Export procedure is a set of steps including legal documentation such as a bill of export and invoice required for every export related to any goods and products.
Regarding merchandise exports, India is one of the top 20 countries worldwide. The Indian government’s expanded trade liberalization has created several opportunities for starting a successful export company. Before starting an export firm, an entrepreneur should be thoroughly aware of the laws and paperwork governing these export operations.
What is export order processing?
Receiving an export order is the first step in processing it. Simply put, an export order means that before the exporter begins producing or acquiring products for shipment, there should be a contract in the form of a document between the exporter and the importer. Typically, a proforma invoice, purchase order, or letter of credit can be used to fulfil an export order. Certain steps typically occur in processing the export, as listed below.
What are the stages of the export process?
1) Order Confirmation
Before confirming an export order, it should be properly inspected regarding items, specifications, payment conditions, packing, and delivery schedule. Therefore, the exporter can enter into a formal contract with the international client.
2) Goods Acquisition
Following confirmation of the export order, immediate actions may be made to procure/manufacture the goods for export. It should be recalled that the order was gained after considerable work and competition. Thus the procurement should precisely correspond to the buyer’s requirements.
3) Quality assurance
It is critical to be quality concerned in today’s competitive economy. Certain products, such as food and agricultural products, fishery products, certain chemicals, and so on, are subject to mandatory pre-shipment inspection. Foreign buyers may also establish their standards/specifications and require inspection by their designated agent.
4) Financial
Commercial banks can provide exporters with pre-shipment and post-shipment financing at low-interest rates to complete the export transaction. Packaging Credit advances are offered to new exporters in the pre-shipment stage against the lodgement of an L/C or confirmed order for 180 days to satisfy working capital requirements for acquiring raw materials/finished goods, labour expenses, packing, transportation, and so on.
Banks typically advance between 75% and 90% of the order value, with the remaining as a margin. Banks adjust the packing credit advance based on the proceeds of negotiated, acquired, or discounted export bills. Post-shipment financing is often provided to exporters up to 90% of the invoice amount during a normal transit duration.
5) Marking, labelling, packaging, and packaging
Export items must be labelled, wrapped, and packed according to the buyer’s specifications. Good packaging keeps the goods in good condition and appealingly presents them. Similarly, good packaging facilitates easy handling, and maximum loading lowers transportation costs and ensures cargo safety. Address, package number, port and destination, weight, handling instructions, and other markings offer identification and information about the cargo packed.
6) Coverage
Having maritime insurance in place safeguards against the possibility of loss or damage to goods while they are in transit. Exporters must secure insurance in CIF contracts, whereas purchasers must do so in C&F and FOB agreements.
7) Shipping
This aspect of export operations is crucial, and the exporter is required to follow the delivery timetable. An exporter should make enough preparations to ensure prompt and effective delivery.
8) Customs Protocols
Customs requires a PAN-based Business Identification Number (BIN) before exporting the shipment bill. Exporters must open a current account in the approved bank and register it on the system before crediting drawback amounts.
The Shipping Bill and Bill of Export (Form) Regulations, 1991, dictate the format for non-EDI shipping bills and bills of export. An exporter must fill out many papers, along with a shipping bill or bill of export, to export duty-free, dutiable, or drawback goods. Customs Service Centers must format EDI declarations. Exporter/CHA develops data verification checklist.
9) Customs Office Personnel
Exporters can hire Customs House Agents who the Commissioner of Customs has granted licenses. They are experts who facilitate tasks related to the cargo’s customs clearance.
What are export documents?
10) Documentation
FTP 2015-2020 outlines the following essential import and export documents.
- Airway bill, bill of lading
- commercial invoice, packing list,
- Bill of Export, Bill of Entry, and Shipping Bill (for Imports)
(Other documents, such as the original and inspection certificates, can be needed, depending on the circumstances.)
11) Documents required to submit to the bank
The documentation must be submitted to the bank for forwarding to the foreign bank for payment arrangements within 21 days after shipping. The following papers should be included with the documents drafted under Collection, Purchase, or Negotiation under L/C, as applicable:
- Exchange Bill
- Letter of Credit (if L/C covers shipping)
- Packing List
- Invoice
- Certificate of Origin / GSP
- Declaration under Foreign Exchange
- Airway Bill/Bill of Loading
- Whenever necessary, an inspection certificate
- any other paperwork called for by the L/C, the buyer, or the law
12) Export Revenue Realization
According to the FTP 2015-2020, all export contracts and invoices must be issued in Indian rupees, a freely convertible currency. Still, export revenues must be received in the same currency, except for exports to Iran. Within nine months, export revenues should become available. Check out the India Trade Portal for additional details.
FAQ: Export Procedure
1. What is a LUT certificate?
Letter of Undertaking, or LUT, is its full name. It is a form that exporters can use to send products or services abroad without paying taxes. All exports are subject to IGST under the new GST system, which can be reclaimed via reimbursement against the tax paid.
2. What is LC in export?
A letter of credit (LC), often referred to as a banker’s commercial credit, documentary credit, or letter of undertaking (LOU), is a method of payment used in international trade to give a creditworthy bank’s economic guarantee to a product exporter.
3. What is an export policy?
Government legislation governing how, what, when, and with whom a nation exports commodities is known as an export policy. Each nation’s export policy establishes tariffs, customs regulations, and restrictions on foreign trade.
4. How do I start exporting?
After doing market research, procuring enough knowledge for the required export product and abiding by the rules and regulations of the government, one can start a legal export startup.
5. Is NOC required for export?
Yes, NOC is required for most cases of exports related to any goods. Kindly refer to government guidelines and above mention document list for more clarity.
6. Can we export without IEC?
It is impossible to conduct export or import transactions without this IEC code. You must follow specific procedures and meet requirements to receive the import-export code (IEC code). Additionally, you must follow specific rules.
7. What is the export checklist?
Airway bills, bills of lading, commercial invoice, packing list, bills of Export, Bills of Entry, and Shipping bills (for Imports) are the main document checklist for export-import businesses.
Conclusion
Export dominates international trade. Export Procedure boost domestic output, employment, and trade. Competitive organizations export goods and services. The company or person must get an Import Export Code, or IE Code, from the Directorate General of Foreign Trade before importing or exporting items from India. After getting a PAN and creating a bank account, request the IE Code from the company.