Export Communication

Assignment

On

“Export co-ordination, communication and documentation”

Submitted to: Submitted by:

Ms. Nethravati Ashish Omar

Pramod Kumar

Nitin Verma

Krishanu Bose

Neeraj Km. Ravi

(M.F.M-IInd sem)

NATIONAL INSTITUTE OF FASHION TECHNOLOGY, BANGALORE

Acknowledgement

We are thankful to Ms. Nethravati for giving us the opportunity to work on assignment “export co-ordination, communication and documentations”. The assignment was beneficial to us in many respects and we learned a lot about export communications, how orders are placed, importance of documents, and how exports co-ordinates with sources and buyer and many more….

Thanking you From:

Ashish Omar

Pramod Kumar

Nitin Verma

Krishanu Bose

Neeraj Kr. Ravi


Content:

1 Selecting the market2 Foreign market research3 Foreign market selection process4 Selecting prospective buyers5 Selecting channels of distribution6 Negotiating with buyers7 Processing an export order8 Entering into export contract9 Specimen of contract form for sale – purchase transaction10

Export pricing and costing

11

Procuring goods for export and inspection by authorities

12

Export documentations

13

Commercial documents

14

Regulatory documents

15

Auxillary documents

16

Other documents

17

Octroi

18

Marine insurance policy

19

Shipping and custom formalities

20

Excise clearance

21

Methods of receiving payments

22

Annexures

23

Bibliography


Selecting the markets

Target markets should be selected after careful consideration of various factors like political embargo, scope of exporter's selected product, demand stability, preferential treatment to products from developing countries, market penetration by competitive countries and products, distance of potential market, transport problems, language problems, tariff and non-tariff barriers, distribution infrastructure, size of demand in the market, expected life span of market and product requirements, sales and distribution channels. For this purpose you should collect adequate market information before selecting one or more target markets.

The information can be collected from various sources like Export Promotion Council (EPCs)/Commodity Boards, Federation of Indian Export Organization, (FIEO), Indian Institute of Foreign Trade (IIFT), Indian Trade Promotion Organization (ITPO), Indian Embassies Abroad, Foreign Embassies in India, Import Promotion Institutions Abroad, Overseas Chambers of Commerce and Industries, Various Directories, Journals, Market Survey Reports.

Foreign Market Research

Understanding a market’s key characteristics requires gathering a broad range of primary and secondary research, much of which you can source without cost from the internet.

Primary research, such as population figures, product compliance standards, statistics and other facts can be obtained without any cost from international organizations like United Nations (UN) and World Trade Organizations (WTO). Analysis of export statistics over a period of several years helps an individual to determine whether the market for a particular product is growing or shrinking.

Secondary research, such as periodicals, studies, market reports and surveys, can be found through government websites, international organizations, and commercial market intelligence firms.


Foreign Market Selection Process

Step 1: Gather Information on a Broad Range of Markets

Market selection process requires a broad range of information’s depending upon the products or services to be exported, which includes:

The demand for product/service.

The size of the potential audience.

Whether the target audience can afford product.

What the regulatory issues are that impact on exports of product.

Ease of access to this market – proximity/freight.

Are there appropriate distribution channels for product/ service?

The environment for doing business – language, culture, politics etc.

Is it financially viable to export to selected market?

You can gather much of the first step information yourself from a variety of sources at little or no cost. Sources of information include:

Talking to colleagues and other exporters.

Trade and Enterprise – web site, publications, call centre.

The library.

The Internet.

Step 2: Research a Selection of Markets In-Depth

From the results of the first stage, narrow your selection down to three to five markets and undertake some in-depth research relating specifically to your product. While doing so, some of the questions that may arise at this stage are:

What similar products are in the marketplace (including products that may not be similar but are used to achieve the same goal, e.g. the product in our sample matrix at the end of this document is a hair removal cream. As well as undertaking competitor research on other hair removal creams, we would also need to consider other products that are used for hair removal, i.e. razors, electrolysis, wax).


What is your point of difference? What makes your product unique? What are the key selling points for your product?

How do people obtain/use these products? Who provides them? Are they imported? If so from which countries? Is there a local manufacturer or provider? Who would your major competitors be? What are the key brands or trade names? What is the market’s structure and shape? What is the market’s size? Are there any niche markets, and if so how big are they? Who are the major importers/ stockiest / distributors / agencies or suppliers? What are the other ways to obtain sales/representation? What are the prices or fees in different parts of the market? What are the mark-ups at different distribution levels? What are the import regulations, duties or taxes, including compliance and professional

registrations if these apply? How will you promote your product or service if there is a lot of competition? Are there any significant trade fairs, professional gathers or other events where you can

promote your product or service? Packaging – do you need to change metric measures to imperial; do you need to list

ingredients? Will you need to translate promotional material and packaging? Is your branding – colors, imagery etc., culturally acceptable.

Selecting prospective Buyers

You can collect addresses of the prospective buyers of the commodity from the following sources:

Enquiries from friends and relatives or other acquaintances residing in foreign countries. Visiting/ participating in International Trade Fairs and Exhibitions in India and abroad.

Contact with the Export Promotion Councils, Commodity Boards and other Government Agencies.

Consulting International Yellow Pages (A Publication from New York by Dun & Bradstreet, USA or other Yellow Pages of different countries like Japan, Dubai Etc.)

Collecting addresses from various Private Indian Publications Directories available on cost at Jain Book Agency, C-9, and Connaught Place, New Delhi-1. (PH. 3355686, Fax.3731117).

Collecting information from International Trade Directories/ Journals/periodicals available in the libraries of Directorate General of Commercial Intelligence and Statistics, IIFT, EPCs, ITPO etc.

Making contacts with Trade Representatives of Overseas Govt. in India and Indian Trade and Other Representatives/ International Trade Development Authorities abroad.

Reading biweekly, fortnightly, monthly bulletins such as Indian Trade Journal, Export Service Bulletin, Bulletins and Magazines issued and published by Federation of Exporters' Organizations, ITPO, EPCs, Commodity Boards and other allied agencies.


Visiting Embassies, Consulates etc. of other countries and taking note of addresses of importers for products proposed to be exported.

Advertising in newspapers having overseas editions and other foreign newspapers and magazines etc.

Consulting ITPO, IIFT, etc. Contacting authorized dealers in foreign exchange with whom exporter is maintaining

bank account.

Overseas importers can be contacted or informed about the products by the following methods:

By corresponding and sending brochures and product literature to prospective overseas buyers.

By undertaking trips to foreign markets and establishing personal rapport with overseas buyers. The number of trips will depend on your budget and resources. But it is essential for long-term success in international marketing to establish personal rapport. Foreign trip will provide first-hand information regarding the market, overseas customers, their requirement, taste, preference and better out communication of the merits of exporters' products.

Participation in buyer-seller meets and meeting the members of foreign delegation invited by Export Promotion Councils concerned.

Participation in international trade fairs, seminars. Advertisement and publicity in overseas reputed newspapers and magazines. Facilities of

free publicity can be availed from Import Development Centers.

Selecting channels of distribution

The following channels of distribution are generally utilized while exporting to overseas markets:

Exports through Export Consortia Export through Canalizing Agencies Export through Other Established Merchant Exporters or Export Houses, or Trading

Houses Direct Exports Export through Overseas Sales Agencies.

Negotiating with Prospective Buyers

Whatever the channel of distribution for exporting to the overseas countries is proposed to be is utilized, it is essential that the exporters should possess the necessary skill for negotiating with the overseas channels of distribution. The ability to negotiate effectively is needed for discussion with importers or trade agents. While conducting business negotiations, the prospective exporter


should avoid conflict, controversy and criticism vis-à-vis the other party. During conversation the attitude should be to communicate effectively. There should be coherence, creativity, compromise, concessions, commonality, consensus, commitment and compensation in business negotiations. The general problem you may face is about pricing. The buyer's contention is that prices are too high. It should be noted that though the price is only one of the many issues that are discussed during business negotiations, it influences the entire negotiating process.

Processing an Export orderYou should not be happy merely on receiving an export order. You should firstAcknowledge the export order, and then proceed to examine carefully in respect of

Items Specification Pre-shipment inspection Payment conditions Special packaging Labeling and marketing requirements Shipment and delivery date Marine insurance Documentation requirement etc.

If you are satisfied on these aspects, a formal confirmation should be sent to the buyer,Otherwise clarification should be sought from the buyer before confirming the order.

After confirmation of the export order immediate steps should be taken forProcurement / manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.

Before accepting any order necessary homework should have been done as to availability of the production capacity, raw material etc.. It would be in the interest of the exporter to look into entering into forward contract to safeguard against exchange rate fluctuations. Ensure that the mode of payment is also agreed upon. In case of shipment against letter of credit, the buyer should be advised to open the credit well in advance before effecting the shipment.

Entering into an Export contract

In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal.

There should not be any ambiguity regarding the exact specifications of goods and terms of sale including export price, mode of payment, storage and distribution methods, type of packaging,


port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under:

Product, Standards and Specifications Quantity Inspection Total Value of Contract Terms of Delivery Taxes, Duties and Charges Period of Delivery/Shipment Packing, Labeling and Marking Terms of Payment-- Amount/Mode & Currency Discounts and Commissions Licenses and Permits Insurance Documentary Requirements Guarantee Excuse for Non-performance of contract Remedies Arbitration

BRIEF SPECIMEN CONTRACT FORM FOR SALE PURCHASE TRANSACTIONS

EXPORTS AND IMPORTS

I. Name and address of the parties.......(state correct appellation and complete address of the parties)

II. We, the above named parties have entered into this contract for the sale/purchase, etc....... (State briefly the purpose of the contract) on this........ (Date) at........ (Place)..... subject to the following terms and conditions:

a. Goods................b. Quantity ...............Quality................. (Describe the quantity, quality and

the other specifications of the goods precisely as per the agreement. An agency for inspection/certification of quality and/or quantity may also be stipulated).

c. Price................ Mode of payment ...................(Quote the price, terms, i.e. ex-works/FOB(free on board) CIF(Cost, Insurance & Freight) etc. in the currency agreed upon and describe the mode of payment i.e. payment against L/C(letter of credit)/DA (document against acceptance) /D/P(document against payment)etc. It is also desirable to mention the exchange rate.)

d. Shipment............... (Specify date of delivery and the maximum period up to which delivery could be delayed and for which reasons, port of shipment and delivery should be mentioned).


e. Packing and marking...............(Requirements to be specified precisely)f. Insurance................. (State the type of insurance cover required, i.e. FPA

(free from particular average)/WA (with average)/ All Risks, etc. State also the party responsible for insurance)

g. Brokerage/Commission ........(if any payable may be mentioned)h. Passing of the property and of risk. The property or ownership of the

goods and the risk shall finally pass to the buyer at such stage as the parties may agree,

Arbitration

Arbitration clause recommended by the Indian Council of Arbitration: "All disputes or differences whatsoever arising between the parties out of relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the rules of the arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties.

Signature (Seller):

Signature (Buyer):

Export Pricing and Costing

Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is the price that we pay/incur for the product. Price includes our profit margin; cost includes only expenses we have incurred. Export pricing is the most important tool for promoting sales and facing international competition. The price has to be realistically worked out taking into consideration all export benefits and expenses. However, there is no fixed formula for successful export pricing. It will differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalizing agency. You should also assess the strength of your competitor and anticipate the move of the competitor in the market. Pricing strategies will depend on various circumstantial situations. You can still be competitive with higher prices but with better delivery package or other advantages.

Your prices will be determined by the following factors:

o Range of products offeredo Prompt deliveries and continuity in supplyo After-sales service in products like machine tools, consumer durableso Product differentiation and brand imageo Frequency of purchaseo Presumed relationship between quality and priceo Specialty value goods and gift items


o Credit offeredo Preference or prejudice for products originating from a particular sourceo Aggressive marketing and sales promotiono Prompt acceptance and settlement of claimso Unique value goods and gift items

Ex-Works: 'Ex-works' means that your responsibility is to make goods available to the buyer at works or factory. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. This term thus represents the minimum obligation for you. It is mostly used for sale of plantation commodities such as tea, coffee and cocoa.

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 for road transport. Your obligations are fulfilled when the goods are delivered to the carrier.

Free Alongside Ship (FAS): Once the goods have been placed alongside the ship, your obligations are fulfilled and the buyer notified. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. The buyer has to bear all costs and risks of loss or damage to the goods hereafter.

Free on Board (FOB): Your responsibility ends the moment the contracted goods are placed on board the ship, free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that a 'Received for Shipment' B/L (Bill of Lading) is not sufficient. Such B/L if issued must be converted into 'Shipped on Board B/L' by using the stamp 'Shipped on Board' and must bear signature of the carrier or his authorized representative together with date on which the goods were 'boarded'.

Cost and Freight (C&F): You must on your own risk and not as an agent of the buyer, contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. This being a shipment contract, the point of delivery is fixed to the ship's rail and the risk of loss or of damage to the goods is transferred from the seller to the buyer at that very point. As will be seen though you bear the cost of carriage to the named destination, the risk is already transferred to the buyer at the port of shipment itself.

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 of loss or damage to the goods during the carriage.

Freight or Carriage Paid (DCP): While C&F is used for goods which are to be carried by sea, the term "DCP" is used for land transport only, including national and international transport by road, rail and inland waterways. You have to contract for the carriage of the goods to the agreed destination named in the contract of the sale and pay freight. Your obligations are fulfilled when the goods are delivered to the first carrier and


not beyond. In case the buyer desires you to insure the goods till the destination, he would add 'including insurance' before the word 'paid in Freight' or 'Carriage Paid to'.

EXS/EX-Ship: This is an arrival contract and means that you make the goods available to the buyer in the ship at the named port of destination as per sales contract. You have to bear the full cost and risk involved in bringing the goods there. Your obligation is fulfilled before the customs border of the foreign country and it is for the buyer to obtain necessary import license at his own risk and expense.

EXQ/Ex-Quay: Ex-Quay means that you make the goods available to the buyer at a named quay. As in the term 'Ex-Ship' the points of division of costs and risks coincide, but they have now been moved one step further -- from the ship into the quay or wharf i.e. after crossing the customs border at destination. Therefore, in addition to arranging for carriage and paying freight and insurance you have to bear the cost of unloading the goods from the ship.

Delivered at Frontier (DAF): The term is primarily intended to be used when the goods are to be carried by rail or road. Your obligations are fulfilled when the goods have arrived at the frontier, but before the 'Customs border' of the country named in the sales contract.

Delivery Duty Paid (DDP): This term may be used irrespective of the type of transport involved and denotes your maximum obligation as opposed to 'Ex-Works'. You have not fulfilled 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 of goods. The term 'duty' includes taxes, fees and charges. Therefore, the obligation to pay VAT (Value Added Tax) levied upon importation will fall upon you. It is, therefore, advisable to use 'exclusive of VAT' after the words 'duty paid'.

FAO/FOB Airport: 'FOB Airport' is based on the same main principle as the ordinary FOB term. You fulfill your obligation by delivering the goods to the air carrier at the airport of departure. Without the buyer's approval delivery at a town terminal outside the airport is not sufficient, your obligations with respect to costs and risks do not extend to the arrival of the goods at the destination.

Free Carrier (Named Point) FRC: The term has been designed particularly to meet the requirements of modern transport like 'multi-modal' transport as container or 'roll-on-roll-off' traffic by trailers and ferries. The principle on which the term is based is same as applicable to FOB except that the seller or the exporter fulfills his obligations when he delivers the goods into the custody of the carrier at the named point.

Freight Carriage and Insurance Paid (CIP): The term is similar to 'Freight or Carriage Paid to'. However, in case of CIP you have additionally to procure transport insurance


against the risk of loss or damage to the goods during the carriage. You contract with the insurer and pay the insurance premium.

Dispatching Samples As the overseas buyers generally insist for the samples before placing confirmed orders, it is essential that the samples are attractive, informative and have retention and reminder value. Besides, the exporter should know the Government policy and procedures for export of samples from India. He should also be aware about the cheapest modes of sending samples.

In this connection, it is advised that the postal channel is comparatively cheaper than sending samples by air. While sending samples through postal channel due regard should be given to weight and dimension of the post parcels as postal authorities have prescribed maximum weight and dimension for the post parcels handled by them.

Export of trade samples is allowed by sea/air (as distinguished from sea/airmail) without any value restriction, provided the customs authorities are satisfied about the bona fide of the goods that they do not fall in the export control restrictions. However, customs authorities may ask for suitable documentary evidence in this regard viz. correspondence etc. with the overseas buyer. Trade samples against which the foreign buyer agrees to make payment can be exported in the same manner in which normal exports are affected. Samples can also be carried personally by you while traveling abroad provided these are otherwise permissible or cleared for export as explained earlier.


PREPARE A BUSINESS PLAN

LEGAL REGISTRATION

NEED ANALYSISMARKET IDENTIFICATION

EXPORT COMMUNICATION FLOWCHART


CHANNEL SELECTION

IDENTIFYING THE POTENTIAL BUYERS/ CUSTOMERS

AGENTS, DSTBTR, WHLSLRS, SALES REP., END USERS

AGREEING UPON PRICING, FRIEGHT CHARGES,DOCUMENT, CURRENCY, DELIVERY ETC.

TRADE FAIRS/ INTERNET/ PERSONAL VISITS/ CONTACT/ AGENTS.

DETERMINING THE PAYMENT TERMS

IMPORTER SENDS PURCHASE ORDER

Going for procuring orders

SIGNING OF CONTRACT

ADVANCE PAYMENT/ LETTER OF CREDIT/ OPEN ACCOUNT

PACKAGING WAREHOUSE

PRODUCTION


BANK SENDS DOCS TO IMPORTER’S BANK .PAYMENT IS DONE

CERTIFICATE OF QUALITY CONTROL

TRANSPORTATION

MARITIME/ AIR/ ROAD/ RAIL

SUBMISSION OF DOCS TO BANKS

INSURANCE CERTIFICATE, SHIPPING BILL, MATE’S RECEIPT, BILLS OF LADING, AIRWAY BILL, PACKING LIST , customs invoice etc

PREPARE MARINE, AIR, AND DOCS

exporter

Obtains samples as per buyer specification from vendor

Sends samples for approval of the buyer

After approval puts order in bulk with

Procuring/Manufacturing Goods for Export & their Inspection by Government Authorities

I. Procuring / Manufacturing Goods

Once you are ready with the infrastructure for exporting goods and have obtained necessary finance, you should proceed to procure the goods for export. Procuring the goods should be done with extreme care and caution as to the quality and cost. However, procuring the raw materials etc. and manufacturing the goods for export will need extra efforts on your part. If you are an established exporter, you can have the facility of procuring raw materials under the Duty Exemption Scheme.

II. Compulsory Quality Control & Pre shipment Inspection

An important aspect about the goods to be exported is compulsory quality control and pre-shipment inspection. Under the Export(Quality Control and Inspection) Act, 1963, about 1000 commodities under the major groups of Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products / Components are subject to compulsory pre-shipment inspection.

At times, foreign buyers lay down their own standards / specifications which may or may not be in consonance with the Indian standards. They may also insist upon inspection by their own nominated agencies. These issues should be sorted out before confirmation of order. Specific provisions have also been made for compulsory inspection of textile goods.

Inspection' as per standardized pre-shipment export documents to the nearest office of the respective Export Inspection Agency along with the following documents:

Particulars of the consignment intended to be exported. A crossed cheque/draft for the amount of requisite inspection fees or an Indian Postal Order.

o Copy of the Commercial Invoice.o Copy of letter of credit.o Details of packing specifications.o Copy of the export order/contract, indicating inter alia the buyer's requirement

that goods are strictly according to the prescribed specifications, or as per samples etc.

After satisfying itself that the consignment of exportable goods meets the requirements stipulated in the export contract/order, the inspection agency issues, generally within four days of receipt of intimation for inspection, the necessary certificate of inspection to the exporter in the prescribed Performa in five copies.


After approval puts order in bulk with

The certificate is issued in the standardized form which is aligned pre-shipment export document.

(Three copies for exporter, original copy for customs use, the second copy for the use of the foreign buyer and the third copy for the exporter's use, fourth copy for Data Bank, Export Inspection Council, New Delhi and the fifth copy is retained with the agency for their own office record).

In-Process Quality Control (IPQC)

Certain products like chemicals or engineering goods are subject to this control. The inspection is done at various stages of production. The exporter has to get his unit registered as "Export Worthy" and keep record of processing and production. Inspection by the officers of Export Inspection Agency is done from time to time. The certification of inspection on the end-products is then given without in-depth study at the shipment stage. Under this system, export is allowed on the basis of adequacy of in-process quality control and inspection measures exercised by the manufacturing units themselves. The certificates of inspection in favor of the units approved under the scheme are issued by the Export Inspection Agencies (EIAs) in the normal course. Consequently, the manufacturer exporters of products approved under the IPQC have been recognized as an agency for pre-shipment inspection for export of engineering products for which they have been approved by the Export Inspection Agencies at Bombay, Calcutta, Cochin, Delhi and Madras.

III. ISO 9000

The discussion on quality control and pre shipment inspection will be incomplete without saying a few words about ISO 9000.The ISO-9000 Series of Standards evolved by the International Standards Organization has been accepted worldwide as the norm assuring high quality of goods. The ISO-9000 is also the hallmark of a good quality- oriented system for suppliers and manufacturers. It identifies the basic principles underlying quality, and specifies the procedures and criteria to be followed to ensure that what leaves the manufacturer / supplier's premises fully meets the customer’s requirements. The ISO-9000 series of standards are basically quality assurance standards and not product standards.ISO-9000 spells out how a company can establish, document and maintain an effective and economic quality control system which will demonstrate to the customer that the company is committed to quality. The series of Standards aims the following:

o Increased customer confidence in the companyo Shift from a system of inspection, to one of quality managemento Removing the need for multiple assessments of supplierso Gaining management commitmento Linking quality to cost-effectivenesso Giving customers what they need


The implementation of ISO-9000 Standards involves:

o Management educationo Writing quality policyo Nominating a quality representativeo Identifying responsibilitieso Identifying business processeso Writing a quality manualo Writing procedureso Writing work instructions

It is thus clear that the ISO-9000 series of standards constitute of concept of Total Quality Management (TQM).

Labeling, Packaging, Packing and Marking Goods

An important stage after manufacturing of goods or their procurement is their preparation for shipment. This involves labeling, packaging, packing and marking of export consignments. Labeling requirements differ from country to country and the same should be ascertained well in advance from the buyer. The label should indicate quality, quantity, method of use etc. Packaging fulfills a vital role in helping to get your export products to the market in top condition, as well as in presenting your goods to the overseas buyer in an attractive way. While packaging, quality should not be compromised merely to cut down costs, packaging should also be in conformity with the instructions issued by the importer. Packing refers to the external containers used for transportation. Before packing and sealing the goods, it should be ensured that all the contents are properly placed in the case and the list of contents of packing notes should be prepared so that the buyer, the Customs authorities and the Insurance authorities can easily check the contents of each and every case.


EXPORT DOCUMENTS

Any export shipment involved various documents required by various authorities such asCustoms, excise, RBI, Inspection and according depending upon the requirements, thereare categorized into 2 categories, namely commercial documents and regulatoryDocuments.

A. Commercial Documents. : - Commercial documents are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. Out of the 16 commercial documents in the export documentation framework as many as 14 have been standardized and aligned to one another. These are Performa invoice, commercial invoice, packing list, shipping instructions, intimation for inspection, certificate, of inspection of quality control, insurance declaration, certificate' of insurance, mate's receipt, bill of lading or combined transport document, application for certificate origin, certificate of origin, shipment advice and letter to the bank for collection or negotiation of documents.

Commercial Invoice Commercial invoice is an important and basic export document. It is also known as a 'Document of Contents' as it contains all the Information required for the preparation of other documents. It is actually a seller's bill of merchandise. It is prepared by the exporter after the execution of export order giving details about the goods shipped.

Contents of Commercial Invoice Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel or Flight. Name of the port of loading. Name of the port of discharge and final destination. Invoice number and date. Exporter's reference number. Buyer's reference number and date. Name of the country of origin of goods. Name of the country of final destination. Terms of delivery and payment. Marks and container number. Number and packing description. Description of goods giving details of quantity, rate and total amount in terms of

Internationally accepted price quotation. Signature of the exporter with date.

2 Inspection Certificate: The certificate is issued by the inspection authority such as the export inspection agency. This certificate states that the goods have been inspected before shipment, and that they confirm to accepted quality standards.


3 Marine insurance policies: Goods in transit are subject to risk of loss of goods arising due to fire on ship, perils of sea, theft etc. marine insurance protects losses incidental to voyages and in land transportation. Marine insurance policy is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at the request of the importer, but the premium payment will be made by the exporter. There are different types of policies such as

Specific Policy: This policy is taken to cover different risks for a single shipment. For a regular exporter, this policy is not advisable as he will have to take a separate policy every time a shipment is made, so this policy is taken when exports are in frequent.

Floating Policy: This is taken to cover all shipments for some months. There is no time limit, but there is a limit on the value of goods and once this value is crossed by several shipments, then it has to be renewed.

Open Policy: This policy remains in force until cancelled by either party i.e. insurance company or the exporter.

Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or more destinations. The open cover may specify the maximum value of consignment that may be sent per ship and if the value exceeded, the insurance company must be informed by the exporter.

4. Consular invoice- Consular invoice is a document required mainly by the Latin American countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Guinea, Zanzibar, etc. This invoice is the most important document, which needs to be submitted for certification to the Embassy of the importing country concerned. The main purpose of the consular invoice is to enable the authorities of the importing country to collect accurate information about the volume, value, quality, grade, source, etc., of the goods imported for the purpose of assessing import duties and also for statistical purposes. In order to obtain consular invoice, the exporter is required to submit three copies of invoice to the Consulate of the importing country concerned.

5. Certificate of Origin: The importers in several countries require a certificate of origin without which clearance to import is refused. The certificate of origin states that the goods exported are originally manufactured in the country whose name is mentioned in the certificate. Certificate of origin is required when:-

The goods produced in a particular country are subject to’ preferential tariff rates in the foreign market at the time importation.

The goods produced in a particular country are banned for import in the foreign market.


Contents of Certificate of Origin Name and logo of chamber of commerce. Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel of Flight Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity. Signature and initials of the concerned officer of the issuing authority. Seal of the issuing authority.

Significance of the Certificate of Origin

Certificate of origin is required for availing of concessions under Generalized System of Preferences (GSP) as well as under Commonwealth Preferences (CWP).

It is to be submitted to the customs for the assessment of duty clearance of goods with concessional duty.

It is required when the goods produced in a particular country are banned for import in the foreign market.

It helps the buyer in adhering to the import regulations of the country. Sometimes, in order to ensure that goods bought from some other country have not been

reshipped by a seller, a certificate of origin is required.

6. Bill of Lading: The bill of lading is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order, provided the freight and other charges as specified in the bill have been duly paid. It is also a document of title to the goods and as such, is freely transferable by endorsement and delivery.

Bill of Lading serves three main purposes: As a document of title to the goods; As a receipt from the shipping company; and As a contract for the transportation of goods.

Contents of Bill of Lading1. Name and logo of the shipping line.2. Name and address of the shipper.3. Name and the number of vessel.4. Name of the port of loading.5. Name of the port of discharge and place of delivery.6. Marks and container number.7. Packing and container description.8. Total number of containers and packages,


9. Description of goods in terms of quantity.10. Container status and seal number.11. Gross weight in kg. and volume in terms of cubic meters.12. Amount of freight paid or payable.13. Shipping bill number and date.14. Signature and initials of the Chief Officer.

7. Airway Bill: An airway bill, also called an air consignment note, is a receipt issued by an airline for the carriage of goods. As each shipping company has its own bill of lading, so each airline has its own airway bill. Airway Bill or Air Consignment Note is not treated as a document of title and is not issued in negotiable form.

Contents of Airway Bill

Name of the airport of departure and destination. The names and addresses of the consignor, consignee and the first carrier. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity. Container status and seal number. Amount of freight paid or payable. Signature and initials of the issuing carrier or his agent.

Importance of Airway Bill: It is a contract between the airlines or his agent to carry goods to the destination. It is the document of instructions for the airline handling staff. It acts as a customs declaration form. Since, it contains details about freight it also represents freight bill.

8. Shipment Advice to Importer:- After the shipment of goods, the exporter intimates the importer about the shipment of goods giving him details about the date of shipment, the name of the vessel, the destination, etc. He should also send one copy of non-negotiable bill of lading to the importer.

9. Packing List: The exporter prepares the packing list to facilitate the buyer to check the shipment. It contains the detailed description of the goods packed in each case, their gross and net weight, etc. The difference between a packing note and a packing list is that the packing note contains the particulars of the contents of an individual pack, while the packing list is a consolidated statement of the contents of a number of cases or packs.

10. Bill of Exchange: The instrument is used in receiving payment from the importer. The importer may prefer Bill of Exchange to LC as it does not involve blocking of funds. A bill of exchange is drawn by the exporter on the importer, to make payment on demand at sight or after a certain period of time.


B/E is a means to collect payment. B/E is a means to demand payment. B/E is a means to extent the credit. B/E is a means to promise the payment. B/E is an official acknowledgement of receipt of payment. Financial documents perform the function of obtaining the finance Collection of payment etc. 2 sets. Each one bearing the exclusion clause making the other part of the draft invalid. Sight B/E. It is known as draft. Immediate payment – Sight draft. There are two copies of draft. Each one bears reference to the other part

B) Auxiliary Documents: These documents generally form the basic documents based on which the commercial and or regulatory documents are prepared. These documents also do not have any fixed formats and the number of such documents will wary according to individual requirements.

1. Performa Invoice: The starting point of the export contract is in the form of offer made by the exporter to the foreign customer. The offer made by the exporter is in the form of a Performa invoice. It is a quotation given as a reply to an inquiry. It normally forms the basis of all trade transactions.

Contents of Performa Invoice Name and address of the exporter. Name and address of the importer. Mode of transportation, such as Sea or Air or Multimodal transport. Name of the port of loading. Name of the port of discharge and final destination. Provisional invoice number and date. Exporter's reference number. Buyer's reference number and date. Name of the country of origin of goods. Name of the country of final destination. Marks and container number. . Number and packing description. Description of goods giving details of quantity, rate and total amount in terms of internationally accepted price quotation. Signature of the exporter with date.

Importance of Performa Invoice It forms the basis of all trade transactions. It may be useful for the importer in obtaining import license or foreign exchange.


2. Intimation for Inspection: Whenever the consignment requires the pre shipment inspection, necessary application is to be made to the concerned inspection agency for conducting the inspection and issue of certificate thereof.

3. Declaration of Insurance: Where the contract terms require that the insurance to be covered by the exporter, the shipper has to give details of the shipment to the insurance company for necessary insurance cover. The detailed declaration will cover:

Name of the shipper \ exporter. Name & address of buyer. Details of goods such as packages, quantity, value in foreign currency as well as in Indian

Rs. Etc. Name of the Vessel \ Aircraft. Value for which insurance to be covered.

4. Application of the Certificate Origin: In case the exporter has to obtain Certificate of Origin from the concerned authorities, an application has to be made to the concerned authority with required documents. While the simple invoice copy will do for getting C\O from the chamber of commerce, in respect of obtained the same from the office of the Textile Committee or Export Promotion Council, the documents requirement are different.

5. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo is loaded on the ship. The mate's receipt is a evidence that goods are loaded in the vessel. The mate's receipt is first handed over to the Port Trust Authorities. After making payment of all port dues, the exporter or his agent collects the mate's receipt from the Port Trust Authorities.The mate's receipt is freely transferable. It must be handed over to the shipping company in order to get the bill of lading. Bill of lading is prepared on the basis of the mate's receipt.

6. Shipping order: it is issued by the Shipping/Conference Line intimating the exporter about the reservation of space for shipment of cargo which the exporter intends to ship. Details of the vessel, poet of the shipment, and the date on which the goods are to be shipped are mentioned. This order enables the exporter to make necessary arrangements for customs clearance and loading of the goods.

7. Shipping Instructions: at the pre-shipment stage, when the documents are to sent to the CHA for customs clearance, necessary instructions are to be give with relevance to:

The export promotion scheme under which goods are to be exported. Name of the specific vessel on which the goods are to be loaded. If goods are to be FCL or LCL. If freight amount are to be paid / collected. If shipment are covered under A.R.E.-1 procedure. Instructions for obtaining Bill of Lading etc.


8. Bank letter for negotiation of documents: at the post shipment stage, the exporter has to submit the documents to a bank for negotiation or discounting or collection for forwarding the same to the customer and also for realization of export proceeds. The bank letter is the set of instruction for the bank as to how to handle the documents by them and by the bank at the buyer’s country which may included:

Name and address of the buyer. Details of various documents being sent and the number of the copies thereof. Name and address of the buyer’s bank if available. If the documents are sent L/C or on open terms. If the proceeds are to adjusted against any pre-shipment packing credit loan. If the bill amount is to be adjusted against any forward exchange cover. In case of credit bill who has to bear the interest, either exporter or if the same is to be

collected from the buyer. Instructions in case non-acceptance/non-payment by the buyer.

C. Regulatory Document: Regulatory pre-shipment export documents are prescribed by the different government departments and bodies in order to comply with various rules and regulations under the relevant laws governing export trade such as export inspection, foreign exchange regulation, export trade control, customs, etc. Out of 9 regulatory documents four have been standardized and aligned. These are shipping bill or bill of export, exchange control declaration (GR from), export application dock challan or port trust copy of shipping bill and receipt for payment of port charges.

1. Shipping Bill: Shipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods. The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e. certified by the customs.

2. A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central Excise rules for export of goods. In case goods meant for export are cleared directly from the premises of a manufacturer, the exporter can avail the facility of exemption from payment of terminal excise duty. The goods may be cleared for export either under claim for rebate of duty paid or under bond without payment of duty. In both the events the goods are to be cleared under form A.R.E-1 which will show the details of the goods being exported, the relevant duty involved and if the duty is paid or goods being cleared under bond, details of goods being sealed either by the exporter or Central Excise officials etc.

3. Exchange Control declaration Form (GR/PP/SOFTEX): under the exchange control regulations all exporters must declare the details of shipment for monitoring by the Reserve Bank of India. For this purpose, RBI has prescribed different forms for different types of shipments like GRI, PP forms etc. These declaration forms must be presented to the customs officials at the time of passing of export documentation. Under the EDI processing of shipping bill in the customs, these forms have been dispensed with and a new form SDF has to be submitted to the customs in the place of above forms.


4. Export Application: this is the application to be made to the customs officials before shipment of goods. The prescribed form of the application is the Shipping Bill/Bill of Export. Different types are required for shipment like ex- bond, duty free goods, and dutiable goods and for export under different export promotion schemes such as claims for duty drawback etc.

5. Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken inside the port for loading, necessary permission has to be obtained for moving the vehicle into the customs area. This permission is granted by the Port Trust Authority. This document will contain the detail of the export cargo, name and address of the shippers, lorry number, marks and number of the packages, driver’s license details etc.

6. Bank Certificate of Realization: this is the form prescribed under the Foreign Trade Policy, wherein the negotiating bank declares the fob value of exports and for the date of realization of the export proceeds. This certificate is required for obtaining the benefit under various schemes and this value of fob is reckoned as fob value of exports.

D. Other Document:

Black List Certificate: it certifies that the ship/aircraft carrying the cargo has not touched the particular country on its journey or that the goods are not from the particular country. This is required by certain nations who have strained political and economical relations with the so called “Black Listed Countries”.

Language Certificate: Importers in the European Community require a language certificate along with the GSP certificate in respect of handloom cotton fabrics classifiable under NAMEX code 55.09. Generally four copies of language certificate are prepared by the concerned authority who issues GSP certificate.

Freight Payment Certificate: in most of the cases, the B/L or AWB will mention the transportation and other related charges. However if the exporter does not want these details to be disclosed to the buyer, the shipping company may issue a separate certificate for payment of the freight charges instead of declaring on the main transport documents. This document showing the freight payment is called the freight certificate.

Insurance Premium Certificate: this is the certificate issued by the Insurance Company as acknowledgement of the amount of premium paid for the insurance cover. This certificate is required by the bank for arriving at the fob value of the goods to be declared in the bank certificate of realization.

Combined Certificate of Origin and Value: this certificate is required by the Commonwealth Countries. This certificate is printed in a special way by the Commonwealth Countries. This certificate should contain special details as to the origin and value of goods, which are useful for determining import duty. All other details are


generally the same as that of Commercial Invoice, such as name of the exporter and the importer, quality and quantity of the goods etc.

Customs Invoice: this is required by the countries like Canada, USA for imposing preferential tariff rates.

Legalized Invoice: this is required by the certain Latin American Countries like Mexico. It is just like consular invoice, which requires certification from Consulate or authorized mission, stationed in the exporter’s country.

OCTROI: Octroi is the local tax levied by the civic body on goods entering into the city. There are three procedures for clearing goods which are meant for export.

Procedure – 1 Export on payment of octroi duty and refund thereof after export..Pay the Octroi Duty and apply for refund of payment made.

a) At Octroi Naka form B is issued with cash receipt for the payment of Octroi Duty.b) Cargo is moved to the docks.c) At Docks Octroi officer prepares form”C” & endorses Shipping Bill Number & Steamers

Name.d) After shipment exporter prepares claim for refund by submitting following documents:

Covering Letter for refund of Octroi Duty. Original receipt of Octroi paid. Original Form B. Original Form C Invoice under which material was bought to the city. Export invoice issued by the Exporter to the importer. Export Promotion Copy of Shipping Bill – Photo Copy. Bill of Lading or Airway Bill Copy.

Procedure – 2, Export without payment of Octroi Duty.N Form Procedure.

Prepares form N in 3 copies. Checking of documents Shipping Bill, Carting order, Export Invoice by Octroi officer. Under taking that the goods will be cleared for export within 7 days of clearance through

the octroi post. Octroi officer at Docks will endorse the Shipping Bill number & shipment details on N

form. Proof of export... N form with above endorsement to be submitted to the Head Office

along with copies of Shipping Bill, Bill of Lading, Export Invoice etc.


MARINE INSURANCE POLICY

Goods in transit are subject to risks of loss of goods arising due to fire on the ship, perils of sea, thefts etc. Marine insurance protects losses incidental to voyages and in land transportation.Marine Insurance Policy is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at the request of the importer, but the premium payment will be made by the exporter.

There are different types of policies such as:

Specific Policy: This policy is taken to cover different risks for a single shipment. For a Exporter, this policy is not advisable as he will have to take a separate policy every time the shipment is made, so this policy is taken when exports are infrequent.

Floating Policy: This policy is taken to cover all shipments for same months. There is no time limit, but there is a limit on the value of goods and once this value is crossed by several shipments, then it has to be renewed.

Open Policy: This policy remains in force until cancelled by either party, i.e. insurance company or the exporter.

Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or all destinations. The open cover may specify the maximum value of consignment that may be sent pre ship and if the value exceeded, the insurance company must be informed by the exporter.

Insurance Premium: Differs upon from product to product and a number of other such factors, such as, distance of voyage, type and condition of packing etc. Premium for air consignments are lower as compared to consignments by sea.

The Insurance Policy Normally Contains:

The name and address of the insurance company. The name of the assured & description of the risk covered. A description of the consignment. The sum insured & the date of issue. The place where claims are payable together with details of the agent to whom claims

may be directed & any other details, as applicable.


SHIPPING AND CUSTOMS FORMALITIES(As per the Prevailing Law i.e., ICA 62)

The shipment of export cargo has to be made with prior permission of, and under the close supervision of the custom authorities. The goods cannot be loaded on board the ship unless a formal permission is obtained from the custom authorities. The custom authorities grant this permission only when it is being satisfied that the goods being exported are of the same type and value as have been declared by the exporter or his C&F agent, and that the duty has been properly determined and paid, if any. The custom procedure can be briefly explained as follows:

Submission of Documents: The exporter or his agent submits the necessary documents along with the shipping bill to the Custom House. The documents include:

o ARE-1 (Original and duplicate)o Excise gate pass (Original and duplicate transporters’ copyo Performa Invoiceo Packing Listo GRI form (Original and duplicate)o Customs Invoice (where required in the importing country)o Original letter of credit/contracto Declaration form in triplicateo Quality Certificateo Purchase memoo Labelso License (if any required) including advance license copyo Railway receipt/lorry way billo Inspection Certificate by Export Inspection Agency

Verification of Documents: The Customs Appraiser verifies the documents and appraises the value of goods. He then makes an endorsement of “Examination Order” on the duplicate copy of shipping bill regarding the extent of physical examination of the goods at the docks. All documents are returned back to the agent or exporter, except:

o Original Copy of GR to be forwarded to RBIo Original copy of shipping billo One copy of commercial invoice

Carting Order: The exporter’s agent has to obtain the carting order from the Port Trust Authorities. Carting Order is the permission to bring the goods inside the docks. The carting order is issued by the superintendent of Port Trust. Carting Order is issued only after verifying the endorsement on the duplicate copy of shipping bill. The Carting Order enables the exporter’s agent to cart goods inside the docks and store them in proper sheds.

Storing the Goods in the Sheds: After securing the carting order, the goods are moved inside the docks. The goods are then stored in the sheds at the docks.


Examination of Goods: The exporter’s agent then approaches the customs examiner to examine the goods. The customs examiner examines the cargo and records his report on the duplicate copy of the shipping bill. The customs examiner then sings the “Let Export Order”.

Let Export Order: The Let Export Order is then shown to the Customs Preventive Officer, along with other documents. The CPO is in charge of supervision of loading operations on the vessel. If CPO finds everything in order, he endorses the duplicate copy of shipping bill with the “Let Ship Order” This order helps the exporter/shipper to load the goods on the ship.

Loading Goods: The goods are then loaded on the ship. The CPO supervises the loading operations. After loading is completed, the Chief Mate (Cargo Officer) of the ship issues the “Mate’s Receipt”. The Mate’s Receipt is sent to the Port Trust Office.

Obtaining Bill of Lading: The Mate’s Receipt is then handed over to the shipping company (on whose vessel the goods are loaded). The shipping company issues bill of lading.

PROCEDURE OF EXCISE CLEARANCE:The common procedure of excise clearance under “bond” and under “rebate” is discussed as follows:

Preparing of Invoice: The export goods have to be cleared from the factory under invoice. The invoice contains details like name of the exporter, value of goods, excise duty chargeable, etc. The invoice is to be prepared in triplicate. In case of export under Bond, the invoice should be marked as “For Export without payment of duty”. In addition to the invoice, a prescribed for ARE 1 has to be filed in by exporter.

Filling up of ARE-1 form : The ARE-1 form needs to be filled in four copies. A fifth (Optional) may be filled in by the exporter, which can be used at the time of claiming other export incentives. The ARE-1 copies have distinct color for the purpose of verification and processing.

Application to Assistant Commissioner of Central Excise (ACCE): The exporter has to make an application to ACCE regarding the removal of goods from the factory/warehouse for export purpose.

Information to Range Superintendent of Central Excise (RSCE): The ACCE will inform the RSCE under whose jurisdiction the goods are intended to be cleared for export

Deputation of Inspector: The RSCE will then depute an inspector to clear the goods, either at the factory or warehouse, and in certain cases at the port.


FACTORY STUFFING OF CARGO:

Clearance of goods to docks: If the goods meant for export is of a small quantity which may not be sufficient to make one full container, the cargo is said to be less than container load (LCL) cargo. Such cargo has to be taken to the docks where the goods will be consolidated (combining the cargo of other exporters to make up quantity for a full container) by the agent and loaded into a container. Here the examination of the cargo is done at the docks.(There are also inland container depots approved by the customs where the goods can be consolidated and stuffed into the container by the agent under the supervision of the customs officer). If the goods meant for export is of sufficient quantity to make up a full container, the exporter has the option to take the goods to the docks and get them examined and stuffed into a separate container. An exporter gets the benefit on the freight amount for a full container.

METHODS OF RECEIVING PAYMENT AGAINST EXPORTS

Before we proceed to understand the concept of Letter of Credit, let us understand the various types of payment methods available against export.

METHODS OF PAYMENT

There are three methods of payment depending upon the terms of payment, and each method of payment involves varying degrees of risks for the exporter. The methods are:

Payment in advance Documentary Bills Letter of Credit Open Account Counter Trade

A. PAYMENT IN ADVANCEThis method does not involve any risk of bad debts, provided entire amount has been received in advance. At times, a certain per cent is paid in advance, say 50% and the rest on delivery. This method of payment is desirable when:

The financial position of the buyer is weak or credit worthiness of the buyer is not known.

The economic/ political conditions in the buyer’s country are unstable. The seller is not willing to assume credit risk The goods are specifically designed for the customer, and There is heavy demand for the goods (a seller’s market situation).


B. DOCUMENTARY BILLS:Under this method, the exporter agrees to submit the documents to his bank along withthe bill of exchange. The minimum documents required are

full set of bill of lading commercial Invoice Marine Insurance policy and other document, if required.

There are two main types of documentary bills: Documents against Payment, Documents against Acceptance.

Documents against payment (D/P): The documents are released to the importer against payment. This method indicates that the payment is made against Sight Draft. Necessary arrangements will have to be made to store the goods, if a delay in payment occurs.The risk involved that the importer may refuse to accept the documents and to pay against them.

Documents Against acceptance (D/A): The document are released against acceptance of the Time Draft i.e. credit allowed for a certain period, say 90 days. However, the exporter need not wait for payment till bill is met on due date, as he can discount the bill with the negotiating bank and can avail of funds immediately after shipment of goods. In case of D/A as compared to D/P bills, the risk involved is much greater, as the importer has already taken possession of goods which may or may not be in his custody on the maturity date of the bill. If the importer fails to pay on due date, the exporter, will have to start civil proceedings to receive his payment, if all other alternatives fails.

C. LETTER OF CREDIT (L/C):

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

CONTENTS OF A LETTER OF CREDIT

This is only an illustrative list. name and address of the bank establishing the letter of credit letter of credit number and date The letter of credit is irrevocable Date of expiry and place of expiry value of the credit Product details to be shipped Port of loading and discharge Mode of transport Final date of shipment


Details of goods to be exported like description of the product, quantity, unit rate Type of packing Documents to be submitted to the bank upon shipment Tolerance level for both quantity and value If L/C is restricted for negotiation Reimbursement clause

PARTIES TO LETTER OF CREDIT

Applicant: the buyer or importer of goods. Issuing Bank: importer’s bank who issues the L/C. Beneficiary: the party to whom the L/C is addressed. The seller or supplier of goods. Advising Bank: issuing bank’s branch or correspondent bank in the exporter’s country to

which the L/C is sent for onward transmission to the beneficiary. Confirming Bank: the bank in beneficiary’s country which guarantees the credit on the

request of the issuing bank. (Many a times the advising bank and confirming bank are one and the same).

Negotiation Bank: the bank to whom the beneficiary present his documents for Payment under L/C.

Reimbursing Bank: the bank which will reimburse the negotiating bank for the value of the credit.

Open a/c: The money is transferred in account provided by exporter to buyer.

Counter trade: a system of providing goods in lieu of goods. Instead of providing with money they would provide with some other material, product or services.


Bibliography:

A guide on export, policy, procedure and documentation By: M.I. Mahajan

Export managementBy: T.A.S. Balagopal

Export management By: N.Kumar and R.Mittal

Magazines: Garment line, Apparel online

www.google.com

www.exportindia.com

www.exportpolicy.com

www.expoinfo.com

www.apparel.co.in

www.indiandata.com


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http://www.apparel.co.in/

http://www.expoinfo.com/

http://www.exportpolicy.com/

http://www.exportindia.com/

http://www.google.com/

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