Export Procedure| Class 11 Business Studies International Business

Export Procedure

Export Trade refers to selling to another country.

Following steps are involved in export trade:

1. Receipt of Enquiry: The exporter receives trade enquiry from the importer and responds to this enquiry by sending a proforma invoice. 

2. Receipt of Order or Indent: In this step, the importer places an order with the exporter. The order contains information about the price, quantity, grade, quality and the instructions regarding packing, shipping, delivery and payment.

3. Assessing importer's creditworthiness and securing a guarantee for payments: In order to ensure that there is no risk of non-payment, a letter of credit may be demanded by the exporter from the importer. Letter of credit is issued by the importer's bank to give guarantee of honouring the payment.

4. Obtaining Export License: The exporter must get the export license. Every exporter must 

→be registered with DGFT (Director General of Foreign Trade) or regional licensing authority and get an import export code (IEC) number

→be registered with Export Credit and Guarantee Corporation (ECGC) 

→be registered with the export promotion council

5. Obtaining Pre Shipment Finance: The exporter arranges for pre shipment finance from his bank. This finance is needed for obtaining inputs for carrying out the production. 

6. Production or Procurement of Goods: The exporter either carries out the production of goods himself or buys from the market. 

8. Pre Shipment Inspection: In order to ensure that only quality products are exported from the country, the government of India has taken various steps like inspection of certain products. 

9. Excise Clearance: The exporter must take excise clearance from the excise commissioner after payment of excise duty, if any. 

10. Obtaining Certificate of Origin: Certificate of origin acts as a proof that the goods have actually been manufactured in the country from which the export is taking place. 

11. Reservation of Shipping Space: The exporter applies to the shipping company for the provision of shipping space. On acceptance of the application for shipping, the shipping company issues a shipping order. 

12. Packing and Forwarding: The goods are properly packed and marked with necessary details. The exporter then makes necessary arrangements for transportation of goods to the port. 

13. Insurance of Goods: The exporter takes insurance of the goods to protect against the risk of loss or damage during the transit. 

14. Custom Clearance: The goods needs to be cleared by the customs before loading them on the ship. 

15. Obtaining Mate's Receipt: On loading goods on the ship, the captain of the ship issues mate's receipt to the port superintendent. 

16. Payment of Freight: On the basis of mate’s receipt, the shipping company computes freight and issues a bill of lading after receipt of freight. 

17. Preparation of Invoice: The exporter prepares an invoice which contains details regarding the quantity of goods and the amount to be paid by the importer.

18. Securing Payment: Various documents such as invoice, insurance policy and certificate of origin are handed over to the importer against acceptance of the bill of exchange.