Export Processing – Step By Step 2

Step I Seller contacts a Buyer after studying the market 3

Step II Check on the Regulatory Controls in your own country and in Importer’s country Forex restrictions? Ask Importer to obtain licence Objective is to account for movement of goods and forex, protect economic, political, culturaland other interests and to properly implement bilateral and multilateral trade agreements So the exporter should ensure that s/he seeks permission from all the competent authorities before sending a formal offer 4

Foreign Trade (dev and Regulation) Act 1992 Office of DGFT brings out EXIM policy Determines whether export is prohibited, whether product is subject to quota restrictions or licensing arrangements, or it is to be canalised through some public channel Is there some floor price provision for the product? Under quota restricted products exporter is advised to enter this in contract that it is subject to availability from the concerned department 5

FEMA 6

Acknowledgement of the Offer Usually in the form of an invoice, should contain: Expected date of shipment from factory to port Price and credit terms in acc with the quotation Method of shipment – Air/ Ship/ Courier Method of packing, labeling, marking Specify whether exp/imp license is to be obtained Name of bank for negotiating the documents Mention if any specific bank is preferred for issuing L/C Any other instructions that will be adhered to as per the customer’s needs 7

Step IV After receiving final order: Apply for Importer-Exporter Code No. from DGFT Have a PAN no allotted from IT authorities RCMC (Reg-Cum-Membership Certificate) from concerned Promotion Agency Apply for exp license / quota/ import license from the chief Controller of Import and Export (CCIE) Give instructions to your suppliers/ factory to proceed 8

Step V Arrange for Excise Clearance Inform the Central Excise and arrange for clearance either under clearance under bond or after payment of excise duties 9

Step VI Apply to Export Inspection Council for Pre-shipment Inspection to obtain Certificate of inspection 10

Step VII Apply to RBI Fill in Exch control declaration forms; GR Softex Submit to RBI 11

Step VIII Apply for Maritime Insurance if necessary (cif) Obtain ECGC cover Obtain Certificate of Origin / Consular Invoice if necessary 12

Step IX Dispatch Documents to Forwarding Agents with instructions Then dispatch the goods from factory 13

Step X Shipment of Export cargo by completing all port procedures Customs clearance Quality control Shipping – loading on ship, etc 14

Step XI Obtain Bill of Lading (B/L) Send shipment advice to Importer 15

Step XII Present documents to Bank for negotiation and collection of payments 16

Step XIII Apply for excise rebates ( where applicable) to Maritime Collector of Central Excise And obtain Duty Drawbacks (excise and imports) 17

Step XIV Apply for incentives, reliefs (cash, Import replenishments, etc) 18

Procedure for Export Cargo Clearance

Procedure for Import Cargo Clearance

EXPORT-IMPORT PROCEDURE 21

Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit). Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary). 22

Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advise, and usually to confirm, the credit. Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit. If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier. 23

Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate. Bank, if other than the issuing bank, sends the documents and draft to the issuing bank. Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit. 24

Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. Documents released to Buyer after payment, or on other terms agreed between the bank and Buyer. Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order. 25

Schematic diagram – Processing of an Export Order 26