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Presented by:

Lalit Sondhi
MBA-IB

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Quality and Pre-
Shipment Inspection
 The international market is highly competitive and
quality of product is one of the important
determinants in export business.
 Quality improvement is one of the prerequisites in
improving the share in export market.
 “Pre-shipment inspection is the process of inspection
of a batch of goods, just prior to shipment to
determine whether it satisfies the conditions for
shipment, which may be concerned either with the
quality, weight, packaging, contraband character, etc.”

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Mechanism For
Enforcement of Quality
 In order to promote exports as per international standards,
the Government of India has introduced compulsory
quality control and pre-shipment inspection for majority of
items (around 90%), by enacting the Export (Quality
Control and Inspection) Act, 1965.
 The Government has set up Export Inspection Councils to
monitor the quality of goods meant for exports.
 EIC has a network of offices through out the country to
conduct inspections and issue quality control certificates
that are required before shipment of goods.

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Methods of Quality
Inspection
Consignment Wise inspection

In-Process Quality Control

Self Certification

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Consignment Wise
Inspection
 Under this system, each consignment, in packed condition, is
subjected to detailed inspection by the Export Inspection Agencies.
They conduct the inspection on the basis of statistical sampling plan.
If the goods conform to the stipulated quality, they issue the
inspection certificate.
 The certificate also carries a validity period before which the export
consignment must be shipped.
 In case of consignment-wise inspection, actual export consignment,
in packed condition, is taken for inspection. No consignment of any
notified commodity is allowed to be exported without the certificate
issued by the recognized inspection agency.
 This system is applicable to all commodities other than those that
undergo in-process quality control. Generally, Small scale
manufacturers who cannot afford to have their own facilities and
personnel adopt consignment-wise inspection certificate procedure. 5
Procedure for Consignment Wise
Inspection

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Application to the EIA
The exporter has to apply in the prescribed ‘Intimation
for Inspection’, well in advance, to the date of shipment
to avoid delays, along with the following documents:
 Copy of export contract;
 Copy of letter of credit;
 Details of packing specifications;
 Commercial invoice giving evidence of FOB value of export
consignment;
 Crossed cheque/DD in favor of EIA towards inspection
fees and
 Declaration regarding importer’s technical specifications.
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Deputation of Inspector
 After getting the ‘Intimation for Inspection’, EIA
deputes an inspector to conduct an inspection of the
consignment, in packed conditions, at the
factory/warehouse of exporter.
 The exporter should keep the consignment, in packed
condition for export, ready for inspection at the
appointed place and time.

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Inspection and Testing
 The inspector conducts inspection on a random basis.
He will conduct inspection with reference to the
agreed specifications, which should not be inferior to
the notified specifications.
 Samples may be drawn and sent to the laboratory, if
required.
 Where testing facilities are not available at the
exporter’s place, sample may be sent to the private
independent laboratories.
 Inspector submits the field report based on his
inspection and test results obtained.
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Packing and Sealing of
Goods
If the inspector is satisfied with the
quality of goods, he issues order for
packing of goods in his presence. After
packing, the consignment is marked and
sealed with the official seal of Export
Inspection Agency.

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Submission of Report to EIA
and issue of Inspection
Certificate
 Based on the field inspection report, the Deputy
Director, Export Inspection Agency issues the
Inspection Certificate to the exporter, in triplicate,
which will be disposed as under:
 The original copy is to be submitted to the
customs.
 The duplicate copy is dispatched to the importer.
 The triplicate copy is retained by the exporter for
his record.

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Issue of Rejection Note &
Appeal against Rejection
Note
 If the inspection report is not favorable, the Deputy Director
of EIA issues Rejection Note.
 Exporter can file an appeal against the order of the Deputy
Director, EIA.
 The appeal is to be made within 10 days from the date of
receipt of Rejection Note.
 On receipt of the appeal, EIC arranges to convene a meeting
of the Appellate Panel.
 The appellate panel reviews the inspection report and
examines the consignment again, if necessary.
 The decision of the Appellate Panel is final and binding on
both the parties i.e. Exporter and Export Inspection Agency.
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In Process Quality Control
 Certain commodities like paints and allied products,
linoleum, ceramics, printing ink, sanitary wares etc.
come under the purview of In-process quality control.
 In case of continuous process industries, an option is
given to them to become approved "export-worthy”
unit, as they possess the requisite infrastructure for
manufacturing/processing products of standard
quality.
 This status enables them to conduct inspection and
give declaration and based on their declaration, they
get inspection certificate.

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In Process Quality Control
 Manufacturing/processing units, having continuous
processing system, are given an option to become
“export-worthy” status units so that they get the
inspection certificate, based on their own declaration.
 These units are highly quality conscious and conduct
thorough quality control at each and every stage of
production that includes:
 Raw materials and bought out components,
 Process control,
 Product control and
 Packing and packaging control.
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Export-worthy Status
Units
 These units possess the required infrastructure facilities for
manufacturing/processing standard quality products.
 To secure recognition and approval of “export-worthy”
status, export-oriented manufacturing/processing units
have to submit an application, in the prescribed format, to
Export Inspection Agency.
 After a preliminary visit by the officer of Export Inspection
Agency, it appoints a panel of experts to investigate the
quality control facilities available in the unit.
 The panel thoroughly investigates the quality control
facilities available from the stage of raw materials to
packing. It submits its report to the agency. On the basis of
these recommendations, the unit is accorded the status of
an "export-worthy” unit.
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Self Certification
 With the experience gained in operating the
compulsory Quality Control and Preshipment
Inspection Scheme in India, there has been a
qualitative change in the inspection system also.
 Recently, a self-certification system has been
introduced.
 This is based on the concept that the manufacturing
unit which has in-built responsibility for quality
control should have the freedom to certify its own
product for export.

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 For the purpose of qualifying to become eligible, the
reputed manufacturing unit should comply with the
prescribed norms that include the following:
 Product Quality
 Design and Development
 Raw materials/Bought out Components
 Organization and personnel for quality control
 Process Control
 Laboratory
 Quality Audit
 Packaging
 After-sales-service and
 House-keeping and Maintenance
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Exemption from Pre-
Shipment Inspection
The following units are exempt from the requirement of
compulsory pre-shipment inspection:
 Export House, Trading House, Super Trading House
and Super Star Trading House.
 100% Export oriented unit set up in the Export
Processing Zones or Free Trade Zones.
 Where the overseas buyer does not want pre-shipment
inspection certificate.
 Products bearing ISI mark or the AGMARK for
exports.

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