Index

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Title Introduction of study Objective of study Company profile Glossary Introduction Export Procedure Export Documentation and Container overview Foreign Trade Policy Organizations Supporting to Exporters General Foreign Trade Act

Page No. 004 004 005 009 012 014 052 087 103 108

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Introduction of Study
The project is all about to know about export import procedure and documentation of shipment. This project puts more focus on to know benefit and banking procedure. This project will also find out how Arvind private limited could sustain in the comeptitive world by exporting huge amount of goods with customer satisfaction. The purpose of the study was to know about export procedure and documentation by road/air/sea.

Objective of Study

To know about export procedure To know what are the documents required before and after shipment. To know about different type of container used in shipment. To know about banking and benefit procedure.

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Company Profile
Arvind Mills was established in 1931. It was founded by the three brothers Kasturbhai Lalbhai , Narottambhai Lalbhai and Chimanbhai Lalbhai one of the leading families of Ahmedabad. 1931 Arvind Mills Ltd. is incorporated with share capital Rs.2525000 ($55000) in Ahmedabad. Products manufactured are dhoties, sarees, mulls, dorias, crepes, shirtings,bra. panties, coatings, printed lawns & voiles cambrics, twills gaberdine etc. 1987 The Company took up a modernisation programme to triple the production of denim cloth and to produce double yarn fabrics for exports. The new product groups identified were theindigo dyed blue denim, high quality two-ply fabrics for exports, and special products such as butta sarees, full voils and dhoties. 1991 Arvind reached 100 million meters of denim per year, becoming the fourth largest producer of denim in the world. 1992 The Company increased the production of denim cloth by 23,000 tonnes per day by modernising the plant located at Khatraj of Ankur Textiles. 1993 The Company proposed to expand the denim manufacturing capacity by 85,00,00 metres per annum. The Company also proposed to set up a new composite mill for producing annually 120 lakh metres of high quality shirting fabrics to be marketed in the domestic as well as international markets. 1994 The Company's operations were divided into 3 units viz., Textile Division, telecom division and garments division. 1995 The performance of textile division was significantly affected due to an unprecedented rise in cost of cotton. Garment division launched ready to stitch jeans pack under the brand `Ruf & Tuf`.
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 1997 The marketing and distribution network of `Newport` brand was strengthened and the relaunched `Flying Machine' and 'Ruggers` brand were strengthened. The Company reported a fire in the goods godown & folding packing department in Naroda Road unit of the company. Arvind Mills sets up the anti-piracy cell for the first time in India to curb large scale counterfeiting of their highly successful brands Ruf & Tuf and Newport jeans. Arvind Mills adopts the franchisee system for the manufacture and distribution of Ruf and Tuf jeans. Arvind Fashions, doubles its capacity in the state-of-the-art manufacturing facility in Bangalore to produce Lee jeans. 1997 was also the year when arvind mills started facing serious troubles financially 1998 Arvind Mills emerges as the world's third largest manufacturer of denim. Arvind Mills goes live with SAP R/3 ERP package in April 1998 in their new manufacturing units. 1999 Arvind Mills sets a two-month deadline for hiving off its garments division into a separate company and sale of its real estate in Delhi. 2000 CRISIL downgrades the debenture issues of Arvind, indicating that the instruments were in default. 2001 Arvind Mills defaults on a $125 million floating rate note issue and puts forward a debt restructuring proposal that could significantly reduce its debt burden and sharply improve its financial health. Arvind Mills posts a net loss of Rs 44.59 crore for the quarter ended September 30, 2001. 2003 For the fourth quarter, Arvind Mills witnesses 280% growth in the net profit Arvind Mills Ltd is assigned a `P1+` rating by CRISIL, which indicates a very strong rating for their commercial paper.

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 2004 Company turns itself around showing remarkable improvement in financial performance. 2005 For the fourth quarter in a row, Arvind Mills has managed to post a profit growth in excess of 80 per cent. Arvind Mills decides to buy entire stake in Arvind Brands from ICICI Ventures. Arvind Mills does not distribute dividends to its share holders consistently.

Business :
Fabric :

Denim Shirtings Khakis Knitwear Voiles

Garment Exports :

Shirts Jeans

Arvind Brands (owned) :

Flying Machine Newport Ruf & Tuf Excalibur

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Arvind Brands (licensed) :

Arrow Lee Wrangler Gant U.S.A. Sansabelt Izod Cherokee Mossimo

In year of 2011 Arvind limited that enter in to Arvind infrastructure. It also has successfully run the Knowledge Academy (Ahmedabad University) since 2008.

Financial Restructuring :
In the mid 1990s, Arvind Mills undertook a massive expansion of its denim capacity even though other cotton fabrics were slowly replacing the demand for denim. The expansion plan was funded by loans from both Indian and overseas financial institutions. With the demand for denim slowing, Arvind Mills found it difficult to repay the loans, and thus the interest burden on the loans shot up. In the late 1990s, Arvind Mills ran into financial problems because of its debt burden, and it incurred huge losses in the late 1990s. The company came up with a massive debt-restructuring plan for the longterm debts being taken up in February 2001. This complex financial restructuring exercise, which involved several domestic and international lenders, is considered to be the benchmark and a case study in India. The restructuring was overseen by Mr Jayesh Shah, CFO and advised on by a JP Morgan Hong Kong team, led by Mr Ahmad Ayaz.

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Glossary
Acronym Explanation :
ACU AEZ ANF ARO ASIDE BG BIFR BOA BOT BRC BTP CBEC CCP CEA CEC CIF CIS CoD CoO CVD DA DoBT DC DEPB DFIA DFRC DGCI&S DGFT DIPP DoC DoE DoIT DoR DoT DTA : Asian Clearing Union : Agri Export Zone : Aayaat Niryaat Form : Advance Release Order : Assistance to States for Infrastructure Development of Exports : Bank Guarantee : Board of Industrial and Financial Reconstruction : Board of Approval : Board of Trade : Bank Realisation Certificate : Biotechnology Park : Central Board of Excise and Customs : Customs Clearance Permit : Central Excise Authority : Chartered Engineer Certificate : Cost, Insurance & Freight : Commonwealth of Independent States : Cash on Delivery : Certificate of Origin : Countervailing Duty : Document against Acceptance : Department of Bio Technology : Development Commissioner : Duty Entitlement Passbook : Duty Free Import Authorisation : Duty Free Replenishment Certificate : Director General, Commercial Intelligence & Statistics. : Director General of Foreign Trade : Department of Industrial Policy & Promotion : Department of Commerce : Department of Electronics : Department of Information Technology : Department of Revenue : Department of Tourism : Domestic Tariff Area
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EDI EEFC EFC EFT EH EHTP EIC EO EODC EOP EOU EPC EPCG EPO FDI FIEO FIRC FMS FOB FPS FTDO FTP GATS GRC HACCP HBP v1 HBP v2 ICD ICM IEC ISO ITC ITPO LoC LoI LoP LUT MAI MDA MEA

: Electronic Data Interchange : Exchange Earners Foreign Currency : Exim Facilitation Committee : Electronic Fund Transfer : Export House : Electronic Hardware Technology Park : Export Inspection Council : Export Obligation : Export Obligation Discharge Certificate : Export Obligation Period : Export Oriented Unit : Export Promotion Council : Export Promotion Capital Goods : Engineering Process Outsourcing : Foreign Direct Investment : Federation of Indian Export Organisation : Foreign Exchange Inward Remittance Certificate : Focus Market Scheme : Free On Board : Focus Product Scheme : Foreign Trade Development Officer : Foreign Trade Policy : General Agreement on Trade in Services : Grievance Redressal Committee : Hazard Analysis and Critical Control Process : Handbook of Procedures (Vol.1) : Handbook of Procedures (Vol.2) : Inland Container Depot : Indian Commercial Mission : Importer Exporter Code : International Standards Organisation : Indian Trade Classification : India Trade Promotion Organisation : Line of Credit : Letter of Intent : Letter of Permit : Legal Undertaking : Market Access Initiative : Market Development Assistance : Ministry of External Affairs
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MoD MoF NC NFE NOC PRC PTH PSU R&D RA RBI REP RCMC RSCQC S/B SHE SEZ SFIS SIA SION SSI STE STH STP TEE TH TRA TRQ VA VKGUY WHOGMP

: Ministry of Defense : Ministry of Finance : Norms Committee : Net Foreign Exchange : No Objection Certificate : Policy Relaxation Committee : Premier Trading House : Public Sector Undertaking : Research and Development : Regional Authority : Reserve Bank of India : Replenishment : Registration-cum-Membership Certificate : Regional Sub-Committee on Quality Complaints : Shipping Bill : Star Export House : Special Economic Zone : Served from India Scheme : Secretariat for Industrial Assistance : Standard Input Output Norms : Small Scale Industry : State Trading Enterprise : Star Trading House : Software Technology Park : Towns of Export Excellence : Trading House : Telegraphic Release Advice : Tariff Rate Quota : Value Addition : Vishesh Krishi and Gram Udyog Yojana : World Health Organisation Good Manufacturing Practices

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Introduction

How to Start Export is a fair question that every first time exporter wants to ask. Export in itself is a very wide concept and lot of preparations is required by an exporter before starting an export business. A key success factor in starting any export company is clear understanding and detail knowledge of products to be exported. In order to be a successful in exporting one must fully research its foreign market rather than try to tackle every market at once. The exporter should approach a market on a priority basis. Overseas design and product must be studies properly and considered carefully. Because there are specific laws dealing with International trade and foreign business, it is imperative that you familiarize yourself with state, federal, and international laws before starting your export business. In very simple terms, export may be defined as the selling of goods to a foreign country. However, As per Section 2 (e) of the India Foreign Trade Act (1992), the term export may be defined as an act of taking out of India any goods by land, sea or air and with proper transaction of money.

Why Need to Export :

There are many good reasons for exporting: The first and the primary reason for export is to earn foreign exchange. The foreign exchange not only brings profit for the exporter but also improves the economic condition of the country. Secondly, companies that export their goods are believed to be more reliable than their counterpart domestic companies assuming that exporting company has survive the test in meeting international standards.
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Thirdly, free exchange of ideas and cultural knowledge opens up immense business and trade opportunities for a company. Fourthly, as one starts visiting customers to sell ones goods, he has an opportunity to start exploring for newer customers, state-of-the-art machines and vendors in foreign lands. Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand for seasonal products. Lastly, international trade keeps an exporter more competitive and less vulnerable to the market as the exporter may have a business boom in one sector while simultaneously witnessing a bust in a different sector. No doubt that in the age of globalization and liberalizations, Export has became of the most lucrative business in India. Government of India is also supporting exporters through various incentives and schemes to promote Indian export for meeting the much needed requirements for importing modern technology and adopting new technology from MNCs through Joint ventures and collaboration.

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Export Procedure
INCOTERMS :
Incoterms are most frequently listed by category. Terms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for shipping. Eterms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some specific point. Because shipments are moving into a country, D terms usually involve the services of a customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all ports and determining who is responsible for each charge.

EXW (EX-Works) : One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, export clearance and handling all other paperwork.

FOB (Free On Board) : One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. "Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's responsibility for insurance and transportation begins at the same moment.
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FCA (Free Carrier) :

In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a predetermined port or destination point and the buyer is responsible for Insurance.

FAS (Free Alongside Ship) : In these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation.

CFR (Cost and Freight) : This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing with the actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined destination point. It is the shipper/seller's responsibility to get goods from their door to the port of destination. "Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin or port of shipment to buyer's door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder.

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CIF (Cost, Insurance and Freight) : This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder. "Delivery" as above, is accomplished at the port of destination.

CPT (Carriage Paid To) : In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has to buy cargo insurance, naming the buyer as the insured while the goods are in transit.

CIP (Carriage and Insurance Paid To) : This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the Forwarder.

DAT (Delivered At Terminal) : This term is used for any type of shipments. The shipper/seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

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DAP (Delivered At Place) : DAP term is used for any type of shipments. The shipper/seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

DDP (Delivered Duty Paid) : DDP term tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and risks including the payment of duty and fees.

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SERVICES Factory warehouse storage Labour charges in factory warehouse Export Packing Loading Charges Inland freight till airport/oceanpo rt Terminal handling charges Customs clearance at origin/Forwarder s charges Loading On Vessel Ocean/Air Freight Terminal handling charges and port charges at destination Insurance of cargo Duty, Taxes & Customs Clearance

Cost Free Insurance & Delivered Delivered Ex Works ( Free Carrier( Free Alongside Onboard ( Cost & Freight Freight ( CIF Duty Unpaid Duty Paid ( Ex-w ) FCA ) Ship(FAS ) FOB ) (C&F) ) ( DDU ) DDP )

Seller

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Seller Seller Buyer

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seller Seller Buyer

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Payterms :
T.T. : Telegraphic Transfer or cash Advance. It is the safest mode of payment as we receive the payment in advance from our consignee.You has to send the full set of original documents to the buyer as per agreed term only. This mode of payment is mostly useful for starting relationship with a new client/consignee to avoid risk. In this mode of payment 100% risk is buyers only. L/C at Sight : L/C means letter of credit. It is a guarantee, given by the buyer's bank, that they will pay for the goods exported, provided that the exporter can provide a given set of documents in accordance with clauses specified in the L/C and in a timely manner. It is also a safest mode as if the buyer does not pay the amount, their bank have to pay the amount being the guarantor. If there would be any discrepancy in the documents, buyer's bank can highlight that and they have authority to deduct the some amount that should be mention in the discrepancy clause in the L/c. L/c can be according to the days term which means the payment will be received after 45/60/90 days of bill of lading date. But the payment is secure as the bank is the guarantor. CAD : Cash Against Documents/Bill of Exchange/DP,:You have to send the documents (including the bill of lading necessary to claim the goods at the foreign port)to the buyer through your bank and they will forward those documents to a bank in the buyer's country, along with instructions on how to collect the money from the buyer.

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Method

Usual Time of Payment

Goods Available To Buyer

Risk to Seller

Risk to Buyer

Comments Seller's goods must be special in one way or another, or special circumstances prevail over normal trade practices (e.g., goods manufactured to buyeronly specification). Letters of Credit require total accuracy in conforming to terms, conditions, and documentaion. Consult your United Shipping Associate member for determining feasibility of terms and conditions.

CASH IN ADVANCE

Before shipment

After payment

None

Complete. Relies on seller to ship exactly the goods expected, as quoted and ordered

LETTER OF CREDIT (L/C) (See next two items.)

Commerical Invoice must match the L/C exactly. Dates must be carefully headed. "Stale" documents are unacceptable for collection. Assures shipment is made but relies on exporter to ship goods as described in documents. Terms may be negotiated prior to L/C agreement, alleviating buyer's degree of risk.

CONFIRED IRREVOCABLE CREDIT

After shipment is made, After documents payment presented to the bank.

Gives the seller a double assurance of payments. Depends on the terms of the letter of credit.

The inclusion of a second assurance of payment (usually a U.S. Bank) prevents surprises, and adds assurance that issuing bank has been deemed acceptable by confirming bank. Adds cost and an additional requirement to seller.

UNCONFIRMED IRREVOCABLE CREDIT

Same as above

Same as above

Seller has single bank assurance of payment and seller remains dependent on foreign bank. Seller should contact his Same as above banker to determine whether the issuing bank has sufficient assests to cover the amount. Drafts, by design,

Credit can be changed only by mutual agreement, as stipulated in a sales agreement. Becomes open account with buyer's bank as collection agent. Foreign bank may have problems making payment in sum or timeliness. A draft may be

DRAFTS

Remittance

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(See next two items.)

time from buyer's bank to seller's bank may still take one week to one month.

should contain terms and conditions mutually agreed upon.

written with virtually any term or condition agreeable to both parties. When determining draft tenor (terms and conditions), consult with your banker and freight forwarder to determine the most desirable means of doing business in a given country. A draft can be a collection instrument used to exchange possession and title to goods for payment. Seller is essentially Assures drawing a shipment but not check against content, unless the bank inspection or account of the check-in is buyer. Buyer's allowed before bank must have payment. pre-approval, or seek approval of the buyer prior to honoring the check. Payble upon presentation of documents. Payable based upon the Assures acceptance of shipment but not an obligation to content. Time of pay the seller at maturity allows a specified for adjustments, time. Although if agreed to by a time draft has seller. more collection leverage than

SIGHT DRAFT (with documents against acceptance)

On presentation of draft to buyer.

After payment to buyer's bank.

If draft not honored, goods must be returned or resold. Storage, handling, and return freight expenses may be incurred.

TIME DRAFTS (with documents against acceptance)

On maturity of the draft

Before payment, after acceptance

Relies on buyer to honor draft upon presentation.

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an invoice, it remains only a promissory note, with conditions. All terms of payment, including extra charges and terms should be mutually understood and agreed upon prior to open account initiation. Companies conducting ongoing business are candidates for open account terms of payment. Seller must measure not only buyer's credit reliability but the country's as well.

OPEN ACCOUNT

As agreed, usually by invoice

Before payment

Relies completely on None buyer to pay account as agreed

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International transaction :

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Basic Planning For Export :

The main objective of a typical export plan is to: Identifies what you want to achieve from exporting. Lists what activities you need to undertake to achieve those objectives. Includes mechanisms for reviewing and measuring progress. Helps you remain focused on your goals.

For a proper export planning following questions need to answered: Which products are selected for export development? What modifications, if any, must be made to adapt them for overseas markets? Which countries are targeted for sales development? In each country, what is the basic customer profile? What marketing and distribution channels should be used to reach customers? What special challenges pertain to each market (competition, cultural differences, import controls, etc.), and what strategy will be used to address them? How will the product's export sale price be determined? What specific operational steps must be taken and when? What will be the time frame for implementing each element of the plan? What personnel and company resources will be dedicated to exporting? What will be the cost in time and money for each element? How will results be evaluated and used to modify the plan? From the start, the plan should be viewed and written as a management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. The company should not hesitate to modify the plan and make it more specific as new information and experience are gained.

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Some "Do's and Don'ts of Export Planning : DO ensure your key staff members are signed on to the Plan. DO seek good advice and test your Export Plan with advisers. DO review the Export Plan regularly with your staff and advisers. DO assign responsibility to staff for individual tasks. DO create scenarios for changed circumstances look at the what ifs for changes in the market environment from minor to major shifts in settings. e.g. changes of government, new import taxes. DO develop an integrated timeline that draws together the activities that make up the Export Plan. DO make sure that you have the human and financial resources necessary to execute the Export Plan. Ensure existing customers are not neglected. DONT use unrealistic timelines. Review them regularly they often slip. DONT create a bulky document that remains static.

Identifying Export Product : A key factor in any export business is clear understanding and detail knowledge of products to be exported. The selected product must be in demand in the countries where it is to be exported. Before making any selection, one should also consider the various government policies associated with the export of a particular product. There are products that sell more often than other product in international market. It is not very difficult to find them from various market research tools. However, such products will invariably have more sellers and consequently more competition and fewer margins. On the other hand - a niche product may have less competition and higher margin - but there will be far less buyers. Fact of the matter is - all products sell, though in varying degrees and there are positive as well as flip sides in whatever decision you take - popular or niche product.

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Key Factors in Product Selection : The product should be manufactured or sourced with consistent standard quality, comparable to your competitors. ISO or equivalent certification helps in selling the product in the international market. If possible, avoid products which are monopoly of one or few suppliers. If you are the manufacturer - make sure sufficient capacity is available inhouse or you have the wherewithal to outsource it at short notice. Timely supply is a key success factor in export business The price of the exported product should not fluctuate very often threatening profitability to the export business. Strictly check the government policies related to the export of a particular product. Though there are very few restrictions in export - it is better to check regulatory status of your selected product. Carefully study the various government incentive schemes and tax exemption like duty drawback and DEPB. Import regulation in overseas markets, specially tariff and non-tariff barriers. Though a major non-tariff barrier (textile quota) has been abolished - there are still other tariff and non-tariff barriers. If your product attracts higher duty in target country - demand obviously falls. Registration/Special provision for your products in importing country. This is specially applicable for processed food and beverages, drugs and chemicals. Seasonal vagaries of selected products as some products sell in summer, while others in winter. Festive season is also important factor, for example certain products are more sellable only during Christmas. Keep in mind special packaging and labeling requirements of perishable products like processed food and dairy products. Special measures are required for transportation of certain products, which may be bulky or fragile or hazardous or perishable.

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SWOT Analysis :
SWOT analysis is a useful method of summaries all the information generated during the export planning. SWOT stands for strengths, weakness, opportunities and threats, which helps to isolate the strong and weak areas within an export strategy. SWOT also indicates the future opportunities or threats that may exist in the chosen markets and is instrumental in strategy formulation and selection. Strengths : Business strengths are its resources and capabilities that can be used as a basis for developing a competitive-advantage. Examples of such strengths include: Patents Strong brand names. Good reputation among customers. Cost advantages from proprietary know-how. Exclusive access to high grade natural resources. Favorable access to distribution networks.

Weaknesses : The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses : Lack of patent protection. A weak brand name. Poor reputation among customers. High cost structure. Lack of access to the best natural resources. Lack of access to key distribution channels.

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Opportunities : The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include :

An unfulfilled customer need. Arrival of new technologies. Loosening of regulations. Removal of international trade barriers.

Threats : Changes in the external environmental also may present threats to the firm. Some examples of such threats include: Shifts in consumer tastes away from the firm's products Emergence of substitute products. New regulations. Increased trade barriers

Successful SWOT Analysis : Simple rules for successful SWOT analysis: Be realistic about the strengths and weaknesses of the organization. Analysis should distinguish between where the organization is today, and where it could be in the future. Be specific. Always analyse in relation to your competition i.e. better than or worse than your competition. Keep your SWOT short and simple. A SWOT analysis can be very subjective, and is an excellent tool for indicating the negative factors first in order to turn them into positive factors

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Registrations :
Once all the research and analysis is done its time to get registered with the various government authorities. Registration with Reserve Bank of India (RBI) : Prior to 1997, it was necessary for every first time exporter to obtain IEC number from Reserve Bank of India (RBI) before engaging in any kind of export operations. But now this job is being done by DGFT. Registration with Director General of Foreign Trade (DGFT) : For every first time exporter, it is necessary to get registered with the DGFT (Director General of Foreign Trade), Ministry of Commerce, Government of India. With the help of this code number the exporter can supply goods to overseas countries under O.G.L. (Oper General License) system. Without I.E. Code the shipper / exporter shall not be allowed to load cargo. Same is the case with the importers who invariably need the I.E. Code number to carry out imports clearance under O.G.L. and restricted items. As M.M.T.C and S.T.C come into the picture while importing band item, the importer my not have to submit I.E. Code which is usually submitted on demand. An application for grant of IEC Number shall be made by Registered Office, in case of companies and Head Office in case of proprietorship concerns, partnership concerns and HUFs, of applicant, except EOUs and SEZ units, to concerned RA in ANF2A with document sprescribed therein. Only one IEC would be issued / allowed against a single PAN number. The application (ANF 2 A) for issuance of fresh IEC or modification of IEC shall indicate the name and designation of the person whose photograph has been affixed on the Bank Certificate. A photograph of the person alongwith his/her name and designation shall also be affixed on the IEC No. to be issued (Appendix 18 B).

DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required for the purpose of export as well as import. No exporter is allowed to export his good abroad without IEC number.
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However, if the goods are exported to Nepal, or to Myanmar through IndoMyanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-. Application for IEC number can be submitted to the nearest regional authority of DGFT. Application form which is known as "Aayaat Niryaat Form ANF2A" can also be submitted online at the DGFT web-site: http://dgft.gov.in. While submitting an application form for IEC number, an applicant is required to submit his PAN account number. Only one IEC is issued against a single PAN number. Apart from PAN number, an applicant is also required to submit his Current Bank Account number and Bankers Certificate. A amount of Rs 1000/- is required to submit with the application fee. This amount can be submitted in the form of a Demand Draft or payment through EFT (Electronic Fund Transfer by Nominated Bank by DGFT. An IEC number allotted to an applicant shall be valid for all its branches / divisions / units / factories. Where an IEC Number is lost or misplaced, issuing authority may consider requests for grant of a duplicate copy of IEC number, on an affidavit. If an IEC holder does not wish to operate allotted IEC number, he may surrender same by informing issuing authority. On receipt of such intimation, issuing authority shall immediately cancel it and electronically transmit it to DGFT and Customs authorities. An application for grant of an Authorization for import or export of items mentioned as restricted in ITC (HS) may be made to RA as specified under relevant Chapters of this Handbook.

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Registration with Export Promotion Council : Basic objective of Export Promotion Councils (EPCs) is to promote and develop Indian exports. Each Council responsible for promotion of a particular group of products, projects and services as given in HBP-v1. Registered under the Indian Company Act, Export Promotion Councils or EPC is a non-profit organization for the promotion of various goods exported from India in international market. EPC works in close association with the Ministry of Commerce and Industry, Government of India and act as a platform for interaction between the exporting community and the government. So, it becomes important for an exporter to obtain a registration cum membership certificate (RCMC) from the EPC. An application for registration should be accompanied by a self certified copy of the IEC number. Membership fee should be paid in the form of cheque or draft after ascertaining the amount from the concerned EPC. The RCMC certificate is valid from 1st April of the licensing year in which it was issued and shall be valid for five years ending 31st March of the licensing year, unless otherwise specified. Registration with Central Excise Department : If a unit is not registered with the Central Excise Department, it cannot issue Excise Invoice & ARE1. If the goods are excisable, the consignments cannot be examined and sealed at factory. The unit can not avail the benefit of Self-Sealing etc. If the goods are cleared by manufacturer for export, the goods are accompanied by ARE-1 (earlier AR-4). This form should be submitted to customs authorities. The Customs Officer certifies that the goods under this form have indeed been exported. This form has then to be submitted to Maritime Commissioner for obtaining proof of export. The bond executed by manufacturer-exporter with excise authorities is released only when proof of export is accepted by Maritime Commissioner or Assistant Commissioner, where bond was executed.

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EDI Registration with Customs at Respective Ports/ICD : If a unit To clear any export/import consignment at any custom station, you have to registered in the EDI system of the customs. Separate registration is required for each custom station. Under EDI system, declarations in prescribed form are to be filed through Service Centre of customs. After verification, shipping bill number is generated by the system, which is endorsed on printed checklist generated for verification of data. Goods are inspected at docks on the basis of printed check list. All documents are submitted to Customs Officer along with checklist. If goods and documents are found in order, let export order is issued. Then two copies of Shipping Bill are generated one customs and other exporters copy. Exporters copy is generated only after EGM (Export General Manifest) is submitted by shipping agent. These are signed by CHA and customs officer and then by Appraiser. SDF, ARE1, octroi papers, quota certification for export etc. are also signed. Exporters copy of Shipping Bill, SDF, ARE-1 etc. duly signed are handed over to exporter or CHA. - Chapter 3 Paras 42 to 60 of CBE&Cs Customs Manual, 2001. Registration with Commodity Boards : Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. At present, there are five statutory Commodity Boards under the Department of Commerce. These Boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.

Registration with Income Tax Authorities : Goods exported out of the country are eligible for exemption from both Value Added Tax and Central Sales Tax. So, to get the benefit of tax exemption it is important for an exporter to get registered with the Tax Authorities.

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Export Sales Leads : Export Sales leads are initial contacts a seller or exporter seeks in order to finalize a deal or agreement for export of goods and are considered as the first step in the entire sales process. After getting the first lead, a company should respond to that lead in a very carefully manner in order to convert that opportunity into real export deal. Generating Sales Leads : Sales leads can be generated either through a word-of-mouth or internet research or trade show participation. Qualifying sales leads : As the buyer is far away and sometimes communication process can be difficult, so its always better to make an extra effort to understand the exact need of the customer. Sending Acknowledgement : After receiving a lead it is quite important to acknowledge the enquirer within 48 hours of receiving the enquiry either through e-mail or fax. Acknowledgement also gives an option to provide further detail about the product or to make an enquiry about the buyer. Responding with quality products : Quality products strengthen buyer seller relationship, so its always better to provide quality products to the buyers. Follow Ups : Always try to be in touch with the buyer or customer. For this purpose one can ask a phone number and a convenient time to call. It is always better to make the call in the presence of an Export Adviser. One should avoid high pressure call during follow up.

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Exporting Product Samples :

The foreign customer may ask for product samples before placing a confirmed order. So, it is essential that the samples are made from good quality raw materials and after getting an order, the subsequent goods are made with the same quality product. Extra care should be taken in order to avoid the risk associated in sending a costly product sample for export. Secrecy is also an important factor while sending a sample, especially if there is a risk of copying the original product during export. Before exporting a product sample an exporter should also know the Government policy and procedures for export of samples. While sending a product sample to an importer, it is always advised to send samples by air mail to avoid undue delay. However, if the time is not an issue then the product sample can also be exported through proper postal channel, which is cheaper as compared to the air mail. Sending Export Samples from India : Samples having permanent marking as sample not for sale are allowed freely for export without any limit. However, in such cases where indelible marking is not available, the samples may be allowed for a value not exceeding US $ 10,000, per consignment. For export of sample products which are restricted for export as mentioned in the ITC (HS) Code, an application may be made to the office of Director General of Foreign Trade (DGFT). Export of samples to be sent by post parcel or air freight is further divided into following 3 categories, and under each category an exporter is required to fulfill certain formalities which are mentioned below : Samples of value up to Rs.10, 000- It is necessary for the exporter to file a simple declaration that the sample does not involve foreign exchange and its value is less than Rs. 10,000. Samples of value less than Rs. 25,000- It is necessary for the exporter to obtain a value certificate from the authorised dealer in foreign exchange
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(i.e. your bank). For this purpose, an exporter should submit a commercial invoice certifying thereon that the parcel does not involve foreign exchange and the aggregate value of the samples exported by you does not exceed Rs. 25,000 in the current calendar year. Samples of value more than Rs. 25,000- It becomes necessary for the exporter to obtain GR/PP waiver from the Reserve Bank of India Export Samples against Payment : A sample against which an overseas buyer agrees to make payment is exported in the same manner as the normal goods are exported. Sample can also be carried personally by you while travelling abroad provided these are otherwise permissible or cleared for export as explained earlier. However, in case of precious jewellery or stone the necessary information should be declared to the custom authorities while leaving the country and obtain necessary endorsement on export certificate issued by the Jewelry Appraiser of the Customs.

Export of Garment Samples : As per the special provision made for the export of garment samples, only those exporters are allowed to send samples that are registered with the Apparel export Promotion Council (AEPC). Similarly, for export of wool it is necessary for the exporter to have registration with the Woolen Export Promotion Council. Export of Software : All kinds electronic and computer software product samples can only be exported abroad, if the exporter dealing with these products is registered with the Electronics and Computer Software Export Promotion Council (ESC) Similarly samples of other export products can be exported abroad under the membership of various Export Promotion Councils (EPC) of India.

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Export Pricing And Costing : Pricing and costing are two different things and an exporter should not confuse between the two. Price is what an exporter offer to a customer on particular products while cost is what an exporter pay for manufacturing the same product. Export pricing is the most important factor in for promoting export and facing international trade competition. It is important for the exporter to keep the prices down keeping in mind all export benefits and expenses. However, there is no fixed formula for successful export pricing and is differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalising agency. Determining Export Pricing : Export Pricing can be determine by the following factors: Range of products offered. Prompt deliveries and continuity in supply. After-sales service in products like machine tools, consumer durables. Product differentiation and brand image. Frequency of purchase. Presumed relationship between quality and price. Specialty value goods and gift items. Credit offered. Preference or prejudice for products originating from a particular source. Aggressive marketing and sales promotion. Prompt acceptance and settlement of claims. Unique value goods and gift items.

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Export Costing : Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable cost comprising various elements. It is advisable to prepare an export costing sheet for every export product. As regards quoting the prices to the overseas buyer, the same are quoted in the following internationally accepted terms which are commonly known as Incoterm.

Understanding of Foreign Exchange Rates : An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. In this section, we have discussed various topics related to foreign exchange rates in detail. Spot Exchange Rate : Also known as "benchmark rates", "straightforward rates" or "outright rates", spot rates represent the price that a buyer expects to pay for a foreign currency in another currency. Settlement in case of spot rate is normally done within one or two working days. Forward Exchange Rate : The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.

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Method of Quoting Exchange Rates : There are two methods of quoting exchange rates: Direct Quotation: In this system, variable units of home currency equivalent to a fixed unit of foreign currency are quoted. For example: US $ 1= Rs. 42.75 Indirect Quotation: In this system, variable units of foreign currency as equivalent to a fixed unit of home currency are quoted. For example: US $ 2.392= Rs. 100 Before 1993, banks were required to quote all the rates on indirect basis as foreign currency equivalent to RS. 100 but after 1993 banks are quoting rates on direct basis only. Exchange Rate Regime : The exchange rate regime is a method through which a country manages its currency in respect to foreign currencies and the foreign exchange market. Fixed Exchange Rate A fixed exchange rate is a type of exchange rate regime in which a currency's value is matched to the value of another single currency or any another measure of value, such as gold. A fixed exchange rate is also known as pegged exchange rate. A currency that uses a fixed exchange rate is known as a fixed currency. The opposite of a fixed exchange rate is a floating exchange rate. Floating Exchange Rate A Floating Exchange Rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. A Floating Exchange Rate or a flexible exchange rate and is opposite to the fixed exchange rate. Linked Exchange Rate A linked exchange rate system is used to equlise the exchange rate of a currency to another. Linked Exchange Rate system is implemented in Hong Kong to stabilise the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD).

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Forward Exchange Contracts : A Forward Exchange Contract is a contract between two parties (the Bank and the customer). One party contract to sell and the other party contracts to buy, one currency for another, at an agreed future date, at a rate of exchange which is fixed at the time the contract is entered into. Benefits of Forward Exchange Contract : Contracts can be arranged to either buy or sell a foreign currency against your domestic currency, or against another foreign currency. Available in all major currencies. Available for any purpose such as trade, investment or other current commitments. Forward exchange contracts must be completed by the customer. A customer requiring more flexibility may wish to consider Foreign Currency Options. Foreign Currency Options : Foreign Currency Options is a hedging tool that gives the owner the right to buy or sell the indicated amount of foreign currency at a specified price before a specific date. Like forward contracts, foreign currency options also eliminate the spot market risk for future transactions. A currency option is no different from a stock option except that the underlying asset is foreign exchange. The basic premises remain the same: the buyer of option has the right but no obligation to enter into a contract with the seller. Therefore the buyer of a currency option has the right, to his advantage, to enter into the specified contract.

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Flexible Forwards : Flexible Forward is a part of foreign exchange that has been developed as an alternative to forward exchange contracts and currency options. The agreement for flexible forwards is always singed between two parties (the buyer of the flexible forward and the 'seller' of the flexible forward) to exchange a specified amount (the face value) of one currency for another currency at a foreign exchange rate that is determined in accordance with the mechanisms set out in the agreement at an agreed time and an agreed date (the expiry time on the expiry date). The exchange then takes place approximately two clear business days later on the delivery date). Currency Swap : A currency swap which is also known as cross currency swap is a foreign exchange agreement between two countries to exchange a given amount of one currency for another and, after a specified period of time, to give back the original amounts swapped.

Foreign Exchange Markets : The foreign exchange markets are usually highly liquid as the world's main international banks provide a market around-the-clock. The Bank for International Settlements reported that global foreign exchange market turnover daily averages in April was $650 billion in 1998 (at constant exchange rates) and increased to $1.9 trillion in 2004 [1]. Trade in global currency markets has soared over the past three years and is now worth more than $3.2 trillion a day. The biggest foreign exchange trading centre is London, followed by New York and Tokyo.

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Appointing a Sales Agent :

Selling a product through an overseas agent is a very successful strategy. Sales agents are available on commission basis for any sales they make. The key benefit of using an overseas sales agent is that you get the advantage of their extensive knowledge of the target market. Sales agent also provides support to an exporter in the matter of transportation, reservation of accommodation, appointment with the government as and when required. It is, therefore, essential that one should very carefully select overseas agent. Merits of Appointing a Sales Agent : There are various types of merits associated with appointed a sales agent for export purpose are as follow: Sales agent avoids the recruitment, training, time and payroll costs of using own employees to enter an overseas market. An agent is a better option to identify and exploit opportunities in overseas export market. An agent already have solid relationships with potential buyers, hence it saves the time of the exporter to build own contacts. An agent allows an exporter to maintain more control over matters such as final price and brand image - compared with the other intermediary option of using a distributor. Demerits of Appointing a Sales Agent : There are also certain disadvantages associated with appointing a sales agent for export purpose which are as follows: After-sales service can be difficult when selling through an intermediary. There is a risk for exporter to lose some control over marketing and brand image.

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Important Points While Appointing a Sales Agent : Appointing right sales agent not only enhance the profit of an exporter but also avoid any of risks associated with a sales agent. So it becomes important for an exporter to take into consideration following important points before selection an appropriate sales agent for his product. Size of the agent's company. Date of foundation of the agent's company. Company's ownership and control. Company's capital, funds, available and liabilities. Name, age and experience of the company's senior executives. Number, age and experience of the company's salesman. Oher agencies that the company holds, including those of competing products and turn-over of each. Length of company's association with other principal. New agencies that the company obtained or lost during the past year. Company's total annual sales and the trends in its sales in recent years. Company's sales coverage, overall and by area. Number of sales calls per month and per salesman by company staff. Any major obstacles expected in the company's sales growth. Agent's capability to provide sales promotion and advertising services Agent's transport facilities and warehousing capacity. Agent's rate of commission; payment terms required. References on the agents from banks, trade associations and major buyers.

Some source of Information on Agents is : Government Departments Trade Associations. Chambers of Commerce. Banks. Independent Consultants. Export Promotion Councils. Advertisement Abroad.

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Agent Vs Distributor : There is a fundamental legal difference between agents and distributors and an exporter should not confuse between the two. An agent negotiates on the behalf of an exporter and may be entitled to create a legal relationship between exporter and the importer A distributor buys goods on its own account from exporter and resells those products to customers. It is the distributor which has the sale contract with the customer not the exporter. In the case of distributor, an exporter is free from any kinds of risks associated with the finance.

Export Risk Management :

Export pricing is the most important factor in for promoting export and facing international trade competition. It is important for the exporter to keep the prices down keeping in mind all export benefits and expenses. However, there is no fixed formula for successful export pricing and is differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalising agency. Like any business transaction, risk is also associated with good to be exported in an overseas market. Export is risk in international trade is quite different from risks involve in domestic trade. So, it becomes important to all the risks related to export in international trade with an extra measure and with a proper risk management. The various types of export risks involve in an international trade are as follow:

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Credit Risk : Sometimes because of large distance, it becomes difficult for an exporter to verify the creditworthiness and reputation of an importer or buyer. Any false buyer can increase the risk of non-payment, late payment or even straightforward fraud. So, it is necessary for an exporter to determine the creditworthiness of the foreign buyer. An exporter can seek the help of commercial firms that can provide assistance in credit-checking of foreign companies. Poor Quality Risk : Exported goods can be rejected by an importer on the basis of poor quality. So it is always recommended to properly check the goods to be exported. Sometimes buyer or importer raises the quality issue just to put pressure on an exporter in order to try and negotiate a lower price. So, it is better to allow an inspection procedure by an independent inspection company before shipment. Such an inspection protects both the importer and the exporter. Inspection is normally done at the request of importer and the costs for the inspection are borne by the importer or it may be negotiated that they be included in the contract price. Alternatively, it may be a good idea to ship one or two samples of the goods being produced to the importer by an international courier company. The final product produced to the same standards is always difficult to reduce.

Transportation Risks : With the movement of goods from one continent to another, or even within the same continent, goods face many hazards. There is the risk of theft, damage and possibly the goods not even arriving at all.

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Logistic Risk : The exporter must understand all aspects of international logistics, in particular the contract of carriage. This contract is drawn up between a shipper and a carrier (transport operator). For this an exporter may refer to Incoterms 2000, ICC publication. Legal Risks : International laws and regulations change frequently. Therefore, it is important for an exporter to drafts a contract in conjunction with a legal firm, thereby ensuring that the exporter's interests are taken care of.

Political Risk : Political risk arises due to the changes in the government policies or instability in the government sector. So it is important for an exporter to be constantly aware of the policies of foreign governments so that they can change their marketing tactics accordingly and take the necessary steps to prevent loss of business and investment. Unforeseen Risks : Unforeseen risk such as terrorist attack or a natural disaster like an earthquake may cause damage to exported products. It is therefore important that an exporter ensures a force majeure clause in the export contract. Exchange Rate Risks : Exchange rate risk is occurs due to the uncertainty in the future value of a currency. Exchange risk can be avoided by adopting Hedging scheme.

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Export Risk Management Plan : Risk management is a process of thinking analytically about all potential undesirable outcomes before they happen and setting up measures that will avoid them. There are six basic elements of the risk management process: Establishing the context Identifying the risks Assessing probability and possible consequences of risks Developing strategies to mitigate these risks Monitoring and reviewing the outcomes Communicating and consulting with the parties involved

A risk management plan helps an exporter to broaden the risk profile for foreign market. For a small export business, an exporter must keep his risk management analysis clear and simple. Export Risk Mitigation : Export risk mitigations are the various strategies that can be adopted by an exporter to avoid the risks associated with the export of goods. Direct Credit: Export Credit Agencies support exports through the provision of direct credits to either the importer or the exporter. Importer: a buyer credit is provided to the importer to purchase goods. Exporter: makes a deferred payment sale; insurance is used to protect the seller or bank. Guarantees

Bid bond (tender guarantee): protects against exporters unrealistic bid or failure to execute the contract after winning the bid. Performance bond: guarantees exporters performance after a contract is signed. Advance payment guarantee (letter of indemnity): in the case where an importer advances funds, guarantees a refund if exporter does not perform. Standby letter of credit: issuing bank promises to pay exporter on behalf of importer.
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 Insurance Transportation insurance: Covers goods during transport; degree of coverage varies. Credit Insurance: Protects against buyer insolvency or protracted defaults and/or political risks. Seller non-compliance (credit insurance): Covers advance payment risk. Foreign exchange risk insurance: Provides a hedge against foreign exchange risk.

Hedging Instruments used to Hedge Price Risk Stabilization programs and funds. Timing of purchase/sale. Fixed price long-term contracts. Forward contracts. Swaps

Packing and Labeling of Goods :

An important stage after manufacturing of goods or their procurement is their preparation for shipment which involves packaging and labelling of goods to be exported. Proper packaging and labelling not only makes the final product look attractive but also save a huge amount of money by saving the product from wrong handling the export process. Packaging : The primary role of packaging is to contain, protect and preserve a product as well as aid in its handling and final presentation. Packaging also refers to the process of design, evaluation, and production of packages. The packaging can be done within the export company or the job can be assigned to an outside packaging company. Packaging provides following benefits to the goods to be exported:

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 Physical Protection Packaging provides protection against shock, vibration, temperature, moisture and dust. Containment or agglomeration Packaging provides agglomeration of small objects into one package for reason of efficiency and cost factor. For example it is better to put 1000 pencils in one box rather than putting each pencil in separate 1000 boxes. Marketing: Proper and attractive packaging play an important role in encouraging a potential buyer. Convenience - Packages can have features which add convenience in distribution, handling, display, sale, opening, use, and reuse. Security - Packaging can play an important role in reducing the security risks of shipment. It also provides authentication seals to indicate that the package and contents are not counterfeit. Packages also can include antitheft devices, such as dye-packs, RFID tags, or electronic article surveillance tags, that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention. Labeling : Like packaging, labeling should also be done with extra care. It is also important for an exporter to be familiar with all kinds of sign and symbols and should also maintain all the nationally and internationally standers while using these symbols. Labelling should be in English, and words indicating country of origin should be as large and as prominent as any other English wording on the package or label. Labelling on product provides the following important information: Shipper's mark Country of origin Weight marking (in pounds and in kilograms) Number of packages and size of cases (in inches and centimeters) Handling marks (international pictorial symbols) Cautionary markings, such as "This Side Up." Port of entry Labels for hazardous materials

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Labelling of a product also provides information like how to use, transport, recycle, or dispose of the package or product. With pharmaceuticals,food, medical, and chemical products, some types of information are required by governments. It is better to choose a fast dyes for labelling purpose. Only fast dyes should be used for labeling. Essential data should be in black and subsidiary data in a less conspicuous colour; red and orange and so on. For food packed in sacks, only harmless dyes should be employed, and the dye should not come through the packing in such a way as to affect the goods.

Inspection Certificates and Quality Control :

An important aspect about the goods to be exported is compulsory quality control and pre-shipment inspection. For this purpose, Export Inspection Council (EIC) was set up by the Government of India under Section 3 of the Export (Quality Control and Inspection) Act, 1963. It includes more than 1000 commodities which are organized into various groups for a compulsory preshipment inspection. It includes Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products. An important aspect about the goods to be exported is compulsory quality control and pre-shipment inspection. For this purpose, Export Inspection Council (EIC) was set up by the Government of India under Section 3 of the Export (Quality Control and Inspection) Act, 1963. It includes more than 1000 commodities which are organized into various groups for a compulsory preshipment inspection. It includes Food and Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products.

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ISI Certification : Indian Standards Institute now known as Bureau of Indian Standard (BIS) is a registered society under a Government of India. BIS main functions include the development of technical standards, product quality and management system certifications and consumer affairs. Founded by Professor P.C. Mahalanobis in Kolkata on 17th December, 1931, the institute gained the status of an Institution of National Importance by an act of the Indian Parliament in 1959. AgMmark Certification : AgMark is an acronym for Agricultural Marketing and is used to certify the food products for quality control. Agmark has been dominated by other quality standards including the non manufacturing standard ISO 9000. Benefits of ISI and Agmark Certification : Products having ISI Certification mark or Agmark are not required to be inspected by any agency. These products do not fall within the purview of the export inspection agencies network. The Customs Authorities allow export of such goods even if not accompanied by any pre-shipment inspection certificate, provided they are otherwise satisfied that the goods carry ISI Certification or the Agmark.

In-Process Quality Control (IPQC) : In-Process Quality Control (IPQC) inspection is mainly done for engineering products and is applied at the various stages of production. Units approved under IPQC system of in-process quality control may themselves issue the certificate of inspection, but only for the products for which they have been granted IPQC facilities. The final certificate of inspection on the end-products is then given without in-depth study at the shipment stage.

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Self Certification Scheme : Under the self Certification Scheme, large exporters and manufacturers are allowed to inspect their product without involving any other party. The facility is available to manufacturers of engineering products, chemical and allied products and marine products. Self-Certification is given on the basis that the exporter himself is the best judge of the quality of his products and will not allow his reputation to be spoiled in the international market by compromising on quality. Self-Certification Scheme is granted to the exporter for the period of one year. Exporters with proven reputation can obtain the permission for self certification by submitting an application to the Director (Inspection and Quality Control), Export Inspection Council of India, 11th Floor, Pragati Tower, 26 Rajendra Place, New Delhi.

ISO 9000 : The discussion on inspection certificate and quality control is incomplete without ISO-9000. Established in 1987, ISO 9000 is a series of international standards that has been accepted worldwide as the norm assuring high quality of goods. The current version of ISO 9000 is ISO 9000:2000

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Export Documents and container overview

An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. In this section, we have discussed various topics related to foreign exchange rates in detail.

Container Types Overview :

As an Exporter/Importer which types of container should be selected it really vary important, because of the product. For Ex. For the export of Vegetables or Machinery same container cannot be used.

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Standard Container 20' 40' 40' High-Cube Version. Suitable for any general cargo. Various lashing devices on the top and bottom longitudinal rails and corner post. Hardtop Container 20' 40' 40' High-Cube Version. Equipped with a removable steel roof. Especially for heavy loads and overweight cargo. Loading through roof opening and doorway by swung out door header. Open-Top Container 20' 40'With removable tarpaulin. Especially for overheight cargo. Loading either from top side or door side by swung out doorheader. Flat Rack 20' 40' 40' High-Cube Version. Especially for heavy loads and overwidth cargo. Platform 20' 40' Especially for heavy loads and oversized cargo. Non domestic shipments. Ventilated Container 20' Especially for cargo which needs ventilation. Refrigerated Container 20' 40' 40' High-Cube Version. Reefer Container do have their own electrically operated cooling/ heating unit. The power supply is provided by ship's electrical plant, by terminal or by "clip-on" diesel generator. Insulated Container 20' 40' These container do not have their own cooling facility. The cooling/ heat is supplied by a onbord Conair plant, by terminal or by a "clip-on" reefer unit. Tank Container 20' For the transport of liquid food, e.g.: Alcohols Fruit juices Edible oils Food additives.

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Export from India required special document depending upon the type of product and destination to be exported. Export Documents not only gives detail about the product and its destination port but are also used for the purpose of taxation and quality control inspection certification.

Pre shipment and post shipment process :

Exporter operation starts with the receipt of enquiry buy the exporter from importer. Bar on the enquiry exporter submits his offer giving complete details of products technical specific price delivery payment terms etc. After the process negotiations importer sends a purchase order follow by letter of credit (if applicable). The exporter manufactures the goods according to the specification given in purchase order. As soon as the goods are ready the exporter invites the representative of Export inspection agency (EIA) for pre shipment inspection and obtains the certificate of inspection.

After that, factory stuffing permission is obtained by the exporter the selected container are bought into the factory for stuffing. On completion of stuffing, pre-shipment inspection is carried out and the container is sealed by the excise officer under ARE-1 or ARE-2 certificate. There after the containers is dispatch to ICD for Customs clearance. At International Container Depot (ICD) the documents related to the export under reference such as IE code no. , Invoice, Packing List, Inspection certificate, and product catalogue along with completely filled up. Shipping bill shall be put up before the noting officer at the customs. On completion of noting, noting officer dispatches these documents to a specified appraiser for scrutiny of document. After the scrutiny the documents move to the customs inspector. The Custom inspector shall break open the excise seal and inspect the cargo on the basis of 100% inspection or under random testing. There after the containers are sealed by both the customs authority and shipping lines.
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 Once the inspection is completed the paper is moved to superintendent of customs or assistant commissioner of customs (higher authority), who immediately issue delivery order (DO) and let export order (LEO) through which the containers are loaded on railway (CONCOR) and moved to nearest port yard. On reaching the port yard the containers perhaps, if needed, can be inspected again by the Custom. There after the shipping line and the customs re-seals the container. The shipping line shall issue mat receipt on arrival of the container at the port yard and Once the containers are loaded on board bill of leading shall be issued by shipping line. Once the shipper/exporter receives BL it can apply for certificate of origin from local chamber of commerce.

The exporter prepares following documents : Excise Department

Excise invoice/Plant invoice (Original, Duplicate, quadruplicate) 1copy ARE-1 (Original, Duplicate, quadruplicate) 2copy Excise packing list - (Original, Duplicate, quadruplicate) 1copy

Custom Department : Custom invoice 3copy Custom packing list 6copy Detail packing list 3copy Shipping instruction 1copy Drawback declaration form 1copy Export value declaration 1copy Order conformation note -1copy Statutory Declaration form -1copy Summary packing list 6copy

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 Pre/Post shipment documents :

Copy of purchase order/ lc Bill leading instruction/ Air way Bill instruction/Lori Receipt Generalized System of Preferences Certificate of origin Marine insurance policy Letter of credit check list Commercial invoice Indian Bank Association certificate Detail packing list Free on Board declaration

Custom Clearance Process : The Customs appraiser examines That the value & quantity declared in the shipping bill is the same as in the export order/L/C.That all formalities regarding exchange control, preShipment quality control inspection have been completed.Following verification all the documents, except SDF/GR (original) Form, the original shipping bill and a copy of the commercial invoice are returned to the forwarding agent to be presented to the dock appraiser. It is the dock appraiser who finally makes "Let Export" endorsement on the duplicate copy of the shipping bill and hands it over to the forwarding agent. The agent then presents the documents to the preventive officer, of the Customs department, who makes an endorsement "Let Ship" on the duplicate copy of the Shipping Bill. The duplicate copy of the Shipping bill is then handed over to the agent of the Shipping Co. Following this the captain of the ship aboard which the goods are loaded issues a "Mate Receipt" to the Shed Superintendent of the port (source). The forwarding agent then makes a payment of the port charges and takes delivery of the Mate Receipt to be presented to the Preventive Officer who records the Certificate of Shipment on all the copies of shipping bill, original and duplicate copies of AR-1 to the forwarding agent. Following this the agent again presents the Mate Receipt to the Shipping Co. to procure the Bill of Lading. Export of goods by land and river, applicable only to Bangladesh, Nepal and Pakistan, are required to pass through the specified border (Customs) check posts.After the goods have been shipped the exporters should send Shipment Advice to the importers enclosing
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copies of all basic documents viz. Copy of Bill of Lading (Non-negotiable Copy), Invoice, Packing Specification etc. When the goods are exported by Air the Shipment/despatch advice should be Faxed to the importer.

Customs Clearance of Exports by Air : The export of Cargo by Air is more or less as that of export by Steamer or by land. Some of the procedural matter are detailed below : Actual booking by the flight concerned is done in advance. Even Airway Bill is obtained before arrival of the flight. All the documents require customs clearance i.e. the Shipping Bill, the appropriate type, and all the supporting documents as required in connection with the shipment by a vessel are to be brought along with the cargo for which booking has already been done. The documents are first submitted to the section meant for checking them at the Air Cargo complex. After the documents have been checked and physical examination order has been given, physical examination is conducted in quick succession. Physical examination is conducted on a much larger scale in respect of export by air, as compared to export by vessel i.e. 50 to 25 percent of the total in respect of air cargo, as against 1 to 2 per cent of the total in respect of cargo moving by vessel. Each packet is to be passed for shipment---whether examined and passed for shipment or passed for shipment. The export cargo examined and passed for shipment is kept under the charge of Customs in the control of GROUND HANDLING AUTHORITIES. Usually some cooling period is observed, 24 to 48 hrs. before the cargo is to be loaded on board the aircraft. Before arrival of the flight Export General Manifest (EGM) whether provisional or final, is to be prepared by the airline concerned and is to be handed over to the Customs Authority. With the help of EGM, goods are to be moved from the storage under Customs charge to the place where from they are to be moved alongside the aircraft for being loaded on board. In case of air flights, no entry inward permit is required for each flight. There is standing facility granted to the airline concerned for landing and taking off specified flight. Hence, no rotation number is allotted in advance. This number is allotted by the station-officer on duty when the flight has landed.
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 The Customs Officer who has to supervise the loading operation with reference to the EGM has to write Rotation Number on the Shipping Bill-the copies available at the stage and the EGM. Unlike the practice followed in the case of ship, there is no arrangement for associating a Preventive Officer right from the stage when entry inward permit is granted. The Customs Officer in-charge of the duty routine for the period when the flights are scheduled to land, assigns the task of supervision unloading and loading operation to customs official on duty. After the loading of the cargo on board the aircraft, the captain does not issue Mates Receipt. He signs the Duplicate and Triplicate copy of the Shipping Bill against contents received. He may initial the copy of the Shipping Bill. This flexibility is provided in keeping with requirement of air-cargos expeditious movement. Customs Clearance of Post parcel Post parcels can be sent from any part of the country even without completing customs clearance before the booking of the parcel. As such, employment of customs house agent can be easily dispensed with. However, it should not be construed that the post parcel can be dispatched to foreign destinations without customs check. In fact the booking post office cannot prepare the final bag for destination. The parcel has to be routed through the foreign post office having the destination within its jurisdiction, where customs check and clearance are arranged. At each foreign post office there are two wings; Customs Wing and Postal Wing. The latter has to get customs examined parcels received from different post offices of the country for dispatch to foreign destinations. In the case of post parcel there is no Shipping Bill required. Instead a Customs Declaration Form, prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration to facilitate movement of postal articles among different countries of the world is required. This document, popularly known by its code number CP2/CP3 has to be prepared in quadruplicate duly signed by the sender. One copy is to be pasted on the parcel and two copies are to be placed inside the parcel along with two copies of Invoice. One copy is to be retained by the sender for record and future reference.

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Another document prescribed by the Universal Postal Union (UPU) is the Dispatch Note, popularly known by its code number, CP2. It has to be filled in by the sender to specify the action to be taken by the postal authority at destination if the address is not traceable or refuses to accept the parcel. It has to be safely tagged to the parcel. The other prescriptions of the UPU are regarding the minimum and maximum sizes of the parcel and its maximum weight. Minimum size: Total surface area not to be less than 140 mm X 90 mm. Maximum size: Lengthwise not more than 1.05 M. Measurement of any other side of circumference 0.9 M./2.00 M. The two taken together Maximum Weight: 10 kg for most destinations, 20 kg for some destinations.

Also needed are : Commercial invoice: This key document is issued by the seller in the standardized format. It is usually made out for the full realisable amount of goods as per trade term. However, the undrawn balance is shown as a deduction from the full amount. Consular Invoice : This is required mainly by the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. To be prepared in prescribed format and signed/certified by the consul of the importing country located in the country of export. Customs Invoice : Required for countries like USA, Canada etc. To be prepared on a special form presented by the Customs authorities of the importing country to facilitate entry of goods in the importing country at preferential tariff rate.

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 Legalised/Visaed Invoice : These are meant for showing the sellers genuineness before the appropriate consulate/chamber of commerce/ embassy. No prescribed form is available for this. Certified Invoice : Required when exporters are needed to certify on the invoice that the goods are of particular origin or manufactured/packed at a particular place and in accordance with specific contract. Two types of draft are availableSight Draft and Usance Draft. The former is required when the drawer (exporter) expects immediate payment from the drawee (importer). Usance Draft is needed for credit delivery. Packing List : Shows the item wise details of goods contained in each parcel/shipment. Certificate of Inspection---Issued in aligned document form it indicates that goods have been inspected before shipment. Black List Certificate : Needed for countries having strained political relation, it certifies that the ship/aircraft carrying the goods has not touched that particular country(s). Weight Note : This document is used to confirm that the packets/bales etc. are of a stipulated weight. Manufacturers/Suppliers Quality/Inspection Certificate Language Certificate : Issued by the Textile Committee in quadruplicate, this is needed for importers in European Economic Community countries.Manufacturers Certificate---This is required in addition to the Certificate of Origin for some countries to indicate that goods shipped have actually been manufactured and are available. Certificate of Chemical Analysis : Needed to ensure quality and grade of certain items like metallic ores, pigments, etc.

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 Certificate of Shipment : Signifies that a certain lot of goods have been shipped. Health/Veterinary/Sanitary Certification : Needed for export of foodstuffs, marine products, hides, livestock etc. Certificate of Conditioning : Issued by a competent office to certify compliance of humidity factor, dry weight etc. Antiquity Measurement : This is issued by the Archaeological Survey of India in case of antiques. Transshipment Bill : Used for goods imported into a customs port/airport intended for transshipment. Transhipment Permit : It gives permission for transhipment of goods from the vessel on which the same are booked originally to another for export. Shipping Order : It is issued by the Shipping (Conference) Line intimating the exporter about the reservation of space of shipment of cargo through a particular vessel from a specified port and on a specified date. Cart/Lorry Ticket : This is prepared for admittance of cargo through the port gate and includes shippers name, cart/lorry number, marks on packages, quantity etc. Shut Out Advice : It is a statement of packages shut out by a ship and is prepared by the shed concerned and sent to exporter.Short Shipment Form------An application to the customs authorities at port advising short shipment of goods and for claiming the return.

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 Shipping Advice : Prepared in aligned document it is used to inform the overseas customer about the shipment of goods. Documents required for Customs Clearance : GR /SDFforms in duplicate for shipment to all countries Detail packing list Commercial invoices Contract, L/C, Purchase Order of the overseas buyer AR1(Original and duplicate) Excise invoice Inspection/Examination Certificate Bl/LR/AWB Shipping bill

Universal set (In case of Road shipment) Commercial invoice Summary packing list Custom invoice packing list Lori receipt Letter of credit Performa invoice Pre shipment document set Bill of export

Banking Process:
The advising bank of Seller sends the document related to shipment and claims against letter of credit to the LC opening bank, unless otherwise mentioned in letter of credit. On satisfactory negotiation the LC, opening bank reimbursing the payment to the sellers advising bank. The exporter files a FIR with the bank where the utilization of foreign currency is specifically described. On filing FIR the export receives the BRC which culminates the entire export operation.

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Documents required for Negotiation: Bank Set

Bank covering 2copy Bill of exchange 1copy Bill of exchange with labor int. -1copy (In case of usance Lc) LC 1copy Commercial invoice 2copy Custom attested invoice -1copy Lori Receipt/BL/AWB 1copy SDF 1copy FOB + commercial invoice 3copy Bill of exchange As per Lc Bill Of exchange (libor) As per Lc Commercial invoice As per Lc Custom attested invoice As per lc Packing list As per lc LR/AWB/BL As per lc Certificate of origin As per lc Beneficiary certificate As per lc Courier receipt As per lc Fax copy As per lc Pre shipment inspection certificate As per lc Shipment advice As per lc IBA certificate As per lc Weight /measurement certificate As per lc Third party inspection certificate As per lc

Party Set

Description of documents :
Letter Of Credit : A letter of credit (L/C) is a banks conditional promise to pay issued by a bank at the request of an importer, in which the bank promises to pay an exporter upon presentation of documents specified in the L/C. An L/C reduces the risk of noncompletion because the bank agrees to pay against documents rather than actual merchandise.
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 A letter of credit is the most commonly used form of secure payment. It is a document issued by a financial institution at the buyer's request and instructions. It spells out the terms under which the seller will be paid. Pay the seller a certain amount when it produces documents according to the instructions. It acts as an escrow account. A letter of credit is the preferred method of payment in trade with areas outside of Western Europe, Canada, and the United States. Because it offers independent assurance to the both exporter and buyer. A letter of credit is a critical document, so it is imperative that the seller issue clear guidelines to the buyer on how to open a letter of credit.

Types of Letter of Credit : Revocable Letter of Credit L/c A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. It is rarely used in international trade and not considered satisfactory for the exporters but has an advantage over that of the importers and the issuing bank. There is no provision for confirming revocable credits as per terms of UCPDC, Hence they cannot be confirmed. It should be indicated in LC that the credit is revocable. if there is no such indication the credit will be deemed as irrevocable.

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 Irrevocable Letter of Credit L/c In this case it is not possible to revoked or amended a credit without the agreement of the issuing bank, the confirming bank, and the beneficiary. Form an exporters point of view it is believed to be more beneficial. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made. Confirmed Letter of Credit L/c Confirmed Letter of Credit is a special type of L/c in which another bank apart from the issuing bank has added its guarantee. Although, the cost of confirming by two banks makes it costlier, this type of L/c is more beneficial for the beneficiary as it doubles the guarantee. Sight Credit and Usance Credit L/c Sight credit states that the payments would be made by the issuing bank at sight, on demand or on presentation. In case of usance credit, draft are drawn on the issuing bank or the correspondent bank at specified usance period. The credit will indicate whether the usance draft are to be drawn on the issuing bank or in the case of confirmed credit on the confirming bank. Back to Back Letter of Credit L/c Back to Back Letter of Credit is also termed as Countervailing Credit. A credit is known as backtoback credit when a L/c is opened with security of another L/c. A backtoback credit which can also be referred as credit and countercredit is actually a method of financing both sides of a transaction in which a middleman buys goods from one customer and sells them to another. The parties to a Backto Back Letter of Credit are : The buyer and his bank as the issuer of the original Letter of Credit. The seller/manufacturer and his bank, The manufacturer's subcontractor and his bank.

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The practical use of this Credit is seen when L/c is opened by the ultimate buyer in favour of a particular beneficiary, who may not be the actual supplier/ manufacturer offering the main credit with near identical terms in favour as security and will be able to obtain reimbursement by presenting the documents received under back to back credit under the main L/c. The need for such credits arise mainly when : The ultimate buyer not ready for a transferable credit The Beneficiary do not want to disclose the source of supply to the openers. The manufacturer demands on payment against documents for goods but the beneficiary of credit is short of the funds Transferable Letter of Credit L/c A transferable documentary credit is a type of credit under which the first beneficiary which is usually a middleman may request the nominated bank to transfer credit in whole or in part to the second beneficiary. The L/c does state clearly mentions the margins of the first beneficiary and unless it is specified the L/c cannot be treated as transferable. It can only be used when the company is selling the product of a third party and the proper care has to be taken about the exit policy for the money transactions that take place. This type of L/c is used in the companies that act as a middle man during the transaction but dont have large limit. In the transferable L/c there is a right to substitute the invoice and the whole value can be transferred to a second beneficiary. The first beneficiary or middleman has rights to change the following terms and conditions of the letter of credit: Reduce the amount of the credit. Reduce unit price if it is stated Make shorter the expiry date of the letter of credit. Make shorter the last date for presentation of documents. Make shorter the period for shipment of goods.
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 Increase the amount of the cover or percentage for which insurance cover must be effected. Substitute the name of the applicant (the middleman) for that of the first beneficiary (the buyer). Parties to Letters of Credit : Applicant (Opener): Applicant which is also referred to as account party is normally a buyer or customer of the goods, who has to make payment to beneficiary. LC is initiated and issued at his request and on the basis of his instructions. Issuing Bank (Opening Bank) : The issuing bank is the one which create a letter of credit and takes the responsibility to make the payments on receipt of the documents from the beneficiary or through their banker. The payments has to be made to the beneficiary within seven working days from the date of receipt of documents at their end, provided the documents are in accordance with the terms and conditions of the letter of credit. If the documents are discrepant one, the rejection thereof to be communicated within seven working days from the date of of receipt of documents at their end. Beneficiary : Beneficiary is normally stands for a seller of the goods, who has to receive payment from the applicant. A credit is issued in his favour to enable him or his agent to obtain payment on surrender of stipulated document and comply with the term and conditions of the L/c. If L/c is a transferable one and he transfers the credit to another party, then he is referred to as the first or original beneficiary. Advising Bank : An Advising Bank provides advice to the beneficiary and takes the responsibility for sending the documents to the issuing bank and is normally located in the country of the beneficiary. Confirming Bank : Confirming bank adds its guarantee to the credit opened by another bank, thereby undertaking the responsibility of payment/negotiation acceptance under the credit, in additional to that of the issuing bank. Confirming bank play an important role where the exporter is not satisfied with the undertaking of only the issuing bank. Negotiating Bank: The Negotiating Bank is the bank who negotiates the documents submitted to them by the beneficiary under the credit either
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advised through them or restricted to them for negotiation. On negotiation of the documents they will claim the reimbursement under the credit and makes the payment to the beneficiary provided the documents submitted are in accordance with the terms and conditions of the letters of credit. Reimbursing Bank : Reimbursing Bank is the bank authorized to honor the reimbursement claim in settlement of negotiation/acceptance/payment lodged with it by the negotiating bank. It is normally the bank with which issuing bank has an account from which payment has to be made. Second Beneficiary : Second Beneficiary is the person who represent the first or original Beneficiary of credit in his absence. In this case, the credits belonging to the original beneficiary is transferable. The rights of the transferee are subject to terms of transfer.

Commercial Invoice - This is the most important document that certifies the sale as well as gives the description of the items as well as reflects the pricing or the value of the cargo. Customs valuation is based on the value reflected on the Commercial Invoice. Customs also verifies the rates charged in the commercial invoice and can question the rates applied incase it has sufficient cause to believe that the rates charged as not as per international market rates or the invoice is under valued to avoid duties. Packing List - It is mandatory to put the shipping marks on all the cargo covering each and every individual piece or parcel. The details of the number of parcels in the consignment, their dimension, the shipping marks, the gross and net weights of each of the parcels along with the number of units contained in each parcel is catalogued in the form of packing list. Packing List is used to identify the parcels as belonging to the particular consignment under the said Invoice. Certificate of Origin - Certain bilateral agreements and multi lateral agreements would enjoy favorable tariffs for import duties. In such cases when the consignments are exported from such member countries, the designated Export Agency issues Certificate of Origin to the importer for
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submission to Customs. Based on this certificate the Customs Department of the Importing Country classifies the cargo under specific schedule. Certificate of Origin also helps to avoid third party countries from routing imports through member countries and effecting third party exports to avoid duty, quantity or license restriction

Bill of lading : bill of lading is a document used at the time of export of goods. B/L is issued by the shipping company or its agents. It is issued when the shipping company receives the goods for shipment. It is a receipt of the goods, delivered to the shipping company. It is an acknowledgement to the effect that goods are received by the shipping company for the shipment. The various types of Bill of Lading are : 1. To order bill of lading: It means that B/L can be endorsed by the shippers or his bank or by another specified party in the favour of other person. So that goods are delivered on the transfer of B/L. Some times the endorsement can be in blank i.e. transferee name is not mentioned. 2. Clean bill of lading: It is issued when no adverse negative remark is made about the appearance and condition of goods. It states that goods received by the shipping company were in a good condition. 3. Freight Paid/Collect Bill of Lading: Freight paid bill of Lading is issued when goods are exported on CIF basis and freight is paid by the exporter. Freight collect bill of Lading is issued when goods are exported on FOB basis and freight is not paid. 4.Claused/Foul / Dirty Bill of Lading: A bill of Lading which is marked with any negative or adverse entry about apparence or conditions of goods is called claused /foul / dirty bill of Lading.
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5.Direct Bill of Lading: This bill of Lading is issued when the initial vessel takes the consignment from the port of shipment to the port of discharge. It is issued when cargo/goods are carried in same vessel up to the port of destination and not left half way to any in between port of discharge. 6.Through Bill of Lading: When a cargo has to be shipped in a vessel, that will take it to the port of destination then through B/L is issued. 7.Stale Bill of Lading: A B/L is said to be stale B/L if it is presented to the bank after the LC expiry date or after 21 days of shipment of goods and then it may not reach the overseas buyer before the ship's arrival at destination. 8.Charter Party Bill of Lading: When the exporter for the shipment of his goods hires a vessel or substantial part of vessel then charter party B/L is issued. 9.Steamship Bill of Lading: When the goods are shipped in a vessel that will carry cargo for other exporter also then steamship B/L is issued. It means that the exporter himself does not hire the whole vessel or a substantial part of vessel. 10.Port Bill of Lading: Port B/L in issued when the vessel has arrived at port but still the goods an not taken on the board of vessel. 11.House/Groupage Bill of Lading/Forwarding Agents Bill of Lading: These B/L are issued by clearing & forwarding agents. When the agents collect the same type of cargo for different exports & group into the single consignment then they issues this B/L to the exporter. 12.Negotiable Bill of Lading: A bill of Lading is said to be negotiable when made negotiable by the exporter and transferred to anybody for taking delivery of the goods. It means that title of goods can be transferred to another person by the transfer of B/L.

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13.On Deck Bill of Lading: It states that the goods have been loaded for storage on deck. 14. Shipped (On Board) & Received for shipment ( RFS ) Bill of Lading (Alongside B/L): When the goods are loaded on board of the ship the shipped bill of Lading is issued. Where the goods are received by shipping company for storing or for any other purpose then received bill of Lading is issued. RFS or Alongside BL certifies only receipt of goods. 15. Short Form Bill of Lading: A short form B/L is one which does not contain whole of the terms & conditions & clauses of the B/L. In this B/L a reference of another document is given from where all the terms/conditions and clauses can be taken. 16. Combined/Multimodal transport Bill of Lading: Combined bill is that form of bill of Lading which covers the several modes of transport (viz air, land, sea)

Shipping Bill / Bill of Export : Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. A shipping bill is issued by the shipping agent and represents some kind of certificate for all parties, included ship's owner, seller, buyer and some other parties. For each one represents a kind of certificate document. Documents Required for Post Parcel Customs Clearance In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

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 Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender. Despatch Note- It is filled by the exporter to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted. Commercial Invoice - Issued by the exporter for the full realisable amount of goods as per trade term. Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export. Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate. Legalised / Visaed Invoice - This shows the seller's genuineness before the appropriate consulate or chamber or commerce/ embassy. Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery. Packing List - It shows the details of goods contained in each parcel / shipment. Certificate of Inspection It is a type of document describing the condition of goods and confirming that they have been inspected. Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s). Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and is available. Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc. Certificate of Shipment - It signifies that a certain lot of goods have been shipped.
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 Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc. Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc. Antiquity Measurement It is issued by Archaeological Survey of India in case of antiques. Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date. Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc. Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter. Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return. In India custom clearance is a complex and time taking procedure that every export face in his export business. Physical control is still the basis of custom clearance in India where each consignment is manually examined in order to impose various types of export duties. High import tariffs and multiplicity of exemptions and export promotion schemes also contribute in complicating the documentation and procedures. So, a proper knowledge of the custom rules and regulation becomes important for the exporter. For clearance of export goods, the exporter or export agent has to undertake the following formalities: Registration : Any exporter who wants to export his good need to obtain PAN based Business Identification Number (BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for clearance of export goods. The exporters must also register themselves to the authorised foreign exchange dealer code and open a current account in the designated bank for credit of any drawback incentive. Registration in the case of export under export promotion schemes: All the exporters intending to export under the export promotion scheme need to get their licences / DEEC book etc.

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Processing of Shipping Bill - Non-EDI: In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to apply different forms of shipping bill/ bill of export for export of duty free goods, export of dutiable goods and export under drawback etc. Processing of Shipping Bill - EDI: Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is printed and given by the Service Center to the exporter/CHA immediately after submission of shipping bill. The cess can be paid on the strength of the challan at the designated bank. No copy of shipping bill is made available to exporter/CHA at this stage. Quota Allocation : The quota allocation label is required to be pasted on the export invoice. The allocation number of AEPC (Apparel Export Promotion Council) is to be entered in the system at the time of shipping bill entry. The quota certification of export invoice needs to be submitted to Customs along-with other original documents at the time of examination of the export cargo. For determining the validity date of the quota, the relevant date needs to be the date on which the full consignment is presented to the Customs for examination and duly recorded in the Computer System. Arrival of Goods at Docks : On the basis of examination and inspection goods are allowed enter into the Dock. At this stage the port authorities check the quantity of the goods with the documents.
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System Appraisal of Shipping Bills : In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made by the exporters without any human intervention. Sometimes the Shipping Bill is also processed on screen by the Customs Officer. Customs Examination of Export Cargo : Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and check list to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow "let export" for the shipment and inform the exporter or his agent. Stuffing / Loading of Goods in Containers : The exporter or export agent hand over the exporters copy of the shipping bill signed by the Appraiser Let Export" to the steamer agent. The agent then approaches the proper officer for allowing the shipment. The Customs Preventive Officer supervising the loading of container and general cargo in to the vessel may give "Shipped on Board" approval on the exporters copy of the shipping bill.

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Drawal of Samples : Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency in the ICES/E system. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent. The disposal of the three copies of the test memo is as follows: Original to be sent along with the sample to the test agency. Duplicate Customs copy to be retained with the 2nd sample. Triplicate Exporters copy. The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also order for sample to be drawn for purpose other than testing such as visual inspection and verification of description, market value inquiry, etc.

Amendments: Any correction/amendments in the check list generated after filing of declaration can be made at the service center, if the documents have not yet been submitted in the system and the shipping bill number has not been generated. In situations, where corrections are required to be made after the generation of the shipping bill number or after the goods have been brought into the Export Dock, amendments is carried out in the following manners. The goods have not yet been allowed "let export" amendments may be permitted by the Assistant Commissioner (Exports). Where the "Let Export" order has already been given, amendments may be permitted only by the Additional/Joint Commissioner, Custom House, in charge of export section.

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In both the cases, after the permission for amendments has been granted, the Assistant Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the shipping bill to the Dock Appraiser for cancellation before amendment is approved on the system.

Export of Goods under Claim for Drawback : After actual export of the goods, the Drawback claim is processed through EDI system by the officers of Drawback Branch on first come first served basis without feeling any separate form. Generation of Shipping Bills : The Shipping Bill is generated by the system in two copies- one as Custom copy and one as exporter copy. Both the copies are then signed by the Custom officer and the Custom House Agent.

Benefit Process:
Apply for License : An export license is a document issued by the appropriate licensing agency after which an exporter is allowed to transport his product in a foreign market. The license is only issued after a careful review of the facts surrounding the given export transaction. Export license depends on the nature of goods to be transported as well as the destination port. So, being an exporter it is necessary to determine whether the product or good to be exported requires an export license or not. While making the determination one must consider the following necessary points: What are you exporting ? Where are you exporting ? Who will receive your item ? What will your items will be used ?
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Canalization : Canalization is an important feature of Export License under which certain goods can be imported only by designated agencies. For an example, an item like gold, in bulk, can be imported only by specified banks like SBI and some foreign banks or designated agencies. Application for an Export License : To determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying what is called ITC (HS) Classifications. Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application can be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for issue of export licenses. Exports Free unless regulated : The Director General of Foreign Trade (DGFT) from time to time specifies through a public notice according to which any goods, not included in the ITC (HS) Classifications of Export and Import items may be exported without a license. Such terms and conditions may include Minimum Export Price (MEP), registration with specified authorities, quantitative ceilings and compliance with other laws, rules, regulations.

Documents required for Benefits : IE Code (import export code) EP Copy of shipping bill (export promotion copy of shipping bill) Custom Sealed Invoice Custom Sealed Packing List One copy of non negotiable BL Mat receipt in original BRC in original
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Foreign Trade Policy

Special Focus : With a view to continously increasing our percentage share of global trade and expanding employment opportunities, certain special focus initiatives have been identified/continued for Market Diversification, Technological Upgradation, Support to status holders, Agriculture, Handlooms, Handicraft, Gems & Jewellery, Leather, Marine, Electronics and IT Hardware manufacturing Industries, Green products, Exports of products from North-East, Sports Goods and Toys sectors. Government of India shall make concerted efforts to promote exports in these sectors by specific sectoral strategies that shall be notified from time to time. Further Sectoral Initiatives in other sectors will also be announced from time to time. Market Diversification : Weaker demand in developed economies, triggered by falling asset prices and increased economic uncertainty has pulled down the growth of Indias exports to developed countries. There are no clear signals as to when the markets in developed countries would revive. To insulate Indian exports from the decline in demand from developed countries, in this Policy focus is on diversification of Indian exports to other markets, specially those located in Latin America, Africa, parts of Asia and Ocenia. To achieve diversification of Indian exports, following initiatives have been taken under this Policy. 26 new countries have been included within the ambit of Focus Market Scheme. The incentives provided under Focus Market Scheme have been increased from 2.5% to 3%. There has been a significant increase in the outlay under Market Linked Focus Product Scheme by inclusion of more markets and products. This ensures support for exports to all countries in Africa and Latin America. Technological Up gradation :

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To usher in the next phase of export growth, India needs to move up in the value chain of export goods. This objective is sought to be achieved by encouraging technological upgradation of our export sector. A number of initiatives have been taken in this Policy to focus on technological up gradation; such initiatives include: EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textiles, plastics, handicrafts, chemicals and allied products and leather and leather products. The existing 3 % EPCG Scheme has been considerably simplified, to ease its usage by the exporters. To encourage value added manufacture export, a minimum 15 % value addition on imported inputs under Advance Authorization Scheme has been stipulated. A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. Steps to encourage Project Exports shall be taken. Support to status holders : The Government recognized Status Holders contribute approx. 60% of Indias goods exports. To incentivise and encourage the status holders, as well as to encourage Technological upgradation of export production, additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition.

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 Agriculture and Village Industry : Vishesh Krishi and Gram Udyog Yojana Capital goods imported under EPCG will be permitted to be installed anywhere in AEZ. Import of restricted items, such as panels, are allowed under various export promotion schemes. Import of inputs such as pesticides are permitted under Advance Authorisation for agro exports. New towns of export excellence with a threshold limit of Rs 150 crore shall be notified. Certain specified flowers, fruits and vegetables are entitled to a special duty credit scrip, in addition to the normal benefit under VKGUY. Handlooms : Specific funds are earmarked under MAI / MDA Scheme for promoting handloom exports. Duty free import entitlement of specified trimmings and embellishments is 5 % of FOB value of exports during previous financial year. Duty free import entitlement of hand knotted carpet samples is 1 % of FOB value of exports during previous financial year. Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted. New towns of export excellence with a threshold limit of Rs 150 crore shall be notified.

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 Machinery and equipment for effluent treatment plants is exempt from customs duty. Handicrafts : Duty free import entitlement of tools, trimmings and embellishments is 5 %of FOB value of exports during previous financial year. Entitlement is broad banded, and shall extend also to merchant exporters tied up with supporting manufacturers. Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable. Specific funds are earmarked under MAI & MDA Schemes for promoting Handicraft exports. CVD is exempted on duty free import of trimmings, embellishments and consumables. New towns of export excellence with a reduced threshold limit of Rs 150 crore shall be notified. Machinery and equipment for effluent treatment plants are exempt from customs duty. All handicraft exports would be treated as special Focus products and entitled to higher incentives. Gems & Jewelry : Import of gold of 8 k and above is allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content. Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of Consumables and Tools, for:

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Jewelry made out of: Precious metals (other than Gold & Platinum) 2% Gold and Platinum 1% Rhodium finished Silver 3% Cut and Polished Diamonds 1% Duty free import entitlement of commercial samples shall be Rs. 300,000. Duty free re-import entitlement for rejected jewelry shall be 2% of FOB value of exports. Import of Diamonds on consignment basis for Certification/ Grading & re-export by the authorized offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies will be permitted. Personal carriage of Gems & Jewellery products incase of holding/participating in overseas exhibitions increased to US$ 5 million and to US$ 1 million incase of export promotion tours. Extension in number of days for re-import of unsold items in case of participation in an exhibition in US Aincreased to 90 days. In an Endeavour to make India a diamond international trading hub, it is planned to establish Diamond Bourse (s). Leather and Footwear : Duty free import entitlement of specified items is 3% of FOB value of exports of leather garments during preceding financial year. Duty free entitlement for import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), gloves, travel bags and handbags is 3 % of FOB value of exports of previous financial year. Such entitlement shall also cover packing material, such as printed and nonprinted shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear. Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty.
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 Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted. CVD is exempted on lining and interlining material notified at S.No 168 of Customs Notification No 21/2002 dated 01.03.2002. CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS). Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 50% of the applicable export duty. Imports for technological up gradation under EPCG in fisheries sector (except fishing trawlers, ships, boats and other similar items) exempted from maintaining average export obligation. Duty free import of specified specialized inputs / chemicals and flavoring oils is allowed to the extent of 1% of FOB value of preceding financial years export. To allow import of monofilament longline system for tuna fishing at a concessional rate of duty and Bait Fish for tuna fishing at Nil duty. A self removal procedure for clearance of seafood waste is applicable subject to prescribed wastage norms. Marine products are considered for VKGUY scheme. Electronics and IT Hardware Manufacturing Industries: Expeditious clearance of approvals required from DGFT shall be ensured. Exporters /Associations would be entitled to utilize MAI & MDA Schemes for promoting Electronics and IT Hardware Manufacturing industry exports.

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 Sports Goods and Toys : Duty free import of specified specialized inputs allowed to the extent of 3 % of FOB value of preceding financial years export. Sports goods and toys shall be treated as a Priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI /MDA Scheme for promoting exports from this sector. Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT. Sports Goods and Toys are treated as special focus products and entitled to higher incentives. Green products and technologies India aims to become a hub for production and export of green products and technologies. To achieve this objective, special initiative will be taken to promote development and manufacture of such products and technologies for exports. To begin with, focus would be on items relating to transportation, solar and wind power generation and other products as may be notified which will be incentivized under Reward Schemes of Chapter 3 of FTP. Incentives for Exports from the North Eastern Region : In order to give a fillip to exports of products from the north-eastern States, notified products of this region would be incentivized under Reward Schemes of

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 VISHESH KRISHI AND GRAM UDYOG YOJANA : Objective of VKGUY is to promote exports of : Agricultural Produce and their value added products; Minor Forest Produce and their value added variants; Gram Udyog Products; Forest Based Products; and Other Products, as notified from time to time. Such products shall be listed in Appendix 3 7A of HBPv1. Entitlement : Duty Credit Scrip benefits are granted with an aim to compensate high transport costs, and to offset other disadvantages. Exporters, of products notified in Appendix 37A of HBPv1, shall be entitled for Duty Credit Scrip equivalent to 5 % of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards. However, for exports made w.e.f 2 7.8.2009, some Flowers, Fruits, Vegetables and other products, as listed in Table 2 of Appendix 3 7A shall be entitled to an additional duty credit scrip equivalent to 2 % of FOB value of exports; over and above the 5 % or 3 % VKGUY reduced rate entitlement available. Applicability of Reduced Rate: Duty Credit Scrip benefits under VKGUY scheme shall be granted only at a reduced rate of 3 % of FOB value of exports in such cases where exporter has also availed benefits of: Drawback at rates higher than 1%; and/or

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 Specific DEPB rate (i.e. other than Miscellaneous Category Sr. Nos. 22 C & 22 D of Product Group 90); and/or Advance Authorization or Duty Free Import Authorization Import of inputs (other than catalysts, consumables and packing materials) for the exported product for which Duty Credit Scrip under VKGUY is being claimed.

Agri. Infrastructure Incentive Scrip : For exports made during a particular year, all Status Holders (having status recognition for the current year) exporting products covered under ITC HS Chapters 1 to 24 , shall be incentivized with duty credit scrip equal to 1 0% of FOB value of agricultural exports (including VKGUY benefits entitled under Policy) provided that the total benefits for all status holders put together does not exceed Rs 100 Cr (i.e. Rs 5 0 Cr for each half year) and the conditions specified in Para 3.7.2 of HBPv1 are satisfied. Zonal Office, CLA, New Delhi shall be the licensing office for grant of the benefit to all status holders. FOCUS MARKET SCHEME (FMS) : Objective is to offset high freight cost and otherexternalities to select international markets with a view to enhance Indias export competitiveness in these countries. Entitlement: Exporters of all products to notified countries (as in Appendix 3 7C of HBPv1) shall be entitled for Duty Credit Scrip equivalent to 3 % of FOB value of exports (in free foreign exchange) for exports made from 2 7.8.2009 onwards. Ineligible Exports Categories / Sectors for FMS : The following categories of export products / sectors shall be ineligible for Duty Credit Scrip, under FMS scheme: Supplies made to SEZ units; Service Exports;
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 Diamonds and other precious, semi precious stones; Gold, silver, platinum and other precious metals in any form, including plain and studded Jewellery; Ores and Concentrates, of all types and in all forms; Cereals, of all types; Sugar, of all types and in all forms; Crude / Petroleum Oil & Crude / Petroleum based Products covered under ITC HS codes 2 709 to 2 715, of all types and in all forms; and Export of Milk and Milk Products covered under ITC HS Codes 0401 to 0406, 1 9011 001, 1 9011 010, 2105 & 3501.

FOCUS PRODUCT SCHEME (FPS) : Objective is to incentivise export of such products which have high export intensity / employment potential, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products. Entitlement : Exports of notified products (as in Appendix 37D of HBPv1) to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to 2 % of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards. However, Special Focus Product(s) /sector(s), covered under Table 2 and Table 5 of Appendix 3 7D, shall be granted Duty Credit Scrip equivalent to 5 % of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards.

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Market Linked Focus Products Scrip (MLFPS): Export of Products/Sectors of high export intensity/ employment potential (which are not covered under present FPS List) would be incentivized at 2 % of FOB value of exports (in free foreign exchange) under FPS when exported to the Linked Markets (countries), which are not covered in the present FMS list, as notified in Appendix 3 7D of HBPv1, for exports made from 27.8.2009 onwards.

Status Category of Export Performance :

Status Category

Export Performance FOB / FOR Value (Rupees in Crores) 20 100 500 2500 7500

Export House (EH) Star Export House (SEH) Trading House (TH) Star Trading House (STH) Premier Trading House (PTH)

Status Holders Incentive Scrip : With an objective to promote investment in upgradation of technology of some specified sectors as listed in Para. below, Status Holders shall be entitled to incentive scrip @1% of FOB value of exports made during 2 009- 10 and during 2010-11, of these specified sectors, in the form of duty credit. This shall be over and above any duty credit scrip claimed/availed under this chapter.
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 Status Holders availing Technology Upgradation Fund Scheme (TUFS) benefits (under Ministry of Textiles) during a particular year shall not be eligible for Status Holders Incentive Scrip for exports of that year. The Status Holders Incentive Scrip shall be with Actual User Condition and shall be used for imports of capital goods (as defined in FTP) relating to the sectors specified in Para 3.16.4 below. The Status Holders of the following Sectors shall be eligible for this Status Holders Incentive Scrip: Leather Sector (excluding finished leather); Textiles and Jute Sector; Handicrafts; Engineering Sector (excluding Iron & Steel, Nonferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors & parts and Ships, Boats and Floating Structures; Plastics; and Basic Chemicals (excluding Pharma Products). Common Provisions of Duty Credit Scrips, except where specifically provided for Special Provisions : Government reserves the right in public interest, tospecify export products or services or exports to such countries, which shall not be eligible for computation of entitlement. Further Government reserves the right to impose / change the rate / ceiling on Duty Credit Scrip under this chapter. Similarly, Government may also notify goods (in Appendix 3 7B of HBPv1), which shall not be allowed for import under Duty Credit Scrips. Ineligible Exports Categories /Sectors : For VKGUY, FMS, FPS (including MLFPS) and Status Holders Incentive Scrip, the following exports categories /sectors shall be ineligible for Duty Credit Scrip entitlement: EOUs / EHTPs / BTPs who are availing direct tax benefits / exemption;

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 Export of imported goods covered under Para 2 .35 of FTP; Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India; Deemed Exports; Exports made by SEZ units or SEZ products exported through DTA units; and Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).

Counting of Commission in FOB value of Exports in free foreign exchange: For computation of Duty Credit Scrip Benefits, FOB Value of Exports (in free foreign exchange) shall include () up to 12.5% Foreign Agency Commission.

Free Transferability: Duty Credit Scrip and items imported against it would be freely transferable. However, Duty Credit Scrip under SFIS and under Status Holders Incentive Scrip shall not be freely transferable.

Imports Allowed : Duty Credit Scrip may be used for import of inputs or goods including capital goods, provided same is freely importable and / or restricted under ITC (HS). However, import of items listed in Appendix 3 7B of HBPv1 shall not be permitted to be debited. Duty Credit Scrips under Chapter 3 of FTP can also be utilized for payment of duty against imports under EPCG scheme provided the item is importable against the scrip.

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CENVAT / Drawback : Additional customs duty/excise duty paid in cash or through debit under Duty Credit scrip shall be adjusted as CENVAT Credit or Duty Drawback as per DoR rules, except under SFIS. TRA Facility : Utilization of Duty Credit Scrip for imports from a port other than port of registration shall be allowed under Telegraphic Release Advice (TRA) facility as per DoR notification. Exclusivity of Entitlement : For a shipment, Duty Credit Scrip benefit under any one of the schemes covered in this Chapter can alone be claimed, at exporters option.

Import under Lease financing : Utilization of Duty Credit Scrip shall be permitted for payment of duty in case of import of capital goods under lease financing in terms of provision in Para 2.25 of FTP. Transfer of Export Performance : Transfer of export performance from one to anothershall not be permitted. Thus, a shipment bill containing name of applicant shall be counted in export performance / turnover of applicant only if export proceeds from overseas are realized in applicants bank account and this shall be evidenced from BRC / FIRC. However, for VKGUY, FMS and FPS (including MLFPS), benefits can be claimed either by the supporting manufacturer (along with disclaimer from the company / firm who has realized the foreign exchange directly from overseas) or by the company / firm who has realized the foreign exchange directly from overseas.

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EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME : Zero duty EPCG Scheme: Zero duty EPCG scheme allows import of capital goods forpre production, production and post production (including CKD/SKD thereof as well as computer software systems) at zero Customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. The scheme will be available for exporters of engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products; subject to exclusions as provided in HBPv1. Validity period for import of capital goods and provision for extension in export obligation period will be as separately provided in the HBPv1. All other provisions pertaining to concessional 3 % duty EPCG scheme under this Chapter, to the extent they are not inconsistent with the above provisions of zero duty EPCG scheme, shall be applicable to the zero duty EPCG scheme also.

Concessional 3% Duty : Concessional 3 % duty EPCG scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 3 % Customs duty, subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issuedate. In case of agro units, and units in cottage or tiny sector, import of capital goods at 3 % Customs duty shall be allowed subject to fulfillment of export obligation equivalent to 6 times of duty saved on capital goods imported, in 12 years from Authorization issue-date. For SSI units, import of capital goods at 3 % Customs duty shall be allowed, subject to fulfillment of export obligation equivalent to 6 times of duty saved on capital goods, in 8 years from Authorization issue-date, provided the landed cif value of such imported capital goods under the scheme does not exceed Rs. 5 0 lakhs and total investment in plant and machinery after such imports does not exceed SSI limit. However, in respect of EPCG Authorization with a duty saved amount of Rs. 1 00 crores or more, export obligation shall be fulfilled in 12 years.
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In case CVD is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved, provided the same is not CENVATed. Capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds. Second hand capital goods, without any restriction on age, may also be imported under EPCG scheme. However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travelagents, tour operators or tour transport operators andcompanies owning/operating golf resorts, subject to the condition that: total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current and preceding three licensing years is Rs. 1 .5 crores or more. duty saved amount on all EPCG Authorizations issued in a licensing year for import of motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 5 0% of average foreign exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three licensing years. vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A copy of the Registration certificate should be submitted to concerned RA as a confirmation of import of vehicle. However, parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc. cannot be imported under the EPCG Scheme. Import of Restricted items of imports mentioned under ITC(HS) shall only be allowed under EPCG Scheme after approval from EFC at Headquarters. Spares (including refurbished/reconditioned spares), moulds, dies, jigs, fixtures, tools, refractory for initial lining and catalyst for initial charge; for existing plant and machinery (imported earlier, under EPCG or otherwise), shall be allowed to be imported under the EPCG scheme subject to an export obligation equivalent to 5 0% of the normal export obligation prescribed to be fulfilled in 8 years (6 years for zero duty EPCG scheme), reckoned from Authorization issue date. This would however be subject to the condition that the c.i.f. value of import of the above spares etc. will be limited to 1 0% of the value of plant and machinery imported under the EPCG scheme. In case of plant and machinery not imported under the EPCG scheme, c.i.f. value of import of the spares etc. will be limited to 1 0% of the book value of the plant and machinery.
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Organizations Supporting to Exporters

In India there are a number of organisation and agencies that provides various types of support to the exporters from time to time. These export organisations provides market research in the area of foreign trade, dissemination of information arising from its activities relating to research and market studies. So, exporter should contact them for the necessary assistance.

Export Promotion Councils (EPC) : Export Promotion Councils are registered as non -profit organisations under the Indian Companies Act. At present there are eleven Export Promotion Councils under the administrative control of the Department of Commerce and nine export promotion councils related to textile sector under the administrative control of Ministry of Textiles. The Export Promotion Councils perform both advisory and executive functions. These Councils are also the registering authorities under the Export Import Policy, 2002-2007.

Commodity Boards: Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. There are five statutory Commodity Boards, which are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.

Federation of Indian Export Organisations (FIEO): FIEO was set up jointly by the Ministry of Commerce, Government of India and private trade and industry in the year 1965. FIEO is thus a partner of the
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Government of India in promoting Indias exports. Address: Niryaat Bhawan, Rao Tula Ram Marg, Opp. Army Hospital. Research & Referral, New Delhi 110057.

Indian Institute of Foreign Trade (IIFT): The Indian Institute of Foreign Trade (IIFT) was set up in 1963 by the Government of India as an autonomous organisation to help Indian exporters in foreign trade management and increase exports by developing human resources, generating, analysing and disseminating data and conducting research. Address: B-21 Kutub Institutional Area, Mehrauli Road, New Delhi-110016.

Indian Institution of Packaging (IIP): The Indian Institute of Packaging or IIP in short was established in 1966 under the Societies Registration Act (1860). Headquartered in Mumbai, IIP also has testing and development laboratories at Calcutta, New Delhi and Chennai. The Institute is closely linked with international organisations and is recognized by the UNIDO (United Nations Industrial Development Organisation) and the ITC (International Trading Centre) for consultancy and training. The IIP is a member of the Asian Packaging Federation (APF), the Institute of Packaging Professionals (IOPP) USA, the Insitute of Packaging (IOP) UK, Technical Association of PULP AND Paper Industry (TAPPI), USA and the World Packaging Organisation (WPO). Address: B-2, MIDC Area, P.B. 9432, Andheri (E), Mumbai 400096.

Export Inspection Council (EIC): The Export Inspection Council or EIC in short, was set up by the Government of India under Section 3 of the Export (Quality Control and Inspection) Act, 1963 in order to ensure sound development of export trade of India through Quality Control and Inspection.
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Address: 3rd Floor, ND YMCA, Cultural Centre Bldg., 1, Jai Singh Road, New Delhi-110001.

Indian Council of Arbitration (ICA): The Indian Council for Arbitration (ICA) was established on April 15, 1965. ICA provides arbitration facilities for all types of Indian and international commercial disputes through its international panel of arbitrators with eminent and experienced persons from different lines of trade and professions. Address: Federation House, Tansen Marg, New Delhi-110001.

India Trade Promotion Organisation (ITPO): ITPO is a government organisation for promoting the countrys external trade. Its promotional tools include organizing of fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion Programmes, Product Promotion Programmes, Promotion through Overseas Department Stores, Market Surveys and Information Dissemination. Address: Pragati Bhawan Pragati Maidan, New Delhi-10001.

Chamber of Commerce & Industry (CII): CII play an active role in issuing certificate of origin and taking up specific cases of exporters to the Govt.

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Federation of Indian Chamber of Commerce & Industry (FICCI) : Federation of Indian Chambers of Commerce and Industry or FICCI is an association of business organisations in India. FICCI acts as the proactive business solution provider through research, interactions at the highest political level and global networking. Address: Federation House, Tansen Marg, New Delhi-110001.

Bureau of Indian Standards (BIS): The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body set up under the Bureau of Indian Standards Act, 1986. BIS is engaged in standard formulation, certification marking and laboratory testing. Address: 9, Manak Bhavan, Bahadur Shah Zafar Marg, New Delhi-110002

Textile Committee : Textile Committee carries pre-shipment inspection of textiles and market research for textile yarns, textile machines etc. Address: Textile Centre, second Floor, 34 PD, Mello Road, Wadi Bandar, Bombay-400009.

Marine Products Export Development Authority (MPEDA): The Marine Products Export Development Authority (MPEDA) was constituted in 1972 under the Marine Products Export Development Authority Act 1972 and plays an active role in the development of marine products meant for export with special reference to processing, packaging, storage and marketing etc.
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Address: P.B No.4272 MPEDA House, pannampilly Avenue, Parampily Nagar, Cochin-682036

India Investment Centre (IIC): Indian Investment Center (IIC) was set up in 1960 as an independent organization, which is under the Ministry of Finance, Government of India. The main objective behind the setting up of IIC was to encourage foreign private investment in the country. IIC also assist Indian Businessmen for setting up of Industrial or other Joint ventures abroad. Address: Jeevan Vihar, 4th Floor, Parliament Street, New Delhi-110001

Directorate General of Foreign Trade (DGFT): DGFT or Directorate General of Foreign Trade is a government organisation in India responsible for the formulation of guidelines and principles for importers and exporters of country. Address: Udyog Bhawan, H-Wing, Gate No.2, Maulana Azad Road, New Delhi 110011

Director General of Commercial Intelligence Statistics (DGCIS): DGCIS is the Primary agency for the collection, compilation and the publication of the foreign inland and ancillary trade statistics and dissemination of various types of commercial informations. Address: I, Council House Street Calcutta-700001

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General Foreign Trade Act

Legalization and Israel boycott : Due to political compulsions the Islamic country does not have any trade relation with Israel. This compulsion lades to Israel boycott and any exporter who intense to supply goods to these Islamic counties are needed to authenticate a few suggested key documents through the local embassy from the importing country. This process is called legalization on Israel boycott. Importance of FPA : The intermediaries who bring/organize business to either exporter or importer are usually benefited by receiving commission. To ensure the commission payment the paying party prepares a fee protection agreement in fever of beneficiary which is submitted to the bank with a clear interaction to make commission payment to the beneficiary. This FPA is irrevocable and cannot withdraw without the consent of the beneficiary. The FPA payment is made after payer gates the payment from the settled source. Chinese inspection quarantine : International trade with china is different from other trade regulation apply world while. China accepts any import cargo after application of its own inspection at the port of arrival. To apply this inspection and to reaffirm the quality of the received cargo a portion of payment is withheld which is reimbursed on successful completion of the inspection at the arrived port. This inspection issued is called Chinese inspection quarantine. Role of MMTC/STC : As the government of India has imposed ban on import of a few product the consumers of such banned product approach Minerals and Metals Trading Corporation of India LTD (MMTC) & State Trading Corporation of India LTD (STC) to import on specified terms and condition. MMTC
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and STC arrange this cargo from their own sources in abrade. A general import export regulation is applied against these imports.

LIBOR : An international arrangement always becomes applicable while fixing interest rate against offered credit terms by the exporter to import to avoid any kind of misunderstanding conflict. The trading partner usually refers to an independent monitory agency in London, UK. This agency offers guideline on credit period as well as indicates the application interest rate this is called London international borrowing operating rates.

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