Definition of Export
Export meaning includes such manufactured goods and services which originate in one country, but are procured by another country. Export can be of services and goods of any type, and that may be traded through electronic transmission or traditional transportation like shipping.
The top exports from India are mineral fuels (14.9%), precious metals and gems (12.4%), machineries (6.3%), and pharmaceuticals (4.4%) among others. The fastest gain rate of exports from India is recorded for organic chemicals at 30.7%.
What is Export Trade?
Export trade is the transaction in international trade where the manufactured goods and services from one country are purchased by residents of another country. Another component of international trade is import.
Test your knowledge –
What was India’s export trade volume in 2018-2019?
(Refer to the solution given at the end of the article)
1. Exporter Meaning
Consistent with exports meaning, one has to also know what an exporter is. An exporter pertains to such a person, firm or country that sends and sells goods or services to another country.
2. Exporting Meaning
The procedure for export essentially involves the act of exporting. Exporting is the carrying of manufactured goods or sending services to another country to be traded. For example, organic chemicals are to be shipped from India to be sold in foreign countries.
Import is the opposite concept to export where residents of a country purchase foreign manufactured goods or services. Imported goods and services are usually expensive, owing to those being subjected to a range of tariff schedules.
4. Trade Surplus
A trade surplus takes place in a country when the exported goods and services value amounts to higher than its imports. It indicates that there is a greater inflow of the exporting company's currency from the markets in a foreign country.
5. Trade Deficit
A trade deficit occurs in a country when the imports of that country exceed its exports costs. It can be considered as problematic to the extent that it can cause foreign exchange shortages within the country.
Do you know?
A high trade deficit of a country leads to the weakening of its currency. As imports consistently exceed exports, there is more outflow of U.S. dollars. Such outflow weakens the country’s currency. The weakening of currency further makes the imports expensive.
Export Trade Objectives
Domestic Resources Being Optimally Utilised
The natural resources which are in greater abundance in a particular country can be used for production increase. It would be sold in the markets of those industries that have a shortage of such resources.
Surplus Production Sale
If there is a surplus production in a country, it can be sold off in markets of another country which will bring in revenue.
Accumulation of Foreign Exchange
On selling surplus production in a foreign country’s market, there will be a greater inflow of foreign currency in the selling country's reserve.
Increasing National Income and Greater Employment Opportunities
The increase in foreign exchange earnings cause addition to the country’s national income. It not only helps in increasing employment opportunities but also improves the standard of living of the residents.
Export Trade Procedure
The broad export procedures have been laid down in the following chart.
Step 1: An international buyer may make a trade enquiry related to quality, price, and terms and conditions, among others.
Step 2: As a response to the enquiry of the buyer, the exporter sends the quotation in the form of ‘Proforma invoice’ indicating quality, selling price, mode of delivery, quantity etc.
Step 3: The buyer, when he agrees on the quotation, places the order receipt to the exporter for importing the goods or services.
Step 4: To determine the creditworthiness of the buyer, the exporter demands a Letter of Credit from the buyer that provides the assurance that the bill of exchange will be honoured.
Step 5: The exporter has to take out an export license from the controller of imports and exports in lieu of depositing fees.
Step 6: The pre-shipment finance application can be made based on the order receipt, Letter of Credit and export license.
Step 7: In this stage, the exporter has two options – procure the raw materials to manufacture the goods according to buyer’s specifications or purchase the already made goods from the market to ship to the buyer.
Step 8: It is mandatory to apply to the government for a quality check. After checking, Inspection Certificate is issued.
Step 9: Only after the Inspection Certificate is received, the exporter can obtain excise clearance from the Excise Commissioner.
Step 10: Origin certificate indicates the country from which the ordered goods are manufactured and exported.
Step 11: The packaging of the goods has to show specific details like title and address of the importer, weight (net and gross), destination port, origin country, railway or road receipt etc. The exporter also has to obtain a valid insurance policy.
Step 12: Only after the customs duty is paid, the cargo can be loaded to be transported.
Step 13: Mate's receipt is the documentation delivered by the ship captain to the port superintendent.
Step 14: After the delivery of freight receipt, the company submits the Bill of Lading. The Bill acts as proof that the shipping company is authorised to transport the cargo to the specified destination.
Step 15: The invoice is prepared after the goods are shipped.
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1. What is Export?
The meaning of export is that services and goods that are manufactured in one country and the buyers of those goods and services reside in another country. A service or good that is exported can be of any description.
2. What is Export Trade?
When the services and goods manufactured in one country are bought by residents of another country, such a transaction is called export trade. It is one of the components of international trade. The underlying principle of export trade is that it has to be necessarily produced domestically in order to be sold to customers in a foreign country.
The exports in merchandise had reached a new peak of US$ 331.02 billion that surpassed the earlier high of US$ 314 billion. It had registered a positive growth of 9.06% compared to the previous year.