Transparent Overseas Project File on Export Policies and Process

8/7/2019 Transparent Overseas Project File on Export Policies and Process

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Summer Training Project ReportSummer Training Project Report

PROJECT TOPICPROJECT TOPIC

EXPORT POLICIES AND PROCESSEXPORT POLICIES AND PROCESS

Name of the organizationName of the organization

MASTER OF BUSINESS ADMINISTRATIONMASTER OF BUSINESS ADMINISTRATION

SessionSession:: 2008 102008 10Submitted BySubmitted By:: Vinay Pratap SinghVinay Pratap Singh

Project GuideProject Guide:: Mr. Satendra BhardwajMr. Satendra Bhardwaj

The MangalayatanThe Mangalayatan UniversityUniversityBeswan, AligarhBeswan, Aligarh


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STUDENTS DECLARATIONSTUDENTS DECLARATION

I, VINAY PRATAP SINGH here by declare that this

project report entitled EXPORT POLICIES ANDEXPORT POLICIES AND

PROCESSPROCESS, has been completed based on actual study

carried out by me in TRANSPARENT OVERSEAS,

FIROZABAD.

I am presenting an authentic report of my work,

carried out under the guidance ofMr. SATENDRA

BHARDWAJ , which is required in the partial

fulfillment for degree of M.B.A. MANGALAYATAN

UNIVERSITY, ALIGARH.

This research report is original & the information,

data & fact furnished their in are actual, based on

study carried out by me.

VINAY PRATAP

SINGH


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CONTENTSCONTENTS

1.1. INTRODUCTIONINTRODUCTION

General introduction

Export Country

Turnover of the Group

Certificates of T.O.

Other Sister Companies

T.O. Process Flow Chart

2.2. INTRODUCTION TO THE COMPANYINTRODUCTION TO THE COMPANY

Company Profile

An ISO 9001: 2000 Certified Company

Integrated management system

IMS core group

Planning for product realization

3. COMPANYS SNAP SHOTS OF MANUFACTURING & OTHERS

Glass Factory Pot Furnace, Tank Furnace

Machines Come in use of Manufacturing of Glass Articles

Sand Frost Machine, Cutting Machine

Magnet Separator, Press & Blowing Machine

Automatic Neumatic Press Machine

Annealing Leather Machine

Heating Furnace, Annealing Room

Melting Room

Tank Furnace & Draw out the melted Glass

Melted Glass drawed out

Blowing, Mouth Blowing

Annealing , After Annealing

IMS CORE GROUP

4. PRODUCTS

Lantern


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Wall scone

Vase

Christmas Hanging Ornament

5. INTRODUCTION OF EXPORT IN INDIA & ITS PROCEDURE

Types of Exporters

How to set up an Export Organisation

Choosing appropriate mode of operations

Naming the Business

Structure of an export Organisation

Registration with export Promotion Council

Registration with Sales Tax Authorities

How to Begin to do Export

Finding a Customs

Negotiating Contracts

Export Sales & Contract Terms & Conditions

Nature of International Trade Contracts

Terms of Shipments Incoterms

Processing an export order

Financial risks involved in Foreign Trade

6. EXPORT DOCUMENTS

Commercial Documents

Auxiliary Document

Pre- Shipment Documents

7. EXPORT PROCUDURES & POLICIES

Marine Insurance Policy

Quality Control and Pre- Shipment Inspection

Shipping and Customs Formalities

Factory Stuffing of Cargo

Sales Tax exemption Procedure

Method of receiving payment against export

Cover risk by T.O. & register this EU in ECGC

Foreign Exchange Fluctuation risks

Transfer risk to Third Parties


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8. IMPORT- EXPORT POLICY IN INDIA

Why do we need export?

Brief History

Exim Policy- Objectives

Export Promotion Measures

Import Control in India

Pre 90s Exim Policy of India

Post 90s Exim Policy of India

9. LIMITATION OF THE STUDY

10. RESEARCH METHODOLOGY

11. CONCLUSION

12. DATA ANANLYSIS & INTERPRETATION

13. BIBLIOGRAPHY

14. APPENDIX


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GENERAL INTRODUCTION

1.TRANSPARENT OVERSEAS:-We are pleased to introduce ourselves as a Transparent Groupof industries. Transparent Overseas is the parent company of the

group. Established in 1997 & engaged in import, manufacture& export of its products i.e. glass artware, Brassware, Ironware& all other handicrafts items worldwide. It has ONE STAREXPORT HOUSE status & a ISO 9001, ISO 14001 and OSHAS18001 certified. It has got several states & national award forexcellence export performance during the past years , theseaward was sponsored by Export Promotion Bureau, Lucknow(State Export Award), Export Promotion Council forhandicrafts, New Delhi (Certificate of Merit Award), Capexilformerly known as Chemical Allied Products Export PromotionCouncil , Kolkata (Certificate of Merit Award) etc. etc..

Name of worldwide high profile buyers are-

- U.S.A. - Target Corporation- U.S.A. - Walmart- U.S.A. - Marmaxx- U.S.A.- Straight Trade Corporation

- U.K. - J.R.C.

- U.S.A- Hoff Interior,

- Germany- Hudsenbay

- Canada - France Gift

- France - Dunnes

- Ireland - Bonton- U.S.A. - Zodax


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Registered Office:Opp. Pradeep Nagar,Dholpura Crossing,Agra Road,

Firozabad-283203

Noida Office Corporate Office:B-101, Sector 2Noida 201301(UP)

CONTACT PERSONS:

MR. AKASH JOSEPH(MERCHANDISING MANAGER)

Phone nos. (Factory) - 91-9971842590- 91-9310551366

Fax no. - 91-5612-243800

Factory:-Agra Road, Firozabad-283203

Showroom:-

B-102, Sector-2,NOIDA- 201 301


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TUR

NOV

EROFT H

EG

ROU

P

TRANS

PAR

ENTOVERSE A

S

$4.15M

illion(U.S.D

.)

FM

GLASS

WORK

S

$9.5M

illion(U

.S.D.)

GLASS

IND

I AEXPORTS

$2.6M

illion(U

.S.D.)

SHRISITAR

AM

GLASSW

ORKS

$1.8M

illion( U

.S.D.)

EVERA

AU

TOIND

IALTD .

$0.2Million(U

.S.D.)

GROU

PT

URNO

VER

$18.25

Million(U

.S.D

.)


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CertificateofMeritbyCapexil

2000-01

StateExportAwardbyU.P.ExportPromotion

Council2001-02


2001-02

ExcellenceAwardbyU.P.ExportPromotion

Council2002-03CertificateofMeritbyCapexil

2002-03

ArchofExcellenceAward(Business)

2003-04

CertificateofMeritbyCapexil2003-04

NationalExcellenceAwardbyNational

AwarnessForum2003-04

BhartiyaUdhyogRatnaAwardbyIEDRA

2003-04

CertificateofMeritbyCapexil 2004-05

CertificateofMeritbyEPCH

2004-05


2005-06CertificateofMeritbyCapexil

2006-07


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Other Sister companies

As earlier we mentioned that we are importer and manufactureralso for the domestic market so these two fields are organizethrough our flagship company sister concerns. Those are asfollows.

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

2. GLASS INDIA EXPORTS:

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

3. SHRI SITARAM GLASS WORKS:

CERTIFICATES


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This unit was established in 2004 and its a high quality color glassproducing unit having a pot furnace & it is engage to export itsproducts abroad.

4. EVERA AUTO INDIA PVT.LTD:Evera Auto India Private Limited is an automobile companyengaged in manufacturing of battery operated two wheelers &

three wheeler vehicle, incorporated in 2007.This is sister companyof Transparent Overseas. Directly or indirectly we are associatedwith the glass industries for last 30 years. Battery operated twowheelers & three wheelers come under new project nameEVERA. Transparent Group is a ISO 9001, ISO 14001 andOSHAS 18001 certified. This year Evera Auto India PrivateLimited has taken initiative arrangement to manufacture battery

operated two wheelers bikes & three wheeler auto rickshaw? It isexpected by the company to market its products in domestic &international market.

CONTACTS

ADDRESS:

EVERA AUTO INDIA PVT. LTD.,OPP. PRADEEP NAGAR,AGRA ROAD,FIROZABAD -283 203 (U.P.) INDIA


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Process Flow Chart

ISSUE PURCHASE ORDER

FOR RAW MATERIAL

ISSUE PURCHASE

ORDER AND DESIGN

TO SUPPLIER

INSPECTION

AND TESTING

OF RAW

MATERIAL

(i)

REJECTION

RETURN BACK TO

SUPPLIER

INSPECTION

AND

TESTING

OF RAW

MATERIAL

(i)

ISSUE OF

MATERIAL

FOR

PROCESSING

REJECTION RETURN BACK

TO SUPPLIER/IN HOUSE

INSPECTION, TESTING

OF PROCESSED ITEM (ii)

ASSEMBLING COLORING PROCESS REJECTIONFOR REWORK

HANDYWORK

INSPECTION, TESTING ANDPACKING (iii)

REJECTION RETURN TOSUPPLIER

DISPATCH FOR SHIPMENT

LACQUERING


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M/s Transparent Overseas is an ambitious industrial ventureof Firozabad. The company has the manufacturing unitat Opp. Pradeep Nagar, Agra Road, Firozabad. It is oneof the leading Manufacturer and Supplier of Glasswareand Glass decorative items etc. All the activities arecarried out by well-qualified and experienced

personnel.

Imbibing technical innovations/creations and using the mostsophisticated machinery, we provide value-added, quality

products to meet the ever-changing needs of our customerand their customers. Company has achieved a unique place

among the products being manufactured for salespromotions of National and International Companies.

We are known for our concern and efforts for optimum usesof resources, solid waste management & providing safeworkplace for our employees. The Company believes thatcontinual improvement in the quality management system is

essential to achieve maximum customer satisfaction &improvement in environment and health & safety

COMPANY PROFILE


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

In continuation of the efforts to improve our qualitymanagement, environment and health & safety performance,we have established a Quality Management System (QMS)ISO 9001: 2000, Environmental Management System(EMS) ISO 14001: 2004 and Occupational Health &Safety Assessment (OHSAS) 18001The companys top management has authorized Mr. VinayPratap Singh as it Management Representative having fullauthority & responsibility for development, implementation

and maintenance of QMS, EMS, and OHSAS.

The Company has well trained and experienced staff ofabout 23 people. The languages understood by theemployees are Hindi & English.

SCOPER OF QMS: Manufacture and supply of Glasswares and glass decorative items


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EXCLUSIONS:1. Design and development.

At present Design & Development is notunder scope of the organization. All the products manufactured at TransparentOverseas are based on customersspecifications only.

4.1 GENERAL REQUIREMENTS

The Management of M/s Transparent Overseas is motivated to establish,implement and maintain a documented Integrated Management System (QMS, EMS& OHSAS) and continually improve its effectiveness in accordance with therequirements of the International Standards ISO 9001 : 2000, ISO 14001 : 2004,OHSAS 18001 : 1999.

4.1 .1 Process needed for IMS and their interaction

INTEGRATED MANAGEMENT SYSTEM

Customersrequirement Reviewand acceptance

ProductionPlanning

Purchased

MaterialStores

Purchase

CustomerFeedback

Monitoring of objectives

and managementprograms for EMS &

OHSAS

InternalAudit

Manufacturing & InProcess Monitoring

ManagementReview of

IMSFinal

Productmonitoring

Packing

Delivery

Initiation of Requiredcorrective/ Preventive

Action

Act &Implement

VerificationBy QC


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4.1 .2 APPLICATION OF PROCESSES FOR IMS :

a) Our integrated management system follows the requirements of QMS, EMS& OHSAS.

b) Criteria and methods, to ensure effectiveness of the operation and control ofthe processes, are determined & defined in the relevant work instructions orAs per Quality Plans.

c) The management ensures availability of required resources and informationto support and monitoring of the process.

d) The management monitors and analyses the processes.e) Necessary action is taken to achieve the planned goals for their continual

improvement.

4.2 DOCUMENTATION REQUIREMENT FOR IMS

4.2.1 General

The Company has documented its Policy, objectives and manual includingprocedure, required by the International standards and by the Company foreffective implementation and control of IMS.

4.2.2. ManualThe Company has established and maintained Integrated Management System

(QMS, EMS & OHSAS) manual which includes scope of the QMS, EMS & OHSAS,details & justification for exclusions under element 7, documented procedures forQMS and description & interaction of the processes.

4.2.3. Control of documents Procedure

a) Documents are reviewed for adequacy and approved by the Mr, prior to

release.b) Whenever required documents are reviewed, updated and re-approved byMR. Also record of such authorized changes is maintained by MR.

c) Drawing a vertical line on right hand side of the changed portion toidentifies changes to a document. Current revision status is also identified onthe document.

d) MR issues the authorized/ approved documents, wherever required andensures availability of the relevant version of the applicable document.

e) It is ensured that documents remain legible and readily identifiable. IMSmanual is controlled, as defined in section 2.0 of this IMS manual.

INTEGRATED MANAGEMENT SYSTEM


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f) Other documents are controlled by giving a document no. as follows:Document Code / Functions code (Format/Record) Sr. no.

g) A specimen copy of each format is approved and issued by MR. And a set ofblank formats is maintained by the MR.

h) Revision status of all the existing formats (without bearing any revision

status) is issue.1.i) In case of any change to a document, fresh document (bearing next revision

no..) is issued. Fresh issue is issued, whenever required.j) MR maintains master copy & master list of all documents, identifying their

current revision status.k) Documents of external origin, if any, are controlled by marking

CONTROLLED COPY. MR maintains their master list and updated itonce in a year.

l) Unintended use of obsolete documents is prevented. They are identified by

stamping OBSOLETE, and kept separately, if they are to be retained.

4.2.4 Control of records-procedure

a) Records are maintained to provide evidence of conformity to the requirementsand of the effective operation of the Integrated Management System.

b) Records are indexed identifying their type and year/period.c) The person, responsible for their control, is also responsible for their review to

maintain effectiveness of the Integrated Management System.d) MR maintains a master list of records, identifying their location, retention

period.e) Records are stored and maintained to ensure their easy & readily

access/retrievability, whenever required, and to prevent damage/loss.f) Records are retained for a defined period or to fulfill the contractual obligation,

whichever is later. Records, required to be retained after expiry of theirretention period, are suitably identified and kept separately.

g) Obsolete records, which need not to be retained after expiry of their retentionperiod, are disposed off in consultation with the GM.

h) MR ensures that the records are made available to the customers, where this is

agreed requirement and to the internal/external auditors during audit.


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PLANNING FOR PRODUCT REALIZATION

22

Sr.

No.Process/

Activity

Quality

Objectives

In Put Out Put Monitoring

Criteria

Effectiveness

Criteria1. Review of customersrequirement

Within 07 daysafter receipt

Customerenquiry/orders

Reviewed/Accepted enquiry/order

At the end ofweek

In 100% casescustomer requirementsshould be reviewedwithin 07 days

2. Marketing Increase sales by10% w.r.t lastfinancial year

Moreorders

Increased sales First week ofeach month.

Sales targets should beachieved withinspecified time period

3. Customer satisfaction

To increasecustomersatisfaction level

by 15% of present level

within next sixmonths

Feedbackfromcustomers

Analysis offeedback and% level

After sixmonths.

At least 50% of thedecided target should

be achieved

4. Purchase Order of required rawmaterial, fromapprovedsuppliers

Within 04 daysafter order conformation

Materialrequirement

Purchasedmaterial

After everytwo days

At least in 60% casesorder should be send tothe suppliers withinfour days after orderconformation

5. Verification of purchasedmaterial/Components forits conformance

Within 02 days ofreceipt of material/components

PurchasedMaterial

Verifiedmaterial(Either it isconfirmed ornot)

After everythree days.

In 100% cases, definedobjective should beachieved.

6. Manufacturing

Process

Reduce rejection/

wastage during production in allstages by 2%with in next sixmonths

Raw

Material

Finish product First week of

Month

Rejection/ Wastage

should be reduce, atleast by 1%

7. Testing of Various Product

Within one dayof production

Untestedmaterial

Testedmaterial

First week ofmonth

After production ateach stages productshould be tested withinone day.

8. Review &analysis of

customercomplaints

Within 07 days ofreceipt.

CustomerComplain

ts

Result of review/

analysis

First week ofMonth

Complaints should notbe repetitive nature

9. Internal audits Once in 06months

Requirements of ISO9001:14001 &OHSAS18001:1999 andreports of

previousaudits

Internationalaudit reports

After one year Proposed correctiveand preventive actionsgiven be auditee should

be implemented

10. Managementreview

At plannedinterval (Once in06 months)

Data forreview

Decisionstaken

After one year Out put of the MRMmaster be implemented


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POT FURNACE

TANK FURNACE


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Press & Blowing MachineAutomatic Neumatic Press MachineAnnealing Lehr Machine.Rusa Furnace MachineMouth blowing items melting machinePressed glass items melting machineDania MachineHand Press MachineSpinning MachineGrinding MachineEdge Smoothing machine

Magnate SeparatorHand Cut GrinderDrill MachineSand Frosted Machine

Mixing MachineConveyerLethe Machine

MACHINES COME IN USE OF

MANUFACTURING OF GLASS

ARTICLES


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SAND FROST MACHINE

CUTTING MACHINE


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MAGNET SAPERATER

PRESS & BLOWING MACHINE


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AUTOMATIC NEUMATIC

PRESS MACHINE

ANNEALING LEATHER MACHINE


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HEATING FURNACE

ANEALING ROOM


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MELTING MACHINE

PRESSED GLASS MELTING

MACHINE


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TANK FURNACE & DRAW OUT

THE MELTED GLASS


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MELTED GLASS

DRAWED OUT

BLOWING


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MOUTH BLOWING TO GIVE A SHAPE TO MELTED GLASS

TO MAKE CRACKLE, DIPP THE HEATED GLASS INTO WATER

MOUTH BLOWING


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AFTER ANNEALINGPRODCUT IS READY FOR FURTHUR

PROCESSING

ANNEALING


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Introduction of Export in India

India has a mission to capture 2% of the global share of trade by 2010, up from thepresent level of less than 1%. Export is one of the lucrative business activities in India.

The government also provides various promotional schemes to the exporters forearning valuable foreign exchange for the country and for meeting their requirementsfor importing modern technology and essential inputs. Besides, the income fromexport business is also exempted to the specified extent under the Income Tax Act,1961, Refund of Central Excise and Custom Duty on export is also made under theDuty Drawback Scheme and other export promotion schemes of the Government.

Exports can be of goods or services which can be moved physically from one countryto another or can be rendered.

Physical Exports: If the goods physically go out of the country or services arerendered outside the country then it is called as physical export. The Foreign Tradedefines exports as taking out of India any goods by land, sea, air. Although the actdoes not term them as Physical Exports, we have to put phrase to distinguish it fromDeemed Exports which is sales in India but considered as exports for limited

purpose.

TYPES OF EXPORTERS:

Exporters can be basically classified into two groups

1. Manufacturer Exporter: As the exporter has the facility to manufacturer the producthe intends to export and hence he exports the products manufactured by him.

2. Merchant Exporter: An exporter who does not have the facility to manufacture anitem. But, he procures the same from other manufacturers or from the market andexports the same.An exporter can be both a manufacturer exporter as well as a merchant exporter, hecan export product manufactured by him or he can export items bought from themarket.

Once it is decided to export, it is mandatory on your part to follow certain procedures,rules and regulations as prescribed by various regulatory authorities such as DGFT,RBI, and Customs. These procedures, rules and regulations are laid down in the EximPolicy 2004-09, Exchange Control Manual, Customs Act etc. Accordingly Exportdocuments are required to be prepared keeping in view of the requirement of theforeign buyers and our regulatory authorities.


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HOW TO SET UP AN EXPORT ORGANISATION

The proper selection of organization depends upon

1. Ability to raise finance.

2. Capacity to bear the risk3. Desire to exercise control over the business.

4. Nature of regulatory framework applicable to anyone.

On close evaluation of once capacity with regard to above four variables, exportorganization cam is set up as proprietorship business, partnership firm, private limitedcompany or public limited company.

CHOOSING APPROPRIATE MODE OF OPERATIONS:

You can choose any of the following modes of operations

1. Merchant Exporter i.e. buying the goods from the market or from themanufacturer and then selling it to foreign buyers

2. Manufacturer Exporter i.e. manufacturing the goods yourself for export.

3. Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of theseller and charging the Commission.

4. Buying Agent i.e. acting on behalf of the buyer and charging Commission.5. Service provider i.e. providing service from India to another country

.NAMING THE BUSINESS

Whatever form of business organization has been finally decided, naming the businessis an essential task for every exporter. The name and style should be soft, attractive,short and meaningful. Open a current account in the name of the organisation inwhose name you intend to export. It is advisable to open the account with a bank

which is authorised to deal in Foreign Exchange.


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STRUCTURE OF AN EXPORT ORGANISATION

1. Marketing manager for generating sales

2. Commercial manager for looking activities of the execution of the orders

3. Staff personnel for carrying out the day-to-day activities namely

Preparation of pre - shipment documents.

Co-ordinating with clearing agents on the progress of the shipment to bemade.

Co-ordinating with the ware house\C. excise department regarding packingand clearance of the goods for export.

Preparation of post shipment documents foe banks.

Follow-up with the bank on dispatch of documents, receipt of payment, aailment of bank loans etc.

4. To look into the requirement of licenses, claiming of export benefits filing ofdocuments with the Government Authorities in Discharge of ExportObligations, if any, filing of returns to the various Government Agencies whichare mandatory, prepare and keep an information bank of various transaction ofthe company, their domestic as well as international competitors.

5. An office boy for doing leg work.

6. A clearing and forwarding agent to handle the documents and the goods in thecustoms premises\ in the ports of lading.Depending upon the size of the business the numbers of personnel under eachcategory may increase. For example if a company is transacting substantialvolume of business in more than one product. Then it is necessary to havemarketing manager for each product so that the person can concentrate on a

particular trade to enhance the business.


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REGISTRATION WITH REGIONAL LICENCING AUTHORITIES

OBTAINING IMPORTER EXPORTER CODE (IEC) NUMBER.

The Customs Authorities will now allow the exporter to export or import goods intoor from India unless he holds a valid IEC number. Before applying for IEC number it

is necessary to open a bank account in the name of the company with any commercialbank authorized to deal in foreign exchange. The duly signed application form shouldbe supported by the following documents.

Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs.1000/-

Certificate from the banker of the applicant firm as per Annexure1to theform given.

One copy of PAN number issued by Income Tax Authorities duty attested

by the applicant.

One copy of Passport Size photographs of the applicant duly attested by thebanker to the applicant.

Declaration by the applicant that the proprietor/ partners/ directors as the case may beof the applicant company, are not associated as proprietor/ partners/ directors in anyother firm, which has been caution, listed by the RBI. Where the applicant declaresthat they are associated as proprietor/ partners/ directors in any other firm, which has

been caution, listed by the RBI, they will be allotted IEC No. but with an additional

condition that they can export only with RBIs prior approval and they shouldapproach RBI for the purpose.

Each importer/exporter shall be required to file importer/ exporter profile once withthe licensing authority shall enter the information furnished in Appendix 2 in theirdatabase so as to dispense with changes in the information given in Appendix-2,importer/ exporter shall intimate the same to the licensing authority.

APPLICATION FOR OBTAINING AN IEC NUMBER

For obtaining IEC number apply in the prescribe form along with the documents listedabove to Regional Licensing Authority (Office of the Regional DGFT). The registeredoffice or the head office may apply for allotment of IEC No. Whenever, there is achange in the name, address or constitution of the holder of IEC No., such changeshould be intimated within 30 days to the concern authorities.

IEC certificate will be issued in the form (copy enclosed). A copy of IEC No. is alsoendorsed to the concerned banker.


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VALIDITY:

The IEC No allotted to a individual/firm/company will be valid for all itsbranches/divisions units/factories as indicated in the IEC No. Import/Export of anycommodity by that firm/company. There being no date of expiry, the IEC onceallotted is valid till it is revoked. But, if no import or export is affected in the previous

financial year, the same will be made inoperative. However, this can be madeoperative by a formal request to the DGFT.IDENTITY CARD (For conducting transactions with the office of DGFT):

As it is not always possible for the top man or directors, promoters of the company tovisit DGFT frequently. There is a provision of issuance of identity cards to the

proprietors/partners/directors and their authorized representatives. An application ofIssuance of an identity card may be made in the form (Appendix-5) The document/License/Certificate/Permissions may be delivered to the identity card holder and

officials of the Licensing Authority (DGFT)shall not be responsible for any loss etc.In case of loss of an identity card a duplicate card may be issued on the basis of anFIR & affidavit. In addition to obtaining the IEC No. the exporter is also required toobtain Business Identification No(BIN). For this exporter is required to contact DGFTonline on web site. The licensing authority issues BIN in coordination with customsauthorities. This BIN is required to be mentioned on the shipping bills at the time ofcustoms clearance of the export cargo.

RCMC (Registration-Cum-Membership Certificate)

REGISTRATION WITH EXPORT PROMOTION COUNCILS

In order to enable the exporter to obtain benefits/concessions under the Foreign TradePolicy, the exporter is required to register himself with an appropriate export

promotion agency by obtaining registration-cum-membership certificate. (RCMC). Ifthe export product is that it is not covered by any EPC, RCMC in respect thereof may

be issued by FIEO. An application for registration should be accompanied by a selfcertified copy of the Importer-Exporter Code number issued by the regional licensingauthority concerned and bank certificate in support of the applicants financialsoundness. The RCMC shall be valid for 5 years ending 31st March of the licensingyear.

REGISTRATION WITH SALES TAX AUTHORITIES:

Goods that are to be shipped out of the country for export are eligible for exemptionsfrom both Sales Tax and Central Sales Tax. For this purpose, exporter should gethimself registered with the Sale Tax Authority of is state after following the

procedures prescribed under the Sales Tax Act applicable to his state.


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HOW ONE BEGINS TO DO EXPORT

Before entering into the venture of exports, one must look for the product to beexported and the market where he intends to export.In case of a manufacturer, obviously he would like to export the product he

manufactures as is or with possible modification as may be required by the market.However, in case of a merchant exporter or a trader, one has to identity the product toexport. If the exporter is already in the trade in the domestic market and is familiarwith the product it would be an advantage to export the said product of which he hasreasonable knowledge.

Before selecting a product, one must simultaneously made a study and find out theprospective market. For finding out the market for the selected product, the followingmethods will help.

Get statistical information as to imports of the product by various countries and theirgrowth prospects in the respective countries

Approach the chamber of commerce for their guidance to find out the market.

Approach the Export Promotion Council dealing in the product of selection to getmore information.

The Preliminary

Once you are ready with the product you wish to export and have found the market forthe same, you are ready to proceed further. Following sequences can be followed:

1. Any one, who wishes to export, must first of all get an Importer Exporter CodeNumber (IE Code).This can be obtained by making a formal application to theoffice of the Regional Directorate General of Foreign Trade (DGFT).

Get yourself registered with the related Export Promotion Council and becomea member. Also arrange to obtain Registration-Cum-Membership Certificate

(RCMC) from the council. This has twin objectives:

Under the Foreign Trade Policy, it is mandatory that an exporter gets himregistered with the Export Promotion Council to avail of various exportfacilities.

Being a member, you will have access to all the information relating to theproduct that could be made available by the council

Many foreign buyers send their enquiries for the imports to the ExportPromotion Council. Hence you will have few customers interested in your

product.


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2. If you are a manufacturer, find out the provisions under the EXIM Policy ofgetting the raw materials duty free.

3. Get familiar with the excise formalities as goods meant for export can becleared without payment of C. Excise duty on the finished product subject tocompliance of certain formalities.

4. Understand the local government regulations in relations to the export of theproduct.

5. Get information of the governments regulations of the importing country as torestrictions on the quantity, product specification, packing regulations, customsregulations, requirement of specific documents/information etc.

6. Availability of Vessels/Airlines, the transport charges, frequency of operationetc.,

7. To look for a Custom House Agent (CHA) (also know as freight forwarders orclearing agents) for handling the documents/cargo in the customs.

8. If the product is covered under any quota regulation, find out theagency/council who is handling the quota distribution for the product and theavailability of quota for exports.

FINDING A CUSTOMS

Once you have selected the market, the next step is to find a prospective customer.This you can get

1. From the directory of importers of the country you intend to export to

2. By writing to the Embassy of India in that country for assistance

3. By writing to the chamber of commerce of that country

4. By means of participation in a Fair/Exhibition abroad either directly or throughthe Export Promotion Council

5. By participating in international fair if organized locally

Through the personal contacts in that country. By these processes one can only have

the list of customers. One has to dialogue or correspond with these customers bysending samples, getting feedback from the customers etc. to ultimately select thecustomer with whom to deal with. It is necessary to know the financial standing of thecompany which can be obtained through the bank channel or through the office ofECGC.

NEGOTIATING CONTRACT:

Once the prospective customer is found, the business deal has to be concluded. The

following aspects may be considered before entering into a final contract with thebuyer.


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1. Credit Worthiness of the Customer.

2. Availability of the Steamer/Airlines and the frequency

3. The freight charges

4. The full product specification

5. The quantity, Price

6. Terms of Payment

7. Type of packing and markings on the packages

8. Mode of shipment & Shipment schedule

9. Tolerance of quantity to be shipped

10.Documentation requirement for the customer

11.Documentation requirement of the government of importing country

12.Compliance of the local governmental rules and regulationsBefore entering into contract one should take note of the above factors. Whilethese are indicative, the requirements will vary from country to country, productto product and buyer to buyer.

EXPORT SALES & CONTRACT TERMS & CONDITIONS

Very often exporters do not enter into any formal contract and finalize the trade dealthrough the exchange of letters, cable, telex etc. It is, however, expedient that the

parties (exporters & importers) incorporate all important terms & conditions of theirtrade deal in a separate document or contract that will avoid disputes arising out ofuncertainty or ambiguity. Export contract may be sent in duplicate along with theProforma Invoice to the overseas buyer.

NATURE OF INTERNATIONAL TRADE CONTRACTS:

There are certain, peculiar characteristics of international trade contract which are notpresent in those for sales of goods in the domestic market

Whereas the parties to a domestic trace contract normally needs only agree on theelements which are necessary for their particular trade transactions like price,description, quality and quantity of goods, delivery terms etc the situation will bequite different when the buyer and the seller to sale/purchase contract belong todifferent countries. The parties to all international trade contracts provide all theirrelative rights and obligations in several ways

For example, they may agree to adopt either the Law of the country of the buyer orthat of the seller. The traders are normally reluctant to leave the determination of therights and obligations by implications under the legal system of eithers country. They


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prefer to make explicit provisions regarding the rights and obligations by including aset of detailed and precise terms and conditions in their contract.

EXPORT OF SAMPLES\GIFTS:

Exports of bonafide trade and technical samples of freely exportable items shall beallowed without any limit. Goods including edible items of value not exceeding Rs.100000/- in a licensing year, may be exported as a gift. However items mentioned asrestricted for exports in ITC (HS) shall not be exported as a gift without alicence/certificate/permission, except in the case of edible items.

STANDARD CONTRACT FORMS:

Notwithstanding the efforts made by various national/international organizations like

the United Nations Commission on the International Trade Law, there is still noperfection or a device which would give the parties an accurate and complete idea ofeach others understanding of various trade terms, the commercial practices and therights and the obligations vis--vis each other so that the misunderstandings are

practically Nevertheless, the Indian Council of Arbitration published in 1966 a booklet onStandard Contract Forms and Model Arbitration Clause for use in Foreign TradeContracts. It was revised and reprinted in 1969 and 1977. It can be referred to byexporter for various clause to be incorporated in the Export Contract.

ENTERING INTO AN EXPORT CONTRACT

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

There should not be any ambiguity regarding the exact specifications of goods andterms of sale including export price, mode of payment, storage and distributionmethods, type of packaging, port of shipment, delivery schedule etc. The differentaspects 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


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Period of Delivery/Shipment

Packing, Labeling and Marking

Terms of Payment-- Amount/Mode & Currency

Discounts and Commissions

Licenses and Permits

Insurance

Documentary Requirements

Guarantee

Force Majeure of Excuse for Non-performance of contract

Remedies

Arbitration clause

It will not be out of place to mention here the importance of arbitration clause in anexport contract Court proceedings do not offer a satisfactory method for settlement ofcommercial disputes, as they involve inevitable delays, costs and technicalities. Onthe other hand, arbitration provides an economic, expeditious and informal remedy forsettlement of commercial disputes. Arbitration proceedings are conducted in privacyand the awards are kept confidential. The Arbitrator is usually an expert in the subjectmatter of the dispute. The dates for arbitration meetings are fixed with theconvenience of all concerned. Thus, arbitration is the most suitable way for

settlements of commercial disputes and it may invariably be used by businessmen intheir commercial dealings.

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

parties (or any other arbitration clause that may be agreed upon between the parties).

TERMS OF SHIPMENTS INCOTERMS

The INCOTERMS (International Commercial Terms) is a universally recognized setof definition of international trade terms, such as FOB, CFR & CIF, developed by theInternational Chamber of Commerce (ICC) in Paris, France. It defines the tradecontract responsibilities and liabilities between buyer and seller. It is invaluable and acost-saving tool. The exporter and the importer need not undergo a lengthynegotiation about the conditions of each transaction. Once they have agreed on a

commercial terms like FOB, they can sell and buy at FOB without discussing whowill be responsible for the freight, cargo insurance and other costs and risks.


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The INCOTERMS was first published in 1936 --- INCOTERMS 1936 --- and it isrevised periodically to keep with changes in the international trade needs. Thecomplete definition of each term is available from the current publication ---INCOTERMS 2000. Under INCOTERMS 2000, the international commercial termsare grouped into E, F, C and D, designated by the first letter of the term, relating to the

final letter of the term. E.g. EXWexworks comes under grouped E.

The purpose of Incoterms is to provide a set of international rules for theinterpretation of the most commonly used trade terms in foreign trade. Thus, theuncertainties of different interpretations of such terms in different countries can beavoided or at least reduced to a considerable degree. The scope of Incoterms is limitedto matters relating to the rights and obligations of the parties to the contract of salewith respect to the delivery of goods. Incoterms deal with the number of identifiedobligations imposed on the parties and the distribution of risk between the parties.

In international trade, it would be best for exporters to refrain, wherever possible,from dealing in trade terms that would hold the seller responsible for the importcustoms clearance and/or payment of import customs duties and taxes and/or othercosts and risks at the buyers end, for example the trade terms DEO (Delivery ExQuay) and DDP (Delivered Duty Paid) Quite often, the charges and expenses at the

buyers end may cost more to the seller than anticipated. To overcome losses, hire areliable customs broker or freight forwarder in the importing country to handle theimport routines.

Similarly, it would be best for importers not to deal in EXW (Ex Works) which wouldhold the buyer responsible for the export customs clearance, payment of exportcustoms charges and taxes, and other costs and risks at the sellers endMORE CLARIFICATION ON INCOTERMSEXW {The named place}Ex Works: Exmeans from. Works means factory, mill or warehouse, which are the sellers premises.EXW applies to goods available only at the sellers premises. Buyer is responsible forloading the goods on truck or container at the sellers premises and for the subsequentcosts and risks. In practice, it is not uncommon that the seller loads sthe goods ontruck or container at the sellers pre4mises without charging loading fee. N thequotation, indicate the named place (sellers premises) after the acronym EXW forexample EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and export-trader(buyer), and the export-trader resells on other trade terms to the foreign buyers.Some manufacturers may use the term Ex Factory, which means the same as ExWorks.FCA {The named point of departure} Free Carrier: The delivery of goods on truck,rail car or container at the specified point(depot) of departure, which is usually the

sellers premises, or a named railroad station or a named cargo terminal or into thecustody of the carrier, at sellers expense. The point(depot) at origin may or may not be


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a customs clearance centre. Buyer is responsible for the main carriage/freight, cargoinsurance and other costs and risks.

In the air shipment, technically speaking, goods placed in the custody of an air carrierare considered as delivery on board the plane. In practice, many importers and

exporters still use the term FOB in the air shipment. The term FCA is also used in theRO/RO (roll on/roll off) services

In the export quotation, indicate the point of departure (loading) after the acronymFCA, for example FCA Hong Kong and FCA Seattle. Some manufacturers may usethe former terms

FOT (Free on Trucks) and

FOR (Free on Rail) in selling to export-traders.

FAS (The named port of origin)

Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship, onthe dock or lighter, within reach of its loading equipment so that they can be loadedaboard the ship, at sellers expense. Buyer is responsible for the loading fee, maincarriage/freight, cargo insurance, and other costs and risks In the export quotation,indicate the port of origin(loading)after the acronym FAS, for example FAS NewYork and FAS Bremen. The FAS term is popular in the break-bulk shipments andwith the importing countries using their own vessels.

FOB {The named port of origin)

Free on Board: The delivery of goods on the board the vessel at the named port oforigin (Loading) at sellers expense. Buyer is responsible for the main carriage/freight,cargo insurance and other costs and risks. In the export quotation, indicate the port oforigin (loading) after the acronym FOB, for example FOB Vancouver and FOBShanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight

only. However, in practice, many importers and exporters still use the term FOB in theair freight. In North America, the term FOB has other applications. Many buyers andsellers in Canada and the USA dealing on the open account and consignment basis areaccustomed to using the shipping terms FOB Origin and FOB destination.

FOB Origin means the buyer is responsible for the freight and other costs and risks.FOB Destination means the seller is responsible for the freight and other costs andrisks until the goods are delivered to the buyers premises which may include theimport custom clearance and payment of import customs duties and taxes at the

buyers country, depending on the agreement between the buyer and seller. Ininternational trade, avoid using the shipping terms FOB Origin and FOB Destination,which are not part of the


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INCOTERMS (International Commercial Terms).

CFR {The named port of destination}

Cost and Freight: The delivery of goods to the named port of destination (discharge)at the sellers expenses. Buyer is responsible for the cargo insurance and other costsand risks. The term CFR was formerly written as C&F. Many importers and exportersworldwide still use the term C&F.In the export quotation, indicate the port of destination (discharge) after the acronymCFR, for example CFR Karachi and CFR Alexandria. Under the rules of theINCOTERMS 1990, the term Cost and Freight is used for ocean freight only.However, in practice, the term Cost and Freight (C&F) is still commonly used in theair freight.

CIF {Named port of destination}

Cost, Insurance and Freight: The cargo insurance and delivery of goods to the namedport of destination (discharge) at the sellers expense. Buyer is responsible for theimport customs clearance and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the acronymCIF, for example CIF Pusan and CIF

Singapore. Under the rules of the INCOTERMS 1990, the term CIFI is used for oceanfreight only. However, in practice, many importers and exporters still use the termCIF in the air freight.

CPT {The named place of destination}

Carriage Paid To: The delivery of goods to the named port of destination (discharge)at the sellers expenses. Buyer assumes the cargo insurance, import custom clearance,

payment of custom duties and taxes, and other costs and risks. In the export quotation,indicate the port of destination (discharge) after the acronym CPT, for example CPT

Los Angeles and CPT Osaka.

CIP {The named place of destination)

Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to thenamed place of destination (discharge) at sellers expense. Buyer assumes theimporter customs clearance, payment of customs duties and texes, and other costs andrisks.In the export quotation, indicate the place of destination (discharge) after the acronymCIP, for example CIP Paris and CIP Athens.


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DAF {The names point at frontier}

Delivered At Frontier: The delivery of goods to the specified point at the frontier atsellers expense. Buyer is responsible for the import custom clearance, payment ofcustom duties and taxes, and other costs and risks.

In the export quotation, indicate the point at frontier (discharge) after the acronymDAF, for example DAF Buffalo and DAF Welland.

DES {Named port of destination}

Delivered Ex Ship: The delivery of goods on board the vessel at the named port ofdestination (discharge) at sellers expense. Buyer assumes the unloading free, importcustoms clearance, payment of customs duties and taxes, cargo insurance, and othercosts and risks.

In the export quotation, indicate the Port of destination (discharge) after the acronymDES, for example DES Helsinki and DES Stockholm.

DEQ {The named port of destination Delivered Ex Quay:

The delivery of goods to the Quay (the port) at the destination at buyers expense.Seller is responsible for the importer customs clearance, payment of customs dutiesand taxes, at the buyers end. Buyer assumes the cargo insurance and other costs andrisks. In the export quotation, indicate the Port of destination (discharge) after the

acronym DEQ, for example DEQ Libreville and DEQ Maputo.

DDU {The named point of destination}

Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the finalpoint at destination, which are often the project site or buyers premises at sellersexpense. Buyer assumes the import customs clearance, payment of customs duties andtaxes. The seller may opt not to insure the goods at his/her own risks.

In the export quotation, indicate the point of destination (discharge) after the acronymDDU for example DDU La Paz and DDU Ndjamena.

DDP {The named point of destination)Delivered Duty Paid:

The seller is responsible for most of the expenses which include the cargo insurance,import custom clearance, and payment of custom duties, and taxes at the buyers end,and the delivery of goods to the final point of destination, which is often the projectsite or buyers premise. The seller may opt not to insure the goods at his/her own risk.

In the export quotation, indicate the point of destination (discharge) after the acronymDDP, for example DDP Bujumbura and DDP Mbabane.E-term,F-term, C-term


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&D-term: Incoterms 2000, like its immediate predecessor, groups the term in fourcategories denoted by the first letter in the three-letter abbreviation.

1. Under the E-TERM (EXW), the seller only makes the goods available tothe buyer at the sellers own premises. It is the only one of that category.

2. Under the F-TERM (FCA, FAS, &FOB), the seller is called upon todeliver the goods to a carrier appointed by the buyer.

3. Under the C-TERM (CFR, CIF, CPT, & CIP), the seller has to contract forcarriage, but without assuming the risk of loss or damage to the goods oradditional cost due to events occurring after shipment or discharge.

4. Under the D-TERM (DAF, DEQ, DES, DDU & DDP), the seller has tobear all costs and risks needed to bring the goods to the place of destination.

All terms list the sellers and buyers obligations. The respective obligations of both

parties have been grouped under up to 10 headings where each heading on the sellersside mirrors the equivalent position of the buyer. Examples are Delivery, Transferof risks, and Division of costs. This layout helps the user to compare the partiesrespective obligations under each Incoterms.

PROCESSING AN EXPORT ORDER

You 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

1. Items

2. Specification

3. Pre-shipment inspection

4. Payment conditions

5. Special packaging

6. Labeling and marketing requirements

7. Shipment and delivery date

8. Marine insurance

9. Documentation requirement etc.

If you are satisfied on these aspects, a formal confirmation should be sent to the buyer,otherwise clarification should be sought from the buyer before confirming the order.After confirmation of the export order immediate steps should be taken for

procurement/manufacture of the export goods. In the meanwhile, you should proceedto enter into a formal export contract with the overseas buyer.


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Before accepting any order necessary homework should have been done as toavailability of the production capacity, raw material e.t.c. It would be in the interest ofthe exporter to look into entering into forward contract to safeguard against exchangerate fluctuations. Ensure that the mode of payment is also agreed upon. In case ofshipment against letter of credit, the buyer should be advised to open the credit well in

advance before effecting the shipment.

FINANCIAL RISKS INVOLVED IN FOREIGN TRADE

As an exporter while selling goods abroad, you encounter various types of risks. Themajor risks which you have to undergo are as follows:

1. Credit Risk

2. Currency Risk

3. Carriage Risk4. Country Risk

You can protect yourself against the above risks by initiating appropriate steps.

Credit Risks:

You can cover your credit risk against the foreign buyer by insisting upon opening aletter of credit in your favour. Alternatively one can avail of the facility offered byvarious credit risk agencies. A specific insurance cover can also be obtained from

ECGC (Exports Credit & Guarantee Corporation) to cover your country risk besidescovering credit risk.

Currency Risks:

As regards covering the currency risk, due to the exchange rate fluctuations, you canrequest your banker to book a forward contract.

Carriage Risk:

The carriage risk can be covered by taking an appropriate general insurance policy.

Country Risk:

ECGC provides cover to protect the exporter from country risks. A detailed procedurehow an exporter can get himself protected against the above risks are given in separatechapters later.

EXPORT DOCUMENTS

Any export shipment involved various documents required by various authorities suchas customs, excise, RBI, Inspection and according depending upon the requirements,


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there are categorized into 2 categories, namely commercial documents and regulatorydocuments.

A. Commercial Documents. : -

Commercial documents are required for effecting physical transfer of goods and theirtitle from the exporter to the importer and the realisation of export sale proceeds. Outof the 16 commercial documents in the export documentation framework as many as14 have been standardised and aligned to one another. These are performa invoice,commercial invoice, packing list, shipping instructions, intimation for inspection,certificate, of inspection of quality control, insurance declaration, certificate' ofinsurance, mate's receipt, bill of lading or combined transport document, applicationfor certificate origin, certificate of origin, shipment advice and letter to the bank forcollection or negotiation of documents. However, shipping order and bill of exchangecould not be brought within the fold of the Aligned Documentation System,

1. Commercial Invoice: Commercial invoice is an important and basic exportdocument. It is also known as a 'Document of Contents' as it contains all theinformation required for the preparation of other documents. It is actually a seller's billof merchandise. It is prepared by the exporter after the execution of export ordergiving details about the goods shipped. It is essential that the invoice is prepared in thename of the buyer or the consignee mentioned in the letter of credit. It is a prima facieevidence of the contract of sale or purchase and therefore, must be prepared strictly in

accordance with the contract of sale.Contents of Commercial Invoice

1. Name and address of the exporter.

2. Name and address of the consignee.

3. Name and the number of Vessel or Flight.

4. Name of the port of loading.

5. Name of the port of discharge and final destination.

6. Invoice number and date.

7. Exporter's reference number.

8. Buyer's reference number and date.

9. Name of the country of origin of goods.

10.Name of the country of final destination.

11.Terms of delivery and payment.

12.Marks and container number.

13.Number and packing description.


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14.Description of goods giving details of quantity, rate and total amount in termsof internationally accepted price quotation.

15.Signature of the exporter with date.

Significance of Commercial Invoice

1. It is the basic document useful in preparation of various other shippingdocuments.

2. It is used in various export formalities such as quality and pre-Shipmentinspection excise and customs procedures etc.

3. It is also useful in negotiation of documents for collection and claim ofincentives.

4. It is useful for accounting purposes to both exporters as well as importers.

Inspection Certificate:-

The certificate is issued by the inspection authority such as the export inspectionagency. This certificate states that the goods have been inspected before shipment, andthat they confirm to accepted quality standards.

Marine insurance policy:-

Goods in transit are subject to risk of loss of goods arising due to fire on ship,perils of sea, theft etc. marine insurance protects losses incidental to voyages and in

land transportation. Marine insurance policy is one of the most important documentused as collateral security because it protects the interest of all those who haveinsurable interest at the time of loss. The exporter is bound to insure the goods in caseof CIF quotation, but he can also insure the goods in case of FOB contract, at therequest of the importer, but the premium payment will be made by the exporter. Thereare 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 everytime 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 notime limit, but there is a limit on the value of goods and once this value is crossed byseveral 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 allshipments to one or more destinations. The open cover may specify the maximum


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value of consignment that may be sent per ship and if the value exceeded, theinsurance company must be informed by the exporter.

Insurance Premium: Differs upon product to product and a number of such otherfactors, such as, distance of voyage, type and condition of packing, etc. Premium forair consignments are lowered as compared to consignments by sea.

Consular Invoice: Consular invoice is a document required mainly by the LatinAmerican countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand,Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Guinea, Zanzibar, etc. Thisinvoice is the most important document, which needs to be submitted for certificationto the Embassy of the importing country concerned. The main purpose of theconsular invoice is to enable the authorities of the importing country to collectaccurate information about the volume, value, quality, grade, source, etc., of thegoods 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 threecopies of invoice to the Consulate of the importing country concerned. The Consulateof the importing country certifies them in return for fees. One copy of the invoice isgiven to the exporter while the other two are dispatched to the customs office of theimporter's country for the calculation of the import duty. The exporter negotiates acopy of the consular invoice to the importer along with other shipping documents.

Significance of Consular Invoice for the Exporter

1. It facilitates quick clearance of goods from the customs in exporter's as well asimporter's country.

2. Certification' of goods by the Consulate of the importing country indicarer thatthe importer has fulfilled all procedural and licensing formalities for import ofgoods.

3. It also assures the exporter of the payment from the importing country.

Significance of Consular Invoice for the Importer

1. It facilitates quick clearance of goods from the customs at the port destination andtherefore, the importer gets quick delivery of goods.

2. The importer is assured that the goods imported are not banned for imported in hiscountry.

Significance of Consular Invoice for the Customs Office

1. It makes the task of the customs authorities easy.2. It facilitates quick calculation of duties as the value of goods as determine bythe Consulate is considered for the purpose.


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

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

2.The goods produced in a particular country are banned for import in the foreignmarket.

Types of the Certificate of Origin

(a) Non-preferential Certificate of Origin: - Non-preferential certificate of origin is

required in general by all countries for clearance of goods by the importer, onwhich no preferential tariff is given. It is issued by:

1. The authorised Chamber of Commerce of the exporting country.

2. Trade Association. Of the exporting country.

(b) Certificate of Origin for availing Concessions under GSP Certificate of originrequired for availing of concessions under Generalised System of Preferences(GSP) extended by certain, countries such as France, Germany, Italy,BENELUX countries, UK, Australia; Japan, USA, etc. This certificate can be

obtained from specialised agencies, namely;

1. Export Inspection Agencies

2. Jt. Director General of Foreign Trade..

3. Commodity Boards and their regional offices.

4. Development Commissioner, Handicrafts.

5. Textile Committees for textile products.

6. Marine Products Export Development Authority for marine products.

7. Development Commissioners of EPZs

Certificate for availing Concessions under Commonwealth Preferences (CWP):

Certificate of origin for the purpose of Commonwealth Preference is also known as'Combined Certificate of Origin and Value'. It is required by two member countries,i.e. Canada and New Zealand of the Commonwealth. For concession under

Commonwealth preferences, the certificates or origin have to be submitted in specialforms obtainable,


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from the High Commission of the country concerned.

Certificate for availing Concessions under other Systems of Preference:-

Certificate of origin is also required for tariff concessions. under the Global System ofTrade Preferences (GSTP), Bangkok Agreement(BA) and SAARC PreferentialTrading Arrangement (SAPTA) under which India grants and receives tariffconcessions On imports and exports. Export Inspection Council (EIC) is the soleauthority to print blank Certificates of Origin under BA, SAARC and SAPTA whichcan be issued by such agencies as EPCs, DCs of EPZs, EIC, APEDA, MPEDA, FIEO,etc...

Contents of Certificate of Origin

1. Name and logo of chamber of commerce.

2. Name and address of the exporter.

3. Name and address of the consignee.

4. Name and the number of Vessel of Flight


6. Name of the port of discharge and place of delivery.

7. Marks and container number.

8. Packing and container description.

9. Total number of containers and packages.

10.Description of goods in terms of quantity.

11.Signature and initials of the concerned officer of the issuing authority.

12.Seal of the issuing authority.

Significance of the Certificate of Origin

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

It is to be submitted to the customs for the assessment of duty clearance ofgoods 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.


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Sometimes, in order to ensures that goods bought from some other country havenot been reshipped by a seller, a certificate of origin IS required.

Bill of Lading: The bill of lading is a document issued by the shipping company or itsagent acknowledging the receipt of goods on board the vessel, and undertaking todeliver the goods in the like order and condition as received, to the consignee or hisorder, 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 byendorsement and delivery.

Bill of Lading serves three main purposes:

i. As a document of title to the goods.

ii. As a receipt from the shipping company; and

iii. As a contract for the transportation of goods.

Types of Bill of Lading

1. Clean Bill of Lading: - A bill of lading acknowledging receipt of the goodsapparently in good order and condition and without any qualification is termedas a clean bill of lading.

2.Claused Bill of Lading: - A bill of lading qualified with certain adversere

marks such as, "goods insufficiently packed in accordance with the Carriage ofGoods by Sea Act," is termed as a claused bill of lading.

3.Transhipment or Through Bill of Lading: - When the carrier uses othertransport facilities, such as rail, road, or another steamship company in additionto his own, the carrier issues a through or transhipment bill of lading.

4.Stale Bill of Lading: - A bill of lading that has been held too long before it ispassed on to a bank for negotiation or to the consignee is called a stale bill oflading.

5.Freight Paid Bill of Lading: - When freight is paid at the time of shipment orin advance, the bill of landing is marked, freight paid. Such bill of lading isknown as freight bill of lading.

6.Freight Collect Bill of lading :- When the freight is not paid and is to becollected from the consignee on the arrival of the goods, the bill of lading ismarked, freight collect and is known as freight collect bill of lading


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Contents of Bill of Lading

1. Name and logo of the shipping line.

2. Name and address of the shipper.

3. Name and the number of vessel.


5. Name of the port of discharge and place of delivery.



8. Total number of containers and packages,

9. Description of goods in terms of quantity.

10.Container status and seal number.

11.Gross weight in kg. and volume in terms of cubic meters.

12.Amount of freight paid or payable.

13.Shipping bill number and date.

14.Signature and initials of the Chief Officer.

Significance of Bill of Lading for Exporters

1. It is a contract between the shipper and the shipping company for carriage ofthe goods to the port of destination.

2. It is an acknowledgement indicating that the goods mentioned in thedocument have been received on board for the Purpose of shipment.

3. A clean bill of lading certifies that the goods received on board the ship are inorder and good condition.

4. It is useful for claiming incentives offered by the government to exporters.

5.The exporter can claim damages from the shipping company if the goods arelost or damaged after the issue of a clean bill of lading.


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Significance of Bill of Lading for Importers

1. It acts as a document of title to goods, which is transferable endorsement anddelivery.

2. The exporter sends the bill of lading to the bank of the importer so as to enablehim to take the delivery of goods.

3. The exporter can give an advance intimation to the foreign buyer about theshipment of goods by sending him a non-negotiable copy of bill of lading.

Significance of Bill of Lading for Shipping Company

It is useful to the shipping company for collection of transport charges from the

importer, if not collected from the exporter.

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

Contents of Airway Bill

1. Name of the airport of departure and destination.

2. The names and addresses of the consignor, consignee and the first carrier.



5. Total number of containers and packages.

6. Description of goods in terms of quantity.

7. Container status and seal number.

8. Amount of freight paid or payable.

9. Signature and initials of the issuing carrier or his agent.

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

Shipment Advice to Importer:- After the shipment of goods, the exporter intimatesthe importer about the shipment of goods giving him details about the date of


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shipment, the name of the vessel, the destination, etc. He should also send one copy ofnon-negotiable bill of lading to the importer.

Packing List: The exporter prepares the packing list to facilitate the buyer to check

the shipment. It contains the detailed description of the goods packed in each case,their gross and net weight, etc. The difference between a packing note and a packinglist 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 ofcases or packs.

Bill of Exchange: The instrument is used in receiving payment from the importer.The importer may prefer bill of exchange to LC as it does not involve blocking offunds. A bill of exchange is drawn by the exporter on the importer, to make payment

on demand at sight or after a certain period of time. B/E is a means to collect payment. B/E is a means to demand payment. B/E is a means to extent the credit. B/E is a means to promise the payment. B/E is an official acknowledgement of receipt of payment. Financial documents perform the function of obtaining the finance collection of

payment etc. 2 sets. Each one bearing the exclusion clause making the other part of the draft

invalid. Sight B/E. Usance B/E. It is known as draft. Immediate payment Sight draft. There are two copies of draft. Each one bears reference to the other part A&B. whenany one of the draft is paid, the second draft becomes null and void.

Parties to bill of exchange.

1. The drawer: The exporter / person who draws the bill.2. The drawee: The importer / person on whom the bill is drawn for payment.3. The payee: The person to whom payment is made, generally, the exporter / supplierof the goods.

B Auxiliary Documents: These documents generally form the basic documents basedon which the commercial and or regulatory documents are prepared. These documentsalso do not have any fixed formats and the number of such documents will wary

according to individual requirements.


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

Contents of Proforma Invoice Name and address of the exporter. Name and address of the importer. Mode of transportation, such as Sea or Air or Multimodal transport. Name of the port of loading. Name of the port of discharge and final destination. Provisional invoice number and date. Exporter's reference number.

Buyer's reference number and date. Name of the country of origin of goods. Name of the country of final destination. Marks and container number. . Number and packing description. Description of goods giving details of quantity, rate and total amount in terms ofinternationally accepted price quotation. Signature of the exporter with date.Importance of Proforma Invoice

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

2. Intimation for Inspection: Whenever the consignment requires the pre-shipmentinspection, necessary application is to be made to the concerned inspection agency forconducting 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 theinsurance 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 inIndian Rs. Etc. Name of the Vessel \ Aircraft. Value for which insurance to be covered.


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4. Application of the Certificate Origin: In case the exporter has to obtainCertificate of Origin from the concerned authorities, an application has to be made tothe concerned authority with required documents. While the simple invoice copy willdo for getting C\O from the chamber of commerce, in respect of obtained the samefrom 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 ofthe ship when the cargo is loaded on the ship. The mate's receipt is a prima facieevidence that goods are loaded in the vessel. The mate's receipt is first handed over tothe Port Trust Authorities. After making payment of all port dues, the exporter or hisagent collects the mate's receipt from the Port Trust Authorities. The mate's receipt isfreely transferable. It must be handed over to the shipping company in order to get the

bill of lading. Bill of lading is prepared on the basis of the mate's receipt.

Types of Mate's Receipts

Clean Mate's Receipt: - The Commanding Officer of the ship issues a clean mate'sreceipt, if he is satisfied that the goods are packed properly and there is no defect inthe packing of the cargo or package.

Qualified Mate's Receipt: - The Commanding Officer of the ship issues qualified

mate's receipt, when the goods are not packed properly and the shipping companydoes not take any responsibility of damage. to the goods during transit.

Contents of Mate's Receipt1. Name and logo of the shipping line.2.Name and address of the shipper.3.Name and the number of vessel.4.Name of the port of loading.

5.Name of the port of discharge and place of delivery.6.Marks and container number.7.Packing and container description.8.Total number of containers and packages.9.Description of goods in terms of quantity.10.Container status and seal number.11.Gross weight in kg. and volume in terms of cubic meters.12.Shipping bill number and date.13. Signature and initials of the Chief Officer.

Significance of Mate's Receipt

It is an acknowledgement of goods received for export on board the ship.


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It is a transferable document. It must be handed over to the shipping company in orderto get the bill of lading.

Bill of lading, which is the title of goods, is prepared on the basis of the mate's receipt.

It enables the exporter to clear port trust dues to the Port Trust Authorities.Obtaining Mate's Receipt The goods are then loaded on board the ship for which theMate or the Captain of the ship issues Mate's Receipt to the Port Superintendent.

Shipping order: it is issued by the Shipping/Conference Line intimating the exporterabout the reservation of space for shipment of cargo which the exporter intends toship. Details of the vessel, poet of the shipment, and the date on which the goods areto be shipped are mentioned. This order enables the exporter to make necessary

arrangements for customs clearance and loading of the goods.

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

1. The export promotion scheme under which goods are to be exported.2. Name of the specific vessel on which the goods are to be loaded.3. If goods are to be FCL or LCL.

4. If freight amount are to be paid / collected.5. If shipment are covered under A.R.E.-1 procedure.6. Instructions for obtaining Bill of Lading etc.

Bank letter for negotiation of documents: at the post shipment stage, the exporterhas to submit the documents to a bank for negotiation or discounting or collection forforwarding 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 bythem and by the bank at the buyers country which may include

1. Name and address of the buyer.2. Details of various documents being sent and the number of the copies thereof.3. Name and address of the buyers bank if available.4. If the documents are sent L/C or on open terms.5. If the proceeds are to adjusted against any pre-shipment packing credit loan.6. If the bill amount is to be adjusted against any forward exchange cover.7. In case of credit bill who has to bear the interest, either exporter or if the same is to

be collected from the buyer.

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


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C. Regulatory Document: Regulatory pre-shipment export documents are prescribedby the different government departments and bodies in order to comply with variousrules and regulations under the relevant laws governing export trade such as exportinspection, foreign exchange regulation, ex port trade control, customs, etc. Out of 9

regulatory documents four have been standardised and aligned. These are shipping billor bill of export, exchange control declaration (GR from), export application dockchallan 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 thecustoms authorities for granting permission for the shipment of goods. The cargo ismoved inside the dock area only after the shipping bill is duly stamped, i.e. certified

by the customs. Shipping bill is normally pr