HOW TO EXPORT

India’s Foreign Trade i.e. Exports and Imports are regulated by Foreign Trade Policy notified
by Central government in exercise of powers conferred by section 5 of foreign trade
(Development and Regulation)
Act 1992. Presently Foreign Trade Policy 2015-20 is effective from 1st April, 2015. As per
FTD & R act, export is defined as an act of taking out of India any goods by land, sea or air
and with proper transaction of money.
STARTING EXPORTS
Export in itself is a very wide concept and lot of preparations is required by an exporter
before starting an export business. To start export business, the following steps may be
followed:
1) Establishing an Organisation
To start the export business, first a sole Proprietary concern/ Partnership firm/Company has
to be set up as per procedure with an attractive name and logo.
2) Opening a Bank Account
A current account with a Bank authorized to deal in Foreign Exchange should be opened.
3) Obtaining Permanent Account Number (PAN)
It is necessary for every exporter and importer to obtain a PAN from the Income Tax
Department. (To apply PAN Card Click here)
 4) Obtaining Importer-Exporter Code (IEC) Number
•As per the Foreign Trade Policy, it is mandatory to obtain IEC for
export/import from India. Para 2.05 of the FTP, 2015-20 lays down the
procedure to be followed for obtaining an IEC, which is PAN based.
•An application for IEC is filed online at www.dgft.gov.in as per ANF 2A,
online payment of application fee of Rs. 500/- through net Banking or
credit/debit card is made along with requisite documents as
• mentioned in the application form. (For more information Click here)
5) Registration cum membership certificate (RCMC)
For availing authorization to import/ export or any other benefit or
concession under FTP 2015-20, as also to avail the services/ guidance,
exporters are required to obtain RCMC granted by the concerned
Export Promotion Councils/ FIEO/Commodity Boards/ Authorities.
6) Selection of product
All items are freely exportable except few items appearing in prohibited/
restricted list.
After studying the trends of export of different products from India proper
selection of the product(s) to be exported may be made.
 7) Selection of Markets
An overseas market should be selected after research covering market size, competition,
quality requirements, payment terms etc. Exporters can also
evaluate the markets based on the export benefits available for few countries under the
FTP. Export promotion agencies, Indian Missions abroad,
colleagues, friends, and relatives might be helpful in gathering information.
8) Finding Buyers
Participation in trade fairs, buyer seller meets, exhibitions, B2B portals, web browsing are
an effective tool to find buyers. EPC’s, Indian Missions abroad,
overseas chambers of commerce can also be helpful. Creating multilingual Website with
product catalogue, price, payment terms and other related information would also help.
9) Sampling
Providing customized samples as per the demands of Foreign buyers help in getting export
orders. As per FTP 2015-2020, exports of bonafide trade and technical samples of freely
exportable items shall be allowed without any limit.
10) Pricing/Costing
Product pricing is crucial in getting buyers’ attention and promoting sales in view of
international competition. The price should be worked out
taking into consideration all expenses from sampling to realization of export proceeds on
the basis of terms of sale i.e. Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost &
Freight(C&F), etc. Goal of establishing export costing should be to sell maximum quantity
at competitive price with maximum profit margin. Preparing an export costing sheet for
every export product is advisable.

11) Negotiation with Buyers

After determining the buyer’s interest in the product, future prospects and continuity in
business, demand for giving reasonable allowance/discount in price may be considered.

12) Covering Risks through ECGC

International trade involves payment risks due to buyer/ Country insolvency.
These risks can be covered by an appropriate Policy from Export Credit Guarantee
Corporation Ltd (ECGC). Where the buyer is placing order without making advance
payment or opening letter of Credit, it is advisable to procure credit limit on the foreign
buyer from ECGC to protect against risk of non-payment.(To know more about ECGC
Click here)
 Processing an Export Order
i. Confirmation of order
On receiving an export order, it should be examined carefully in respect of items,
specification, payment conditions, packaging,
delivery schedule, etc. and then the order should be confirmed. Accordingly, the exporter
may enter into a formal contract with the overseas buyer.
ii. Procurement of Goods
After confirmation of the export order, immediate steps may be taken for
procurement/manufacture of the goods meant for export.
It should be remembered that the order has been obtained with much efforts and
competition so the procurement should also be strictly as per buyer’s requirement.
iii. Quality Control
In today’s competitive era, it is important to be strict quality conscious about the export
goods. Some products like food and agriculture, fishery, certain chemicals, etc. are subject
to compulsory pre-shipment inspection. Foreign buyers may also lay down their own
standards/specifications and insist upon inspection by their own nominated agencies.
Maintaining high quality is necessary to sustain in export business.
 iv. Finance
Exporters are eligible to obtain pre-shipment and post-shipment finance from Commercial
Banks at concessional interest rates to complete the export transaction. Packing Credit
advance in pre-shipment stage is granted to new exporters against lodgment of L/C or
confirmed order for 180 days to meet working capital requirements for purchase of raw
material/finished goods, labour expenses, packing, transporting, etc. Normally Banks give
75% to 90% advances of the value of the order keeping the balance as margin. Banks
adjust the packing credit advance from the proceeds of export bills negotiated, purchased or
discounted.
Post Shipment finance is given to exporters normally upto 90% of the Invoice value for
normal transit period and in cases of usance export bills upto notional due date. The
maximum period for post-shipment advances is 180 days from the date of shipment.
Advances granted by Banks are adjusted by realization of the sale proceeds of the export
bills. In case export bill becomes overdue Banks will charge commercial lending rate of
interest.
v. Labeling, Packaging, Packing and Marking
The export goods should be labeled, packaged and packed strictly as per the buyer’s specific
instructions. Good packaging delivers and presents the goods in top condition and in
attractive way. Similarly, good packing helps easy handling, maximum loading, reducing
shipping costs and to ensuring safety and standard of the cargo.
Marking such as address, package number, port and place of destination, weight, handling
instructions, etc. provides identification and information of cargo packed.
 vi. Insurance
Marine insurance policy covers risks of loss or damage to the goods during
the while the goods are in transit.
Generally in CIF contract the exporters arrange the insurance whereas for
C&F and FOB contract the buyers obtain insurance policy.
vii. Delivery
It is important feature of export and the exporter must adhere the delivery
schedule. Planning should be there to let nothing stand in the way of fast
and efficient delivery.
viii. Customs Procedures
It is necessary to obtain PAN based Business Identification Number (BIN)
from the Customs prior to filing of shipping bill for clearance of export good
and open a current account in the designated bank for crediting of any
drawback amount and the same has to be registered on the system.
In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format
as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter
need to apply different forms of shipping bill/ bill of export for export of duty free goods,
export of dutiable goods and export under drawback etc.

• Under EDI System, declarations in prescribed format are to be filed through the Service
Centers of Customs.
• A checklist is generated for verification of data by the exporter/CHA.
• After verification, the data is submitted to the System by the Service Center operator and
the System generates a Shipping Bill Number, which is endorsed on the printed checklist
and returned to the exporter/CHA.
• In most of the cases, a Shipping Bill is processed by the system on the basis of declarations
made by the exporters without any human intervention.
• Where the Appraiser Dock (export) orders for samples to be drawn and tested, the
Customs Officer may proceed to draw two samples from the consignment and enter the
particulars there of along with details of the testing agency in the ICES/E [Indian Customs
EDI System’] system.
In both the cases, after the permission for amendments has been granted,
the Assistant Commissioner / Deputy Commissioner (Export) may approve
the amendments on the system on behalf of the Additional /Joint
Commissioner.
Where the print out of the Shipping Bill has already been generated, the
exporter may first surrender all copies of the shipping bill to the Dock
Appraiser for cancellation before amendment is approved on the system.
ix. Customs House Agents
Exporters may avail services of Customs House Agents licensed by the
Commissioner of Customs. They are professionals and facilitate work
connected with clearance of cargo from Customs.
x. Documentation
FTP 2015-2020 describe the following mandatory documents for import and
export.
· Bill of Lading/ Airway bill
· Commercial invoice cum packing list
· shipping bill/ bill of export/ bill of entry (for imports)
(Other documents like certificate of origin, inspection certificate etc may be required as per the case.)
 xi. Submission of documents to Bank
After shipment, it is obligatory to present the documents to the Bank within 21 days for
onward dispatch to the
foreign Bank for arranging payment. Documents should be drawn under
Collection/Purchase/Negotiation under L/C as the case may be, along with the following
documents
- Bill of Exchange
- Letter of Credit (if shipment is under L/C)
- Invoice
- Packing List
- Airway Bill/Bill of Lading
- Declaration under Foreign Exchange
- Certificate of Origin/GSP
- Inspection Certificate, wherever necessary
- Any other document as required in the L/C or by the buyer or statutorily.
xii. Realization of Export Proceeds
As per FTP 2015-2020, all export contracts and invoices shall be denominated either in freely
convertible currency of
Indian rupees, but export proceeds should be realized in freely convertible currency except
for export to Iran.
Export proceeds should be realized in 9 months.
 Custom Clearance Formalities

• Customs clearance work involves preparation and submission of documentations

required to facilitate export or imports into the country, representing client
during customs examination, assessment, payment of duty and co taking delivery
of cargo from customs after clearance along with documents.
InvestorWords.com defines customs clearance as:
• the act of passing goods through customs so that they can enter or leave the
country.
• a document given by customs to a shipper to show that customs duty has
been paid and the goods can be shipped.
As per Management Study Guide :

• Customs clearance work involves preparation and submission of

documentations required to facilitate export or imports into the country,
representing client during customs examination, assessment, payment of duty
and co taking delivery of cargo from customs after clearance along with
documents.
• Some of the documents involved in customs clearance are :
• 1. Exports Documentation: Purchase order from Buyer, Sales Invoice, Packing
List, Shipping bill, Bill of Lading or air way bill, Certificate of Origin and any other
specific documentation as specified by the buyer, or as required by financial
institutions or LC terms or as per importing country regulations.
• 2. Imports Documentation: Purchase Order from Buyer, Sales Invoice of supplier,
Bill of Entry, Bill of Lading or Air way bill, Packing List, Certificate of Origin, and
any other specific documentation required by the buyer, or financial institution or
the importing country regulation.
Customs Clearance Procedure in India
• Import and export of goods into and outside a country should undergo a customs
clearance process.
• The importer and exporter of the goods should submit valid documents to clear
this process. In this article, we look at some of the major steps and processes in
clearing customs in India.
Calling of Vessels
• Once the vessels carrying the goods reaches the country, the person who carried
the vessels should make sure that the calling of vessels is done at the customs
port.
• For instance, if goods are imported via aircraft, the pilot is responsible for call of
the vessels at the customs airport.
• There is no requirement for the importer to get involved in this process and will
be done by the airline or shipping line.