1. Receipt of enquiry and sending quotations: The prospective buyer of a product sends an enquiry to different exporters requesting them to send information regarding price, quality and terms and conditions for export of goods.
2. Receipt of order or indent: In case the prospective buyer finds the export price and other terms and conditions acceptable, it places an order for the goods to be dispatched. This order, also known as indent, contains a description of the goods ordered, prices to the paid, delivery terms, packing and marking details and delivery instructions.
3. Assessing importer’s credit’worthiness and securing a guarantee for payments: After receipt of the indent, the exporter makes necessary enquiry about the creditworthiness of the importer. The purpose underlying the enquiry is to assess the risks of non-payment by the importer once the goods reach the import destination. To minimise such risks, most exporters demand a letter of credit from the importer.
4. Obtaining export licence: Having become assured about payments, the exporting firm initiates the steps relating to compliance of export regulations. Export of goods in India is subject to custom laws which demand that the export firm must have an export licence before it proceeds with exports.
5. Obtaining pre-shipment finance: Once a confirmed order and also a letter of credit have been received, the exporter approaches his banker for obtaining pre-shipment finance to undertake export production. Pre-shipment finance is the finance that the exporter needs for procuring raw materials and other components. processing and packing of goods and transportation of goods to the port of shipment.
6. Production or procurement of goods: Having obtained the preshipment finance from the bank, the exporter proceeds to get the goods ready as per the specifications of the importer.
7. Pre-shipment inspection: he Government of India has initiated many steps to ensure that only good quality products are exported from the country. One such step is compulsory inspection of certain products by a competent agency as designated by the government. The government has passed Export Quality Control and Inspection Act, 1963 for this purpose.
8. Excise clearance: As per central excise tariff act. excise duty is required to he paid on the materials used in the production of goods meant for export. So if the exporter desires to produce the goods meant for export by himself, he has to pay the excise duty on the material materials used in production of goods for export and obtain export clearance from the concerned excise commissioner. For obtaining export clearance from the concerned excise commissioner exporter has to follow following steps:
(i) The exporter has to apply, to the concerned Excise Commissioner in the region with an invoice because according to the Central Excise Tariff Act, excise duty is payable on the materials used in manufacturing goods. If the Excise Commissioner is satisfied, he may issue the excise clearance.
(ii) 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. This is done to provide an incentive to the exporters to export more and also to make the export products more competitive in the world markets.
