Export Procedure



Process for import and export differ from each other, so let’s understand the export procedure first.

Procedure for Export:

Step 1: Marketing

This is the first step of planning an export business. There is one saying “Failing to plan is planning to fail”, this is true for export marketing if marketing is not proper, your business is going to suffer. Marketing Includes strategies, resources and activities.

Marketing strategies should be chosen after considering the factors like Culture, Technology, Import requirements, local Competition, International Shipping, Foreign Exchange etc. of the country in which you are going to export.

Proper marketing may include - knowing your potential Customers and products, selecting possible export markets, analyzing those markets, Market Entry strategy, Pricing Strategy, Marketing Channel etc.

Step 2: Contact Potential Buyers

Contact potential buyers and validate the buyers on the basis of seriousness. You should start negotiations and discussions with those buyers who are seriously interested.

Step 3: Send Samples

Send samples to those buyers along with proforma invoice, packing list, and certificate of origin (if required).

Only shipping charges to be paid to send samples, no need to pay export duty on samples.

 

 

Step 4: Sign the order contract

If buyer likes the sample, he will place an order. You should sign a contract with him mentioning each and every detail like quantity, price, shipping method, shipping date, delivery terms, payment terms packing details, documents required etc.

Step 5: Demand Advance payment

After the contract is signed then you need to issue the proforma invoice to the buyer.

The buyer needs to arrange the advance payment to confirm the order. Advance payment is usually 30% and the balance payment need to be arranged against the copy of the bill of landing.

Or if you are using Letter of credit (LC) payment, then the buyer should open the deposit for you in the agreed bank. Also if LC, then all the LC conditions need to be agreed, so bank knows in what conditions the LC deposit will be released to you.

Or if Documents against payments (DAP) is followed by you which is another mode of payment in international trade. In DAP documents under consignment are delivered to buyer only after collecting payment of goods by buyer’s bank.

Or if Documents against Acceptance (DA) is another term of payment in international trade. As per D.A terms, once the shipping documents along with bills of exchange received by the buyer’s bank, the buyer is informed to accept documents by buyer’s bank. The buyer accepts documents by signing bills of exchange sent by the exporter, agreeing to pay the value of goods shipped as per agreed period of time. (Say, 30 days from the date of bill of lading, 60 days from the date of bill of lading or 90 days from the date of bill of lading).

In this stage, exporter needs to know all the buyer’s custom requirements and must be sure, that all can be done. Then exporter can prepare all docs and certificates and send together with the goods.

If LC payment, then your bank will send the docs to the buyer’s bank and buyer bank will give over to the buyer.

For first time exporters, it is smart to use service of freight forwarders and custom-agents. They can help you with all the export formalities.

Step 6: Preparation for executing the order

The exporter makes necessary arrangements for executing the order. In this respect he performs the following activities:-

·        Packing and marking of the goods as per the specifications of the importer.

·        Arranging the pre-shipment inspection by the Export Inspection Agency and getting the inspection certificate from it.

·        Securing insurance policy from the Export Credit Guarantee Corporation (ECGC) to get protection against the credit risks.

·        Obtaining a suitable marine insurance policy, consular invoice and certificate of origin, if required.

·        Appointing a forwarding agent for handling the customs and forwarding activities.

Step 7: Formalities done by forwarding agent

The Forwarding Agent completes the following formalities:-

·        He obtains the Customs' Permit from the Customs Department for exporting goods.

·        The Forwarding Agent discloses the details of the goods such as their nature, size, quantity, weight, etc. to the shipping company.

·        The Forwarding Agent prepares a Shipping Bill.

·        The Forwarding Agent prepares two copies of the dock challans and pays the dock dues.

·        The Captain of the ship gets the goods loaded on the ship on the basis of the Shipping Order in the presence of customer officers.

·        When the goods are loaded on the ship, the Mate (Vice Captain or the Captain) issues a receipt, called Mate's or Captain's Receipt.

Step 8: Bill of Lading

The exporter approaches the shipping company, presents the Mate's Receipt and in exchange receives a document called Bill of Lading. It is an official receipt given by the shipping company as an acknowledgement of the receipt of goods to be transported to the port of destination. It is also a contract for the carriage of goods. It gives full description of goods loaded on the ship, name of the port of destination, etc.

Step 9: Shipment advice to buyer

The exporter sends Shipment Advice to the importer informing him about the dispatch of the goods. He sends a copy of packing list, commercial invoice and a non-negotiable copy of the Bill of Lading, along with the Advice Note.

Step 10: Presentation of documents to the bank

The exporter confirms that he has secured a complete set of the shipping documents namely, the Bill of Lading, Marine Insurance Policy, Certificate of Origin, the Consular Invoice and the Commercial Invoice. He then draws a bill of exchange on the basis of the commercial invoice. The bill of exchange accompanied by these documents is called Documentary Bill of Exchange. Such a bill may be a D/P (Documents against payment) bill or D/A (Documents against Acceptance) bill. The exporter hands over the documentary bill to his bank.

Step 11: Realization of export proceeds

For realization of export proceeds, the exporter has to undergo certain banking formalities. Generally he receives payment in foreign currency by bill of exchange or by bank draft.

Step 12: Follow up

After the sales, exporter should always have a follow-up, to find out buyer's reactions towards the goods. Such follow up builds goodwill and the exporter can get more and more orders in future.