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EXPORT PROCEDURE AND DOCUMENTATION IN TATA INTERNATIONAL, DEWAS (M.P.

A Dissertation Submitted in Partial Fulfillment of the Requirement for the Degree of

MBA (Foreign Trade) - 5 Yrs. VI Sem Batch 2007

Submitted by:

Guided by:

Purva Jain MBA (FT) -5 Yrs-VI Sem

Ms. Sapna Bhave IER, IPS Academy, Indore

INSTITUTE OF ECONOMICS & RESEARCH, IPS ACADEMY Rajendra Nagar, A.B. Road, Indore 452 012 (MP)
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CERTIFICATE
This is to certify that the Dissertation EXPORT PROCEDURE AND DOCUMENTATION OF TATA INTERNATIONAL , DEWAS has been completed by PURVA JAIN student of MBA(FT) -5 Yrs-VI Sem in partial fulfillment of the requirement of the MBA(FT) -5 Yrs. Degree.

________________ External Examiner

(Director)
Institute of Economics & Research IPS Academy, Indore

_________________ Internal Examiner

_________________ Internal Guide

ACKNOWLEDGEMENT

My work will remain incomplete until I express my deepest gratitude to respected Mr. V. S. Pal., TATA INTERNATIONAL LTD, and his employees. This project would not have been possible without their support and cooperation. I am also thankful to Ms. Sapna Bhave for guiding me throughout the project and helping me for the completion of the project. A mention has to be made for Mr. Pawan (Logistics) for his support and guidance. I am indebted to Dr. Vivek Singh Kushwah (Director IER, IPS Academy, INDORE) for providing me with an opportunity to explore the various procedures of foreign trade and the documentation process involved in the same. I would also like to express my gratitude to the entire staff of IER, IPS Academy for their help and cooperation for the completion of this project. A significant support has been provided by my parents and without their blessings this project would not have seen the light of day. And last but not the least I would highly rewarded if this project report promotes interest for further research work and /or provides information about the EXIM procedures and documentation involved in foreign trade.

Acknowledging the gratitude

PURVA JAIN

ABSTRACT

Generally documentation is perceived to be the most complex, difficult and critical activity of export and import procedures. To think about the smooth flow of between nations is to take a faulty, narrow and opaque view of the way trade occurs in reality. This is because a certain degree of documentation is necessary to protect the respective interests of export and import which is conditioned by the fact that the exporter and importer are located in two countries, which have different laws and regulations governing the flow of goods and money. Therefore goods must be accompanied, followed or preceded by relevant documents to have proper compliance with those laws and regulations. I therefore felt that there was a need of a project which could impart useful information to all the concerned people as regards the EXIM documentation and procedures. I have approached TATA INTERNATIONAL LTD. I sincerely hope that this project succeeds in providing answers to number of documentation and procedure related issues of foreign trade.

CONTENTS:
Sl. No.
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CONTENT
Overview of Indian Leather Industry Global Scenario Company profile International Network of TATA leather company Product and capacity of the company Objective Methodology Export Procedure An introduction to Export Documents Documents Explained Problem faced in the process of documentation SWOT Analysis of industries Findings and Conclusion Suggestion Bibliography/ References Annexure

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Indian Leather Industry


The leather industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, growth and exports. There has been an increasing emphasis on its planned development, aimed at optimum utilization of available raw materials for maximizing the returns, particularly from exports. The exports of leather and leather products gained momentum during the past two decades. There has been a phenomenal growth in exports from Rs.320 million in the year 1965-66 to Rs.69558 million in 1996-97. Indian leather industry today has attained well merited recognition in international markets besides occupying a prominent place among the top seven foreign exchange earners of the country. The leather industry has undergone a dramatic transformation from a mere exporter of raw materials in the sixties to that of value added finished products in the nineties. Policy initiatives taken by the Government of India since 1973 have been instrumental to such a transformation. In the wake of globalization of Indian economy supported with liberalized economic and trade policies since 1991, the industry is poised for further growth to achieve greater share in the global trade.

Apart from a significant foreign exchange earner, leather industry has tremendous potential for employment generation. Direct and indirect employment of the industry is around 2 million. The skilled and semi-skilled workers constitute nearly 50% of the total work force. The estimated employment in different sectors of leather industry is as follows:

Sector

Total Employment

Flaying, curing & Carcass Recovery Tanning & Finishing Full Shoe Shoe Uppers Footwears & Sandals Leather Goods & Garments 6

8, 00,000 1, 25,000 1, 75,000 75,000

4, 50,000 1, 50,000

Structure of the industry

The leather industry is spread in different segments, namely, tanning & finishing, footwear & footwear components, leather garments, leather goods including saddlery & harness, etc. The estimated production capacity in different segments is as under

Product
Leather
a) Hides b) Skins -

Capacity

64 million pieces 166 million pieces

Footwear & Footwear Components


a) a) Shoes b) b) Leather shoe uppers 100 million pairs 78 million pairs 125 million pairs 6 million pieces 70 million pieces 40 million pairs 6000 pieces

c) c) Non-leather shoes/ footwear etc d) d) Leather Garments e) e) Leather Products f) f) Industrial Gloves g) g) Saddlery -

The major production centers for leather and leather products are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichi, Dindigul in Tamil Nadu, Calcutta in West Bengal, Kanpur in Uttar Pradesh, Jalandhar in Punjab, Bangalore in Karnataka, Delhi and Hyderabad in Andhra Pradesh.

Raw material supplies

There exists a large raw material base. This is on account of population of 194 million cattle, 70 million buffaloes, 95 million goats. According to the latest census, India ranks first among the major livestock holding countries in the world. In respect of sheep with 48 million sheeps, it claims the sixth position. These four species provide the basic raw material for the leather industry. The annual availability of 166 million pieces of hides and skins is the main strength of the industry. This is expected to go up to 218 million pieces by the end of year 2000. Some of the goat/calf/sheep skins available in India are regarded as speciality products commanding a good market. Abundance of traditional skills in training, finishing and manufacturing downstream products and relatively low wage rates are the two other factors of comparative advantage for India.

Tanning and finishing capacity

With tanning and finishing capacity for processing 1192 million pieces of hides and skins per annum spread over different parts of the country, most of which is organized along modern lives, the capability of India to sustain a much larger industry with its raw material resource is evident. In order to augment the domestic raw material availability, the Government of India has allowed duty free import of hides and skins from anywhere in the world. It is an attraction for any foreign manufacturer who intends to shift his production base from a high cost location to low cost base.

Export Potential

The leather industry, one of the major foreign exchange earners of the country recorded significant growth since the beginning of the decade. Today the share of the value added finished products in the total exports from leather sector are 80% as against 20% in 1970s.

(Value in million US$) Category Finished Leather Leather Footwear Footwear Components Leather Garments Leather Goods Saddlery and Harness Total 2006-2007 265.2 290.2 243.7 368.6 429.0 33.4 1630.1

DATA COLLECTED : (Value in million Rs.) Country 2006-2007 Share in total exports in 2006-07 Germany USA Italy UK France Spain Russia Portugal Australia Denmark Netherlands Hong Kong 15462 10826 8317 9744 3240 3103 1009 1240 1465 808 2127 258 9958 69558 22.23 % 15.56 % 11.96 % 14.00 % 4.6 % 4.46 % 1.445 % 1.78 % 2.10 % 1.16 % 3.06 % 3.25 % 14.32 % 100 %

Others
Total

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Global Scenario :
The global trade in leather and leather products has been increasing over the years from mere US$ 4 billion in 1972 to US$ 70 billion in 1997.

Although the exports of Indian leather and leather products have grown manifold during the past decades, our country's share in global trade is around 3% among world imports of leather products. Whereas India's share in world imports of leather footwear is 1%. Major exporting countries of leather footwear are China (14% share), Portugal (6% share), Brazil (5% share) and Indonesia (4% share).

India's share in world imports of leather garments is 6%. Major exporting countries of leather garments are China (36% share), Germany (9% share), Italy (7% share), Turkey (5% share) and Pakistan (4% share)

India's share in world imports of leather goods is 7%. Major exporting countries are China (22% share), Italy (22 % share), France (7% share) and Greece (5% share),

India's share in world imports of harness and saddlery is 8%. Major exporting countries of harness & saddlery are Germany (14 % share), U.K. (14 % share), China (12% share).

Overall, India is facing fierce competition in international market from countries like China, Vietnam, Thailand, Indonesia, etc., which are emerging as major manufacturing countries.

East European countries like Poland, Romania, Czech and Slovak Republics have reemerged as major production centers particularly for footwear sector. These countries pose major challenge to Indian exporters as they enjoy geographical advantage. 11

CONCLUSION:
The leather industry comprising of tanning and finishing, footwear and footwear components, leather garments, leather goods including saddlery & harness etc. segments is the fourth largest foreign exchange earner for India. It has around 7% share in our exports.

India has 10% of world's hides and skins but it has only 4% share in the leather and leather product trade worldwide. Exports from this industry have increased to Rs 5778 million in 1996-97 from Rs 3758 million in 1992-93. Earlier India's exports comprised mainly of leather but 90's have seen a boom in export of value added products. But, the last three years have not been very profitable in terms of Indian exports. On the manufacturing front the value of production is estimated by experts to reach Rs 302,000 million in 2000 AD. Major production centres for leather & its products are located at Chennai, Ambur, Ranipet, Viniyambadi, in Tamil Nadu, Calcutta in West Bengal, Kanpur, Agra in Uttar Pradesh, Jalandhar in Punjab and Delhi. A study interestingly tells that 50% of the total production is expected to be consumed within the country by 2000 AD. Germany tops the list of importers of Indian leather goods with USA, UK, Italy, Japan, Australia, and Denmark, The Netherlands, France and the CIS countries towing the line. Leather industry which employs about 15 lakh persons directly has footwear as the largest, segment. Indian government has undertaken a National Leather Development Programme with the assistance of UNDP to upgrade the quality, design wise and manufacturing capability wise. This is an integrated programme for development of the industry. Selected institutions, for e.g. Shoe Design Centre (for shoes only) at Delhi, are working all over India for the cause. Leather industry is one of the most polluting industries in India. Tanneries are the main centres for the aforesaid. But gradually individual and common Effluent Treatment Plants are being set up. Dutch government supported Ganga Action Plan is covering Kanpur, the biggest leatherwork centre of Uttar Pradesh. Council for Leather Export (CLE) reports that leather is damaged during the removal process and that 35-40 % goes waste. The government has recently undertaken projects in Kalyani, Athani, Wardha, Dewas, Muzzaffarpur and Lucknow for training the worker in tanneries

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COMPANY PROFILE

THE HOUSE OF TATA Established in 1962, Tata International is an international marketing company with a global turnover of US$ 850 million in 2008-09. It is a trading company with business lines that include leather, engineering and pharmaceutical products. It has a worldwide reach provided by a well- integrated network that encompasses its subsidiaries, offices, joint ventures and alliances, with business hubs in South Asia, South East Asia, Europe and Africa catering to its markets in Europe, SAARC, ASEAN, the Far East, and Africa. Tata International is India's leading leather and leather products exporter. As a leather and leather products exporter, the company operates its leather business in India from Dewas , Chennai, Delhi, Calcutta, as well as, from China, South Asia and the Middle East, leveraging our global network. It sources wet blue worldwide and have world-renowned clients for our finished leather and leather products. Tatas R&D department has made internationally acknowledged break-through in the production of chrome free leather and processing of solid waste. It established and coordinate a highly flexible supply chain for sourcing leather, footwear, garments and leather goods. As a leather and leather products exporter our main markets are the quality stringent markets of Western Europe, North America and the Far East. TIL is the international business arm of the house of TATA which is Indias largest industrial group having aggregate assets of US $9 billion to total business turnover nudging US $8.6 billion and an employee strength of 2,50,000. The group enjoys high reputation world wide for its technology, quality and reliability. Its main mission is to be competitive value provider in international business for group companies and all are partners

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TATA INTERNATIONAL LTD, DEWAS

Tatas state-of-the-art manufacturing facility at Dewas in Central India is among the top three worldwide for goat skin. Our units have ISO 9001 certification from RW TUV CERT of Germany since 1994, making ours the first leather-manufacturing facility in India to receive this certification. The leather unit in Dewas is the first in the industry in Asia to be ISO 14000 certified. Its facilities are governed by International Labour Organization laws. Tata international became a leather garments exporter in 1975. The Dewas based (in Madhya Pradesh, India) Leather Garments division of Tata International, adopted best in class manufacturing processes and systems in collaboration with one of the premier leather manufacturers of Germany - Lederman. Today Tata International dewas has one of the most modern and well-equipped manufacturing facilities on the South Asian subcontinent. Apart from being the first leather garments unit in India to boast ISO 9001 and ISO 14001 certification (certificates awarded by RW TUV of Germany), Tata as a leather garments exporter also enjoy the patronage of an established international clientele that includes names like Betty Barclay, Escudo, Karlstad, Kaufof, C&A, Marks & Spencers, Talenti, Gerry Weber, Mango (Spain), Stallman and Mauritius. TI set up an integrated leather and leather products business at Dewas in the state MP in central India in the year of 1975.it is situated in 100 acres site in the midst of Sylam surroundings and amongst the largest in the world. The tannery in fact ranks amongst the top three skin tanneries in the world. The leather and leather products business obtain RM in wet blue form select tanners all over India quality audit of the production of these tanneries I carried out by supervision by the companys technicians posted at Calcutta, Delhi, Kanpur and Muzafarpur and Chennai. TI also import wet blue, cow tubes and sheep skins for muting its special requirement from overseas, including from units managed by TI.

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International Network of Tata international Ltd.

Offices of Tata in abroad of leather units South Africa:Consilience Technologies (pvt) Ltd. Faritte house, 150 kelvin drive, P.O. Box 76784, Woomead 2144, South Africa Tel. 27-11-6007400 Fax 27-11-4423385

South Africa:Tata South Africa Holdings (SA) (PVT) Ltd. P.O.Box: 1627, Parklands , Johannesburg 2121 South Africa Tel: 27-11-4423382/3 Fax: 29-11-4423385 15

PRODUCTS OF THE COMPANY

Range of the products: Finished leather


The leather finished units makes a wide range of full aniline and semi aniline leather from goat, sheep, cow, and buffalo. Colors are processed in a month and specialty is that it can match any tone shade. There is high flexibility in production lot size and computerized color matching.

Leather shoe
The shoe unit has a capacity of manufacturing intricate and high quality shoe upper for fashion conscious customers. Tata internationals large and well equipped production facilities at Dewas, Chennai and Delhi are both versatile and flexible. Orders from 500 pairs to 2, 50,000 pairs can be handled with equal ease.

Leather garment division


The leather garment division makes a wide range of mens and ladies jacket, blousons, skirts and trousers.

Leather article division


This includes a wide range of soft luggage and travel goods, leather accessories and personal articles.

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CAPACITY
The leather unit of TATA located at dewas in central India and Chennai in southern India have a capacity for 25,000 pieces per month of high quality leather garment. Production on leather is 1, 50,000 sq ft of finished leather per day

Annual capacity of TATA leather footwear division:


Shoe upper - 3 million pairs Full shoe - 2 million pairs

Minimum order
The minimum order size will be dependent on the work content. However as an indicative guide this should be as follows:

Finished leather Shoe upper Leather garments Full shoe

: 2000 sq ft/finish leather : 500 pairs : 250 pieces : 500 pairs

Internationally repute names as Salamander, Gybon, peter Kaiser, Ara, Stella, George shoe, Grandson. It has specially developed a market niche in the high value market segment of quality unlined leather out of goat, sheep and cow. This is reflected in the high volumes of sales and continuity business from leading European manufactures.

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OBJECTIVE:

To study the export and import procedure and documentation of leather (both raw and finished) in Tata international ltd and to analyze the problems involved in the procedure as well as provide suggestions regarding these problems.

The objectives of this report are a follows:


To know about the export procedure. To know about the various documents required for export. To get practical knowledge of export procedure To know the actual problems that is faced by export managers in professional transactions.

To know about the importance of foreign trade in leather industry. To study the export procedure in detail. To know about the role in government departments like CHA, Excise, Shipping Companies, etc.

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GLOBAL MARKETING NETWORK


The company has a global network to its own offices and also has arrangements with associate TATA companies abroad. In addition the company has agency arrangements in certain markets. In recent years it has expanded its operation to the Far East and important center making sure for the North Americans markets. It has opened a warehouse at Hong Kong to strengthen its sales efforts there providing off the self distributors of its finished leather to the large client in Hong Kong, China, Taiwan and South Korea. TATA formed its subsidiaries company in HONG KONG named TATA SOUTH ASIA LIMITED for these operations.

FUTURE EXPANSION PLANS


The leather and leather product business of TATA INTERNATIONAL for the last several years has been the largest overseas exporter of finished leather from India. It has Drawn up an ambitious perceptive plan for a quantum jump in the exports of value added product mainly leather footwear and wide ranges of leather garment and leather articles.

The company has identified Western Europe North America and Far East as thrust markets.

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METHDOLOGY
The research work was conducted over duration of 14 days at TATA INTERNATIONAL LTD., DEWAS.

Primary Data
The primary data was collected on the basis of a personal interview of Mr. V. S. Pal (Executive H.R. & Admin.). This work is based on data collected from secondary sources as well as primary sources. As the Government of India already fixes the procedure and legal requirements for exports and imports, they are collected from the DGFT website and EXIM Policy Booklets and on the basis of books providing valuable information

Secondary Data
1.) Books Export documentation & procedure by Jain Khushpat s. Export documentation & procedure by P.K. khurana.

2.) Through Internet www.tatainternational.com www.exim.com

For a satisfactory result a detailed explanation has been made in this report by me.

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EXPORT PROCEDURES

Step -1 Receipt of an entry:


Exporter locates a trade enquiry i.e. he comes across the detail of a foreign buyer who is willing to import the items .On receipt of the trade enquiry, the exporter sends his company profile and the promotional of his product range to know the interest of the buyer. The buyer may like to have the details of a product of his choice from the exporter. Exporter sends the quotation in respect of the product of interest of the buyer. On the receipt of this basic information, the foreign buyer puts forward his requirements. Once the product has been identified, then the process of negotiations of other terms and conditions begins. Exporter sends the Performa Invoice to the foreign buyer setting out in detail the terms and conditions negotiated between the two parties. This invoice represents the Offer to Sell made by the exporters. The importer conveys his Acceptance of Offer to Sell to the exporter. It may be on other document also.

Step 2 Acknowledgement of the export order :


Exporter should send an acknowledgment letter to the importer. Stress should be laid on building if long term business relation ships based on mutual trust.

Step 3 Scrutiny of the export order


Before sending the conformation order, exporter should check for all terms and conditions including: Product Specification, Size, Quality, Quantity Terms of payment Delivery Schedule Inspection 21

Documents like Commercial Invoice, Bill of lading, Certificate of origin , Marine Insurance, etc Labeling, Packaging, Marking Price (FOB Value)
Exporter has to strictly follow the regulation of both the exporting and importing country.

Step 4 Arranging the goods export production / procurement :


As soon as the export order has been confirmed or finalized, preparation is made for the production or procurement of the goods to be exported. Goods manufactured must comply with the description of the goods given in the export order, together with a copy of instruction given by the importer.

Step 5 Export License / Quota requirements:


If the item being exported requires an export license, the same should be procured by the exporter from the licensing authority.

Step 6 Central Excise Clearance:

Excisable goods can be imported either:

1. Under claim for the rebate of excise duty. 2. Under Bond

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In the case of former, the duty is first paid and its refund is claimed after exportation and in the latter case the goods are allowed to be exported without payment of duty provided a bond in executed (form B). Before excisable goods are removed from the factory with an application in the form ARE for claming rebate of excise duty.

The exporter then presents when the goods have been removed from the factory a copy of this application together with the goods to customs collector at the port who will certify that the goods have been actually exported.

Step 7 Apply to Export Inspection Council for the Inspection :


EIC will depute an inspector for carrying out quality control and inspection of exportable products. If consignment found is according to the prescribed specification, each packet is sealed by inspecting officer. A certificate of inspection is issued by the inspection agency. Original is valid for custom purpose, which ensures that only the consignment whose details are given on the certificate is permitted for shipment.

Step 8 Apply for Marine Insurance (if CIF) :


Insurance policy should be obtained in duplicate by the exporter. At this stage, all the formalities in relation to certificate of origin, ECGC etc should be completed.

Step 9 Issue instruction to the C & F Agent :


A detail note is prepared for the clearing and forwarding agent, giving instruction regarding the shipment of the consignment. A Master Document and form of bank Guarantee should be forwarded to the forwarding agent. 23

Step 10 CHA / CFAs role for shipping and customs at the port (Custom Clearance Procedure) :
CHA prepares the Shipping Bill and presents them along with other documents to the export department of the Custom House. The custom appraisal examines the documents and appraises the value of the goods.

If everything is in order, he endorses the duplicate copy of the Shipping Bill and indicates the extent of the physical examination to be carried out at the docks. Then all the master documents are returned to the CHA for presentation to the appraisal. CHA presents the Port Trust copy of the Shipping Bill to the shed superintendent of the port trust and obtains a Carting order. This enables him to cart the cargo to the transit shed for physical examination. If satisfied, the dock appraisal makes out of charge.

STEP 11 Documents returned by CHA:


1. Shipping Bill 2. Original letter of credit 3. Full set of Bill of Lading and number of non-negotiable copies.

STEP 12 Shipment advice to Importer:


Intimation is sent to the importer, indicating the date of dispatch and the name of the ship by which they have sent along with the non-negotiable copies of Bill of Lading and Master Document copy.

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STEP 13 Presentation of Documents by the Exporter to the Bank:


1. Master Document 2. GR-1 (duplicate and triplicate) 3. Full set of Bill of Lading and non-negotiable copies. 4. Original Letter of Credit. 5. Bank Certificate (duplicate) 6. Export Contract 7. Marine Insurance (duplicate) 8. Bill of Exchange

STEP 14 Processing of Documents by Bank:


Bank examines the documents with reference to the terms and conditions of the original order and also the L/C. Exporters Bank screens the above documents and sends a set of the following documents to the importers bank: 1. Master Document (original copy) 2. Marine Insurance Policy 3. Negotiable Bill of Lading (original copy) 4. Bill of exchange (original copy)

The bank sends GR-1 (duplicate) to the ECD of the RBI. Triplicate copy is sent to the RBI on receipt of payment from abroad.

1. Original copy of the Bank Certificate 2. Attested copies of Master Documents. The exporter receives payment against the above documents. The bankers also send to the concerned Joint Chief Controller of import and export a duplicate copy of the bank certificate.

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STEP 15 Central Excise Rebate:


The exporter files a claim with the concerned maritime collector of Central Excise for rebate on the Central Excise duty or for getting credit in his bond account as the case may be.

Goods which are manufactured in India are liable for central excise tax. But if you export those goods, you get exemption in duty.

1. First you pay the duty and ask for rebate. 2. Execute the bond.

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EXPORT DOCUMENTATION

ABBEVIATIONS:

TIL DGFT ISO AWB COO C&F GR1 CAD DA DP ARE-1 GSP SDf CHA ICD CIF

Tata international limited Director General of Foreign Trade International Organization of Standardization Air way bill Certificate of Origin Cost and Freight Guarantee Remittance Form no. 1 Cash against Document Document against Payment Document against Form Application for Removal Of excisable goods for export Generalized System Of preferences Self Declaration Form Custom House Agent Inland Container depot Cost Insurance & Freight.

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AN INTRODUCTION TO EXPORT DOCUMENTS

DOCUMENTATION:

Documentation is a highly significant and important aspect of all export-import transaction as the transactions require complex and intensive documentation.

The exporter and importer both have to make different types of documents before and after the shipment of goods at different stages. There are two types of documents, namely OPERATIONAL and REGULATORY documents. Both regulatory and operational documents are required for submission to various agencies, institutions and authorities like Central Excise, Customs, CHA, C&F Agent, Port Trust Authorities, Chamber of Commerce, etc.

The information on all the documents is nearly the same as most of the data input is repetitive in nature. The introduction of Aligned Documentation System (ADS) has revolutionized the documentation process.

OPERATIONAL DOCUMENTS:

These are also known as Commercial documents. The documents are required for affecting the physical transfer of goods and their title from exporter to importer and the realization of export proceeds.

TYPES OF OPERATIONAL DOCUMENTS:

1. Proforma Invoice 2. Commercial Invoice 3. Packing list 4. Shipping Bill 5. Intimation for Inspection 28

6. Certificate of Inspection / Quality Control 7. 8. 9. Mate Receipt Bill of Exchange Shipping Advice (information to importer)

10. Letter to bank for collection of payment. 11. Bill of lading / Airway Bill / Combined Transport Receipt

REGULATORY DOCUMENTS:

Regulatory documents are Pre-Shipment Documents, which are prepared by different government departments / bodies in compliance with requirements of various rules and regulations under relevant laws governing export and import trade such as EIA, FEMA, DGFT, CHA, etc. These are the legal documents that are compulsory to be presented to comply with countrys rules and regulations for both Import and Export.

Any cargo without these documents is not allowed to be sent out. These documents are compulsory for exporters and importers in any country.

TYPES OF REGULATORY DOCUMENTS:

1. As prescribed by the Central Excise ARE form

2. As prescribed by the Port Trust Authorities Export Application Dock Challan Port trust copy of Shipping Bill Vehicle Ticket 29

3. As prescribed by the Customs Department. Shipping Bill Bill of Exchange

4. A prescribed by the RBI

Exchange Control Certificate Freight Payment Certificate (required in CIF and C&F terms of contract) Insurance premium paid certificate (required in CIF and C&F terms of contract)

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DOCUMENTS EXPLAINED

1. EXPORT ORDER: An order is a commercial transaction which is not only important to exporter and importer, but it is also of concern to their respective countries, since it affects the balance of payment position of both countries. It is, therefore, not just a matter of products, manufacturing, packing, shipment, and payment but also one of licensing authorities, exchange control authorities and banks dealing in export trade. The exporter is required to produce copies of export order to various Government departments / financial institutions e.g. obtaining export licenses when the product is covered under the restricted items or canalized items for exports, availing post shipments finance and other incentives and dealing with inspection authorities, insurance, underwriters, custom offices and exchange control authorities etc. for various purposes.

2. ORDER ACCEPTANCE: The order acceptance is another important commercial document prepared by the exporter confirming the acceptance of order placed by the importer. Under this document he commits the shipment of goods covered at the agreed price during a specified time. Sometimes, the exporter needs a copy of his order acceptance signed by the importer. The order acceptance normally covers the name and address of the intender, name and address of the consignee, port of destination the description of good, quantity, price each and total amount of order in terms of delivery details of freight and insurance, mode of transport, packing and marking details, terms of payment etc.

3. LETTER OF CREDIT: Letter of credit is a document issued by the importers banking favor of the exporter giving him the authority to draw bills up to a particular amount covering a specified shipment of goods and services and assuring him of payment against the delivery of shipping documents. The operations of letter of credit have been regulated and are governed by the Articles of Uniform customs and practices for documentary Credits.

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Types of L/C

Documentary letter of credit Revocable and Irrevocable L/C Confirmed and Unconfirmed L/C Revolving L/C Back to back L/C Deferred payment L/C Transferable L/C Red Clause and green clause L/C Transit L/C Restricted and Unrestricted L/C Traveling L/C, Omnibus L/C

4. MATES RECEIPT: Mates receipt is issued by the chief of vessel after the cargo is loaded, and it contains the name of the shipping line, port of loading, port of discharge, place of delivery, marks and numbers, numbers and kind of packages, description of goods, container status/ seal number, gross weight, condition of cargo at the time of its receipt on the board the vessel and shipping bill number and date. The mate Receipt is of transferable nature and must be presented immediately at the shipping companys office to be exchanged into Bill of Lading.

5. Bill Of Lading: The Bill of Lading is a document issued buy the shipping company or its agent acknowledging the receipt of goods mentioned in the bill of shipment on board the vessel, and undertaking to deliver the goods in the like order and conditions are received, to the consignee or his order of consignee, provided the freight and other charges as specified in the bill of Lading have been duly paid. 32

TYPES OF BILL OF LADING: Clean B/L Cause B/L Stale B/L Freight paid and Freight collect B/L To order B/L Straight B/L On Board & Received B/L Container B/L

6. AIRWAY Bill: Airway bill or Air Consignment Note is the receipt issued by the Airline Company for the carriage of goods, in the terms of the conditions of the contract of carriage of goods. Airway Bill or Air Consignment Note treated as a Document of title and is not issued in negotiable form.

7. POST PARCEL RECEIPT: Post Parcel Receipt evidences the receipt of goods for exports by the Post Office and it is also not treated as a document of title. If the Post Parcel is sent directly in the name of the buyer, the buyer can take immediate possessions of the goods sent by the exporter sometimes without paying for it. Hence, it will be in the interest of the exporter to send Post Parcels in the name of foreign correspondent bank unless the condition of letter of credit provides for the dispatch of goods directly in the name of buyer. In such a case the buyer can take possessions of the post Parcel from the foreign correspondent bank, only after the payment of bill drawn by the exporter.

8. BILL OF EXCHANGE: Bill of exchange is also known as Draft. According to Sec.5 of the Negotiable instrument Act, 1881, a bill of exchange is an instrument in writing containing an unconditional order, signed by maker directing an certain person to pay a certain sum of money only to or to the order of a person or to the bearer of the instrument. 33

9. MANUFACTURERS CERTIFICATE: Some Countries require a certificate from the manufacture himself stating that the goods exported by him are manufactured in India and manufacture of such goods does not contain the raw material of components imported in India from other country or manufactured in third country.

10. GSP CERTIFICATE: The EEC countries France, Germany, Belgium, Luxembourg, Netherlands, Italy, UK, Ireland, Denmark and Greece have adopted the Generalized System of preferences. Under this system manufacturers and semi-manufacturers from developing country including India are entitled to a concessional rate of import duty in these countries. The Government of India has authorized the Export Promotion Offices at Mumbai, Kolkata, Chennai and Cochin and the heads of the Licensing Offices have also been authorized to issue the Certificate of Origin.

11. PROFORMA INVOICE: A temporary commercial invoice is prepared and sent by the exporter to the importer, it contains almost the same particulars as commercial or final invoice. It is required help the exporter in: Getting an import license in his o.0wn country. Opening the letter of credit in favor of the exporter in his own country.

The exporter should cultivate a habit of sending a Proforma invoice, even if it is not demanded.

12. EXPORT DECLARATION FORMS: As per the exchange control regulations, exporters are required to submit following declaration forms to the prescribed authority before any export of goods from India is made. 34

13. GR FORM: This has been prescribed by the Reserve Bank of India to ensure that the foreign exchange receipts in respect of exports are repatriated to India. This has to be prepared in duplicate. Both the copies have to be submitted to the customs authorities at the port of shipment. Customs authorities will certify the value declared by the exporter on both the copies of GR form and will also record the assessed values. They will retain the original to be sent to the RBI directly they will return duplicate copy which is submitted to the negotiating bank along with other documents after shipment of goods. The negotiating bank sends the duplicate copy to the RBI after the exporter has released the proceeds. When the exporter wants to retain the proceeds of the exports with agents or branches abroad or to make other approved types of payment abroad, he has to seal the permission of the RBI. For this purpose he has to submit GR-3 from. This is prepared in triplicate.

The original is submitted to the customs authorities who send it to the RBI directly. The duplicate and triplicate copies are to be dealt with in accordance with the procedures laid down by the RBI. Export by Parcel Post other than value payable, is to be declared on PP form. Export under value payable or cash on delivery have to be declared on VP/COD form. Form SDF to be used for declaring exports in case of specified customs office and specifies categories of shipping bill under EDI system. Form SOFTEX to be used for declaring software exports through data communication links and receipt of royalty on the software exports through packages/ products exported.

14. CERTIFICATE OF ORIGIN: A certificate of origin states the country in which the products under export were originally produced or manufactured. The goods produced in a particular country attract preferential tariff rates in foreign markets at the time of importation or goods produced in a particular country are banned for import in a foreign market. The certificate of origin helps a buyer in adhering to the import regulations of the country. Some of the foreign markets may accept the certificate of origin issued by a CHAMBER OPF COMMERCE of an exporting country. Others require these certificates to be legalized by their own respective consulates. An exporter submits a copy of the commercial invoice to the CHAMBER OF COMMERCE, together with the nominal fee prescribed by the 35

CHAMBER. The chamber of commerce issues a Certificate of Origin to be submitted to the consulate of the concerned foreign country, which makes its endorsement on the certificate. Special certificates of origin are applicable for concessions under the Generalized System of Preferences in which the COO in the specified form is usually in triplicate, is obtained from any one of the following agencies.

A. Export Inspection Council and its exports B. Chief Controller of Imports and Exports C. The Central Silk Board, The Coir Board, The All India Handicrafts Board and the Textile Committee are also authorized to issue COO for the products under their purview.

15. MARINE INSURANCE POLICY: Where the contract with the foreign buyer is on CI or CIF basis, the responsibility for taking insurance cover against all risk of damage to or loss of good during voyage is that of the exporter an application received from him describing the goods loaded as well as the value of goods for which the insurance is required, the insurance company issues a policy in the name of the exporter and endorsed in blank.

The premium charged by the goods are insured, the type of ship and also its age, and the port if discharge of cargo as evidenced in the bill of lading. The premium rate when goods are loaded on deck is higher than when they are loaded in the hold of the ship, for the risks involved and chance of damage to the cargo are more when they are loaded on the deck of the ship.

The insurance policy issued by the insurance company should carry the name of the vessel and the description of the goods, corresponding to those found in the bill of lading. It comes only in effect only after the date of the bill of lading. As a specified Marine insurance covers many types of risks, the insurance cover differs from material to material and also depends upon the risk involved. The exporter should consult the insurer before taking a suitable policy. 36

16. SHIPPING BILL: This is a main document required by the customs authorities for the shipment of goods. It is only after the shipping bill is stamped by the customs, the cargo is allowed to be carted to the docks. The shipping bills are generally prepared in 5 copies:

A Customs Copy B. Drawback Copy C. Export Promotions Copy D. Port Trust Copy E. Exporters Copy

CONVERSION OF E.P COPY OF SHIPPING BILL FROM ONE SCHEME TO ANOTHER:

If the customs authorities, after recording sessions in writing, permit the conversion of an E.P copy of any scheme shipping bill on which the benefit of that scheme has not been availed, on the exporter would be entitled to the benefit under the scheme in which the shipment is subsequently converted.

Types: Free Shipping Billable Dutiable Shipping Bill Drawback Shipping Bill Shipping Bill for Shipment Ex-Bond Coastal Shipping Bill

17. CERTIFICATE OF INSPECTION: Certificate of inspection is issued y the Inspection Agency concerned certifying that the consignment has been inspected as required under the EXPORTS (QUALITY CONTROL AND INSPECTION) ACT 1963 and satisfies the condition relating to quality control and inspection as applicable to it and is certified export worthy.

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In addition to this certificate some countries need Clean Report of Findings under SGS certificate.

18. ANTIQUITY CERTIFICATE: This certificate is issued by the Archeological Society of India in the case of export of antiques.

19. CERTIFICATE OF MEASUREMENT: Freight can be charged wither on weight or on the measurement basis. When it is charged on weight basis, the weight declared by the exporter is accepted. However, a certificate of measurement from the INDIAN CHAMBER OF COMMERCE or any other approved organization is required to be obtained by the exporter and given to the shipping company for calculation of necessary freight. The certificate contains the name of the vessel, port of destination of goods, quantity of packages, etc.

20. PACKING LIST / NOTE: A packing list / note contains the date of packing, connecting invoice number, order number, details of shipping such as the name of the vessels, bill of lading number and date of sailing, case number to which the list / note relates, the details of goods such as the quality and weight and /or item wise details.

21. TRANS-SHIPMENT BILL: This document is used for goods imported into a customs port / airport intended for the trans-shipments.

22. TRANS-SHIPMENT PERMIT: The trans-shipment permit is the permission for the trans-shipment of goods from the vessel on which the same are booked originally to another for shipment.

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23. SHIPPING ORDER: Shipping order is issued by the Shipping Line intimating the exporter about the reservation of space for the shipment of cargo through a particular vessel from a specific port and on a specified date.

24. CART / LORRY TICKET: This ticket is prepared for admittance of cargo through the port gate. This is also known as the known as Vehicle Ticket or Gate pass. This includes the details of export cargo, i.e. Shippers name, Cart / Lorry Number, Marks on packages, quantity and description

25. SHIPPERS DECLARATION FORM: The exporter has to submit his declaration to the customs authorities regarding the value, in sort, specifications, quantity and description of goods being exported. This declaration is usually typed in the shipping bill.

TYPES: CONSULAR INVOICE It is required by Philippines. It is to be certified by the authorized consular invoice mission of the importing country in the exporting country. It may be obtained by paying prescribed fee. LEGALIZED INVOICE Some countries including Mexico require legalized invoices which is not very much different from consular invoice as far as the aim of exporting country is concerned. However, there is no prescribed format for obtaining the legalized invoice.

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CUSTOMS INVOICE: Countries including USA and Canada require customs invoice for their customs valuation. The exporter has to submit the invoice in the prescribed form in such cases. On the basis of price charged as per the agreement, the commercial invoice may be of the following types:

1. FOB Invoice 2. C & F Invoice 3. Ex-Ship price 4. France Invoice

26. SHIPPING ADVICE: A shipping advice is used to inform the overseas customer about the shipment of goods. There is no particular form of shipping advice, the exporter only advices his importer about the invoice number, Bill of Lading / Airway Bill number and date, name of the vessel with the date, the port of export description of goods and quantity and the date of sailing of the vessel.

27. FREIGHT DECLARATION: Freight Declaration is required to be attached to export document, if the importer agrees to pay freight charges. When the exporter pays freight, he also should submit the same declaration.

28. HEALTH CERTIFICATE: Health certificate is required for exports of food products, seed, animal meat products. The Health Department of exporting country issues this certificate.

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29. CERTIFICATE OF VALUE: Though the value is indicated in commercial Invoice, some countries need certificate of value separately.

30. CERTIFICATE OF EXPORT AND REALIZATION: After shipment, the exporter should get his exports certified by an authorized dealer in foreign exchange in the prescribed form namely Bank Certificate of Export and Realization

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PROBLEMS FACED IN THE PROCESS OF DOCUMENTATION:

In the process of documentation, there have been often faced by a number of problems faced by the exporters and importers. These problems arises due to oversight of either the exporting/ importing parties or on the part of their respective agents or freight forwarders etc. at times there has been lack of knowledge and misunderstanding between parties involved in transaction.

Problems related to the documentation:

The most common and important problem in the documentation refers to dealing in the preparation of document due to various reasons, as follows:

1. TECHNICAL PROBLEMS: Due to failure of the computer system, there is a possibility of delay in either making or forwarding of export document and this can create a time lag between the actual and estimated time to perform a particular task.

2. DELAY DUE TO STOCKING: If there is low level of stock in the warehouse or the stock available Is not in usable condition or in case of sudden hike in the demand of goods. The company may require some time in order to maintain level of stock accordingly and this may cause a delay in the operations of the manufacturing, which in turn affects the stocking process.

3. DELAY DUE TO OVER-VOLUME : Sometimes it is seen that the inventory level of company is much bigger than the point of minimum requirements and lead to piling up of goods in the store. But at a time containerizing the goods must be loaded in the order of their lots. Because the goods have been ordered in excess quantity, they are randomly stored here and there which requires a lot of time to load them systematically into the container and hence there can be a delay in shipment of goods which may result into delay submission of export documents. 42

4. DELAY DUE TO DISRUPTED PRODUCTION PLANS: At times there are situations when the containers are ready for stuffing at the plant but there are delay in delays in production due to lack of materials, information or some mechanical failure at the plant. These situations also indirectly affect the documentation process.

5. MISTAKES IN DRAFTING / MAKING OF DOCUMENTS: Differences in the numeric values, omission of certain numbers, making wrong entry in documents, printing and typing mistakes in documents, errors due to repetition of numbers, etc are some of the examples of mistakes made while drafting of documents which require a lot of time to make correction in them. This is also one of the reasons for delay in documentation.

6. OTHER PROBLEMS: Sometimes, the containers require cleaning before stuffing and this task may take time which cause a delay in the stuffing of containers, this may further create problems at the later stages like: Extension in the supply period of the goods. The company has to pay more for the containers and other charges

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SWOT Analysis of Indian Leather Industry

STRENGTHS Existence of more than sufficient productive capacity in tanning. Easy availability of low cost of labour. Exposure to export markets. Managements with business background become quality and environment conscious. Presence of qualified leather technologists in the field. Comfortable availability of raw materials and other inputs. Massive institutional support for technical services, designing, manpower development and marketing. Exporter-friendly government policies. Tax incentives on machinery by Government. Well-established linkages with buyers in EU and USA.

WEAKNESSES Low level of modernization and up gradation of technology and the integration of developed technology is very slow. Low level of labour productivity due to inadequate formal training / unskilled labour. Horizontal growth of tanneries. Less number of organized product manufacturers. Lack of modern finishing facilities for leather. Highly unhygienic environment. Unawareness of international standards by many players as maximum number of leather industries are SMEs.

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Difficulties in accessing to testing, designing and technical services. Environmental problems.

OPPORTUNITIES Abundant scope to supply finished leather to multinationals setting up shop in India. Growing fashion consciousness globally. Use of information technology and decision support software to help eliminate the length of the production cycle for different products Product diversification - There is lot of scope for diversification into other products, namely, leather garments, goods etc. Growing international and domestic markets.

THREATS Entry of multinationals in domestic market. Stiff competition from other countries.(The performance of global competitors in leather and leather products indicates that there are at least 5 countries viz, China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than India.) Non- tariff barriers - Developing countries are resorting to more and more non tariff barriers indirectly. Improving quality to adapt the stricter international standards. Fast changing fashion trends are difficult to adapt for the Indian leather industries. Limited scope for mobilizing funds through private placements and public issues, as many businesses are family-owned.

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FINDINGS AND CONCLUSION


During the training period, the company I worked in dealt with several export documents. I realized that documents have a crucial role in export and import. An export firm has to deal with several organizations like bank, CHA, shipping company and various Government and non Government agencies, licensing authorities, board, institutions. All documents are interrelated and it is not possible to move to the next step without completing previous documents.

Actual process followed at TIL to make the pre-shipment and post shipment document is necessary to complete accurately.

There are so many discrepancies in transacting with banks, custom authorities, etc. The banks making payments on behalf of its foreign customers must verify that all the documents and drafts confirm precisely to the term and conditions of the L/C, the requirement of credit cannot be waived off or altered by the paying bank without specific authority from the issuing bank. To avoid delay in payments, the beneficiary should prepare and examine all the documents carefully before presenting them to the paying bank. Paying banks find that the following discrepancies in documents and the L/C occur most frequently.

Invoice value of drafts exceed amount over lower under L/C. Drafts are presented after the L/C has expired. Drafts are presented after shipment has expired. Amount of insurance coverage does not include risk required by L/C. Insurance documents are not endorsed and countersigned. Date of insurance policy or certificate is later than the date on the bills of lading.

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I worked with the company as a trainee and found that documentation is the basic and most significant part of foreign trade. The entire business depends on the accuracy of documentation. Effective documentation helps in maintaining the proper flow of all business transactions. Documentation is equally important to both the exporter as well as the importer.

Moreover the procedure of import and export is also complex and error at any level can be carried forward resulting in the incurring of loss to the respective parties. Thus it is highly essential for the procedure of import and export to be very clear to the people involved in foreign trade,

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SUGGESTIONS:
Each discrepancy in documents may result in the incurring of heavy loss to an organization. So extra care should be taken while preparing documents and receiving documents from any department.

The following precautions should be taken while dealing with document: The right document should be at the right place. Single window assistance should be acceptable by the government, which will reduce the load. Each and every document should be checked within the proper time period. Documents should be prepared with extra care to avoid errors. Caution should be taken while receiving any documents from other departments. Number of document should be curtailed. Common or repetitive information can be clubbed in one document. E- Mail copies should be acceptable by the government, which will reduce the load. Document should be checked in all aspects at very first stage.

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BIBLIOGRAPHY:

The following sources have been referred to for obtaining the information required for the completion of this project.

www.tatainternational.com www.dgft.com www.export911.com www.google.com www.wikipedia.com www.exim.com www.indiatrade.com Import Export Portfolio by Disha Madan Export Policy and Procedure by M. L. Mahajan Foreign Exchange and Risk management by C. Jeevnandanam Export Marketing by Rathore and Rathore Commercial manual of TATA INTERNATIONAL LTD.

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