Overview of Export Procedures and Documentations
Exports, like the import system, are held to be one of the major components of international trade. Moreover, after the LPG initiative, exporting and importing have heightened its pace of development. Exporting done by the country is bound to many formalities both legal and compulsory made by the exported nation.
In this section, we will know about these formalities that stimulate domestic economic activity. The business exports its goods and services to other nations by adhering to basic principles and law and thus this is very important in the study of export and import fields.
Export Procedure
In general, an export procedure initiates with the willingness to send the goods and services to other foreign nations at some price, these procedures of export are stated below:
Step 1: Receipt Order
The Indian exporter will receive the order either directly from the importer or through the indent houses.
Step 2: Obtaining License and Quota
After receiving the order from the importer, the Indian exporter is required to obtain an export license from the Government of India, for this the exporter needs to apply to the Export Trade Control Authority and get a valid license for this.
Step 3: Letter of Credit
The exporter then asks the importer for the letter of credit, if the importer does not send the letter of credit along with the order.
Step 4: Fixing the Exchange Rate
The rate at which the home currency can be exchanged with the foreign currency is then fixed. The foreign exchange rate fluctuates from time to time so they need to fix the rate of exchange.
Step 5: Foreign Exchange Formalities
As per the Foreign Exchange Regulation Act of India (FERA), every exporter of the goods is required to furnish a declaration in the form prescribed in a manner in the Act.
Step 6: Preparation for Executing the Order
The exporter should make the required arrangements to execute the order:
Step 7: Formalities by a Forwarding Agent
Then the formalities are to be performed by the agent which includes obtaining a permit from the customs department, preparing the shipping bill, paying the dues after disclosing the required details of the product being exported.
Step 8: Bill of Lading
The Indian exporter of the goods presents the receipt copy to the shipping company and issues the Bill of Lading.
Step 9: Shipment Advice to the Importer
The Indian exporter sends shipment advice to the importer of the goods to inform him about the shipment of the goods.
Step 10: Presentation of Documents to the Bank
The Indian exporter needs to confirm that he possesses all the necessary shipping documents.
Step 11: The Realization of Export Proceeds
The exporter of the goods needs to comply with banking formalities after submission of the bill of exchange.
Export Procedure and Documentation
In the previous section, we have learned about the export procedure formalities here we will know about the documentation necessary -
Step 1: Receive an Inquiry
The first step in the shipping documentation process is when someone urges them to buy products.
Step 2: Screen the Potential Buyer and Country
After you receive the inquiry from the buyer, the process is to check their business potentiality to do business with them.
Step 3: Provide a Proforma Invoice
After screening the buyer, we need to provide the proforma invoice for the transaction.
Step 4: Finalize the Sale
The buyer will either reject or accept your proposal thus finalizing the sale.
Step 5: Prepare the Goods and the Shipping Documents
Commercial Invoice, Packing List, Certificate of Origin, Shipper's Letter of Instruction, Bills of Lading all need to be prepared
Step 6: Run a Restricted Party Screening
Again, the process needs to be run, before the goods ship for export.
Step 7: Miscellaneous Forms and Ship Your Goods
There may be other documents that need to be prepared before exporting the goods.
Documents Required for Exporting
When deciding which documents are necessary for an export procedure, the best place to start is with your overseas customer/importer or a freight forwarder. You may help your customer in clearing items with customs in the target market by gathering precise information. Commonly used expert documents are:
Pro Forma Invoice- The document provides a description of the products, such as Price, quantity, weight, kind, and so on, and is a statement by the seller to provide the customer with the products and services at the given date and price.
Commercial Invoice- The commercial invoice is a legal document that is exchanged between the seller and the buyer that clearly outlines the items being sold as well as the price the customer is to pay.
Packing List- This list includes the invoice number, seller, buyer, shipper, carrier, date of shipping, mode of transport, itemized quantity, description, package type, package quantity, total net, and gross weight (in kilograms), packaging markings, and measurements.
Air Waybill- An air waybill is a document that accompanies goods carried by an international air carrier. The paperwork contains complete information about the package and enables tracking.
Export Licenses- A government document that allows the transfer of specified commodities in precise quantities to a specific destination for a defined end-use is known as an export license.
Formalities of Registration and Export Documentation
Export is a very wide concept with a lot of preparations which is required by an exporter before starting the export business.
Establishing an Organization
Opening a Bank Account
Obtaining Permanent Account Number (PAN)
Obtaining Importer-Exporter Code (IEC) Number
Registration cum membership certificate (RCMC)
Selection of product
Selection of Markets
Finding Buyers
Sampling
Pricing/Costing
Negotiation with Buyers
Covering Risks through ECGC
Preparation for Executing an Order
The exporter must make the following arrangements in order to carry out the order:
Marking and packaging of products to be exported in accordance with the importer's standards.
Obtaining an inspection certificate from the Export Inspection Agency after scheduling a pre-shipment inspection.
Getting an insurance policy from the Export Credit Guarantee Corporation (ECGC) to safeguard against credit risks.
Obtaining the necessary marine insurance coverage.
Appoint a forwarding agent, often known as a custom house agent, to handle customs and other related issues.
Formalities by a Forwarding Agent
The agent must complete the following formalities:
The forwarding agency must first get permission from the customs authority before exporting the items.
To the shipping business, agents must provide all needed data about the products to be shipped, such as kind, amount, and weight.
A shipment bill/order must be prepared by the forwarding agent.
The forwarding agency is responsible for duplicating the port challans and paying the fees.
The loading of the products on the ship is the responsibility of the ship's captain. The loading must be done in the presence of customs authorities and on the basis of the shipping order.
When the cargo is loaded into the ship, the ship’s master provides a receipt for them.
Foreign Exchange Formalities
Under exchange control laws, an Indian exporter must comply with specific foreign exchange procedures. Every exporter of products is obliged under the Foreign Exchange Regulation Act of India (FERA) to provide a declaration in the form provided in a way. According to the declaration:
The foreign exchange gained by the exporter on exports must be disposed of in the manner and within the timeframe stipulated by the RBI.
Authorized foreign exchange dealers are needed to handle shipping documentation and discussions.
Only permitted methods will be used to collect payment for the products shipped.
Surrender the foreign exchange to approved dealers through the exchange control authority.
FAQs on Export Procedures and Documentation: A Guide
1. What are the main stages involved in a standard export procedure from India?
The export procedure involves a systematic series of steps to ensure legal compliance and smooth transit of goods. The key stages are:
- Receipt of Enquiry and Sending Quotation: The exporter receives an enquiry and sends a proforma invoice with details on price, quality, and terms.
- Receipt of Order or Indent: The importer places an order for the goods described.
- Assessing Importer’s Creditworthiness: The exporter verifies the importer's ability to pay, often requesting a Letter of Credit (L/C).
- Obtaining Export Licence: The exporter secures necessary licences, including the Importer-Exporter Code (IEC).
- Obtaining Pre-shipment Finance: The exporter arranges funds from their bank to procure raw materials and manufacture the goods.
- Production or Procurement of Goods: The goods are produced or acquired as per the importer's specifications.
- Pre-shipment Inspection: A designated agency inspects the goods to ensure quality compliance.
- Excise Clearance: The exporter obtains clearance from the excise department.
- Obtaining Certificate of Origin: This certificate is acquired to prove the goods originated in the exporting country, which can help the importer avail tariff concessions.
- Reservation of Shipping Space: The exporter books space on a ship for the cargo.
- Packing and Forwarding: Goods are properly packed, marked, and sent to the port of shipment.
- Insurance of Goods: The goods are insured to protect against loss or damage during transit.
- Customs Clearance: The exporter prepares the Shipping Bill and other documents for customs approval.
- Obtaining Mate’s Receipt: The ship's captain issues a Mate's Receipt upon loading the cargo.
- Payment of Freight and Issuance of Bill of Lading: The exporter pays the freight charges and obtains the Bill of Lading from the shipping company.
- Preparation of Invoice: A commercial invoice is prepared and sent to the importer.
- Securing Payment: The exporter presents the necessary documents to their bank to secure payment from the importer.
2. What are the most important documents required for exporting goods?
Several commercial and regulatory documents are essential for a successful export transaction. The primary documents include:
- Commercial Invoice: The seller's bill for the goods, containing full details of the product, price, and terms of sale.
- Packing List: A detailed list of the contents of each package, including weights and dimensions.
- Bill of Lading (for sea freight) or Air Waybill (for air freight): A receipt from the carrier and a contract for transporting the goods. The Bill of Lading also serves as a document of title.
- Shipping Bill: A mandatory legal document filed with customs to get permission for export.
- Certificate of Origin: Certifies the country where the goods were manufactured.
- Letter of Credit (L/C): A payment guarantee from the importer's bank.
- Bill of Exchange: An instrument ordering the importer to pay a certain sum to the exporter.
- Insurance Certificate: A document proving that the cargo is insured against loss or damage.
3. What is a Letter of Credit (L/C) and why is it so important in international trade?
A Letter of Credit (L/C) is a formal undertaking by a bank on behalf of an importer guaranteeing that payment will be made to the exporter, provided the terms and conditions stated in the L/C are met. It is crucial in international trade because it mitigates risk for both parties. For the exporter, it provides a secure payment method, assuring them they will get paid upon presenting the correct documents. For the importer, it ensures that the bank will not pay the exporter until the terms of the agreement, such as providing proof of shipment, are fulfilled.
4. How does a Bill of Lading differ from a Bill of Entry?
A Bill of Lading and a Bill of Entry are both crucial trade documents, but they serve opposite purposes in the trade cycle. A Bill of Lading is an export document issued by a shipping carrier to an exporter, acting as a receipt for the cargo and a contract for its transportation. Critically, it is a document of title, meaning whoever holds it owns the goods. In contrast, a Bill of Entry is an import document filed by an importer (or their agent) with customs authorities. It is a legal declaration of the nature, quantity, and value of the goods being imported, which is necessary for customs clearance and duty assessment.
5. What is the difference between a Proforma Invoice and a Commercial Invoice?
A Proforma Invoice is a preliminary bill or quotation sent by an exporter to an importer before the shipment of goods. Its main purpose is to provide the buyer with a precise cost estimate and to help them arrange for financing or a Letter of Credit. It is not a demand for payment. A Commercial Invoice, on the other hand, is the final, official bill issued after the goods are shipped. It is a formal demand for payment and is used by customs authorities to determine the duties and taxes applicable to the shipment. It represents the actual and final details of the transaction.
6. What is an Importer-Exporter Code (IEC) and is it always mandatory?
The Importer-Exporter Code (IEC) is a unique 10-digit code issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce, Government of India. As per the regulations for the 2025-26 period, obtaining an IEC is a mandatory prerequisite for any individual or business to start an import or export business in India. No person can export or import goods or services without this code. It is a permanent registration that is valid for the lifetime of the entity.
7. What are the consequences of submitting incorrect or discrepant export documentation?
Submitting incorrect or discrepant documentation can have severe consequences for an exporter. The most common repercussions include:
- Shipment Delays: Customs authorities can hold the shipment for clarification, leading to significant delays and storage charges.
- Financial Penalties: Customs may impose heavy fines or penalties for inaccurate declarations.
- Rejection of Payment: If payment is secured by a Letter of Credit, the bank will refuse to make the payment if the submitted documents do not strictly comply with the L/C terms.
- Loss of Credibility: Frequent errors can damage the exporter's reputation with buyers, banks, and customs authorities.
- Legal Action: In cases of deliberate misrepresentation, the exporter could face legal proceedings.
8. What is the role of a Clearing and Forwarding (C&F) Agent in the export process?
A Clearing and Forwarding (C&F) Agent is a specialist intermediary who manages the logistical and documentation-related tasks on behalf of an exporter. Their primary role is to ensure the smooth movement of goods from the exporter's warehouse to the ship. Key responsibilities include arranging for transportation to the port, managing port and customs clearance procedures, preparing and submitting documents like the Shipping Bill, and coordinating with the shipping line to load the cargo onto the vessel.
9. How does pre-shipment finance differ from post-shipment finance for an exporter?
Both are types of export finance, but they cover different stages of the export cycle. Pre-shipment finance, also known as 'packing credit', is the funding an exporter obtains before shipping the goods. It is used to cover costs like purchasing raw materials, manufacturing, processing, and packing the goods for export. In contrast, post-shipment finance is provided after the goods have been shipped. It helps the exporter manage their working capital during the credit period extended to the importer, bridging the financial gap between the date of shipment and the date of receiving payment.
