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EXPORT PROCEDURE

 The selling of goods outside the national borders is known as the process of exporting. Its process is an extremely time taking one with a whopping 17 steps involved. Here it goes.

 

1.RECEIPT OF ENQUIRY AND SENDING QUOTATION

The buyer firstly sends out enquiries to the prospective exporters regarding the goods that he requires. As the exporter receives it, he replies to it through a quotation or ‘Performa Invoice’ where all the details asked by the importer about the goods are mentioned.

 

2.RECEIPT OF ORDER

If the importer is satisfied with all the details and is ready to import goods, he places an order to the exporter either directly or through a middleman. This order or indent contains all the information regarding the goods like quality, quantity, price, date and time, mode of payment, packaging instructions and more.

 

3.SECURING A GUARANTEE FOR PAYMENT

The exporter needs surety that his payment would be made safely by the importer and that he is in a good financial position. To ensure this, the exporter demands a ‘Letter of Credit’ (LOC) which is issued by the importer’s bank that guarantees that the importer is in a good financial position to meet his payments.

 

4.EXPORT LICENSE AND IEC NUMBER

After the assurance of his payment, he must move on with the formalities of the procedure. In India, an exporter must have an export license because exporting is subject to the customs law. Also, he needs to obtain an ‘Import Export Code’ (IEC) from the ‘Directorate General Foreign Trade’ (DGFT) since this number is mentioned on almost every document.

 

5.PRE-SHIPMENT FINANCE

After the license has been received, the exporter moves to his banker to obtain pre-shipment finance which is required for the procurement of raw materials for the production and processing, packaging materials and transportation of goods.

 

6.PROCUREMENT OF GOODS

After the finance, the exporter either obtains raw materials for the production of the goods as per demanded by the importer or simply purchase the goods from the market to export.

 

7.PRE-SHIPMENT INSPECTION

In India, there is an ‘Export Quality Control and Inspection Act, 1963’ according to which certain goods needs complete inspection before being exported. If the exporters goods falls under this category then he has to inform the ‘Export Inspection Agency’ (EIA) which inspects and ensures that the goods are as per demanded by the importer. After this, they issue a ‘certificate of inspection’ which has to be sent to the importer along with other documents.

 

8.EXCISE CLEARANCE

According to the Central Excise Tariff Act, an excise duty must be paid by a manufacturer to produce goods in the country. The exporter contacts the Excise Commissioner regarding this and when the Commissioner is satisfied, he issues an excise clearance. However, this duty is returned to the manufacturer if the goods are supposed to be exported. This return is known as ‘duty drawback’.

 

9.CERTIFICATE OF ORIGIN

There are some tariff concessions allowed in some countries to export goods. In order to obtain these benefits, the importer might ask for a ‘certificate of origin’ to prove sure that the goods have been produced in the country from where they are being imported.

 

10.RESERVATION OF SHIPPING SPACE

The exporter needs to apply at a shipping company to reserve a ship for the consignment. After the application has been approved, the company issues a ‘shipping order’ which is a document containing instructions for the captain of the ship to deliver the specified goods after the customs clearance at the assigned port.

 

11.PACKING AND FORWARDING

A ‘packing list’ is a statement that contains the details of the number of packs being shipped and the number of products in each pack. This list gives information about the nature of the hoods being exported. After this, the exporter sends the consignment to the port through road or railway. If railway is chosen as the medium then, a ‘railway receipt’ (RR) is issued by the railway authorities which is endorsed in the favor of the exporter’s agent who will receive the goods from the railway station at the port.

 

12.INSURANCE OF GOODS

The exporter then gets the goods insured by an insurance company to protect them from any damage or risk of loss due to the calamities of ocean during the transportation.

 

13.CUSTOMS CLEARANCE

For the customs clearance, the exporter must prepare a ‘shipping bill’. This bill is the main document on the basis of which the permission to export the goods is granted by the customs office. After this bill, the port superintendent is approached for ‘carting order’ which is an instruction to the staff at the gate of the port to permit an entry of the cargo in the dock.

 

14.MATE’S RECEIPT

The goods are then loaded on the ship and the captain of the ship or his mate (assistant) issues a receipt to the port superintendent known as the ‘mate’s receipt’ which contains the information regarding the name of the ship, date of shipment, description etc.. If the captain is not satisfied with the packaging of the goods, then he may issue a ‘foul receipt’. The insurance company may not bear the liability for the loss in case the exporter has received a foul receipt.

 

15.ISSUANCE OF BILL OF LADING

Next, the exporter hands this receipt to the shipping company which then calculated the freight charges and issues a ‘bill of lading’ which is a document that serves as a proof that the shipping company has accepted the goods for carrying it to the appointed port.

 

16.INVOICE PREPARATION

After the goods are exported, the exporter creates an invoice of the exported goods. This invoice contains information regarding the quantity of the goods exported and the amount to be paid by the importer for the delivery.

 

17.SECURING PAYMENT

After the goods are shipped, the importer is informed about it by the exporter. The importer then needs to get the goods customs cleared in order to claim them for which he needs various documents. These documents are sent to the importer by the exporter’s banker only when the importer accepts the ‘bill of exchange’ which secures the payment of the goods.