EXPORT

The term export means shipping the goods and services out of the port of a country.
The seller of such goods and services is referred to as an "exporter" and is based in
the country ofexport whereas the overseas based buyer is referred to as an
"importer".
EXPORT DOCUMENTATION AND PROCEDURES

1. Commercial invoice
2. Bill of lading
3. Consular invoice
4. Certificate of origin
5. Inspection certification
6. Dock receipt and warehouse receipt
7. Destination control statement
8. Insurance certificate
9. Export license
10. Export packing list
STEP1: Enquiry :
STEP 2: Proforma generation :
STEP 3:Order placement :
STEP 4: Order acceptance :
STEP 5: Goods readiness & documentation :
STEP 6: Goods removal from works :
STEP 7: Documents for C & F agent :
STEP 8: Customs Clearance :
STEP 9: Document Forwarding :
STEP 10: Bills negotiation :
Step11: Bank to bank documents forwarding :
STEP 12: Customs obligation discharge :
STEP 13: Receipt of Bank certificate :

What is ECGC?
Export Credit Guarantee Corporation of India Ltd. ( ECGC ) is a
Government of India Enterprise which provides export credit
insurance facilities to exporters and banks in India.
It functions under the administrative control of Ministry of
Commerce & Industry, and is managed by a Board of Directors
comprising representatives of the Government, Reserve Bank
of India, banking , insurance and exporting community.
Over the years, it has evolved various export credit risk
insurance products to suit the requirements of Indian exporters
and commercial banks.
ECGC is the seventh largest credit insurer of the world in terms
of coverage of national exports. The present paid up capital of
the Company is Rs. 1200 Crores and the authorized capital is
Rs. 5000 Crores.
ECGC is essentially an export promotion organization, seeking
to improve the competitive capacity of Indian exporters by
giving them credit insurance covers comparable to those
available to their competitors from most other countries. It
keeps it's premium rates at the lowest level possible.

What does ECGC do?

Provides a range of credit risk insurance covers to exporters

against loss in export of goods and services
Offers Export Credit Insurance covers to banks and financial
institutions to enable exporters to obtain better facilities from
them
Provides Overseas Investment Insurance to Indian
companies investing in joint ventures abroad in the form of
equity or loan

How does ECGC help exporters?

ECGC

Offers insurance protection to exporters against payment risks

Provides guidance in export-related activities
Makes available information on different countries with it's own
credit ratings
Makes it easy to obtain export finance from banks/financial
institutions

Assists exporters in recovering bad debts

Provides information on credit-worthiness of overseas buyers

Need for export credit insurance

Payments for exports are open to risks even at the best of times.
The risks have assumed large proportions today due to the farreaching political and economic changes that are sweeping the
world. An outbreak of war or civil war may block or delay payment
for goods exported. A coup or an insurrection may also bring about
the same result. Economic difficulties or balance of payment
problems may lead a country to impose restrictions on either
import of certain goods or on transfer of payments for goods
imported. In addition, the exporters have to face commercial risks
of insolvency or protracted default of buyers. The commercial risks
of a foreign buyer going bankrupt or losing his capacity to pay are
aggravated due to the political and economic uncertainties. Export
credit insurance is designed to protect exporters from the
consequences of the payment risks, both political and commercial,
and to enable them to expand their overseas business without fear
of loss.

IMPORT DOCUMENTATION
1. Bill of Entry:
2. Bill of Lading / Airway bill :
3. Import License
4. Insurance certificate
5. Purchase order/Letter of Credit
6. Technical write up, literature etc. for specific goods if any
7. Industrial License if any
8. RCMC. Registration cum Membership Certificate if any
9. Test report if any
10. DEEC/DEPB /ECGC or any other documents for duty benefits
11. Central excise document if any
12. GATT/DGFT declaration.
13. Any other specific documents other than the above mentioned

IMPORT PROCEDURE
1. TRADE ENQUIRY
2. PROCUEMENT OF IMPORT LICENCE

3. OBTAINING FOREGIN EXCHANGE

4. PLACING THE INDENT
5. DISPATCHING A LETTER OF CREDIT
6. OBTAINING NECESSARY DEOCUMENTS
7. CUSTOMS FORMALITIES AND CLEARING OF GOODS
8. MAKING THE PAYMENT

Types of risk
There are many risks involved in exporting and in this section we briefly cover the main risks you are likely
to encounter. Follow the links below to learn more about the risks in question:

Credit risk
Poor quality risk
Transportation and logistics risks
Legal risks
Political risks
Unforeseen risks
Exchange rate risks
Cultural and language risks
Managing your risks

5 types of export insurance

International business is a risk, which is why insurance cover is more important than ever for exporters.
Here's a guide to the five most popular export insuranceproducts. Murphy's Law states: 'Anything that can go
wrong, will go wrong.' While you may not be as pessimistic as Edward Murphy Jr, it doesn't hurt to think about
how you can mitigate all the negative possibilities to which exporting is exposed. Fortunately, there are a
number of ways you can invest in peace of mind. Export insurance, in its various guises, can not only make you
more comfortable about doing business overseas, it allows you to focus on, and grow, your business
internationally.

Credit insurance
Credit insurance, or trade credit insurance, is the most popular form of export insurance. Suitable for any
business that extends credit to their overseas buyer, credit insurance covers the risk of your buyer becoming

insolvent or unable to pay the money owed to you. "Credit insurance will be able to offer 80-to-90 percent
recovery to what was owed," says Kirk Cheesman, managing director of NCI Brokers. "It also offers
information and assistance with recovery, especially when businesses are marketing to potential new clients.
Insurers will obtain credit reports, financial histories on the debtor, and look at if there's any adverse information
relating to directors and shareholders, and come back with a recommendation and endorsement." The premium
on credit insurance is negotiated as a percentage against your expected turnover at the beginning of the year,
Cheesman explains. If the actual turnover is under expectations, the insurer will charge a minimum base amount
and a rate on the lower turnover. "Likewise, if they achieve more, there'll be an adjustment for over and above,"
he adds. Four commercial insurers provide trade credit insurance - Atradius, Coface, Euler-Hermes and QBE with government agency Export Finance and Insurance Corporation (EFIC) providing longer-term coverage,
usually beyond two-year credit terms, where the commercial providers do not. Credit insurance is harder to
come by these days due to the uncertainty brought on by the global economic downturn, says Cheesman. "The
insurers are more cautious given the current conditions, and there is more insolvency out there. You might also
have risks in financial institutions. If people are selling on letters of credit, then normally the risk goes through
the bank, but a lot of banks have fallen over in the last year so it's not just the debtor, it's the bank supporting the
debtor." The benefits of credit insurance are that it provides the exporter with comfort in knowing that they're
not risking the business if something does happen to the buyer, as well as allowing them to extend credit to
buyers unknown to the business, but considered a good prospect by the insurer. "It definitely protects the
balance sheet and gives them more confidence to grow," notes Cheesman.

Political risk insurance

Political risk insurance (PRI) is another type of coverage exporters need to consider, particularly in emerging
countries. Political risk is defined as the risk of the overseas government intervening in your investments, which
could be the goods you export, or any assets or business you have in the other country. "Traditional PRI would
cover a government confiscating or nationalising or expropriating your assets, or passing laws that block your
ability to transfer money out of the country," explains Chang Foo, head of Product Management and Risk
Transfer at EFIC. He adds it also covers war risk and political violence, "like civil war or riots, insurrection,
upheaval, coup d'etat: things that are beyond the control of the investor". Coverage has also widened to include
other constrictions on an exporters ability to do business, says Foo, including import-export bans, such as the
restriction of importing machinery to complete operations or a cancellation of your export licence; selective
discrimination against foreign entities where the government changes the business environment by favouring
local business; and business-to-government contracts where the government breaches its obligations,
contravening international law. More and more exporters are doing business with emerging economies, and
many businesses arent aware of these risks, says Foo. "With emerging countries, you have weaker
governments, weaker law, not as transparent judiciary systems as you expect in OECD [Organisation for
Economic Cooperation and Development] countries. You could have an unstable regime in which governments
come and go. This is where the PRI product comes into play." Both commercial and public agencies can provide
political risk insurance, from the World Bank to regional and multinational commercial and government
providers. "Normally it's a given that if you buy an export policy you get political risk cover with it, especially
non-acceptance," says Cheesman. However, a public agency can additionally leverage a government-togovernment relationship in the event of a problem. "We can be more proactive and engage appropriate channels
to make sure things don't deteriorate. So we have the halo effect," says Foo. "The World Bank has a larger halo
effect, they have preferential creditor status."

Marine insurance
If you are a goods exporter, marine insurance is one of the most important types you should consider. "Financial
protection of the shipment of products and goods is known as marine insurance, regardless of whether the mode

of transport is over the sea, air, land or post," says Andrew Clarke, account executive with OAMPS Insurance
Brokers. "There are numerous risks to consider when a business is involved in transporting goods, including
damage to and loss of the goods." Because of the number of permutations a shipment of goods can undergo
between seller to buyer-often from factories and storage facilities via airports, wharves, and other terminalsmarine insurance is quite complex. As a general rule, however, exporters should aim for a policy that covers
them from the time it leaves your premises until your customer has taken possession of it, advises Clarke.
"Some business owners have fallen into the trap of not covering goods they are transporting and mistakenly
believing their professional carriers insurance will cover the goods. Common carriers do not have specialist
marine insurance, and the cover is usually limited." He adds that exporters also need to check that the insurer is
capable of handling a claim globally, "otherwise having a claim paid could become an issue".

Currency insurance
While there are a number of foreign exchange management strategies an exporter can use to mitigate losses
through currency movements, some financial institutions and foreign exchange providers also offer currency
insurance against conversion loss. This form of insurance is typical of long-range buying contracts where other
strategies such as forward exchange contracts are unavailable.

Product liability insurance

An international product liability insurance product is similar to a domestic one and involves covering the risks
arising from litigation or the cost of recall should the product you sell be proved faulty or fail to comply with
appropriate regulations. Exporters need to ensure that they make every effort to comply with any laws
associated with selling their product in the destination market, as insurance will not cover uninformed exporters.
Compensation is therefore conditional on proving that the exporter unwittingly sold a product that was later
deemed faulty or dangerous. Australian businesses have been increasingly growing trade with emerging
economies, many of which represent great risks, but promise great returns. By considering and investing in these
five types of insurance, exporters should become more comfortable with the risks of doing business globally,
and be able to take advantage of growth opportunities around the world.

Types of risk
There are many risks involved in exporting and in this section we briefly cover the main risks you are likely
to encounter. Follow the links below to learn more about the risks in question:

Credit risk
Poor quality risk
Transportation and logistics risks
Legal risks
Political risks
Unforeseen risks
Exchange rate risks
Cultural and language risks
Managing your risks

Companies need to develop a professional approach when entering the field of exporting. The company's
management will have to be extremely committed and will need to devote time and money to starting up
their export campaign. Companies will also face greater competition and more stringent rules and
regulations pertaining to products and packaging.

There are a number of risks facing exporters, while there is an element of risk in all commercial
transactions, the complexity of the environments that exporters must operate in, multiplies these risks.

Credit risk
In most instances - mainly because of the large distances and alien environments involved - it is generally
difficult for the exporter to verify the creditworthiness and reputation of an importer. If the creditworthiness
of a foreign buyer is unknown there is the increased risk of non-payment, late payment or even
straightforward fraud.
It is essential, therefore, that the exporter should strive to determine the creditworthiness of the foreign
buyer. There are many commercial firms that can provide assistance in credit-checking foreign companies.
In addition, the exporter should insist (particularly if the foreign buyer is unknown) for a secure method of
payment such as an irrevocable documentary credit. The exporter could approach his bank in South Africa
for assistance regarding international payment procedures.

Poor quality risk

If the goods to be exported are not inspected before they are shipped by an independent third-party, the
exporter may find his entire shipment being rejected on arrival at the importer's premises due to the poor
quality of the goods. Some unscrupulous importers may do this just to put pressure on an exporter and to
try and negotiate a lower price - be careful! Experienced importers may request a pre-shipment inspection,
to be conducted by an independent inspection company (this is commonly carried out for exports into other
African countries). If they don't, then it may be worth suggesting to the importer during the negotiation stage
that such an inspection be carried out as part of the contract. Such an inspection protects both the importer
and the exporter.
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. This small task will ensure that if the importer accepts the quality of
the sample goods and (this is important!) the main consignment is produced to the same standard, then it
will be difficult for the importer to reject the consignment (unless something happened to the goods during
shipping.
Importers cannot always be present at the time of dispatch to physically inspect the goods for quality.
Consequently, they often make use of the services of an independent inspection company. As it is usually
at the request of the importer or his government that these inspections are conducted, the costs for the
inspection are borne by the importer or it may be negotiated that they be included in the contract price.

Transportation and logistic 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.
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). Exporters and importers
must understand their legal rights to claim against carriers. The "shipper", would be the party that pays the
main carrier of freight and this could be either the exporter or the importer, dependant upon the Incoterm
(see section on Incoterms 2000, ICC publication) under which that particular transaction was effected.

Legal risks
International laws and regulations change frequently and/or may be applied differently from that of the
exporter's own country. It is therefore important that the exporter drafts a contract in conjunction with a
legal firm, thereby ensuring that the exporter's interests are taken care of. The exporter should draw up a
checklist of basic legal questions aimed at the imported prior to signing any formal contract.
In particular the exporter should be clear as to which law and dispute-settlement procedure will apply to the
contract (known as the jurisdiction of the contract). The exporter may wish to impose choice of law and

choice of forum clauses, which state that disputes will be settled under the exporter's own national law and
courts.
What is more, the legal environment of a country is developed from, or through, the political environment.
Great care must be taken in assessing the legal aspects of trade with a particular country. The law not only
in South Africa but also in the country to which he is exporting influences the exporter when doing business
internationally. By way of illustration, it is only necessary to refer to the strict product-liability situation in
respect to goods sold into the United States of America and the disastrous impact that this could have on
the exporter.
Another aspect for consideration is when trading with Muslim governed countries, such as Saudi Arabia.
Exporters should first approach legal organisations within these countries prior to any legal negotiations
being determined, in order to ensure that the exporter's best interests are protected, as these countries do
not operate their legal system based on Roman/Dutch law as we do in South Africa.
When appointing a middleman or intermediary, such as a trading house, agent or distributor, exporters
should be aware of many issues and responsibilities that influence the appointment of such intermediaries.
A list clearly stating these issues must be included in the agreement, by specifying the rights and duties of
the parties involved in the trade transaction, would prevent unpleasant legal conflicts that could arise at a
later stage.

Political risk
The political stability of a foreign country into which a company is exporting is of the utmost importance.
Exporters must be constantly aware of the policies of foreign governments in order that they can change
their marketing tactics accordingly and take the necessary steps to prevent loss of business and
investment.
Instability in the target market could lead to losses resulting from war, civil strife and political instability. It is
essential to warn exporters to be aware of government intervention in the target market. Most countries
world-wide operate under a capitalist system within which the volumes and values of goods and services
whether provided locally or by way of imports, are set by the forces of supply and demand.
There are, however, still a number of countries in which the government plays an interventionist role.
Examples of such economies include North Korea, Cuba and Vietnam. In certain other countries, partial
liberalisation of trade has been achieved but the extent of this liberalisation still has to be investigated by
any exporter wishing to enter these markets.
Furthermore, while there are certain countries that appear to have advanced towards a more open market,
there may be constraints upon their foreign currency reserves. In such countries the Reserve or Central
bank of that country may not have enough foreign exchange to allow payments to progress thereby again
resulting in the risk of non-payment for the exporter.

Unforseen risks
A natural disaster or terrorist action in a particular country could completely destroy an export market for a
company. Unexpected occurrences may also increase the cost of transport causing great loss to the
exporter. It is therefore important that the exporter ensures that a force majeure clause be included in any
international contract the exporter concludes.

Exchange rate risks

All South African exporters face this risk on a daily basis, as our South African Rand strengthens or falls
against other major currencies, it is difficult for South African exporters to predict the movement of the
Rand, thus resulting in speculation on the part of the exporter on the likely direction of movement of the
currency (i.e. up or down). Ultimately one party will benefit over the other. The easiest way to overcome
this is to quote in one's own currency namely the SA Rand. However, the exporter still runs the risk that the
currency will weaken and thus resulting in the benefit of a weaker exchange rate being passed onto the
importer and not benefiting the exporter.

The exporter must approach the Foreign Exchange division of his bank prior to quoting any prices
internationally, in order to obtain advice and the movement of the South African Rand.
A strategy that the exporter could follow in order to protect against the influence of exchange rate
movements is to hedge against such movements through the purchase of forward exchange rate contracts.

Culture and language risk

Misunderstandings in communication and in international trade transactions arise because in most
instances the importer and exporter come from different cultures and express themselves with different
languages. In most instances business practices, tax systems, rules and regulations, accounting methods,
currency controls and customs systems all differ from that of the exporter's own country.
The exporter must ensure that he fully understands these differences and often an in-market visit to the
intended country of export will greatly assist the seller in having a better understanding of his intended
market place and the culture differences (s)he may encounter.

Managing your risks

The task of managing your export-related risks begins with known what the risks. Your first step is therefore
to identify the risks that you are likely to encounter and to give some 'weighting' to the seriousness of the
risk. The more serious it is, the more attention you will need to give to addressing the risk in qiestion. With
some of the risks oultined above, you can obtain insurance to cover the risk. Three main types of risk cover
include credit risk cover, country risk cover and transit risk cover - these are discussed below.
In the case of exchange rate risks, you can cannot direct insure your exchange rate risk exposure, but you
can take steps to minimise these risks through hedging your risk by using one of four financial instruments
forward contracts, future contracts, swaps and options (these are discussed in the section on foreign
exchange). For most exporters, the first two (forward contracts and future contracts) are likely to be the
only two instruments you will consider. Larger exporters with many export and import contracts in place
may try to pair their forex exposures (linking an export contract in, say, US dollars to an import contract
also in US dollars) or by mat