Export Procedure
1. Receipt of enquiry and sending quotations:
The prospective buyer of a product sends an enquiry to different exporters requesting them to send information about price, quality, terms of payment, etc. The exporter sends a reply to the enquiry in the form of a quotation referred to as a proforma invoice.
2. Receipt of order or indent:
If the buyer is satisfied with the export price and other terms and conditions, he places the order or indent for the goods.
3. Assessing importer’s creditworthiness and securing a guarantee for payments:
After receipt of the indent, the exporter makes a necessary enquiry about the creditworthiness of the importer. To minimise the risk, most exporters demand a letter of credit from the importer.
4. Obtaining an export license:
The exporter must apply for an export license to the appropriate authority. The following procedure is followed for obtaining the export license.
- Opening a bank account in any bank authorised by the Reserve Bank of India
- Obtaining Import Export Code (IEC) number
- Registration cum Membership Certificate (RCMC) from appropriate export promotion council
- Registering with Export Credit and Guarantee Corporation (ECGC) in order to safeguard against risks of non-payments.
5. Obtaining pre-shipment finance:
After obtaining the export license, the exporter approaches his banker in order to obtain pre-shipment finance for carrying out production.
6. Production or procurement of goods:
Exporter, after obtaining the pre-shipment finance from the bank, proceeds to get the goods ready as per the orders of the importer.
7. Pre-shipment inspection:
Quality control and pre-shipment inspection is compulsory in India as per Quality Control and Inspection Act. The inspection certificate is provided by the Export Inspection Council. The customs authority permits the shipment of goods only if there is an inspection certificate.
8. Excise clearance:
According to the Central Excise Tariff Act, excise duty on the material used in manufacturing goods is to be paid. For this purpose, the exporter applies to the concerned Excise Commissioner in the region with an invoice. But in many cases, the government exempts payment of excise duty or later on refunds it if the goods so manufactured are meant for exports. The refund of excise duty is known as duty drawback.
9. Obtaining certificate of origin:
In order to obtain Tariff concessions or other exemptions, the importer may ask the exporter to send the certificate of origin.
10. Reservation of shipping space:
The exporting firm applies to the shipping company for the provision of shipping space. Then the shipping company issues a shipping order. A shipping order is an instruction to the captain of the ship that the specified goods after their customs clearance at a designated port be received on board.
11. Packing and forwarding:
The goods are then properly packed and marked with necessary details such as name and address of the importer, gross and net weight, port of shipment and destination, country of origin, etc. The exporter then makes necessary arrangements for the transportation of goods to the port.
12. Insurance of goods:
In order to protect the goods against the risk of loss or damage the exporter gets the goods insured with an insurance company.
13. Customs clearance:
The goods must be cleared from the customs before these can be loaded on the ship. For obtaining customs clearance, the exporter prepares the shipping bill. The shipping bill contains particulars of the goods being exported, the name of the ship, the port at which goods are to be discharged, exporter’s name and address, etc. Five copies of the shipping bill along with the following documents are then submitted to the Customs Appraiser at the Customs House:
- Export Contract or Export Order
- Letter of Credit
- Commercial Invoice
- Certificate of Origin
- Certificate of Inspection, where necessary
Marine Insurance Policy
14. Obtaining mates receipt:
A mate receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on board and contains the information about the name of the vessel, berth, date of shipment, description of packages, condition of the cargo at the time of receipt on board the ship, etc.
15. Payment of freight and issuance of bill of lading:
The clearing & forwarding agent (C&F agent) hands over the mate s receipt to the shipping company for the computation of freight. After receipt of the freight, the shipping company issues a bill of lading which serves as evidence that the shipping company has accepted the goods for carrying to the designated destination.
16. Preparation of invoice:
The exporter prepares an invoice for the dispatched goods. Invoice contains information regarding the quantity of goods & sent the amount to be paid by the importer. It is duly attested by the customs.
17. Securing payment:
After the shipment of goods, the exporter informs the importer about the shipment of goods. Various documents like a certified copy of invoice, bill of lading, packing list, insurance policy, certificate of origin and letter of credit are sent by the exporter through his bank. These documents are required by the importer for getting the goods cleared from customs. The exporter gets payment from his bank on the submission of necessary documents called negotiations of the documents.
