Unit 5 EXPORT PROCEDURES Dr. D RAVINDRAN PROCEDURE FOR EXPORT OF GOODS ◼ Open a current account in any one of the scheduled banks that deal with foreign exchange ◼ Obtain an import – export code number from regional licensing authority, director of DGFT(Directorate General of Foreign Trade), dept of commerce ◼ Registration with export promotion council, commodity board, export development authority. Obtain from them a registration cum membership certificate ◼ Get the names of importers and correspond giving details of your product – information of importers can be sought from EP council, commodity board, export development authority, director general of commercial intelligence and statistics, high commissions etc If you receive a reply send quotation ; which should include - ◼ PROCEDURE FOR EXPORT OF GOODS 1. 2. 3. 4. 5. 6. 7. ◼ ◼ ◼ FOB/CIF/C & F, FAS prices Period of delivery Mode of payment Packing and specifications Commission or discount Arbitration clause Any other clause If the quotation is acceptable, importer will place an order Prepare for the production of goods Get goods inspected under the quality control and preshipment inspection – export inspection agency, AGMARK, etc PROCEDURE FOR EXPORT OF GOODS ◼ ◼ ◼ ◼ ◼ ◼ ◼ Send the goods to the port and ask the clearing and forwarding agents to get the goods cleared by the customs You or the C&F agent must file the shipping bill, GR form with the customs Customs officials inspection and verification After LET SHIP or LET EXPORT, the goods can be loaded After accepting the goods on board the ship the captain or the first officer will issue the MATE RECEIPT Pay port charges You must prepare/obtain the export documents: Export-Import Documentation COMMERCIAL INVOICE 2. GR FORM PP/EP/VP/COD 3. CERTIFICATE OF ORIGIN 4. CERTIFICATE OF ORIGIN UNDER GSP 5. MARINE INSURANCE POLICY 6. ECGC POLICY 7. MATE RECEIPT/ BILL OF LADING 8. LETTER OF CREDIT/DA/DP BILL OF EXCHANGE 9. CERTIFICATE OF QUALITY CONTROL AUTHORITIES 10. SHIPPING BILL 11. GR FORM 12. EP/PP/VP/COD FORM 13.CERTIFICATE OF QUALITY CONTROL 14. CERTIFICATE OF HEALTH OR A SANITARY CERTIFICATE 15. PACKING LIST 16. OTHER DOCUMENTS-COMBINED TRANSPORT DOCUMENTS ◼ WEIGHT CERTIFICATE ◼ CERTIFICATE OF ANALYSIS ◼ CERTIFICATE OF INSPECTION ◼ CERTIFICATE OF SHIPMENT ◼ IMPORTER – EXPORTED CODE NUMBER ◼ RCMC(REGISTRATION CUM MEMBERSHIP CERTIFICATE) 1. ◼ ◼ ◼ ◼ Send the shipping advice to the importer Get the export proceeds from the bank Get the duty drawback from the customs and other assistance Calculate export price based on marginal cost. EXPORT – IMPORT DOCUMENTATION 1.COMMERCIAL INVOICE – it is the seller’s bill for the goods and sets forth the terms of sale. Invoice should contain the names of buyer and seller, the order or contract number, description –quantity and quality of goods, value per unit, total price etc. 2. MATE RECEIPT – when the cargo is loaded on the ship, the commanding officer of the ship will issue a receipt called the mate receipt for the goods loaded. 3. BILL OF LADING – is a document issued and signed by the shipping company acknowledging that the goods mentioned in the bill have been duly received for shipment and undertaking to deliver the goods In the like order 4. AIRWAY BILL – If the goods are sent by air the exporter has to obtain the airway bill in the place of bill of lading. 5. BILLS OF EXCHANGE – it is a document of payment for the goods exported. It is the means of collecting money through banking channels and also a method of payment by credit. 6. LETTER OF CREDIT – is a letter issued by the overseas importers bank and addressed to the exporter or its Indian corresponding bank for payment provided the exporter meets the terms and conditions of contract as indicated in the letter of credit 7. CERTIFICATE OF ORIGIN ISSUED BY THE CHAMBER OF COMMERCE – the exporter has to obtain a certificate of origin from any recognized chamber of commerce or any trade association which has been duly authorized by the government of India to issue certificate of origin. 8. CERTIFICATE OF ORIGIN UNDER G.S.P the exporters who ship goods to developed countries which have agreed to give tariff concession should also obtain a certificate of origin under the Generalized System of Preferences. 9. MARINE INSURANCE a marine insurance policy is a contract between the insurer and the insured whereby the former in consideration of the payment of a premium by the latter against loss incurred by him in respect of goods exposed to perils of the sea or to the particular perils insured against. 10. SHIPPING BILL – The exporter has to prepare a shipping bill which may either be for free goods. Sometimes instead of an export license, endorsement can be had on the shipping bill itself. 11. GR FORM – GR form has been prescribed by the RBI to ensure that the foreign exchange receipts in respect of exports are repatriated to India 12. EP/PP/VP/COD FORM – Exports to all countries by parcel post under arrangements to realize the proceeds through postal channels on value payable or cash on delivery basis should be declared on VP/COD forms 13. CERTIFICATE OF QUALITY CONTROL – In order to create an image of quality in the foreign markets the government of India have launched a detailed programme of quality control and pre shipment inspection under the export (quality control and inspection) act 1963. 14. CERTIFICATE OF HEALTH OR A SANITARY CERTIFICATE – many countries require a certificate of health or a sanitary certificate when animals , animal products, plants and plant products etc are shipped. 15. PACKING LIST – the exporter must prepare an accurate packing list showing item by item the contents of the container or cases to enable the receiver to check the contents of the shipment. 16. OTHER DOCUMENTS – ◼ Combined transport documents ◼ Weight certificate ◼ Certificate of analysis ◼ Certificate of inspection ◼ Certificate of shipment ◼ Importer – exported code number ◼ RCMC(Registration Cum Membership Certificate) ROLE OF ECGC – EXPORT CREDIT AND GUARANTEE CORPORATION The export credit and guarantee corporation is a Government of India undertaking which covers the exports against risks. ECGC also provides guarantees to the financing banks to enable them to provide adequate finance to the exporters The covers issued by ECGC may be divided broadly into four groups: ◼ Standard policies issued to exporters to protect them against the risk of receiving payments while trading with overseas buyers on short term credit ◼ Specific policies designed to protect Indian firms against the risk of not receiving payments in respect of: a) Export on deferred payment terms b) Services rendered to foreign parties c) Construction work undertaken abroad ◼ ◼ Financing guarantees issued to banks against the risks involves in providing credit to exporters; and Special schemes viz transfer guarantee, insurance cover for buyer’s credit, line of credit, joint ventures and overseas investment. BASIC PRINCIPLES ON WHICH ECGC OPERATES: ◼ Spread of risks ◼ An Exporter is a co-insurer SPECIFIC POLICIES SMALL EXPORTER’S POLICIES FINANCIAL GUARANTEE TO BANKS To meet the varying needs of exporters, the corporation has evolved the following types of guarantees: ◼ Packing credit guarantee ◼ Export production finance guarantee ◼ Post-shipment export credit guarantee ◼ Export finance guarantee ◼ Export performance guarantee ◼ Export finance (overseas) lending guarantee. ROLE OF EXIM BANK OF INDIA OBECTIVES: The EXIM bank was set up by th government of India in 1982 as a public sector financial institution under an act passed in parliament for the purpose of financing, facilitating, and promoting foreign trade in India. The EXIM bank is managed by a BOD’s with representation from government financial institutions, banks and business community. FUNCTIONS OF THE BANK: 1. ◼ ◼ ◼ ◼ ◼ ◼ ◼ ◼ ◼ ◼ ◼ ◼ LENDING PROGRAMS TO EXPORTERS Suppliers credit Finance for consultancy and technology services Pre shipment credit Finance for deemed exports Foreign currency pre shipment credit Finance for EOU AND EPZ’s Export vendor development finance Export product development finance Overseas investment finance Software training institute Export marketing finance Production equipment finance 2) SERVICES OFFERED TO INDIAN EXPORTERS: ◼ Underwriting ◼ Forfeiting(Financing that enables exporters to receive cash by selling) ◼ Guarantee facility ◼ Line of credit transactions ◼ Project preparatory services overseas. 3) FOR COMMERCIAL BANKS: ◼ Refinance for export credit ◼ SSI export bills rediscounting ◼ Refinance for term loans ◼ Bulk import finance ◼ Guarantee cum refinance suppliers credit 4) OVERSEAS ENTITIES : ◼ Lines of credit ◼ Buyer’s credit 5) OTHER ACTIVITIES OF THE BANK: ◼ Export Marketing fund ◼ Helps Indian companies set up subsidiaries and JV’s ◼ Information to potential exporters ◼ Help in preparing bids ◼ Term finance for developing and launching new products ◼ Extends advisory and information services ◼ Up gradation of quality standards ◼ Provides information from data bases ◼ 1. Pre Export / Import Documents and procedure ◼ 2. Home Country Regulations(supplier) ◼ 3. Receiving Country Regulations ◼ 4. Certifications and licensing ◼ 5. Post Export/Import Documentation Process ◼ 6. Opportunities and Challenges ◼ (Consider Legal, Intermediary, Currency, Trading policies)
