EXPORT PROCEDURE

Export procedure refers to the procedure, generally, adopted for the export of goods from India to a foreign country. The procedure is as follows: 1.Receipt of an Enquiry: Receipt of an enquiry from the prospective importer is the first step in export procedure. The importer who wishes to import goods, generally, writes a Latter of Enquiry to the exporter inquiring about the price and terms on which the exporter will be able to supply the goods required by him (i.e., the importer). 2.Sending a Quotation: After receiving the letter of enquiry from the importer, the exporter sends his Quotation to the importer. The quotation sent by the exporter contains full details of the quality, quantity and price of the goods, method of packing, terms of payment, etc. (a)Loco Price: This means that the price quoted is the price of the goods as they lie in the exporters warehouse. (b)Free Alongside the Ship Price or F.A.S. Price:

This means that he price quoted includes the cost of the goods, packing charges and all other expenses incurred for taking the goods to the side of the ship.

Free On Board Price or F.O.R. Price: This means that the price quoted includes the cost of the goods, packing charges, all expenses incurred for carrying the goods to the ship and the expenses incurred in putting the goods on board the ship. (d) Cost and Freight Price or C & F Price: This means that the price quoted includes the cost of the goods, packing charges, all expenses incurred for taking the goods to the ship, expenses incurred in putting the goods on board the ship and the freight charges for carrying the goods up to the port of destination. 1.Receiving an Indent: If the importer is satisfied with the quotation, he accepts the quotation and sends an Indent to the exporter through an intermediary like indent house, export house, etc. An indent is an order placed by the importer through an intermediary to the exporter for the supply of goods specified therein. The contents of an indent are:

(i) (ii) (iii) (iv) (v)

Importers name and address. Exporters name and address. Date of placing the indent. Quantity of goods to be imported. Description of the goods to be imported, quality, design, size, weight, etc. (vi) Mode of packing and marking. (vii) Mode of shipment and insurance. (viii)Types of price quoted, whether F.O.B, C.F. OR C.I.F. (ix) Modes of payment. There is a difference between an order and an indent. The difference between an order and indent is that an order is sent by the importer to the exporter directly, whereas an indent is sent to the exporter of goods through an intermediary like an export house, indent house, etc. In foreign trade, the contact between the importer and exporter is generally, not direct, but through an intermediary. That is why, the order placed by the importer is popularly called an indent. An indent may be an open indent or a closed indent. An open indent leaves the selection of goods to the exporter. But a closed indent gives the specification of particulars of the exact goods required, and so, the exporter has to comply with the specifications given in the indent.

1.

Obtaining Import-Export Code Number and an Export Licence: A firm which is interested in dealing in foreign trade, whether export trade or import trade, must obtain Import-Export Code (IEC) Number. As such, the exporter, who is interested in exporting goods, must obtain IEC number. Further, if the item of goods to be exported belongs to the negative list of restricted list, the exporter, having the IEC number, must also obtain an export licence from the competent authority of the Directorate of Foreign Trade by paying the required fee.

2.Collecting or Assembling Goods: After obtaining the necessary IEC number and export licence, the exporter has to collect or assemble the goods which are to be exported. The goods collected by the exporter must correspond to the instructions given by the importer in the indent. 3. Packing and Marking of Goods: After collecting the goods, the exporter has to pack the goods. While packing the goods, certain points must be borne in mind. First, the packing must be done strictly according to the instructions given by the importer in the indent. If the packing is not done according to the instructions given by the importer in the indent, and if any loss arises as a result of defective packing, the exporter is required to bear the loss.

Secondly, the packing must give protection to the goods. Thirdly, the packages must be kept as small in size as possible because the freight is charged according to the weight and the size of packages. After the goods are properly packed, they should be properly market according to the instructions given in the indent. Marking on the packages is necessary in order to identify the packages easily at the port of destination. Marking consists of the initials of the importer and the name of the port of destination written within a symbol like triangle, rectangle, square or circle. The gross weight, the tare (i.e., the weight of the container), the net wright and the measurement also must be marked on the package. 4.Appointment of a Forwarding Agent to attend to the Shipment of Goods: After packing the marking the goods properly, an exporter has to make the necessary arrangements for the shipment of goods. The work of shipment of goods may be done by the exporter himself or may be entrusted to a specialized agent known as Forwarding Agent. But, generally, this work is entrusted to a forwarding agent, as there are a number of formalities to be performed. The forwarding agent is an individual, a firm or a company which performs the various formalities in connection with the shipment of

goods on behalf of the exporter for some commission.

5.

Despatch of Goods to the Port by Road or Rail: After entering into an agreement with the forwarding agent for the shipment of goods, the exporter has to dispatch the goods to the port either by road or by rail. Alternatively, the forwarding agent may himself arrange for the movement of goods from the exporters warehouse to the port.

6.Formalities to be Performed by the Forwarding Agent at the Port: (a)Taking delivery of the goods at the port (b)Securing shipping space (c)Going through the customs formalities:

The various customs formalities under export trade are as follows:

1.

First, the forwarding agent of the exporter is required to fill in a document called the Shipping Bill in triplicate. Shipping bill contains: (i) Description of the goods exported. (ii) Quantity of the goods exported. (iii) Quality of the goods exported.

1.

(iv) Value of the goods exported number of packages and the markings on the packages. (v) Port of destination. (vi) Name of the ship carrying the goods. (vii) If landing and shipping charges are levied at the port, then, the forwarding agent is required to fill in another document called Application to Export in duplicate. After filling in the shipping bill in triplicate and the application to export in duplicate, the forwarding agent has to present these documents along with the landing and shipping charges, if any, at the Landing and Shipping Dues Office or Port Office. The port office will certify these documents and retuen all the three copies of the shipping bill and one copy of the application to export to the forwarding agent, retaining the other copy of the application to export for office reference. Then, the forwarding agent has to present all the three copies of the shipping bill at the customs office. The customs office will collect the export duty, if any, make the necessary entries in it books, retain the second copy of the shipping bill and return the original and the third copy of the shipping bill to the forwarding agent and will also issue the Customs Export Pass.

2.

3.

(d) Payment of Dock Dues and Obtainment of Dock Receipts (e) Loading and the Obtaining of Mates Receipt (f) Obtaining of a Bill of Lading: A Bill of Lading is an official receipt issued by the shipping company for the receipt of goods on board the ship. The contents of a bill of lading are: (i) Name of the ship. (ii) Date of shipment. (iii) Place of loading. (iv) Port of destination. (v) Name and address of the exporter. (vi) Name and address of the importer. (vii) Description of the goods. (viii)Number of packages. (ix) Marks on the packages. (x) Amount of freight, whether paid or to be paid.

(g) Obtaining of a Marine Insurance Policy (h) Advice to the exporter

1.Obtaining of the Other Relevant Documents: (a)Certificate of Origin (b)Consular Invoice

1.Preparation of Export Invoice: The contents of a foreign commercial invoice of foreign invoice are the following: (i) Description of goods (ii) Number of packages (iii) Weight and volume of packages (iv) Name and address of the importer (v) Export Order No. and date (vi) Per unit value of goods (vii) Total value of goods (viii)Terms of payment (ix) Terms of shipment, whether F.O.B., C.F. and C.I.F. (x) Date of shipment and name of shipper.

1.

Securing the Payment: There are mainly three modes by which the payment can be secured by the exporter. They are as follows:

(a)First Method: Under this method, the exporter draws a bill of exchange on the importer and sends it along with the other necessary shipping documents, such as the invoice, bill of lading, marine insurance policy, etc. to an exchange bank having a branch in the importing country for collection. Such a bill is called documentary bill. (b)Second Method: A letter of hypothecation is a letter sent by the exporter to the exchange bank with whom he (i.e., exporter) discounts the bill drawn on the importer for the goods shipped by him. The letter of hypothecation authorizes the exchange bank to sell the goods and realize the amount advanced by it to the exporter, in case the bill is dishonoured by the importer. Third Method: A letter of credit is a letter given by a banker undertaking to accept a bill of exchange drawn by an exporter on behalf of a specified importer. Generally, the banker demads some security from the importer for granting him a letter of credit.

1.Sending Advice to the Importer: After handing over the bill of exchange and the necessary shipping documents to the exchange

bank, the exporter will write a letter to the importer informing him about the dispatch of the goods, bill of exchange and other shipping documents. A copy of the invoice is also sent along with the letter so that the importer may know the amount payable by him to the exchange bank. After receiving the letter from the exporter, the importer will go to the concerned exchange bank and obtain the shipping documents. Thereafter, he will arrange for taking delivery of the goods, when the ship arrives at the port.