SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS

‘B’ ROAD CHURCHGATE, MUMBAI -400020

DEPT. OF FOREIGN TRADE

EXPORT PROCEDURES

SUBMITTED BY-

KIRAN KRISHNA POOJARY

SYFT

ROLL NO - 31

ACADEMIC YEAR: 2019-2020

SR. NO. PARTICULARS PAGE NO.
1 EXPORTS – A BASIC INTRODUCTION 3
2 EXPORT PROCEDURE 5
2.1 REGISTRATION 8
4 10
5 12
6 16
7 17
8 20
9 22
10 24
11 25
12 28
13 30
14 35

15 37

16 40
Advantages & Disadvantages of Export
17 Procedure 41

18 Conclusion 46
19 Bibliography 47

INDEX
1. EXPORTS – A BASIC INTRODUCTION

India is amongst the world’s top 20 nations with respect to the export of merchandise. With the
increased liberalisation of trade by the Indian Government, there’s an abundant opportunity for
establishing a profitable export business. For undertaking an export business, an entrepreneur
should have a clear understanding of the rules and regulations along with the documentation
pertaining to these export transactions.

According to Section 2(18) of the Customs Act 1962, “Export means taking goods out of India to
a place outside India.” Export trade in India is regulated by the Directorate General of Foreign
Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and
Industry, Department of Commerce. Policies and procedures required to be followed for exports
from India are announced by the DGFT, from time to time. For the purpose of exports, goods
have been divided into the following categories:
• Prohibited goods that are not permitted to be exported
• Restricted goods that can be permitted for export under licence and subject to compliance of
stipulated procedures/conditions
• Canalized goods that are permitted to be exported through State Trading Enterprises (STEs)
The exporter of goods has to obtain an Importer-Exporter Code (IEC) Number from the office of
Director General of Foreign Trade prior to filing of shipping bill for clearance of export goods.

Exports are governed by Foreign Trade (Development & Regulation) Act, 1992 and Export-
Import (EXIM) Policy. Directorate General of Foreign Trade (DGFT) is the primary governing
body responsible for the export and import policies in the country. Since an export trade has to
follow a specific set of procedures from receiving inquiries to completion of the transaction,
exporters need to get themselves registered with these authorities for ensuring all the legal
formalities as required by them are met and also for receiving incentives which are allowed
under the export promotion schemes. The Reserve Bank of India (RBI) guidelines have to be met
by the exporter. An exporter also requires an Import-Export Code Number from the concerned
regional licensing authority.
2. EXPORT PROCEDURE:
The export of the goods is subject to certain legal and procedural formalities before being
permitted clearance by Customs. These would include the submission of prescribed documents
and adherence to the laid down procedures before an order can be given by the competent officer
to clear the goods for the intended purpose. The following constitutes the export procedure:
2.1 REGISTRATION: The exporters have to obtain PAN based Business Identification
Number(BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for
clearance of export goods. Under the EDI System, PAN based BIN is received by the Customs
System from the DGFT online. The exporters are also required to register authorised foreign
exchange dealer code (through which export proceeds are expected to be realised) and open a
current account in the designated bank for credit of any drawback incentive.
Whenever a new Airline, Shipping Line, Steamer Agent, port or airport comes into operation,
they are required to be registered into the Customs System. Whenever, electronic processing
of shipping bill etc. is held up on account of non-registration of these entities, the same is
to be brought to the notice of Assistant/Deputy Commissioner in-charge of EDI System for
registering the new entity in the system.
2.2 REGISTRATION IN CASE OF EXPORT UNDER EXPORT
PROMOTION SCHEMES
All the exporters intending to export under the export promotion scheme need to get their
licences/DEEC book etc. registered at the Customs Station. For such registration, original
documents are required.
2.3 PROCESSING OF SHIPPING BILL – NON-EDI
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.
Shipping Bills are required to be filed along with all original documents such as invoice,
AR-4, packing list etc. The assessing officer in the Export Department checks the value of
the goods, classification under Drawback schedule in case of Drawback Shipping Bills, rate
of duty/cess where applicable, exportability of goods under EXIM policy and other laws in
force. The DEEC/DEPB Shipping bills are processed in the DEEC group. If the assessing
officer has any doubts regarding value, description of goods, he may call for samples of
the goods from the docks. He may also call for any other information required by him for
processing of shipping bill. He may assess the shipping bill after visual inspection of the
sample or may send it for test and pass the shipping bill provisionally.
Once, the shipping bill is passed by the Export Department, the exporter or his agent presents
the goods to the shed appraiser (export) in docks for examination. If the description and other
particulars of the goods are found to be as declared, the shed appraiser gives a ‘let export’
order, after which the exporter may contact the preventive superintendent for supervising the
loading of goods on to the vessel.
In case, the examining staffs in the docks find some discrepancy in the goods, they may mark
the shipping bill back to export department/DEEC group with their observations as well as
sample of goods, if needed. The export department re-considers the case and decide whether
export can be allowed, or amendment in description, value etc. is required before export
and whether any other action is required to be taken under the Customs Act, 1962 for
misdeclaration
of description of value etc.
2.4 PROCESSING OF SHIPPING BILL – EDI
Under EDI System, declarations in prescribed format are to be filed through the Service
Centres 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 Centre operator and the
System generates a Shipping Bill Number, which is endorsed on the printed checklist and
returned to the exporter/CHA. For export items which are subject to export cess, the TR-6
challans for cess is printed and given by the Service Centre to the exporter/CHA immediately
after submission of shipping bill. The cess can be paid on the strength of the challan at the
designated bank. No copy of shipping bill is made available to exporter/CHA at this stage.
2.5 OCTROI PROCEDURE, QUOTA ALLOCATION AND OTHER
CERTIFICATION FOR EXPORT GOODS
The quota allocation label is required to be pasted on the export invoice. The allocation
number of AEPC is to be entered in the system at the time of shipping bill entry. The quota
certification of export invoice needs to be submitted to Customs along-with other original
documents at the time of examination of the export cargo. For determining the validity
date of the quota, the relevant date needs to be the date on which the full consignment is
presented to the Customs for examination and duly recorded in the Computer System. Since
the shipping bill is generated only after the 'let export order' is given by Customs, the exporter
may make use of export invoice or such other document as required by the Octroi authorities
for the purpose of Octroi exemption.

2.6 ARRIVAL OF GOODS AT DOCKS

The goods brought for the purpose of examination and subsequent 'let export' is allowed entry
to the Dock on the strength of the checklist and other declarations filed by the exporter in the
Service Centre. The Port authorities have to endorse the quantity of goods actually received on
the reverse of the Check List.

2.7 SYSTEM APPRAISAL OF SHIPPING BILLS

In many cases the Shipping Bill is processed by the system on the basis of declarations made
by the exporters without any human intervention. In other cases where the Shipping Bill
is processed on screen by the Customs Officer, he may call for the samples, if required for
confirming the declared value or for checking classification under the Drawback Schedule.
He may also give any special instructions for examination of goods, if felt necessary.
2.8 STATUS OF SHIPPING BILL
The exporter/CHA can check up with the query counter at the Service Centre whether the
Shipping Bill submitted by them in the system has been cleared or not, before the goods are
brought into the Docks for examination and export. In case any query is raised, the same is
required to be replied through the service centre or in case of CHAs having EDI connectivity
through their respective terminals. The Customs officer may pass the Shipping Bill after all
the queries have been satisfactorily replied to.
2.9 CUSTOMS EXAMINATION OF EXPORT CARGO
After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer
designated for the purpose present the check list with the endorsement of Port Authority
and other declarations as aforesaid along with all original documents such as, Invoice and
Packing list, AR-4, etc. Customs Officer may verify the quantity of the goods actually
received and enter into the system and thereafter mark the Electronic Shipping Bill and also
hand over all original documents to the Dock Appraiser who many assign a Customs Officer
for the examination and intimate the officers’ name and the packages to be examined, if any,
on the check list and return it to the exporter or his agent.
The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The
Customs Officer enters the examination report in the system. He then marks the Electronic
Bill along with all original documents and checklist to the Dock Appraiser. If the Dock
Appraiser is satisfied that the particulars entered in the system conform to the description
given in the original documents and as seen in the physical examination, he may proceed to
allow "let export" for the shipment and inform the exporter or his agent.

2.10 VARIATION BETWEEN DECLARATION & PHYSICAL

EXAMINATION
The check list and the declaration along with all original documents are retained by the
Appraiser concerned. In case of any variation between the declaration in the Shipping Bill
and physical documents/examination report, the Appraiser may mark the Electronic Shipping
Bill to the Assistant Commissioner/Deputy Commissioner of Customs (Exports). He may
also forward the physical documents to Assistant Commissioner/Deputy Commissioner of
Customs (Exports) and instruct the exporter or his agent to meet the Assistant Commissioner/
Deputy Commissioner of Customs (Exports) for settlement of dispute. In case the
exporter agrees with the views of the Department, the Shipping Bill needs to be processed
accordingly. Where, however, the exporter disputes the view of the Department principles of
natural justice is required to be followed before finalisation of the issue.

2.11 STUFFING OR LOADING OF THE GOODS IN THE CONTAINER

The exporter or his agent should hand over the exporter copy of the shipping bill duly signed
by the Appraiser permitting "Let Export" to the steamer agent who may then approach the
Preventive Officer for allowing the shipment. In case of container cargo the stuffing of
container at Dock is done under Preventive Supervision. Loading of both containerized and
bulk cargo is done under Preventive Supervision. The Customs Preventive Superintendent
(Docks) may enter the particulars of packages actually stuffed in to the container, the bottle
seal number particulars of loading of cargo container on board into the system and endorse
these details on the exporter copy of the shipping bill presented to him by the steamer agent.
If there is a difference in the quantity/number of packages stuffed in the containers/goods
loaded on vessel the Superintendent (Docks) may put a remark on the shipping bill in the
system and that shipping bill requires amendment or changed quantity. Such shipping bill
also may not be taken up for the purpose of sanction of Drawback/DEEC logging, till the
shipping bill is suitably amended for the changed quantity. The Customs Preventive Officer
supervising the loading of container and general cargo in to the vessel may give "Shipped on
Board" endorsement on the exporter’s copy of the shipping bill.

2.12 DRAWING OF SAMPLES

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
thereof along with details of the testing agency in the ICES/E system. There is no separate
register for recording dates of samples drawn. Three copies of the test memo are prepared by
the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf
of Customs and the exporter or his agent. The disposals of the three copies of the test memo
are as follows: -
· Original – to be sent along with the sample to the test agency.
· Duplicate – Customs copy to be retained with the 2nd sample.
· Triplicate – Exporter’s copy.
2.13 AMENDMENTS
Any correction/amendments in the checklist generated after filing of declaration can be made
at the service centre, provided, the documents have not yet been submitted in the system and
the shipping bill number has not been generated. Where corrections are required to be made
after the generation of the shipping bill No. or after the goods have been brought into the
Export Dock, amendments is carried out in the following manners.
· If the goods have not yet been allowed "let export" amendments may be permitted by
the Assistant Commissioner (Exports).
· Where the "Let Export" order has already been given, amendments may be permitted
only by the Additional/Joint Commissioner, Custom House, in charge of export
section.
2.14 EXPORT OF GOODS UNDER CLAIM FOR DRAWBACK
After actual export of the goods, the Drawback claim is processed through EDI system by
the officers of Drawback Branch on first come first served basis. There is no need for filing
separate drawback claims. The status of the shipping bills and sanction of DBK claim can
be ascertained from the query counter set up at the service centre. If any query has been
raised or deficiency noticed, the same is shown on the terminal. A print out of the query/
deficiency may be obtained by the authorized person of the exporter from the service centre.
The exporters are required to reply to such queries through the service centre. The claim will
come in queue of the EDI system only after reply to queries/deficiencies is entered by the Service
Centre.
All the claims sanctioned on a particular day are enumerated in a scroll and transferred to the
Bank through the system. The bank credits the drawback amount in the respective accounts
of the exporters. Bank may send a fortnightly statement to the exporters of such credits made
in their accounts.
The Steamer Agent/Shipping Line may transfer electronically the EGM to the Customs
EDI system so that the physical export of the goods is confirmed, to enable the Customs to
sanction the drawback claims.

2.15 GENERATION OF SHIPPING BILL

After the "let export" order is given on the system by the Appraiser, the Shipping Bill is
generated by the system in two copies i.e., one Customs copy, one exporter’s copy. After
obtaining the print out the appraiser obtains the signatures of the Customs Officer on the
examination report and the representative of the CHA on both copies of the shipping bill and
examination report. The Appraiser thereafter signs & stamps both the copies of the shipping
bill at the specified place.
The Appraiser also signs and stamps the original & duplicate copy of SDF. Customs copy of
shipping bill and original copy of the SDF is retained along with the original declarations by
the Appraiser and forwarded to Export Department of the Custom House. He may return the
exporter copy and the second copy of the SDF to the exporter or his agent.
2.16 EXPORT GENERAL MANIFEST
All the shipping lines/agents need to furnish the Export General Manifests (EGM), Shipping
Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel.
Apart from lodging the EGM electronically the shipping lines need to continue to file
manual EGMs along with the exporter copy of the shipping bills as per the present practice
in the export department. The manual EGMs need to be entered in the register at the Export
Department and the Shipping lines may obtain acknowledgements indicating the date and
time at which the EGMs were received by the Export Department.
Keeping in view the above guidelines and procedures, one can successfully export goods
from India.

3. GENERAL GUIDELINES FOR EXPORTS

3.1 EXEMPTION FROM DECLARATIONS
(A) GR EXEMPTION
The requirement of declaration of export of goods and software in the prescribed form will
not apply to the cases indicated in Regulation 4 of FEMA. The exporters shall, however, be
liable to realise and repatriate export proceeds as per FEMA Regulations.
(B) GRANT OF GR WAIVER
i. AD Category – I banks may consider requests for grant of GR waiver from exporters
for export of goods free of cost, for export promotion up to 2 per cent of the average
annual exports of the applicant during the preceding three financial years subject to a
ceiling of Rs.5 lakhs. For status holder exporters, the limit as per the present Foreign
Trade Policy is Rs.10 lakhs or 2 per cent of the average annual export realization
during the preceding three licensing years (April-March), whichever is higher.
ii. Export of goods not involving any foreign exchange transaction directly or indirectly
requires the waiver of GR/PP procedure from the Reserve Bank.
3.2 MANNER OF RECEIPT & PAYMENT
The amount representing the full export value of the goods exported shall be received through
an AD Bank in the manner specified in the Foreign Exchange Management (Manner of
Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA.14/2000-RB
dated May 3, 2000 (Annex-3) in the following manner:
· Bank draft, pay order, banker's cheques or personal cheques.
· Foreign currency notes/foreign currency travellers’ cheques from the buyer during his
visit to India.
· Payment out of funds held in the FCNR/NRE account maintained by the buyer
· International Credit Cards of the buyer.
3.3 REALISATION & REPATRIATION OF EXPORT PROCEEDS
It is obligatory on the part of the exporter to realise and repatriate the full value of goods or
software to India within a stipulated period from the date of export, as under:
i. By Units in Special Economic Zones (SEZs): No specific time period has been
stipulated;
ii. By Status Holder Exporters as defined in the Foreign Trade Policy : Within a period
of twelve months from the date of export;
iii. By 100 % Export Oriented Units (EOUs) and units set up under Electronic Hardware
Technology Parks (EHTPs), Software Technology Parks (STPs) and Biotechnology
Parks (BTPs) schemes : Within a period of twelve months from the date of export on
or after September 1, 2004;
iv. Goods exported to a warehouse established outside India : As soon as it is realised
and in any case within fifteen months from the date of shipment of goods; and
v. In all other cases: With effect from June 3, 2008, this period of realization and
repatriation to India has been enhanced to twelve months from the date of export.
3.4 FOREIGN CURRENCY ACCOUNT
i. Participants in international exhibition/trade fair have been granted general
permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign
Currency Account by a Person Resident in India) Regulations, 2000 for opening
a temporary foreign currency account abroad. Exporters may deposit the foreign
exchange obtained by sale of goods at the international exhibition/trade fair and
operate the account during their stay outside India provided that the balance in the
account is repatriated to India through normal banking channels within a period of
one month from the date of closure of the exhibition/trade fair and full details are
submitted to the AD Category – I banks concerned.
ii. Reserve Bank may consider applications in Form EFC (Annex 6) from exporters
having good track record for opening a foreign currency account with banks in India
and outside India subject to certain terms and conditions.
iii. An Indian entity can also open, hold and maintain a foreign currency account
with a bank outside India, in the name of its overseas office/branch, by making
remittance for the purpose of normal business operations of the said office/branch
or representative subject to conditions stipulated in Regulation 7 of Notification No.
FEMA and as amended from time to time.
iv. A unit located in a Special Economic Zone (SEZ) may open, hold and maintain
a Foreign Currency Account with an AD Category – I bank in India subject to
conditions stipulated in Regulation 6 (A) of Notification No. FEMA and as amended
from time to time.
v. A person resident in India being a project / service exporter may open, hold and
maintain foreign currency account with a bank outside or in India, subject to the
standard terms and conditions in the Memorandum PEM.
3.5 EXPORT OF GOODS ON LEASE, HIRE, ETC.
Prior approval of the Reserve Bank is required for export of machinery, equipment, etc.,
on lease, hire basis under agreement with the overseas lessee against collection of lease
rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission,
through an AD Category – I banks, to the Regional Office concerned of the Reserve Bank,
giving full particulars of the goods to be exported.

3.6 EXPORT OF CURRENCY

In terms of Foreign Exchange Management (Export and Import of Currency) Regulations,
2000, as amended from time to time, any export of Indian currency of value exceeding
Rs.7,500/- except to the extent permitted under any general permission granted under the
Regulations, will require prior permission of the Reserve Bank.

3.7 EXPORTS TO NEIGHBOURING COUNTRIES BY ROAD, RAIL OR

RIVER
The following procedure should be adopted by exporters for filing original copies of GR/SDF
forms where exports are made to neighbouring countries by road, rail or river transport:
(i) In case of exports by barges/country craft/road transport, the form should be presented
by exporter or his agent at the Customs station at the border through which the vessel or
vehicle has to pass before crossing over to the foreign territory. For this purpose, exporter
may arrange either to give the form to the person in charge of the vessel or vehicle or forward
it to his agent at the border for submission to Customs.
(ii) As regards exports by rail, Customs staff has been posted at certain designated railway
stations for attending to Customs formalities. They will collect the GR/SDF forms for goods loaded at
these stations so that the goods may move straight on to the foreign country without
further formalities at the border. The list of designated railway stations can be obtained from
the Railways. For goods loaded at stations other than the designated stations, exporters must
arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station
where Customs formalities are completed.

4. Steps of Export Registration Procedure

In general, an export procedure flows as stated below:
Step 1. Receipt of an Order
The exporter of goods is required to register with various authorities such as the income tax
department and Reserve Bank of India (RBI). In addition to this, the exporter has to appoint
agents who can collect orders from foreign customers (importer). The Indian exporter receives
orders either directly from the importer or through indent houses.
Step 2. Obtaining License and Quota
After getting the order from the importer, the Indian exporter is required to secure an export
license from the Government of India, for which the exporter has to apply to the Export Trade
Control Authority and get a valid license. You can get a license from here too. The quota is
referred to as the permitted total quantity of goods that can be exported.
Step 3. Letter of Credit
The exporter of the goods generally ask the importer for the letter of credit, or sometimes the
importer himself sends the letter of credit along with the order.
Step 4. Fixing the Exchange Rate
Foreign exchange rate signifies the rate at which the home currency can be exchanged with the
foreign currency i.e. the rate of the Indian rupee against the American Dollar. The foreign
exchange rate fluctuates from time to time. Thus, the importer and exporter fix the exchange rate
mutually.
Step 5. Foreign Exchange Formalities
An Indian exporter has to comply with certain foreign exchange formalities under exchange
control regulations. As per the Foreign Exchange Regulation Act of India (FERA), every
exporter of the goods is required to furnish a declaration in the form prescribed in a manner.
The declaration states:-
I.The foreign exchange earned by the exporter on exports is required to be disposed of in the
manner specified by RBI and within the specified period.
II.Shipping documents and negotiations are required to be done through authorised dealers in
foreign exchange.
III.The payment against the goods exported will be collected through only approved methods.
Step 6. Preparation for Executing the Order
The exporter should make required arrangements for executing the order:
I.Marking and packing of the goods to be exported as per the importer’s specifications.
II.Getting the inspection certificate from the Export Inspection Agency by arranging the pre-
shipment inspection.
III.Obtaining insurance policy from the Export Credit Guarantee Corporation (ECGC) to get
protection against the credit risks.
IV.Obtaining a marine insurance policy as required.
V.Appointing a forwarding agent (also known as custom house agent) for handling the customs
and other related matters.
Step 7. Formalities by a Forwarding Agent
The formalities to be performed by the agent include –
I.For exporting the goods, the forwarding agent first obtains a permit from the customs
department.
II.He must disclose all the required details of the goods to be exported such as nature, quantity,
and weight to the shipping company.
III.The forwarding agent has to prepare a shipping bill/order.
IV.The forwarding agent is required to make two copies of the port challans and pays the dues.
V.The master of the ship is responsible for the loading of the goods on the ship. The loading is to
be done on the basis of the shipping order in the presence of customs officers.
VI.Once the goods are loaded on the ship, the master of the ship issues a receipt for the same.
Step 8. Bill of Lading
The Indian exporter of the goods approaches the shipping company and presents the receipt copy
issued by the master of the ship and in return gets the Bill of Lading. Bill of lading is an official
receipt which provides the full description of the goods loaded on the ship and the name of the
port of destination.
Step 9. Shipment Advise to the Importer
The Indian exporter sends shipment advice to the importer of the goods so that the importer gets
informed about the dispatch of the goods. The exporter sends a copy of the packing list, a non-
negotiable copy of the Bill of Lading, and commercial invoice along with the advice note.
Step 10. Presentation of Documents to the Bank
The Indian exporter confirms that he possesses all necessary shipping documents namely;
Marine Insurance Policy
The Consular Invoice
Certificate of Origin
The Commercial Invoice
The Bill of Lading
Then the exporter draws a Bill of Exchange on the basis of the commercial invoice. The Bill of
Exchange along with these documents is called Documentary Bill of Exchange. The exporter
then hands over the same to his bank.
Step 11. The Realisation of Export Proceeds
In order to realise the proceeds of the export, the exporter of the goods has to undergo specific
banking formalities. On submission of the bill of exchange, these formalities are initiated.
Generally, the exporter receives payment in foreign exchange.

5. Steps of Export Registration Procedure

Step 1: Receive an Inquiry

The first step in the shipping documentation process is when someone inquires about buying
your products. When a potential buyer expresses interest, they will send a letter of
inquiry outlining the terms of their interest along with a request for an informal or formal quote.
Step 2: Screen the Potential Buyer and Country
After you receive an inquiry from a buyer, you first need to make sure you can do business with
them. That means screening them on the denied and restricted party lists. You can manually
screen their name, their company name, and their address by checking each of the hundreds of
lists published by the U.S. government, or you can automate that process byusing software like
Shipping Solutions, which automatically checks against the latest version of all the lists.
If your buyer shows up on any of the lists, you cannot do business with them. If they do not show
up, proceed with caution.
The screening step also includes making sure you can ship your goods to the buyer’s country. In
some cases you can ship only if you apply for an export license. It’s best to complete the
licensing process as early as you can to avoid causing delays in your timeline.
Step 3: Provide a Proforma Invoice

After screening your buyer and their country, you may need to provide the buyer with
aproforma invoice for the transaction. The proforma invoice is the first impression you will make
on your buyers, so make sure you do it right. It acts like a quote and looks like a commercial
invoice, and it can be used to arrange financing for the purchase.
If the proforma invoice results in an order, the final commercial invoice will closely resemble the
proforma invoice. That means all of the costs included in the quotation are firm and may not be
varied beyond the terms outlined in the letter of credit.
Certain countries may require a proforma invoice if they tightly control their currency, require an
import permit, or protect local industry by placing import quotas on certain types of goods. For a
deep dive into the benefits and features of a proforma, check out How Does the Proforma
Invoice Fit in the Sales Process?
Step 4: Finalize the Sale
After you send the proforma, the buyer will either reject or accept your proposal. As part of the
acceptance process, they will most likely want to negotiate the terms of the sale. This will result
in a verbal or written contract.
Not only should these negotiations include a discussion of the price to be paid, but they should
also include a discussion of:
The payment terms you'll be using, whether it's cash in advance, open account, or something in
between.
The term of sale you’ll be using, which is typically one of the 11 Incoterms 2020.
 How your goods will be shipped.
 Who’s responsible for shipping the goods.
 Who’s responsible for hiring the freight forwarder or carrier.
 Who’s responsible for filing the electronic export information through AES.
 How the transaction will be paid. If you’re using a letter of credit, you need to make sure
you have the necessary documents to satisfy its requirements.
 What documents need to be provided by which party. As the exporter, you’ll need to
meet whatever regulations your buyer may have in their own country as well as the
documentation and regulation requirements of the U.S.
By taking care of all these important details before you ship any goods, you’ll save a lot of time
and avoid potential headaches—especially if you have specific deadlines to meet.
Once you've reached agreement on these points and any others you or your buyer wants to
discuss, you'll receive the order, which may appear in the form of a purchase order.
Step 5: Prepare the Goods and the Shipping Documents
Commercial Invoice
Once you have finalized your sale and prepared your goods for export, you need to prepare the
proper shipping documents. That typically includes three copies of the commercial invoice with
these important data elements.
Packing List
In addition, you would typically include a packing list, which provides the freight forwarder,
carrier, and ultimate consignee with information about your shipment, the packing details, and
the marks and numbers as noted on the outside of the boxes.
A packing list is also a means by which customs authorities in the importing country assess
security and compliance. And it is a required document to file a claim with the carrier or
insurance company in the event of cargo damage or loss.
Certificate of Origin
While some countries will accept a statement of origin on the commercial invoice, the customs
authorities of other countries may require a separate document titled a certificate of origin. The
certificate of origin is documentary evidence that the goods originated in the country stated in the
certificate, commercial invoice, or packing list.
If the United States has negotiated a free trade trade agreement (FTA) with the country to which
you are exporting—and if your goods qualify for reduced tariffs under the terms of the
agreement—you may want to provide the specific form for that trade agreement. You'll find free
PDF samples of many of these FTA certificates of origin on the Shipping Solutions website.
Shipper's Letter of Instruction
Based on the discussions you had with your buyer in step four about the type of export and who
is filing through AES, you may need to prepare a Shipper’s Letter of Instruction (SLI). An SLI
provides your company with a written record of who received the shipping documents, who to
contact for questions, who to contact for proof of export, and who issued the export control
information that was used to support the decision to export the goods.
In a routed export transaction—unless you specifically negotiate for filing—the forwarder/buyer
will most likely file through AES. Otherwise, you can file through AES yourself or your agent
will file through AES for you. If your agent files, you must provide an SLI as well as power of
attorney to file on your behalf.
Bills of Lading
You will need at least one—but you may need several—bills of lading to accompany your
export. For example, you may need an inland bill of lading to move your goods to a port or
airport. For moving goods out of the United States you will need a separate bill of lading, which
is usually filled out by your freight forwarder. If necessary, you will also need to complete a
dangerous goods form at this point.
Step 6: Run a Restricted Party Screening (Again)
Right before the goods ship for export, run one last restricted party screening to make sure
nothing’s changed on any denied or restricted party. If you use Shipping Solutions Restricted
Party Screening Wizard to do this, your screenings will automatically be documented in the
software, providing a paper trail evidence of your due diligence in the event of an audit.
Step 7: Miscellaneous Forms and Ship Your Goods
There may be other specific documents to prepare before you can export your goods. These may
be identified in the sales contract you negotiated with your buyer, documents required under the
terms of a letter of credit or other payment options, or forms requested by the freight forwarder.
These additional documents may including a bank draft or, for a temporary export, an ATA
carnet.
Once all your documents are accurately completed and you fulfilled the other steps of this export
process, go ahead and ship your goods!
One Last Tip: Recordkeeping
Don't forget that not only must you prepare a variety of documents for your export shipment, it is
your responsibility to keep copies of all of your documents, as well as all other correspondence
throughout the sale, including phone calls, emails, etc. After all, it is your job—not your buyer’s,
your forwarder’s, or anyone else’s— to document the whole process.

5. Post-shipment banking activities in the export business

The export business is an extremely capital-intensive enterprise, with many operational

overheads. Processes can be long-drawn and involve financing at every stage. The post-shipment
phase also requires a lot of financial negotiations and includes several banking activities.
An exporter ships the merchandise through a clearing and forwarding agent, commonly known
as a C&F agent. Once the export of the goods is completed through the C&F agent, the post-
shipment activities commence. These post-shipment activities are conducted in several stages:
Stage 1: Submission of all documents by the C&F agent to the exporter
As soon as the shipment of the goods takes place, the C&F agent has to submit the following
documents to the exporter:
The original Letter of Credit (LC), export order, or contract
Copies of Bill of Lading, both negotiable and non-negotiable
Duplicate copy of the ARE-I form (Application for Removal of Excisable Goods for Export by
Air/Sea/Post/Land).
Export Promotion copy of the Shipping Bill
Drawback copy of the Shipping Bill
Stage 2: Sending information on the shipment of goods to the importer
The exporter must provide the importer with all details of the shipment of the products so that it
will be convenient for the latter to receive the goods promptly on arrival.
The details to be conveyed to the importer should generally be the date of shipment or transport,
name of the vessel/flight number, vehicle details, or post details, and the name of the seaport or
airport or border post, depending on the method of export.
The exporter should also send the importer a copy of the non-negotiable Bill of Lading.
Stage 3: Submission of documents to the exporter’s bank for receiving payment
The next step for the exporter is to submit the relevant documents to the bank where they hold an
account. This process is initiated to receive the payment from the importer’s bank account.
The documents required to be submitted to the bank for receiving the payment are often referred
to as the ‘Negotiable Set of Documents’. The process initiated by the exporter’s bank with the
importer’s bank after receiving the Negotiable Set of Documents is commonly called the
‘Negotiation of the Documents’.
The following documents are generally needed to be submitted to the exporter’s bank for
initiating the process of payment realization:
Commercial Invoice
Bill of Lading
Consular Invoice
Certificate of Origin
Dock Receipt or Warehouse Receipt or Airway Bill or Transport Bill
Inspection Certificate
Destination Statement
Insurance Certificate
Export Packing List
IEC Certificate
Stage 4: Submission of covering letter
For the convenience of the banking authorities, all the documents mentioned above should be
submitted to the exporter’s bank with a covering letter that serializes the documents enclosed and
specifies the purpose of their submission. This will significantly facilitate the process in favor of
the exporter.
Stage 5: Dispatch of documents by exporter’s bank to importer’s bank
As soon as the exporter submits the Negotiable Set of Documents to the bank, the process of
Negotiation of the Documents commences.
The bank will first scrutinize all the documents submitted by the exporter. If the bank finds all
the documents in order, it initiates the process of Negotiation of the Documents with the
importer’s bank. This process will be conducted as per the terms and conditions of the LC of the
importer.
The bank then issues a bank certificate and attested copy of the commercial invoice to the
exporter.
Stage 6: Generation of Bill of Exchange
A Bill of Exchange is generated after consideration of the documents mentioned above, and is
commonly known as the ‘Documentary Bill of Exchange’. This Bill of Exchange can be of two
types:
Sight draft: The exporter instructs the bank to hand over the entire relevant documents only after
receipt of payment from the importer.
Usance draft: The exporter instructs the bank to hand over the entire relevant documents to the
importer after the acceptance of the Bill of Exchange.
Stage 7: Furnishing of indemnity bond
An exporter can receive payment immediately from the bank by furnishing an indemnity bond.
As per the bond, the exporter has to give an undertaking to the bank that the said exporter will
indemnify the bank in case of non-receipt of payment from the importer’s bank, along with
interest imposable for such default.
Stage 8: Realisation of payment
After the importer’s bank receives the documentary Bill of Exchange, it releases the funds for
payment. Payment is released in both cases of sight draft or usance draft. The exporter’s bank
receives the payment from the importer’s bank, and the account of the exporter is credited.
Stage 9: Submission of Exchange Control Declaration (GR) form
After the receipt of the payment by the exporter, the GR form has to be submitted to the Reserve
Bank of India (RBI). The exporter’s bank discloses the relevant facts in the form, about the
transaction of export just concluded by the exporter, and submits it to RBI. The RBI verifies the
disclosed facts in the form, and if the facts are found to be correct, it closes the export transaction
as completed.
Stage 10: Incentive for export
If the exporter is eligible to receive an incentive for the export made, they have to submit a claim
in this regard to the appropriate authority. The application for such an incentive must be
accompanied by the relevant documents and the bank certificate.
This concludes the various stages of post-shipment banking activities in the export business.

Excise clearance of export goods can be carried out in 3 ways :

1.Exporter can pay the excise duty and claim the refund after the goods have been exported.
2.Exporting goods under bond without payment of excise duty, provided proof of export is
submitted, the bond is released.
3.Exporters who are members of EPCs are exempted from submitting a bond to the excise
authorities. Instead, they have to only submit an undertaking to the central excise department on
form UT-1, which is valid for one calendar year.
Export Inspection Council of India (EIC) The Export Inspection Council of India (EIC) was set
up by the Government of India under Section 3 of the Export (Quality Control & Inspection)
Act, 1963 as an apex body to provide for sound development of export trade through quality
control and pre-shipment inspection. The Act empowers the Central Government to notify
commodities and their minimum standards for exports, generally international standards or
standards of the importing countries and to set up suitable machinery for inspection and quality
control. The EIC is assisted in its functions by the Export Inspection Agencies (EIAs) located at
Chennai, Kochi, Kolkata, Delhi and Mumbai having a network of 29 sub-offices and laboratories
to back up the pre-shipment inspection and certification activity. In addition, EIC also designates
inspection agencies and laboratories to supplement its own activities as required. The main
functions of EIC are (i) to advise the central government regarding measures to be taken for
enforcement of quality control and inspection in relation to commodities intended for export and
(ii) to draw up programmes for quality control and inspection of commodities for exports. In the
changing Global Scenario, as India’s trading partners are installing regulatory import controls,
the EIC has re-fashioned its role to develop voluntary certification programmes besides
regulatory export control, especially in food sector. The Council is seeking recognition for its
certification by official import control agencies of its trading partners, as per provisions of WTO
agreements, to facilitate easier access to their markets for Indian exporters.
4. CONCLUSION
Keeping in view the above procedures, compliances and the legal documentations required
there are hardly any chances that the exporter will stumble upon any obstacles. These
guidelines and procedures have been made in order to serve the comfort needs of the exporter
as well as the Government of India and the nation as a whole.