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.
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:
The Indian exporter will receive the order either directly from the importer or through the indent houses.
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.
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.
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.
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.
The exporter should make the required arrangements to execute the order:
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.
The Indian exporter of the goods presents the receipt copy to the shipping company and issues the Bill of Lading.
The Indian exporter sends shipment advice to the importer of the goods to inform him about the shipment of the goods.
The Indian exporter needs to confirm that he possesses all the necessary shipping documents.
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 -
The first step in the shipping documentation process is when someone urges them to buy products.
After you receive the inquiry from the buyer, the process is to check their business potentiality to do business with them.
After screening the buyer, we need to provide the proforma invoice for the transaction.
The buyer will either reject or accept your proposal thus finalizing the sale.
Commercial Invoice, Packing List, Certificate of Origin, Shipper's Letter of Instruction, Bills of Lading all need to be prepared
Again, the process needs to be run, before the goods ship for export.
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
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:
Formalities by a Forwarding Agent
The agent must complete the following formalities:
To the shipping business, agents must provide all needed data about the products to be shipped, such as kind, amount, and weight.
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: