Export Procedure and Documentation (Notes IM 24 Dec 2020)

Export Procedure and Documentation

Export Procedure

Export is one of the major components of international trade. Exports facilitate international trade and stimulate domestic economic activity by creating employment, production, and revenues. Businesses export goods and services where they have a competitive advantage.

 

Introduction

India is amongst the world’s top 20 nations with respect to the export of merchandise. With the increased liberalisation of trade by the Indian Government, there’s an abundant opportunity for establishing a profitable export business. For undertaking an export business, an entrepreneur should have a clear understanding of the rules and regulations along with the documentation pertaining to these export transactions.

 

Governing Authorities

Exports are governed by Foreign Trade (Development & Regulation) Act, 1992 and Export-Import (EXIM) Policy. Directorate General of Foreign Trade (DGFT) is the primary governing body responsible for the export and import policies in the country. Since an export trade has to follow a specific set of procedures from receiving inquiries to completion of the transaction, exporters need to get themselves registered with these authorities for ensuring all the legal formalities as required by them are met and also for receiving incentives which are allowed under the export promotion schemes. The Reserve Bank of India (RBI) guidelines have to be met by the exporter. An exporter also requires an Import-Export Code Number from the concerned regional licensing authority.

 

Export Procedure

In general, an export procedure flows as stated below:

 

Step 1. Receipt of an Order

The exporter of goods is required to register with various authorities such as the income tax department and Reserve Bank of India (RBI). In addition to this, the exporter has to appoint agents who can collect orders from foreign customers (importer). The Indian exporter receives orders either directly from the importer or through indent houses.

 

Step 2. Obtaining License and Quota

After getting the order from the importer, the Indian exporter is required to secure an export license from the Government of India, for which the exporter has to apply to the Export Trade Control Authority and get a valid license. The quota is referred to as the permitted total quantity of goods that can be exported.

 

Step 3. Letter of Credit

The exporter of the goods generally asks the importer for the letter of credit, or sometimes the importer himself sends the letter of credit along with the order.

 

Step 4. Fixing the Exchange Rate

Foreign exchange rate signifies the rate at which the home currency can be exchanged with the foreign currency i.e. the rate of the Indian rupee against the American Dollar. The foreign exchange rate fluctuates from time to time. Thus, the importer and exporter fix the exchange rate mutually.

 

Step 5. Foreign Exchange Formalities

An Indian exporter has to comply with certain foreign exchange formalities under exchange control regulations. As per the Foreign Exchange Regulation Act of India (FERA), every exporter of the goods is required to furnish a declaration in the form prescribed in a manner.

The declaration states: -

I. The foreign exchange earned by the exporter on exports is required to be disposed of in the manner specified by RBI and within the specified period.
II. Shipping documents and negotiations are required to be done through authorized dealers in foreign exchange.

III. The payment against the goods exported will be collected through only approved methods.

 

Step 6. Preparation for Executing the Order

The exporter should make required arrangements for executing the order:
I. Marking and packing of the goods to be exported as per the importer’s specifications.
II. Getting the inspection certificate from the Export Inspection Agency by arranging the pre-shipment inspection.

III. Obtaining insurance policy from the Export Credit Guarantee Corporation (ECGC) to get protection against the credit risks.

IV. Obtaining a marine insurance policy as required.

V. Appointing a forwarding agent (also known as custom house agent) for handling the customs and other related matters.

 

Step 7. Formalities by a Forwarding Agent

The formalities to be performed by the agent include –
I. For exporting the goods, the forwarding agent first obtains a permit from the customs department.
II. He must disclose all the required details of the goods to be exported such as nature, quantity, and weight to the shipping company.

III. The forwarding agent has to prepare a shipping bill/order.

IV. The forwarding agent is required to make two copies of the port challans and pays the dues.

V. The master of the ship is responsible for the loading of the goods on the ship. The loading is to be done on the basis of the shipping order in the presence of customs officers.
VI. Once the goods are loaded on the ship, the master of the ship issues a receipt for the same.

 

Step 8. Bill of Lading

The Indian exporter of the goods approaches the shipping company and presents the receipt copy issued by the master of the ship and in return gets the Bill of Lading. Bill of lading is an official receipt which provides the full description of the goods loaded on the ship and the name of the port of destination.

 

Step 9. Shipment Advise to the Importer

The Indian exporter sends shipment advice to the importer of the goods so that the importer gets informed about the dispatch of the goods. The exporter sends a copy of the packing list, a non-negotiable copy of the Bill of Lading, and commercial invoice along with the advice note.

 

Step 10. Presentation of Documents to the Bank

The Indian exporter confirms that he possesses all necessary shipping documents namely;
Marine Insurance Policy

The Consular Invoice

Certificate of Origin

The Commercial Invoice

The Bill of Lading

Then the exporter draws a Bill of Exchange on the basis of the commercial invoice. The Bill of Exchange along with these documents is called Documentary Bill of Exchange. The exporter then hands over the same to his bank.

 

 

Step 11. The Realization of Export Proceeds

In order to realize the proceeds of the export, the exporter of the goods has to undergo specific banking formalities. On submission of the bill of exchange, these formalities are initiated. Generally, the exporter receives payment in foreign exchange.

 

The export documents can be classified into four types:

 

(a) Regulatory Documents:

Refers to the pre-shipment documents prescribed by the exporting country. The compliance of these documents is mandatory for an export contract.

The regulatory documents include:

i. Shipping bill

ii. Export application prescribed by port authorities

iii. Insurance payment certificate

iv. Excise gate pass for clearance of goods

 

(b) Export Assistance Documents:

Involve those documents that are required for getting government assistance, such as subsidies. It includes documents, such as export-import contract and certificate of quality control.

 

(c) Documents prescribed by importer’s country:

Include pre-inspection, quality approval, and child labor norms related documents. The importer insists the exporter to submit these documents to fulfill the laws and regulations of the importer’s country. The export documents are necessary from the stage when the exporter receives the order till the final stage when he/she gets the payment from the importer. These documents help in the regulation of trade and facilitation of export operation.

 

(d) Commercial Documents:

Refer to those documents that are important for transferring the ownership from the exporter to the importer. These documents are necessary to meet the rules of the export trade.

The documents include the following:

i. Bills of exchange

ii. Letter of credit

iii. Marine insurance policy

iv. Bills of lading

v. Shipping instructions

vi. Shipping order

vii. Inspection documents

viii. Certificate of origin of goods

 

Documents Required for Export Customs Clearance

The type of documents required for customs clearance usually depends on the type of goods being shipped. It may also vary depending on the country of origin and the destination of the cargo. However, as a thumb rule, there are a set of general documents that most businesses need to comply with when importing or exporting goods.

 

List of Documents required for Exports Customs Clearance

Pro Forma Invoice

Customs Packing List

Country of Origin or COO Certificate

Customs Invoice

Shipping Bill

Bill of Lading

Bill of Sight

Letter of Credit

Bill of Exchange

Export License

Warehouse Receipt

Health Certificates

Explanation of these documents as given below.

 

1. Pro Forma Invoice

The Pro Forma Invoice documents the intention of the exporter to sell a predetermined quantity of goods or products. This invoice is generated as per the outlined terms and conditions agreed upon between the exporter and the importer, through a recognized medium of communication such as email, fax, telephone or in person. It is similar to a ‘Purchase Order’, which is issued prior to completing the sales transaction.

 

2. Customs Packing List

The customs packing list states the list of items included in the shipment that can be matched against the pro forma invoice by any concerned party involved in the transaction. This list is sent along with the international shipment and is especially convenient for transportation companies as they know exactly what is being shipped. Individual customs packing lists are secured outside each individual container to minimise the risk of exporting incorrect cargo internationally.

 

3. Country of Origin or COO Certificate

The Country of Origin Certificate is a declaration issued by the exporter that certifies that the goods being shipped have been completely acquired, produced, manufactured or processed in a particular country.

 

4. Customs Invoice

A customs invoice is a mandatory document for any export trade. The customs clearance department will ask for this document first as it contains information about the order, including details such as description, selling price, quantity, packaging costs, weight or volume of the goods to determine customs import value at the destination port, freight insurance, terms of delivery and payment, etc. A customs representative will match this information with the order and decide whether to clear this for forwarding or not.

 

5. Shipping Bill

A shipping bill is a traditional report where the downside is asserted and primarily serves as a measurable record. This can be submitted through a custom online software system (ICEGATE). To obtain the shipping bill, the exporter will need the following documents:

·                        GR Forms for shipment to all the countries

·                        Packing list (with various details such as information about the content, quantity, the gross and net weight of each package)

·                           Export License

·                           Indent

·                           Acceptance of Contract

·                           Invoices (with all relevant information such as the number of packages, quantity, price, correct specification of goods, etc.)

·                           Purchase Order

·                           Letter of Credit

·                           AR4 and Invoice

·                           Examination or QC Certificate

·                           Port Trust document

 

6. Bill of Lading

Bill of Lading is a legal document issued by the carrier to the shipper. It acts as evidence of the contract for transport for goods and products, mentioned in the bill provided by the carrier. It also includes product information such as type, quantity, and destination that the goods are being carried to. This bill can also be treated as a shipment receipt at the port of destination where it must be produced to the customs official for clearance by the exporter. Regardless of the form of transportation, this is a must-have document that should accompany the goods and must be duly signed by the authorized representative from the carrier, shipper, and receiver. The Bill of Lading comes in handy if there is any asset theft.

 

7. Bill of Sight

Bill of Sight is a declaration from the exporter made to the customs department in case the receiver is unsure of the nature of goods being shipped. The Bill of Sight permits the receiver of goods to inspect them before making payments towards applicable duties. Applying for a bill of sight becomes necessary as it acts as a substitute document if the exporter does not have all the must-have information and documents needed for the bill of entry. Along with the bill of sight, the exporter also needs to submit a letter that allows for the clearance of goods by customs.

 

8. Letter of Credit

Letter of credit is shared by the importer’s bank, stating that the importer will honour payment to the exporter of the sum specified to complete the transaction. Depending on the terms of payment between the exporter and importer, the order is dispatched only after the exporter has this letter of credit.

 

9.Bill of Exchange

Bill of Exchange is an alternative payment option where the importer is to clear payments for goods received from the exporter either on-demand or at a fixed or determinable future. It is similar to promissory notes that can be drawn by banks or individuals. You can even transfer a Bill of Exchange by endorsement.

 

10. Export License

Businesses must have an export license that they can provide to customs in order to export or forward any products. This only needs to be produced when the shipper is exporting goods to an international destination for the very first time. This type of license may vary depending on the type of export you intend to make. This can be done by applying with the licensing authority, and the permit is eventually issued by the Chief Controller of Exports and Imports.

 

11. Warehouse Receipt

Warehouse Receipt receipt is generated once the exporter has cleared all relevant export duties and freight charges post customs clearance. This is needed only when an ICD in involved.

 

12. Health Certificates

Health Certificate is applicable only when there are food products that are of animal or non-animal origin involved in international trade. The document certifies that the food contained in the shipment is fit for consumption by humans and has been vetted to meet all standards of safety, rules and regulations prior to exporting. This certificate is issued by authorised governmental organisations from where the shipment originates.

Although these documents are generally common submissions, additional documents may be required in certain cases. For example, industrial license, test report, insurance certificate, GATT declaration, registration cum membership certificate, documents for duty benefits or central excise documents could be essential for certain types of imports.

 

 

E-commerce is a low-risk business strategy for companies to use for developing an international customer base. The combination of global marketing with an Internet distribution method allows many companies to try their hand at reaching growing target markets overseas.

Internet and Global Marketing: Ecommerce on an International Scale

 

Global Internet Marketing

Going global is even easier than it has been in the past. Small entrepreneurs can market their product overseas from their living room, while large corporations have access to consumers across the world 24 hours a day by using the Internet. How is this possible? The Internet and the increasing growth of technology make it easy to reach consumers with websites. The Diaper Sponge Pants Company has recently expanded their market to both India and China. Fortunately, it has been a very easy process due to an E-commerce framework that is available. E-commerce is the buying and selling of products or services over electronic systems such as the Internet. Using the Internet to sell to international consumers is a very low risk business decision. Companies do not have to tie up huge financial investments through franchising, direct investment or brick-and-mortar stores overseas.

 

Pros of Internet and Global Marketing

The Internet and new technologies have allowed companies to easily expand to overseas markets. Diaper Sponge Pants has a dynamic website that allows international orders. It also provides a tremendous database for the company to use to build their customer base. Software has been developed to translate between languages, which makes communication with international customers easier for companies to implement. There is also software that provides currency conversions.

Global shippers, such as UPS and FedEx, help provide easy international logistics for product expansions. The biggest advantage is the ability to reach huge, growing target markets to increase corporate market share and profits. Countries such as India and China have a developing middle class with a large disposable income. The market is ripe for American companies to promote their products and services for long-term growth opportunities. It is very easy to customize websites for each international country, which can reflect local customs, currency and advertising messages.

 

Cons of Internet and Global Marketing

Along with advantages, there are also disadvantages and issues for companies who use E-commerce. Diaper Sponge Pants Company had an unconditional refund policy that they offer as part of their promotional mix. They have run into an issue when trying to sell their diapers with that promotion in Germany. Evidently, Germany has a maximum 14-day return policy, due to a court issued ruling. This law made it difficult for Diaper Sponge Pants to promote their unconditional refund policy.

 

Internet Marketing Definition & Meaning

Internet marketing is the process of promoting a brand or business and its products or services to customers through digital channels such as search engines, email, websites, and social media. It's used to help drive traffic, leads, and sales for the business. The term is all-inclusive and includes a wide range of types, strategies, and tactics to engage with customers.

 

Types of internet marketing

There's a myriad of internet marketing types that encompass different tactics and strategies, and the types listed below are not exhaustive. These types of marketing complement one another and are most effective when used together.

 

Search Engine Optimization (SEO)

SEO is the process of adjusting a website and digital content to improve its organic or "natural" placement in search rankings. The higher a webpage ranks, the more likely it is to be viewed by a potential customer. Search engines (specifically Google) use crawler bots (sometimes called spiders) to crawl the internet and build an index of the content available online. When a user searches a keyword, the search engine will provide the most relevant information.

There are two types of SEO: on-page and off-page. On-page SEO is the manipulations made directly to a web page to increase search engine ranking. It involves optimizing HTML code, content quality, and content structure. Off-page SEO is the SEO practices that take place outside of the website itself, such as backlinks, link relevancy, and social signals.

 

Content marketing

Content marketing is the creation and distribution of relevant online content in a way that's strategically designed to attract and convert consumers. It focuses on communicating with customers rather than selling and is usually better received. Forms of content marketing include blog posts, infographics, ebooks, podcasts, case studies, and webinars.

 

Social media marketing

Social media marketing is the use of social media platforms to improve customer engagement and promote a brand. While it doesn't necessarily drive sales, social media marketing increases engagement, builds links, and expands brand awareness. Popular social media platforms used for marketing include Facebook, Instagram, and Twitter.

 

Influencer marketing

One of the newer types of internet marketing, influencer marketing uses influencers, or someone with a large social following, to promote their product or service for a price. This can be highly effective if the influencer is in line with a company's values and resonates with the company's customers.

 

Email marketing

Email marketing is the process of using email to send direct marketing messages to consumers in an attempt to gain new customers and retain existing ones. It's one of the most cost-effective types of marketing and can be used to reach both a wide network of customers or a very niche one.

 

Affiliate marketing

Affiliate marketing describes any revenue-sharing plan where an online automated marketing program lets bloggers and website owners place an advertiser's banner ads, buttons, or other advertising media on their own website. This could also be in the form of promoting a product through a blog or video. A payment is received for every sale made through a link.

 

Paid advertising

Paid advertising is when advertisers pay to show their advertisements of search engines and other online platforms. This is often referred to as Pay Per Click (PPC), meaning advertisers will pay a fee each time a user clicks on one of their ads. However, advertisers are now charged in different ways depending on their marketing objectives. Other means of charging include cost per thousand impressions, cost per view, and cost per action.

 

Internet marketing strategies

A strong internet marketing strategy can attract new customers and create consumers who are loyal to your brand. Strategies include investing in creating a user-friendly website, optimizing your website for search engines to increase traffic, creating social media campaigns that build customer engagement, and writing press releases to increase online coverage.