Export Import Process and procedures in India deals with the complete process of India.

1. Module 4

2. • Export and Import Procedure – Licensing &
Joint ventures - International Investment -FDI
– Production linkages, Foreign – Investment in
India, Cross Border – Forex reserve – Over
view of Currency Exchange and Risk
Management.

3. Export Import Procedures

4. Export procedures
• Export procedures involve several activities.
These activities are classified into five stages.
• Preliminaries
• Offer and receipt of confirmed orders
• Production and clearance of the products of exports
• Shipment
• Negotiation of documents and realization of export
proceeds and
• Obtaining various export proceeds

5. (i) Preliminaries
1. Importer- Exporter –code number (IEC
Number)-
Individuals and business firms intending to
export and /or import goods and/ or services
should obtain an importer- exporter number
from the regional licensing authorities, unless
exempted by DGFT. This number mentioned
is be shown in documents

6. • Membership in certain bodies- after obtaining
the IEC number, the exporters and importers
may obtain membership in certain bodies like
export promotion council, India trade
promotion organization etc. membership in
these organizations help the exporter and
importer regarding information and
documentation

7. • Registration- the exporter/ importer have to
register themselves with the Export
Promotion Councils (EPC), Sales Tax
authorities etc.

8. Inquiry, offer and receipt of confirmed
order
• Inquiry is the request made by a prospective
importer regarding his wish to import certain
goods. Offer is a proposal submitted by an
exporter expressing his intention to export
specific goods at a specific price with specific
price with specific terms and conditions.
Exporter usually makes an offer in the form of
a ‘proforma invoice’.

9. The proforma invoice includes the
following items
• Name of the buyer- the complete address of the
buyer/importer
• Description of the goods- a brief description of the
goods indicating technical, physical and chemical
features.. If necessary a detailed description is
provided.
• Price- unit wise and total price of the goods in
internationally accepted a currencies. It should also
include the quantity of discounts and cash discounts
both in unit wise and total. The price indicated in the
invoice should be f.o.b, c and f, c.i.f or in other
internationally accepted form

10. • Condition of sale- conditions of sale should be
incorporated in detail. Important among them
are;-
– Validity- the period for which the invoice is valid.
The importer can accept the invoice any time
before the validity period. buyer can stipulate the
validity period in case of tenders.
– Escalation clause- the price of the products may
increase before the delivery period due to
increase in the cost of inputs and thus the cost of
production. Therefore the exporter may include
an escalation clause for escalation price.

11. • Delivery schedule- a realistic delivery schedule
should be indicated. Based on the pricing
mode, the exporter has to indicate the
delivery schedule. In case of c.i.f quotations,
the goods have to be delivered to the port of
destination.
• Inspection- the authority who will conduct
inspection of goods ( if necessary) sholud also
be indicated.

12. • Force majeure clause- the exporter may
sometimes fail to deliver the goods in case if
uncontrollable situations like war, riots,
natural calamities etc. Therefore the exporter
indicates the force majeure clause in order to
get rescue in such situation

13. • Payment terms- payment terms like letter of
credit, bill of exchange should be indicated.
• Other obligations- other obligations of the
following nature should also be indicated;-
– Post sales service to be provided by the exporter
– Providing spare parts
– Warranty/guarantee for the
equipment/technology

14. • Confirmed order- the buyer sends the confirmed
order to the exporter by signing the duplicate
copy of the invoice. The signed invoice by the
importer becomes the confirmed order.
• Export license- the exporter has to obtain license
from the authorities concerned, if the items to be
exported require a license
• Procuring finance-if the exporter does not have
the required finance to undertake the exports,
he/she should obtain finance form different
sources.

15. Production and procurement of goods
• The exporting house after obtaining a
confirmed order should produce the goods as
specified in the invoice. If the exporting house
does not have production facilities, it has to
procure the products from others.

16. • Packaging and marking- after the goods are procured, the
exporter should arrange for packaging and marketing as
per the international standards prescribed by various
bodies. The Bureau of Indian Standards has prescribed
packaging standards for certain items. Similarly the
British Standard Packaging Code and the Exporters
Encyclopedia published in the USA provide detailed
packaging instructions. Shipping companies also provide
packaging instructions. International Cargo- handling
coordination association has also prescribed packaging
instructions.
• The exporter has to follow these instructions while
packaging the goods

17. • Quality control and pre shipment inspection- the
exporter has to arrange for quality control and
pre shipment inspection in order to ensure the
quality of products as indicated in the invoice.
• The Export Inspection Council or other
appropriate body conducts the quality control
inspection, if the goods exported are included
under the Compulsory Quality Control and Pre
shipment Inspection Scheme in accordance with
the provisions of Export (Quality Control and
Inspection Act, 1963

18. • Excise duty rebates- government has exempted
the goods meant for exports from the imposition
of excise duty. Exporters can export the excisable
goods either under claim for rebate of excise duty
or in bond without payment of duty. The rule is
provided under the Rule 12 of the Central Excise
Rules of 1944. Exporters has to submit the
following forms for rebate after the excise duty
• Gate Pass, GP-I
• AR-4 form

19. shipment
• Transporting the goods by ship is cheaper
compared to that by air. In addition, physical size
of the product create hurdles for transporting by
air.
• Regarding shipment, the exporter has to contact
the shipping companies for space, after getting
the confirmed order. Sometimes getting space in
ships is easy through the agents as they have
information of all shipping companies throughout
the world

20. • The shipping company may issue shipping
advise or shipping order, depending upon the
requirement of the exporter. In case of
shipping advise, the shipping company has no
obligation to accept the cargo as the shipping
company has no obligation to accept the cargo
as the shipping advise is only providing
information of availability o f space at the
time of issue of the acceptance. But in case of
shipping order, the shipping company has the
obligation to accept the cargo

21. • Customs clearance- the exporter has to get
customs clearance of the goods before, they
are loaded on the ship. Customs authorities
accord their formal apporaval after
scrutinizing complete set of shipping
documents, copies of shipping bill etc.. These
documents include ;
• Proforma invoice in original and duplicate
• GR-I form (in duplicate)

22. • AR-4 form ( in original and duplicate)
• Export license (if required)
• Letter of credit covering the export order, export
contract or order in original
• Certificate of inspection (where necessary)
• Form of declaration (in duplicate)
• Shipping bill ( five copies)
• Quality control inspection certificate (if required)
• Packaging list
• Letter of registration certificate ( if applicable)

23. • GR-I Form –this form is an exchange control
document required by the RBI. The exporter has
to realize the proceeds of the goods exported
with in 180 days from the date of the shipment
from India. This document is not necessary in
case of Nepal and Bhutan.
• Shipping bill- this is an exchange document
needed by the customs officials for granting
permission for shipment. The bill contain the
following information;

24. – Name of the exporter/shipper including the address
and the IEC number
– Description and quantity of goods to be shipped
– Value of the goods
– Number of pakages and markings on them
– Amount of drawback claimed.
– Port of destination
– Name of the ship and its agent
• Five copies of the shipping bill are to be provided
to the customs officials

25. • Export license – export license is necessary for certain
categories of goods. Export license can be obtained
from the joint director general of foreign trade(JDGFT)
• Carting order-once the goods are ready for export and
the shipping order is available , the exporter has to
approach the Superintendent of the concerned Port
Trust for the latter's permission to move the goods
physically inside the port area. The superintendent of
the Port Trust issues the order for moving the goods
into the port area after verifying the sipping bill and
the shipping order. This order is given by the
superintendent is called the ‘carting order’ after getting
the carting order. After getting the carting order, the
exporter physically moves the goods into the port area.

26. • Customs examination of cargo at docks- the
customs authorities after checking the
documents, check the products to be exported at
the docks. The exporter can arrange for the
physical check of the products in his factory or
warehouse. Applications for this facility can be
made to the Assistant Collector of customs. The
customs Appraiser after checking the
consignment, will seal the packages, after his
satisfaction. Such packages are normally not
checked again at the port, unless the bonafides of
the exporter are doubtful

27. • The customs authorities accord formal
approval for export, once they are satisfied
with the products and documents. After
obtaining the approval from the customs
authorities, the exporter can make the
arrangements for loading the cargo on a ship

28. • Let ship- after getting the approval from the
customs officials, the exporter arranges for
loading the products on the ship. Before
loading take place, the exporters forwarding
agent has to get the permission from the
Preventive officer of the customs department.
This permission is called the ‘let ship order’.
Let ship order authorizes the shipping
company to accept the cargo on board the
vessel . The goods are to be loaded on the sip
in the presence of the customs officials after
obtaining the shipment order.

29. • Mate’s receipt- after the goods are loaded on
the ship, the captain of the ship furnishes a
document to the Port superintendent. This
document is called the “mates receipt’ which
certifies the loading of the cargo. This
document provides the details of products,
conditions of the products at the time of
loading etc.

30. Port Trust Dues- the port trust authorities after
receiving the ‘mates receipt’ from the captain
of the ship, issues the ‘ bill of lading’ to the
exporter.
Bill of lading- the exporter’s forwarding agent
collects the ‘males receipts’ and submits the
same to the authorities and in turn collects
the billof lading from the port authorities.

31. • The exporters forwarding agent provides the
following documents to the exporter at the final
stage. They are
– A copy of the invoice duly attested by the customs
– Drawback copy of the shipping bill
– Export promotion copy of the shipping bill
– Full set of ‘clean on board’ bill of ladding together
with the non negotiable copies
– The original letter of credit
– Customers order or contract
– Duplicate copy of the AR-4 form

32. Shipping by other modes of transport
• All the goods are not transported through ship.
Other modes of transport like air, and land are
also used for exporting the goods.
– Shipping by air- mostly perishable goods, goods of less
weight and goods which are needed by the importer
urgently are transported by air
– Shipping by post- certain goods of less weight are
exported by post- the emergence of E- commerce
increased the export trade by post. Postal Notice
No.13 dtd 3rd December 1973 regulates the export
trade by post

33. • Shipping by land- export of the excisable
goods to the near by countries is similar to the
one laid down for export by sea. The AR-4 is
different for export by land. The Excisable
goods are presented to the Frontier Customs
Officer / Border Examination along with form
4A.
• After the goods are exported, the exported is
interested in getting payment for the exports
made.

34. DOCUMENTS
• The exporter submits the relevant documents
to his banker for getting the payment for the
goods exported. Submission of relevant
documents to the bank and the process of
getting the payment from the bank is called
‘negotiating the documents”, through the
bank. The documents are called ‘negotiable
set of documents’. This set normally includes

35. • Bill of lading
• Commercial invoice together with the packing slip and
bill of exchange
• Certificate of origin
• GR-I form (in duplicate)
• Marine Insurance policy ( in duplicate)
• Letter of credit (in original)
– The letter of credit is opened by the importer through his
bank authorities drawing a bill of exchange. Payment will
be made against this bill of exchange by the importer bank.
The exporter bank realizes the export proceeds and pays
to the exporter.

36. • Aligned documentation system- Government of India
appointed a committee to recommend on the
documentation regarding export trade. Government of
India accepted the documentation regarding the export
trade. Government of India accepted the
recommendations of the committee and introduced
standardized documents with effects from 1st October
1981, which is known as ‘ the aligned documentation
system’. The system is based on the UN layout key.
Standardised documents for Indian exporters based on
the Aligened Documentation System include;

37. – Invoice
– Exchange control declaration (GR) form
– Shipping bill (dock challan/ duty draw back and
port trust copy)
– Bill of lading

38. EXPORT INCENTIVES
• Export incentives include
– Duty drawback and
– Excise duty refund
– Duty drawback- exporter is eligible to get the
excise duty and central excise paid on all raw
materials, components and consumables used in
the production of goods exported, under this
scheme.

39. • Excise duty refund- exporter is eligible for
refund of the excise duty. He/she can recover
it after export, if he paid at the beginning.
He/she also can execute a bind with the excise
authorities without making the payment.

40. Import procedure
• Importing refers to the purchase of foreign
products for the consumption or sale in the home
country. Import process consists of five stages;-
– Determining the market demand and purchase
motivation
– Locating and negotiating with the sources of supply
– Securing physical distribution
– Preparing documentation and customs proceeding to
facilitate movement among countries and
organizations.
– Developing a plan for resale or consumption.

41. • Different kinds of institutions import goods
and services from the foreign countries.
Different kinds of importers include;
– Private industrialists
– Government agencies
– Facilitating agencies
– End users

42. Stages in import procedures
• Preliminaries
• Enquiring and placing indent
• Obtaining the foreign exchange
• Arranging for payment
• Payment of customs duties and taking the
delivery of goods

43. Preliminaries
• The importing firm or an individual has to
obtain a license and importer exporter code
number from the controller of exports and
imports. The firm can become an established
importer by importing the goods it intends to
import during the prescribed period. The
import license are usually issued for a period
of one year at a time

44. Enquiring and placing the indent
• After obtaining the import license, the
importer has to enquire with various
exporters of exporting countries regarding the
goods, he would like to import. Importer at
this stage ask the exporter to send the invoice.
The importer may accept the invoice and send
the indent directly to the exporter. Other wise
they may send the indent through specialized
intermediaries called indent houses.

45. • Indent may be closed or open. Open indent does not
specify the price and the other details of the goods and
leaves them to the discretion of the exporter. On the
other hand, the closed indent specifies the brand,
price, number, packaging, shipping mode, insurance
etc. the indents incorporating the exact price is called
‘confirmatory indent’ indent houses help the importers
in negotiating for price, discounts etc. as they maintain
close links with the foreign firms. As such, some
importers use the services of indent houses. Thus, the
importers order for the goods either directly or
through indent houses

46. Obtaining foreign exchange
• The importer, after sending the indent has to
procure the required foreign exchange from the
Exchange Control Department of the RBI. He/she
has to produce the import license and the
prescribed forms for securing foreign exchange
which is needed to pay for the import of goods.
• Reserve bank releases the foreign exchange
based on the strength of the application,
availability of foreign exchange policy of the
government

47. Arrangement for payment
• The importer has to make arrangements for
paying for imports after obtaining the foreign
exchange.

48. Documents-
• Letter of credit- letter of credit is the centre for
international commercial transactions. Importers instead
of paying for imports before taking delivery of goods,
request their bankers to issue a letter of credit that
indicates that the banker will pay to the exporter as long
as the goods are shipped in accordance with specified
instructions and conditions. Thus importers bank issue
letter of credit to the importers. Letter of credit indicates
that the bank will pay the value to the imports to the
exporter. Banks issue letter of credit against a deposit or
collateral security. Bank charge commission for the issue
of letter of credit.

49. • Importers bank after issuing a letter of credit, it send it
to the exporters banks. The exporters bank tells the
exporter that it has received a letter of credit and he or
she can ship the goods. The exporter ships the goods.
The exporter submits a draft equal to the value of
exports along with necessary documents to his/her
bank. The exporters bank forwards the same to the
importers bank along with the documents submitted
by the exporter and the letter of credit. Then the
importers bank will honor the draft and pay the money
to the exporters bank, if all the conditions are fulfilled.
Exporters bank after receiving the money, pay the
same to the exporter.

50. Documentary credit
• Alternatively, he may request the exporter to forward
the documentary bill through his banker, which would
be delivered to him either against acceptance of the
bill of exchange or against the payment. Thus, the
document may be received by the importer either
through D/A(documents against payment) or D/P
(documents against payment). The importers bank
after receiving the documents from the exporters bank,
hands over the documents to the importer if it is D/A
bill. The banker delivers the documents to the importer
when the latterpays the amount of the bill on maturity.

51. Bill of exchange
• Bill of exchange/ draft- billof exchange or draft
is an order written by an exporter instructing
an importer or his/ her agent to pay a
specified amount of money at a specified
time.

52. Bill of lading
• Bill of lading is the third important instrument
financing international trade. The shipping company or
other common carrier company has received the goods
as described in it. Bill of lading is a receipt, contract and
a document.
• As indicated in the letter of credit, the importers bank
receives all the documents from the exporters bank.
Then the importers bank provides the documents to
the importer. After obtaining the documents from the
bank, the importer awaits the information of ship
carrying the goods.

53. • The importer obtains the ‘endorsement for
delivery on the back of bill of lading from the
shipment company by paying for freight, if the
exporter does not pay it. Then the importer
presents the ‘Port Trust Due Receipts’(two
copies) and the bill of entry to the port trust ti
obtain clearance regarding dock dues.
• Bill of entry certifies the fact that goods of
specified quantity, value and description are
entering the country.

54. Payment of customs duty
• The importer has to pay for the customs
duties. If necessary. The customs duty may be
based on the weight, and size of the goods or
based on the value of the goods. The customs
duty may also be paid under the’ Permanent
Deposit system’. Under this system the
importer maintains a running account with
customs office and deposits money from time
which is adjusted to the duty payable.