The selling
of goods outside the national borders is known as the process of exporting. Its
process is an extremely time taking one with a whopping 17 steps involved. Here
it goes.
1.RECEIPT
OF ENQUIRY AND SENDING QUOTATION
The buyer
firstly sends out enquiries to the prospective exporters regarding the goods
that he requires. As the exporter receives it, he replies to it through a
quotation or ‘Performa Invoice’ where all the details asked by the
importer about the goods are mentioned.
2.RECEIPT
OF ORDER
If the
importer is satisfied with all the details and is ready to import goods, he
places an order to the exporter either directly or through a middleman. This
order or indent contains all the information regarding the goods like quality,
quantity, price, date and time, mode of payment, packaging instructions and
more.
3.SECURING
A GUARANTEE FOR PAYMENT
The exporter
needs surety that his payment would be made safely by the importer and that he
is in a good financial position. To ensure this, the exporter demands a ‘Letter
of Credit’ (LOC) which is issued by the importer’s bank that guarantees that
the importer is in a good financial position to meet his payments.
4.EXPORT
LICENSE AND IEC NUMBER
After the
assurance of his payment, he must move on with the formalities of the
procedure. In India, an exporter must have an export license because exporting
is subject to the customs law. Also, he needs to obtain an ‘Import Export
Code’ (IEC) from the ‘Directorate General Foreign Trade’ (DGFT)
since this number is mentioned on almost every document.
5.PRE-SHIPMENT
FINANCE
After the
license has been received, the exporter moves to his banker to obtain
pre-shipment finance which is required for the procurement of raw materials for
the production and processing, packaging materials and transportation of goods.
6.PROCUREMENT
OF GOODS
After the
finance, the exporter either obtains raw materials for the production of the
goods as per demanded by the importer or simply purchase the goods from the
market to export.
7.PRE-SHIPMENT
INSPECTION
In India,
there is an ‘Export Quality Control and Inspection Act, 1963’ according
to which certain goods needs complete inspection before being exported. If the
exporters goods falls under this category then he has to inform the ‘Export
Inspection Agency’ (EIA) which inspects and ensures that the goods are as
per demanded by the importer. After this, they issue a ‘certificate of
inspection’ which has to be sent to the importer along with other
documents.
8.EXCISE
CLEARANCE
According to
the Central Excise Tariff Act, an excise duty must be paid by a manufacturer to
produce goods in the country. The exporter contacts the Excise Commissioner
regarding this and when the Commissioner is satisfied, he issues an excise
clearance. However, this duty is returned to the manufacturer if the goods are
supposed to be exported. This return is known as ‘duty drawback’.
9.CERTIFICATE
OF ORIGIN
There are
some tariff concessions allowed in some countries to export goods. In order to
obtain these benefits, the importer might ask for a ‘certificate of origin’ to
prove sure that the goods have been produced in the country from where they are
being imported.
10.RESERVATION
OF SHIPPING SPACE
The exporter
needs to apply at a shipping company to reserve a ship for the consignment.
After the application has been approved, the company issues a ‘shipping
order’ which is a document containing instructions for the captain of the
ship to deliver the specified goods after the customs clearance at the assigned
port.
11.PACKING
AND FORWARDING
A ‘packing
list’ is a statement that contains the details of the number of packs being
shipped and the number of products in each pack. This list gives information
about the nature of the hoods being exported. After this, the exporter sends
the consignment to the port through road or railway. If railway is chosen as
the medium then, a ‘railway receipt’ (RR) is issued by the railway
authorities which is endorsed in the favor of the exporter’s agent who will
receive the goods from the railway station at the port.
12.INSURANCE
OF GOODS
The exporter
then gets the goods insured by an insurance company to protect them from any
damage or risk of loss due to the calamities of ocean during the
transportation.
13.CUSTOMS
CLEARANCE
For the
customs clearance, the exporter must prepare a ‘shipping bill’. This
bill is the main document on the basis of which the permission to export the
goods is granted by the customs office. After this bill, the port
superintendent is approached for ‘carting order’ which is an instruction
to the staff at the gate of the port to permit an entry of the cargo in the
dock.
14.MATE’S
RECEIPT
The goods
are then loaded on the ship and the captain of the ship or his mate (assistant)
issues a receipt to the port superintendent known as the ‘mate’s receipt’
which contains the information regarding the name of the ship, date of
shipment, description etc.. If the captain is not satisfied with the packaging
of the goods, then he may issue a ‘foul receipt’. The insurance company
may not bear the liability for the loss in case the exporter has received a
foul receipt.
15.ISSUANCE
OF BILL OF LADING
Next, the
exporter hands this receipt to the shipping company which then calculated the
freight charges and issues a ‘bill of lading’ which is a document that
serves as a proof that the shipping company has accepted the goods for carrying
it to the appointed port.
16.INVOICE
PREPARATION
After the
goods are exported, the exporter creates an invoice of the exported goods. This
invoice contains information regarding the quantity of the goods exported and
the amount to be paid by the importer for the delivery.
17.SECURING
PAYMENT
After the
goods are shipped, the importer is informed about it by the exporter. The
importer then needs to get the goods customs cleared in order to claim them for
which he needs various documents. These documents are sent to the importer by
the exporter’s banker only when the importer accepts the ‘bill of exchange’
which secures the payment of the goods.
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