Export like the import system, is held to be one of the major components of the international trade. Moreover, after the LPG initiative the exporting and importing has 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. 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:
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 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 Realisation of Export Proceeds
The exporter of the goods need to comply with banking formalities after submission of the bill of exchange.
Export Procedure and Documentation
In the previous section we have learnt 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 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 the export.
Step 7: Miscellaneous Forms and Ship Your Goods
There may be other documents that need to be prepared before exporting the goods.
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.
1) Establishing an Organisation
2) Opening a Bank Account
3) Obtaining Permanent Account Number (PAN)
4) Obtaining Importer-Exporter Code (IEC) Number
5) Registration cum membership certificate (RCMC)
6) Selection of product
7) Selection of Markets
8) Finding Buyers
11) Negotiation with Buyers
12) Covering Risks through ECGC