Export Procedures and Documentations

Exports are a major component of international trade, much like imports. They facilitate international trade and stimulate domestic economic activity by creating employment, production, and revenues. Businesses export goods and services in which they have a competitive advantage.

What are Export Procedures?

1. Compliance: Ensuring adherence to domestic and international laws governing trade, customs, and export controls.
2. Efficiency: Streamlining the logistics and administrative tasks of exporting goods to minimise delays and costs.
3. Risk Management: Mitigating risks associated with international transactions, such as currency fluctuations, political instability, and regulatory changes.

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Steps of Export Procedures

Step 1: Receipt of Order

Step 2: Obtaining License and Quota

Step 3: Letter of Credit

Step 4: Fixing the Exchange Rate

Step 5: Foreign Exchange Formalities

• Declaration of foreign exchange earnings and their disposal as per RBI guidelines.
• All shipping documents and negotiations must be handled through authorized foreign exchange dealers.
• Payments for exported goods must be conducted through approved methods.

Step 6: Preparation for Executing the Order

• Packing and marking goods as per importer specifications.
• Obtaining inspection certificates from the Export Inspection Agency after pre-shipment inspections.
• Securing insurance policies from the Export Credit Guarantee Corporation (ECGC) and marine insurance policies as required.
• Appointing a forwarding agent (customs house agent) to manage customs clearance and related procedures.

Step 7: Formalities by a Forwarding Agent

• Obtains customs permits for export.
• Provides detailed product information (nature, quantity, weight) to the shipping company.
• Prepares shipping bills/orders and pays necessary dues.
• Oversees loading of goods onto the ship under customs supervision.
• Receives a receipt from the ship's master upon completion of loading.

Step 8: Bill of Lading

Step 9: Shipment Advice to the Importer

• Shipment advice, a packing list, a non-negotiable copy of the Bill of Lading, and a commercial invoice.

Step 10: Presentation of Documents to the Bank

Step 11: Realization of Export Proceeds

• To receive payment in foreign exchange, exporters complete specific banking formalities, initiating the process upon submission of the Bill of Exchange.
• By following these steps meticulously, exporters facilitate smooth and compliant export procedures, ensuring timely delivery and payment for their goods.

Export Procedures Documentations

1. Receipt of Order

• Purchase Order (PO): Document from the importer indicating the types, quantities, and agreed prices for products or services.
• Proforma Invoice: Issued by the exporter to confirm details with the importer before shipment.

2. Obtaining License and Quota

• Export License: This is required for certain goods. Exporters must apply to India's Export Trade Control Authority to obtain this license.
• Quota Allocation: Exporters must secure an allotment for goods with export restrictions, if applicable.

3. Letter of Credit

• Letter of Credit (LC): A financial guarantee from the importer's bank ensuring payment upon compliance with specified terms.

4. Fixing the Exchange Rate

• Foreign Exchange Contract: Agreement between the exporter and their bank to lock in an exchange rate for the transaction.

5. Foreign Exchange Formalities

• Declaration Form: Per the Foreign Exchange Regulation Act (FERA), exporters must submit a declaration form detailing the export transaction.

6. Preparation for Executing the Order

• Packing List: Details each package's contents, dimensions, and weight.
• Commercial Invoice: Specifies the goods, their value, and terms of sale.

7. Formalities by a Forwarding Agent

• Shipping Bill: The main customs document is required for export customs clearance.
• Customs Permit: Authorization from customs to export the goods.
• Freight Forwarding Agreement: Contract with a forwarding agent to handle shipping logistics.

8. Bill of Lading

• Bill of Lading (B/L): Issued by the shipping company, it serves as a receipt for the cargo and a contract of carriage.

9. Shipment Advice to the Importer

• Shipment Advice: A notification was sent to the importer providing shipment details, including the expected arrival date.

10. Presentation of Documents to the Bank

• Documentary Collection: Includes the Bill of Lading, Commercial Invoice, Packing List, Certificate of Origin, and any other required documents. These are presented to the exporter's bank for processing.

11. Realization of Export Proceeds

• Bill of Exchange: A written order from the exporter to the importer to pay a specified amount at a specified date.
• Banking Formalities: The bank processes the documents and ensures the export proceeds are credited to the exporter’s account.

Registration and Export Documentation Formalities

• Registration with Authorities: Exporters must register with relevant authorities such as the Export Promotion Councils (EPCs), Directorate General of Foreign Trade (DGFT), and other regulatory bodies.
• Obtaining Importer-Exporter Code (IEC): An IEC number is mandatory for exporters and is obtained from the DGFT after completing the application process.
• Permanent Account Number (PAN): Exporters must have a PAN issued by the Income Tax Department for financial transactions.
• Registration cum Membership Certificate (RCMC): RCMC is obtained from EPCs or commodity boards to avail various benefits under export promotion schemes.
• Export License: Depending on the nature of goods, exporters may require specific licenses from DGFT or other competent authorities.
• Documentary Requirements: Essential documents include Commercial Invoices, Packing Lists, Bills of Lading, Certificates of Origin, and relevant customs declarations.
• Compliance with Foreign Exchange Regulations: Exporters must adhere to Foreign Exchange Management Act (FEMA) guidelines regarding foreign exchange transactions and reporting.
• Insurance and Risk Cover: Export Credit Guarantee Corporation (ECGC) provides insurance coverage against various export risks.
• Customs Clearance: Procedures for customs clearance involve submitting shipping bills, obtaining customs permits, and complying with export control regulations.

Formalities by a Forwarding Agent

• Agents must furnish all necessary product information to the shipping company, including type, quantity, and weight.
• The forwarding agent must prepare a shipping bill/order.
• The forwarding agency is responsible for obtaining duplicate port challans and settling associated fees.
• The ship's captain is responsible for overseeing goods loading onto the ship. This process must occur in the presence of customs authorities and by the shipping order.
• Upon completion of loading, the ship’s master issues a receipt for the goods.

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Preparation for Executing an Order

• Marking and Packing : Goods must be marked and packed according to the importer's specifications to ensure safe transportation and compliance with regulatory standards.
• Inspection Certification : It is essential to obtain an inspection certificate from the Export Inspection Agency. This certificate verifies that the goods meet quality and safety standards before shipment.
• Insurance Coverage : To protect against potential risks during transit, it is necessary to secure insurance policies from entities like the Export Credit Guarantee Corporation (ECGC) and marine insurance providers.
• Forwarding Agent Appointment : Selecting and appointing a forwarding agent, also known as a customs house agent, who will handle customs clearance and related logistical matters.
• Documentation Preparation : Ensure all necessary export documentation, including the Commercial Invoice, Packing List, Certificate of Origin, and any required permits, are prepared accurately and in compliance with regulations.

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