidelines and the score chart introduced by SIDBI.

Pre-Shipment Credit in Foreign Currency (PCFC)/ Rupee (PCR)
To enable small scale industries to raise Iinance at internationally
competitive rates as per Reserve Bank oI India guidelines to IulIil their
export commitments.
Industrial concerns in the small scale sector and Government recognized
Export / Trading Houses sourcing their requirement Ior export Irom SSI
sector with
a. proIit making units with proven track record in exports Ior last three
years and sound Iinancial position
b. requirement oI export Iinance assistance oI at least Rs.100 lakh
Pre-shipment Credit in Foreign Currency (PCFC) is being extended in USD
& EURO Currencies. Assistance in Rupees is also considered independent oI
FC limits.

Quantum - need based linked to working capital gap.

Period oI Credit - linked to production cycle (Maximum - 180 days)

Margin - minimum 10 and maximum 25

Repayment - by discounting / negotiation oI Export bills within a maximum
period oI 180 days

Rate oI interest -

For PCFC - Not exceeding 0.75 over 6 Month LIBOR.

For PCR - As per RBI guidelines and the score chart introduced by SIDBI.


An additional beneIit that an exporter can avail oI relates to the Exchange Earners
Foreign Currency Account` (EEFC). This is a Iacility by which an exporter can maintain
an account, with a Bank in India, expressed in Ioreign currency and titled EEFC account.
Amounts that can be credited to this account cannot exceed 50 oI inward remittances Irom
the export transactions (70 in the case oI 100-pct EOUs or units located in export
processing zones). All these measures were taken by Government oI India and Reserve Bank
oI India to promote exports and especially SSIs.
As an exporter while selling goods abroad, you encounter various types oI risks. The
major risks which you have to undergo are as Iollows:

O Credit Risk
O Currency Risk
O Carriage Risk
O Country Risk
You can protect yourselI against the above risks by initiating appropriate steps.

Credit Risks:

You can cover your credit risk against the Ioreign buyer by insisting upon opening a
letter oI credit in your Iavour. Alternatively one can avail oI the Iacility oIIered by
various credit risk agencies. A speciIic insurance cover can also be obtained Irom
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 Iluctuations, you can
request your banker to book a Iorward 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 Irom country risks.











Passenger consignments are cleared under this UB clearance method
International Postal consignments are cleared Under Postal cargo clearance.



An item`s tariff classification is determined based on the Harmonized
Tariff Schedule of the United States, or HTSUS. The HTSUS is derived
from the Harmonized System, which is in use in more than 100 countries

Classification of goods in the tariff schedule shall be governed by the
following principles.

The table of contents, alphabetical index, and titles of sections, chapters
and sub-chapters are provided for ease of reference only; for legal
purposes, classification shall be determined according to the terms of the
headings and any relative section or chapter notes and, provided such
headings or notes do not otherwise require, according to the following
2(a) Any reference in a heading to an article shall be taken to include a
reference to that article, incomplete or unfinished, provided that, as
entered the incomplete or unfinished article has the essential character of
the complete or finished article. It shall also include a reference to that
article complete or finished (or falling to be classified as complete or
finished by virtue of this rule), entered unassembled or disassembled


3. When, by application of rule 2(b) or for any other reason, goods are,
prima facie, classifiable under two or more headings, classification shall
be effected as follows:
(a) The heading which provides the most specific description shall be
preferred to headings providing a more general description. However,
when two or more headings each refer to part only of the materials or
substances contained in mixed or composite goods or to part only of the
items in a set put up for retail sale, those headings are to be regarded as
equally specific in relation to those goods, even if one of them gives a
more complete or precise description of the goods.
3(b) ixtures, composite goods consisting of different materials or made
up of different components, and goods put up in sets for retail sale, which
cannot be classified by reference to 3(a), shall be classified as if they
consisted of the material or component which gives them their essential
character, insofar as this criterion is applicable.
3(c) When goods cannot be classified by reference to 3(a) or 3(b), they
shall be classified under the heading which occurs last in numerical order
among those which equally merit consideration.
5. In addition to the foregoing provisions, the following rules shall apply
in respect of the goods referred to therein:
(a) Camera cases, musical instrument cases, gun cases, drawing
instrument cases, necklace cases and similar containers, specially shaped
or fitted to contain a specific article or set of articles, suitable for long-term
use and entered with the articles for which they are intended, shall be
classified with such articles when of a kind normally sold therewith. This
rule does not, however, apply to containers which give the whole its
essential character;
5 (b) subject to the provisions of rule 5(a) above, packing materials and
packing containers entered with the goods therein shall be classified with
the goods if they are of a kind normally used for packing such goods.
However, this provision is not binding when such packing materials or
packing containers are clearly suitable for repetitive use.

6. For legal purposes, the classification of goods in the subheadings of a
heading shall be determined according to the terms of those subheadings
and any related subheading notes and, mutatis mutandis, to the above
rules, on the understanding that only subheadings at the same level are
comparable. For the purposes of this rule, the relative section, chapter
and subchapter notes also apply, unless the context otherwise requires.


Bases of Value
Transaction VaIue
1. Imported Merchandise
2. IdenticaI Merchandise
3. SimiIar Merchandise
At Time of Entry
AIternative VaIues

Transaction Value
Does Not IncIude
If Identified
Price Paid or PayabIe
1. TotaI Payment - direct or indirect
2. When SoId for Exportation
1. Packing Costs
2. Commissions
3. Assists
4. RoyaIties &
5. Proceeds/ResaIe
1. InternationaI Transportation
2. InternationaI Insurance
3. ReIated Expenses
incident to internationaI
1. Construction
2. TechnicaI
3. Post Importation
4. Customs Duties &
FederaI Taxes


Gifts, samples and promotional items
Merchandise which is imported under consignment
Goods imported under a hire or lease contract
Goods supplied on loan which remain the property of the sender

If purchase on CIF/DDP terms and know actual freight costs, then must
If purchase on CIF/DDP terms but don't know actual freight costs but
learn before liquidation, then must enter at full value and notify of
inclusion of freight costs. To exercise reasonable care, must thereafter
notify of actual costs;
If purchase on CIF/DDP terms and can't discern actual freight costs, but
learn before liquidation, then must enter at full value and notify of
inclusion of freight costs. To exercise reasonable care, must thereafter
notify of actual costs;
If purchase on CIF/DDP terms and can't discern actual freight costs,
then must enter at full value and notify of inclusion of freight costs. To
exercise reasonable care, must provide statement of inability to discern
actual costs; and
If recurring use of CIF/DDP terms, then may use reconciliation