1.

ESSENTIALS OF EXPORT &

IMPORT TRADE
 1.1 GENESIS OF INTERNATIONAL TRADE &
TRENDS IN INDIA
• International trades between countries and across continents have
existed for centuries including previous civilizations.
• Traditionally international trade consisted of traded goods like textile,
food items, spices, precious metals, precious stones, and objects of
art and various items across the borders.
• Everybody has heard of the silk route as well as amber road and other
famous routes that existed and the ports and settlements that
flourished due to the trade, which was carried on through land route
as well as sea routes.
• We all know that international trade has been in vogue for centuries
and all civilizations carried on trade with other parts of the world.
• The need for trading exists due to the variations in availability of
resources and comparative advantage.
• In the present context where technology and innovation in all fields
have thrown open borders to globalization, no country can afford to
remain isolated and be self-sufficient.
• International trade has a rich history starting with barter system being
replaced by Mercantilism in the 16th and 17th Centuries. The 18th
Century saw the shift towards liberalism.
• It was in this period that Adam Smith, the father of Economics wrote
the famous book ‘The Wealth of Nations’ in 1776 where in he defined
the importance of specialization in production and brought
International trade under the said scope. David Ricardo developed
the Comparative advantage principle, which stands true even today.
• All these economic thoughts and principles have influenced the
international trade policies of each country.
• Though in the last few centuries, countries have entered into several
pacts to move towards free trade where the countries do not impose
tariffs in terms of import duties and allow trading of goods and
services to go on freely across countries.
• All currencies were freely convertible into Gold, which was the
international monetary currency of exchange. Establishing business
anywhere and finding employment was easy and one can say that
trade was really free between countries around this period.
• The First World War changed the entire course of the world trade and
countries built walls around themselves with wartime controls. But
then the economic recession in 1920 changed the balance of world
trade. Various Governments adopted protective mechanisms by
adopting to raise customs duties and tariffs.
• In the backdrop of the countries economic policies and financial
conditions such as its balance of payments situation, the
governments formulate rules and regulations that govern the
countries trade with other countries.
• World Trade Organization or WTO as it is called is the International
Organization that deals with the global rules of trade between
nations. Its primary function and goal is to facilitate smooth and free
flow of trade between countries.
• WTO functions primarily as the Forum for trade negotiations between
countries. Its main functions include Administering WTO Trade
Agreements, Handling Disputes, Monitoring National Trade policies of
member countries, Technical assistance to Member Countries.
Considered to be one of the youngest of International Organizations,
the WTO is regarded as a Successor to the GATT agreement that came
into being in the after warmth of Second World War.
• Historically treaties have been the agreements that ruled between two
countries. Post Second World War and creation of WTO and other
organizations have paved way for more and more of international co-
operations in the field of politico economic environment, with the result
there have come to existence many regional, intra regional and global
super nations groups engaging in regional trade agreements.

• Creation of The European Union is one of the most important events in

the History of our Civilization. EU, known as European Union was formed
by Masstricht Treaty in 1991 and laid foundation for an economic and
monetary union that included creation of one single currency across
member nations. The European Free Trade Association was setup in 1960
with one of the main aims to establish multilateral associations between
the member countries to abolish customs barriers and creating a single
free market across European Union.
• However amongst the developed countries the international trade
has always been beneficial.
• But the trade relations between developed and under developed
countries have always been the bone of contention and controversies
like form of exploitation. WTO meetings and conferences are used as
a platform by various interest groups to bring to the table various
issues concerning public health and safety, environmental impact and
other evils arising out of international trade.
• We are slowly seeing the new shades of moral and ethical values as
well as other issues that impact our environment and global
concerns featuring in and affecting the international trade.
 1.2 LATEST FOREIGNTRADE POLICY (2015 – 20)

• Announced by Minister for Commerce,

• Industry & Textiles,
• Mrs. Nirmala Sitharaman
• on 1st April 2015
 VISION & NEW SCHEMES

• FTP -2015-20 provides framework for increasing exports of goods and services,
generation of employment and increasing value addition.
• “Make in India” vision to support both manufacturing & services sectors.
• Two new Schemes replacing all earlier schemes –
• ‘Merchandise Exports from India Scheme’ (MEIS) for export of specified goods to
specified markets.
• ‘Services Exports from India Scheme’ (SEIS) for increasing export of notified services.
• DGFT acts as a facilitator of export/ import.
• DGFT will continue to mentor new and potential exporters through “Niryat Bandhu
Scheme” to achieve objective of “Skill India”.
• DGFT introduced e-IEC facility of online filing of an application.
• Electronic Data Interchange (EDI) exchange system for export facilitation with Customs,
Banks & Export Promotion Councils.
 EXPORTS FROM INDIA SCHEMES

• The Objective of the scheme is to provide rewards to the exporters to

offset cost involved and to provide level playing field.
• There are two Exports from India scheme introduced from 1st Apr
2015.
✓Merchandise Exports from India Scheme (MEIS), and
✓Service Exports from India Scheme (SEIS)
 MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS)
❖ Earlier five different schemes, viz. Focus Product Scheme, Market Linked
Focus Product Scheme, Focus Market Scheme, Agri Infrastructure Incentive
Scrips, Vishesh Krishi & Grami Udyog (VKGUY) are merged into MEIS.
❖ Objective :-
✓To offset infrastructural cost associated in export of goods manufactured in
India,
✓ To improve India’s competitiveness by generating employment potentials.
❖ Entitlements :-
✓Exports of notified goods having ITC[HS] code, to notified markets. Rates of
reward will depend on notified products and market.
✓Basis of calculation will depend on realised FOB value of exports in free
foreign exchange.
 SERVICE EXPORTS FROM INDIA SCHEME (SEIS)
❖ Served From India Scheme (SFIS) is replaced with SEIS.SEIS shall be apply
to ‘Service Providers located in India’ instead of ‘Indian Service Providers’.
❖ Objective :- To encourage export of notified Services from India.
❖ Eligibility :-
✓ Only notified services shall be rewarded under SEIS,
✓Minimum net foreign exchange earnings of USD 15,000 in preceding
financial year to be eligible for Duty Credit Scrips.
✓The rate of reward under SEIS would be based on net foreign exchange
earned. No Actual User condition.
❖Service providers of eligible services shall be entitled for Duty Credit
Schemes at notified rates, on foreign exchange earned.
 GENERAL PROVISIONS FOR EXPORTS FROM INDIA
SCHEMES (MEIS & SEIS)
❖ Additional Customs Duty/ Excise Duty/ Service Tax paid by the exporter through
debit under Duty Credit Scrips shall be adjusted as CENVAT credit or Duty
Drawback.
❖Importer of capital goods under lease finance, can utilise Duty Credit Scrips for
payment of duties.
❖Transfer of export performance from one IEC holder to another IEC holder shall
not be permitted.
❖ However, MEIS, rewards can be claimed by supporting manufacturer.
❖ Facility of payment of Custom duties in case of Export Obligation (EO) defaults.
❖Risk Management System will be in operation for random checking of scrips
already issued.
❖Micro, Small & Medium Enterprise (MSME) and some other categories will get
grant of double weightage for calculation of export performance
 STATUS HOLDER

• Status Holders are business leaders who have successfully

contributed in International Trade.
• They are expected to give guidance and hand holding to new
entrepreneurs.
• Status recognition depends upon Export Performance i.e. FOB value
of export earnings in free foreign exchange.
• For granting status, performance of at least two years in necessary.
 PRIVILEGES OF STATUS HOLDER

• Authorisation & Customs Clearance for Export & Imports on Self

Declaration Basis.
• Exemption from compulsory routing documents through Bank.
However, remittance/ receipts must through banking channel.
• Preferential treatment and priority in handling of their consignments
by concerned Agencies.
• Exemption from furnishing Bank Guarantees for various schemes
under Foreign Trade policy.
 MANDATORY DOCUMENTS FOR EXPORTS
FORM INDIA & IMPORT INTO INDIA
(a) Export from India
1, Bill of Lading/ Air Way Bill
2. Commercial Invoice & Packing List
3. GR/ EDF/ SDF/ SOFTEX/ PP form
(b) Import into India
1. Bill of Lading/ Air Way Bill
2. Commercial Invoice & Packing List
3. Bill of Entry
➢ Above stipulations are effective from 1st April, 2015.
➢Additional documents as Trade practices, like Weight List, Inspection
Report, Certificate of Origin, etc.
 EXPORT PROMOTION COUNCILS (EPC)

• EPCs are organisations of Exporters, set up with the objective to

promote Indian Exports.
• Each Council is responsible for promotion of a particular group of
products/ services, like Handicraft, Cashew, Carpet, Engineering, etc.
• EPC are eligible to function as Registering Authority to issue
Registration – cum – Membership Certificate (RCMC) to its members
 NATURE OF REWARDS

• Duty Credit Scrips (DCS) shall be granted as rewards under MEIS and SEIS.
• Amount of scrips will depend on certain percentage (rates) of certain
notified products – Indian Trade Classification (Harmonised System) [ITC
(HS) code wise] for exports realised on FOB basis.
• Duty Credit Scrips are freely transferrable
• Duty Credit Scrips can be used for –
✓ Payment of Import Duty
✓ Payment of Excise Duty
✓ Payment of Service Tax
✓ Other duties and fees
 DUTY EXEMPTION / REMISSION SCHEMES

❖The main purpose of evolving Duty Exemption and Remission Schemes is

that Country should export goods & services and not duties & taxes.
❖Exporter pays Import duty & Custom duty on Imported component and
Excise duty on indigenous components in the manufacture of exported
goods.
❖ All above duties becomes part of his final cost of goods to be exported.
❖ Thereby his export cost becomes higher.
❖But, if he is exempted to pay these duties, he can sell his export products
at competitive price.
❖Depending upon waiver of Import/ Custom duty prior to import or
subsequently reimbursed to him, following two Schemes are formulated
 DUTY EXEMPTION & REMISSION SCHEMES

1. Duty Exemption Schemes :- Where Import of RM, Component, to be used

in Export goods, is allowed without paying the Import duty before exports
are made,
a. Advance Authorisation Scheme (AA) &
b. Duty Free Import Authorisation (DFIA)
1.Duty Remission Scheme :- Where Import of RM, Component, to be used
in Export goods, is made by making payment of Import/ Excise duty and
these duties are subsequently reimbursed to the Exporter after conclusion of
Export transaction.
a. Duty Drawback (DBK) Scheme. This is administered by Dept. of Revenue.
 ADVANCE AUTHORISATION (AA)

❖AA is issued to allow duty free Import of input that are required for
manufacture of the export goods.
❖ These components includes RM, parts, fuel, oil, energy, catalysts, etc.
❖AA can be issued for Inputs in relation to final product, on the basis
of –
✓As per Standard Input Output norms (SION) notified in Handbook of
Procedure,
✓ On the basis of Self Declaration notified in Handbook of Procedure.
 DUTY DRAWBACK (DBK)

• Manufacturers who are unable to avail any of earlier schemes like, AA or DFIA, can avail
‘Duty Drawback’, i.e. reimbursement after payment.
• Following duties / taxes can be claimed by exporter of finished products.
i. Custom Duty paid on the import of the inputs,
ii. Excise Duty paid on the inputs,
iii. Service tax paid on input services
❖ If inputs in export product is obtained without payment of above duties, then no
Drawback will be paid.
❖ No Drawback is available on other taxes like Sales Tax and Octroi Duty.
 EXPORT PROMOTION CAPITAL GOODS
❖ The main purpose of this scheme toSCHEME (EPCG)
enable the exporter to upgrade their technology at reduced
cost to face global competition.
❖ FTP provides help to the exporter for technological up gradation by promoting imports of Capital
goods for certain sectors under EPCG at zero per cent.
❖ Capital goods shall include –
➢ Capital goods as defined in Chapter 9 of FTP
➢ Capital software systems,
➢ Spares, moulds, jigs, fixtures, etc.
❖ EPCG shall be subject to an export obligation equivalent to 6 times of duty saved on capital goods,
to be fulfilled in 6 years.
❖ Authorisation under EPCG is valid for 18 months.
❖ Second hand capital goods not permitted under EPCG.
❖ Actual User condition is applicable till export obligation is completed.
 SPECIAL ECONOMIC ZONE (SEZ)

• SEZ are specifically developed geographical areas, within our own country.
• The idea is derived from China, where SEZ proved to be growth engine for
development of Chinese economy.
• Basic concept is that a specific area is embarked as Free Trade Zone, where
inputs and capital goods are free from import duty, and exported duty free.
• This is based on the premise that the goods and services are exported and
taxes are not to be exported.
• It is like separate island within the country.
• SEZ is treated as if they are outside India for customs purposes.
• Only manufacturing units are allowed to operate in SEZ and Trading units.
• SEZ is free from all Indian laws except Labour & Banking
 GENERAL PROVISIONS REGARDING
EXPORTS & IMPORTS
• Importer Exporter Code (IEC) is mandatory for export/ import.
• No Export / Import without IEC. Exempted categories –
• Exporting or Importing for personal use and not for Trade
• Importing / Exporting goods from/ to Nepal, Myanmar not exceeding Rs. 25,000/-. And,
if to China thru Nathula pass not exceeding Rs. 100,000/-
• Exports & Imports ‘Free’, unless regulated by way of –
• ‘Prohibited’ – National treasures of artistic, historic & archaeological value, natural
resources, traffic in arms, etc.
• ‘Restricted’ – may be exported or imported only in accordance with an Authorisation/
permission as per procedure.
• Exclusive trading through ‘State Trading Corporation’ – STCs are having exclusive or
special privileges for trading in Oil, Food, Dairy products etc.
• Indian Trade Classification (Harmonised System) - [ITC(HS)] of exports & Imports. Goods
have been classified on their groups or sub groups.
 1.3 TYPES OF EXPORT & IMPORT

• Export and Import is generalized term.

• There are various types of Export and Import, which are in vogue.
• As in the case of domestic trade, there are Manufacturer, Merchant,
Intermediaries, and so on.
• In Export also, there will be Manufacturing, Merchant, Physical,
Deemed Exports, etc.
• Also, in case of Imports, there will be Actual Users or Industrial users.
• Let us study in detail various types of Exports and Imports.
 PHYSICAL EXPORTS

• When there is physical movement of goods (say engineering goods,

Coffee, Tea, etc.) from one country to another and when there is
cross border trade (by Sea, Air, Road, Rail or multimodal) , it is called
Physical Exports.
• Physical Exports can be done by the Manufacturer, Intermediary
Agent or any sort of distribution channels.
• In the globalisation era, it can be done through subsidiaries of foreign
company or their offices located in India.
• In Physical Exports there is reduction in national resources and
addition in foreign exchange reserves.
 ADVANTAGES OF PHYSICAL EXPORTS

• In this case, producer gets direct access to foreign market.

• He gets first hand information about the consumer, their habits and
requirements.
• He has a greater reach to explore newer markets.
• He can trade directly without taking assistance of any intermediary,
thereby saving cost and offering competitive rates.
• Due to direct contact, he can develop better business relations with
the foreign buyer.
• In due course, by R & D, he can improvise on the products.
• Physical exports means Exports other than Export of Services, like -
• Hospitality Industry,
• Media (Print or Electronic), Entertainment Industry, etc.
• Consultancy Services,
• Software Exports,
• Project Exports, Turnkey Projects,
• Deemed Export,
• Merchant Exports, are treated as Physical Exports.
 DEEMED EXPORTS

• The basic objective is to provide level-playing field to domestic

manufacturers in certain specified cases.
• “Deemed Exports” refer to those transactions in which goods
supplied do not leave country, and the payment for such supplies is
received either in Indian rupees or in free foreign exchange.
• The principle behind Deemed Export is, “Foreign Exchange Saved is
Foreign Exchange Earned”.
 DEEMED EXPORTS
CATEGORIES OF SUPPLY
• Supply of goods to following categories shall be regarded as “Deemed
Exports” provided goods are manufactured in India.
• Supply of goods against Advance Authorisation / Duty Free Import
Authorisation,
• Supply of goods to EOU / STP / EHTP / BTP,
• Supply of goods against EPCG Authorisation,
• Supply of goods to projects financed by multilateral agencies,
• Supply of goods to turnkey projects financed by multilateral agencies
where tenders were floated globally.
• Goods supplied to United Nations or International Organisations
 BENEFITS FOR DEEMED EXPORTS

Deemed Exports are treated at par with physical exports and hence shall
be eligible for following benefits in respect of manufacture and supply of
goods, qualifying as Deemed Exports, subject to terms and conditions –
Advance Authorisation / advance Authorisation for annual requirement/
Duty Free Import Authorisation,
Deemed Export Drawback,
Refund of Terminal Excise Duty, if exemption is not available.
Special Import License on Actual User Condition.
 CONDITIONS FOR BENEFITS UNDER
DEEMED EXPORTS
• Refund of Excise Duty for supply of goods will be available, if recipient of
goods does not avail CENVAT credit / rebate.
• In case CENVAT credit / rebate has not been availed on the input services, by
the supplier of goods, then, the Duty Drawback benefit will be available.
• Supplies should be made directly to entities listed.
• Third Party supply shall not be eligible for benefits / exemptions.
• In all cases, supplies should be made directly to the designated projects /
Agencies.
• Supply of domestically manufactured goods by an Indian Sub Contractor to
any Indian or Foreign main contractor, directly to designated projects, shall
also be eligible for Deemed Export benefits.
• A Risk Management System shall be in operation by DGFT on random basis of
10%. Defaulters will be liable for penal action
 MERCHANT EXPORT

• “Merchant Exporter” means a person engaged in Trading activity and

exporting or intending to export goods.
• Merchant Exporter procures the material from a manufacturer and
exports in his name.
• He can export the goods directly from the premises or warehouse of
the manufacturer.
• Merchant Exporters procures order from International market.
• He does not have his own manufacturing unit or processing unit.
• Merchant Exporter can export the excisable goods directly from the
premises of the manufacturer.
 ADVANTAGES OF MERCHANT EXPORT

• Though the manufacturer loses benefits of direct exports, initially his

products gets access in the foreign market.
• While tapping new market, this could be best strategy to enter into
new arena.
• As the Merchant Exporter sells the goods in his own name, it should
be used as stop gap arrangements.
• Merchant Exporter has the advantage to select his own channel of
distribution, marketing and projecting the product.
 MANUFACTURE EXPORT

• “Manufacture Exporter” means a person who export goods (

produced / fabricated / assembled / processed or bring into existence
by hand or machine ) manufactured by him or intends to export such
goods.
• Manufacturer Exporter procures the export order and exports in their
own name
• “Manufacturer Export” also includes agriculture, animal husbandry,
floriculture, pisciculture, poultry, Sericulture, etc.. He has the
advantage of stuffing the goods in his own premises, without
payment of excise duty.
 TYPES OF IMPORT TRADE

• The term Import is derived from the conceptual meaning as to bring

in the goods and services into the part of the country, which also
relates to the cross border trade.
• Import, though discouraged, is inevitable, due to various reasons like,
need, quality, pressures, higher technology, trade relations (bilateral
or multilateral), WTO guidelines, etc.
• Mainly types of Import Trade can be broadly classified in
• Industrial & Consumer goods and,
• Intermediate Goods
 1. INDUSTRIAL & CONSUMER GOODS

• These types of imports can fall further in following categories –

• Import of Raw Material
• Every industry needs Raw Material for manufacturing their final products.
• If any such component is not available locally, needs to be imported till import
substitution is found within the country.
• Every country forms its own policy, which is called Foreign trade Policy for import
of Raw Material.
• In India, Government, through Commerce Ministry and DGFT, declares FTP for
five years, latest being 2015-20.
• Under this policy, most of the items can be imported, except falling under
Prohibited Category (which can not be imported at all) and Prohibited Category
(which can be imported by way of Authorisation or License issued by DGFT)
 2. IMPORT OF CAPITAL GOODS

• Even though, country is in a position to manufacture certain items, it

requires import of Capital goods, which is not available indigenously.
• There is specific provision in FTP, known as EPCG (Export Promotion
of Capital Goods).
• Government allows exemption in Import duty, provided firm gives an
undertaking to export certain quantity, known as Export
Commitment, over a period of seven years.
• Generally, import of Capital goods requires authorisation, except for
permitted items.
 3. IMPORT OF CONSUMER GOODS

• Due to changing behaviour and demand of people to use latest

consumer goods, which are not available locally, such types of
imports are allowed.
• Consumer goods are consumption purpose, which does not increase
manufacturing activity.
• Latest gadgets, styles are in great demand particularly from younger
generation
• Import of Gold falls in this category. This is allowed for social need
and to curb smuggling.
 4. IMPORT OF PETROLEUM PRODUCTS

• Very few countries in the world are oil producers like Gulf countries.
• Oil is required for consumption as well as industrial purpose.
• India’s large portion of import, around 40% is spent of import of oil.
• Oil bill has great impact on country’s economy, till alternate source of
energy is used.
 INTERMEDIATE GOODS & SERVICES

• Business does not only sell the goods but, also consume the goods and
services
• An intermediate good is a good or service that is used in the eventual
production of a final good, or finished product.
• These goods are sold by industries to one another for the purpose of resale
or producing other goods.
• An example of an intermediate good would be sugar, which is directly
consumed but is also used to manufacture food products.
• India’s FTP provides separate provisions for import of intermediate goods.
It provides standard Input Output norms.
 1.4 FOREIGN TRADE (DEVELOPMENT &
REGULATIONS) ACT, 1992 (IMPORTANT PROVISIONS
• The Import & Export (control) Act was replaced by the Foreign Trade
(Development & Regulation) Act in 1992 & amended in 2010.
• It provides Development & Regulations of foreign trade by facilitating
imports into and exports from India and also it deals with matters
connected with it.
• Foreign Trade, i.e. Export & Import is regulated by the Director
General of Foreign Trade (earlier Controller of Export & Import)
• Imports into India should be in conformity with the Foreign Trade
Policy in force, FTP (2015-20),
 FOREIGN TRADE AND ITS
IMPLICATIONS
• Imports and exports are considered to be two important components
of foreign trade.
• Foreign trade refers to nothing but the exchange of the goods and
services between two or more countries, across their respective
international borders.
• The former implies the physical movement of the goods into a
country from another country following a legal manner.
• The latter is concerned with the physical movement of the goods and
services out of the country in a legal manner.
• Thus, both the import and export have made the world a local
market.
• Foreign trade or international trade is considered to be extremely
important for the brand survival as well as the growth of any country.
• This is because foreign trade acts as one of the primary economic
boosters for that specific entity. Not only this, foreign trade is also
supposed to cover up the need for a country for particular resources
and to further get rid of the extra resources that are abundantly
available in the country.
• Exporting, importing involved in the foreign trade of any country
helps to raise the standard of living of the people.
• These kinds of foreign trade also help to maintain the payment
solution balance of the country and make sure that there always
exists a free flow of economy.
• Globalization has reached on its very summit and therefore a number
of countries have introduced their own respective foreign trade
policies so as to avoid all the hassle that might occur while trading
with the foreign countries.
• Thus, India, like other countries of the world has its own respective
foreign policy that covers all the know-hows as well as aspects
involved while dealing with the foreign countries.
• The foreign policy of India is governed and regulated by the Foreign
Trade (Development and Regulation) Act, 1992.
• Today, the entire scenario of exports and imports in India is regulated
and managed by the Foreign Trade (Development and Regulation)
Act, 1992.
• This act has eliminated all the existing nuances of the previously
introduced act and has given the Government of India some of the
most enormous powers to control it.
• This act is considered to be a supreme legislation in accomplishment
of the foreign trade taking place in the country.
• The Act has been incorporated with a major intention to provide a
proper framework as to the development as well as standardization
of the foreign trade by the way of facilitating imports and enhancing
the exports in the country and all the other matters related to the
same.
 SALIENT FEATURES OF THE ACT
• The act has empowered the Central Government to make provisions for
the development as well as regulation of foreign trade by the way of
facilitating imports into as well as augmenting exports from the country
and in all the other matters related to foreign trade.
• This act authorizes the government to formulate as well as announce the
export and import policy and to also keep amending the same on a timely
basis. The government has also been given a wide power to prohibit,
restrict and regulate the exports and imports in general as well as specified
cases of foreign trade.
• The act provides for certain appointments especially that of the Director-
General to advise the Central Government in formulating import and
export policy and to implement the same.
• The act commands every importer as well as exporter to obtain a code
number called the ‘Importer Exporter Code Number (IEC)’ from the
Director-General or the authorized officer.
• The act provides the balancing of all the budgetary targets in terms
of imports and exports so that the nation reaches the very peak of
economic development.
• The principal objectives here include the facilitation of sustain growth
as to the exports of the country, the distribution of quality goods and
services to the domestic consumer at internationally competitive
prices, stimulation of sustained economic growth by providing access
to essential raw materials as well as enhancement of technological
strength and efficiency of Indian agriculture, industry as well as
services and improvement of their competitiveness to meet all kinds
of requirement of the global markets.
2. EXPORT PROCEDURE
2.1 Registration – IEC, RCMC (Registration cum
Membership Certificate), EPC, GST
• There is wide scale difference between domestic trade and International trade.
• This difference is due to –
1. Countries which are trading are sovereign countries,
2. These countries have separate identity,
3. Rules and Regulations of each country differs,
4. Legal system of each country differs,
5. Customs and procedures of each country differs,
6. Payment settlement system differs from country from country,
7. Currency, Languages of each country differs,
8. Traditions, level of literacy, development also differs from country to country,
9. Negotiating capacity of each country differs depending upon its strength,
10. And, lastly Foreign Trade Policy of each country differs.
 STEPS TO START EXPORT BUSINESS
• Select a right name for your Export business.
• Registration as per local laws / Company’s Law.
• Opening a Bank Account.
• Registration with Sales Tax Office.
• Obtaining IEC Number.
• Registration with Export Promotion Council.
• Registration with ECGC.
• Registration with Central Excise.
• Registration with Chamber of Commerce / Boards, etc.
• Export License, if any
 IMPORTER EXPORTER CODE NO.
• It is mandatory for every Exporter or Importer to obtain Importer
Exporter Code (IEC) from respective office of the jurisdiction of
Director General of Foreign Trade (DGFT).
• It is pre requisite and first step towards before commencing business
involving Import or Export.
• This provision is made effective from 1st Jan 1997, as required under
the EXIM policy then prevailing.
• DGFT is a apex body constituted under Ministry of Commerce, having
headquarter at New Delhi and having Regional Offices all over
country represented by Jt. DGFT
• DGFT is responsible to administer India’s Foreign Trade under Foreign
Trade (Development & Regulation) Act, 1992.
 FEATURES OF IEC NO.
• The intending person who wish to undertake Import or Export had to
file “Aayat Niryat Form” with the DGFT under whose jurisdiction the
person’s address falls.
• The applicant needs to submit all relevant document / papers to fulfil
KYC norms.
• DGFT will issue ten digit IEC No. which will be unique one. Only one
IEC can be issued against a single PAN.
• Now, DGFT has introduced e-IEC which can be obtained on line.
• IEC once obtained can be used for ever, unless cancelled by DGFT. It
does not require renewal.
 EXEMPTED CATEGORIES FOR
OBTAINING IEC
• Ministries and Departments of Central or State Government (They
have been given permanent IEC no.)
• Import or Export for personal use and not for commercial activity /
trade / manufacturing / agriculture, etc.
• Person importing / exporting from Nepal if value does not exceed Rs.
25,000/-
• Any other category exempted by FTP
 REGISTRATION CUM MEMBERSHIP
CERTIFICATE (RCMC)
• After obtaining IEC number, next step is to approach Export Promotion
Council or Commodity Board to obtain Registration cum Membership
Certificate (RCMC).
• Obtaining of RCMC is not obligatory like IEC, but certain benefits which are
available under FTP are available only to those exporter who are registered
with one of the EPC.
• An Exporter has an option to obtain RCMC from Federation of Indian
Exporters Organisation (FIEO) or relevant Export Promotion Council (EPC)
like Apparel EPC, Carpet EPC, etc.
• An application for obtaining RCMC should accompany copy of IEC, Bank
Certificate and other relevant trade approvals.
• Generally, validity of RCMC is for five years , unless otherwise specified.
 EXPORT PROMOTION
COUNCIL
• EPCs are the professional bodies registered under Companies’ Act or
Societies’ Act.
• They are registered as non-profit making organisations.
• They are autonomous bodies and manage their own affairs.
• They project India’s image abroad as reliable supplier of high quality
goods and services.
• They organise foreign delegations explore overseas market. Also, they
participate in trade fair and exhibitions.
 MAJOR COMMODITY BOARDS (CB) &
EXPORT PROMOTION COUNCILS (EPC)

• Commodity Boards (CB) –

• Coffee Board, Coir Board, Spices Board, Tea Board, Rubber Board &
Tobacco Board.
• Export Promotion Councils (EPC) –
• Carpet EPC, Cashew EPC, Basic Chemicals EPC, Apparel EPC, EPC for
Handicrafts, Leather EPC, Services EPC Wool Industry EPC, etc.
 2.2 Role of DGFT (Director General of
Foreign Trade)
• The Director General of Foreign Trade (DGFT) was earlier known as
the Chief Controller of Imports and Exports.
• It is the regulatory authority on foreign Trade.
• It is responsible for the execution of the Import and Export policies of
the Government of India.
• Besides promoting Exports, it facilitates the removal of control and
operates through regional offices spread all over the country.
• Directorate General of Foreign Trade (DGFT) organisation is an
attached office of the Ministry of Commerce and Industry and is
headed by Director General of Foreign Trade.
• Right from its inception till 1991, when liberalization in the economic
policies of the Government took place, this organization has been
essentially involved in the regulation and promotion of foreign trade
through regulation.
• Keeping in line with liberalization and globalization and the overall
objective of increasing of exports, DGFT has since been assigned the
role of “facilitator”.
• The shift was from prohibition and control of imports/exports to
promotion and facilitation of exports/imports, keeping in view the
interests of the country.
• DGFT has a commitment to function as a facilitator of exports and
imports.
• Focus is on good governance, which depends on efficient, transparent
and
• accountable delivery systems. In order to facilitate international
trade,
• DGFT consults various Export Promotion Councils as well as Trade and
• Industry bodies from time to time.
• DGFT is implementing the Niryat Bandhu Scheme for mentoring new and
potential exporter on the intricacies of foreign trade through counselling,
training and outreach programmes.
• DGFT has in place a Citizen’s Charter, giving time schedules for providing
various services to clients.
• Importer Exporter Code (IEC) is mandatory for export/import from/to India
as detailed in paragraph 2.05 of this Policy. DGFT 12 issues Importer
Exporter Code in electronic form (e-IEC). For issuance of e-IEC an
application can be made on DGFT (http//:dgft.gov.in). Applicant can upload
the documents and pay the requisite fee through Net banking. Applicant
shall, however, submit the application duly signed digitally.
 What is ICEGATE?
• Indian Customs Electronic Gateway (ICEGATE) is the national portal of Indian Customs of
Central Board of Indirect Taxes and Customs (CBIC) that provides e-filing services to the
Trade, Cargo Carriers and other Trading Partners electronically.
• At present, about 43542 users are registered with ICEGATE who are serving about more
than 12.5 lacs importer/exporter. Through this facility Indian Customs offers a host of
services, including electronic filing of the Bill of Entry (import goods declaration),
Shipping Bills (export goods declaration), e-Payment of Customs Duty, a free of cost web-
based Common Signer utility for signing all the Customs Documents, facility to file online
supporting documents through e Sanchit, end to end electronic IGST Refund and etc.
• ICEGATE is internally linked with multiple partner agencies including RBI, Banks, DGFT,
DGCIS, Ministry of Steel, Directorate of Valuation and other various Partner Government
Agencies involved in EXIM trade enabling faster Customs clearance. All electronic
documents/ messages being handled by the ICEGATE are processed at the Customs' end
by the Indian Customs EDI System (ICES), which is running at 245 Customs Locations.
• In addition to e-filing, ICEGATE also provides host of other services like 24X7 helpdesk
facility for its trading partners, e payment of Central Excise and Service Tax, on-line
registration for IPR, Document Tracking status at Customs EDI, online verification of
DEPB/DES/EPCG licenses, IE code status, PAN based CHA data, IGST Refund Status and
links to various other important websites/information related to EXIM Trade.
 2.3 Declaration of Exports (GR, SDF,
EDI, Etc.)
• 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 with 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.
• Foreign Exchange Management (Export of Goods and Services)
Regulations, 2000 which is part of FEMA, 1999.
• Every Export in physical form or software to any place outside India
(except Nepal & Bhutan) must be declared in GR/EDF/SOFEX FORM to
Customs & AD.
• In case of Export of services no declaration, but, liable to realise the
amount of F. Exch.
• Exemptions : Trade samples, Publicity material, Personal effects of
traveler, ship’s store, gift of goods, S/W Exports below USD 25,000, re-
export for repairs, defective goods, replacement, etc.
• Importer – Exporter code no. from DGFT
• Export invoice can be in Indian Rupees provided it is through freely
convertible Vostro account
• Realisation Exports should be within 9 months from shipment
Declaration of Exports manner of dealing with
the declaration
• Physical Export :
• The declaration in Form GR (Guaranteed Remittance) and SDF (Self Declaration
Form) shall be submitted in duplicate to the Commissioner of Customs.
• Simplification – EDF (Export Declaration Form) will replace existing GR/ SOFTEX
form for exports from non-EDI ports
• For EDI ports procedure of submitting SDF will remain the same. EDF form no. are
available on-line.
• After verifying and authenticating GR/SDF form the Customs shall forward the
original form/data to RBI & duplicate to AD through Exporter.
• Within 21 days form the date of export, Exporter should lodge the Exchange
Copy to ADs.
• After realisation AD may retain or submit to RBI.
• This completes the entire circle of Export Declaration.
 Declaration in Form PP (Post Parcel)
• Physical Exports through Post Office must be declared under PP form
• The declaration in Form Post Parcel (PP) shall be submitted in
duplicate to AD
• AD shall countersign the PP Form and hand over one copy to the
Exporter. Exporter will submit that copy to the Postal Authorities thru
which goods are being dispatched.
• After dispatch Postal Authorities shall forward to RBI.
• Upon realisation AD will send one copy to RBI.
• Original entry of P.O. will be cleared. This completes the circle of
declaration of exports by Post.
 Declaration in Form
SOFTEX
• Export in Non-Physical form, i.e. Software Exports.
• i. Declaration in form SOFTEX in respect of computer software and Audio/
Video/ TV s/w shall be submitted in triplicate to the Ministry of I.T. at the
STP (Software Technology Parks) or at the FTZ (Free Trade Zones) or EPZ
(Export Processing Zone) or SEZ (Special Economic Zone) in India
• ii. Designated office (STPI) will certify all 3 copies and send original to RBI &
duplicate to Exporter.
• iii. S/W Exporter will submit duplicate SOFTEX to AD who in turn will
submit to RBI on realisation.
• This completes the circle of Software Export declaration.
• Facility of Bulk submission of SOFTEX forms is available.
 SUMMARY OF EXPORT
DECLARATION
• Form GR – All types of physical export including s/w , i.e. magnetic
tapes, discs etc.
• Form SDF – Exports declared to Customs which have introduced
Electronic Data Interchange (EDI) system for processing Shipping Bills
• Form PP – For Export by Post
• Form SOFTEX – Export of Software other than in physical form
 2.4 Export
Documentation
• Export from India required special document depending upon the type of product
and destination to be exported. Export Documents not only gives detail about the
product and its destination port but are also used for the purpose of taxation and
quality control inspection certification.
❖Commercial Document :-
➢ Principal documents,
➢ Supporting documents
❖Regulatory documents
✓Various organisations such as Customs, Excise, Shipping Companies, Insurance
Companies, Insurance Agencies, Chamber of Commerce, Authorised Dealers, etc.
get involved at various stages in preparation of the Export Documents. The
Exporter has to keep various aspects, like trade practices, legal and commercial
requirements in the Importer’s country.
 ALIGNED DOCUMENTATION
SYSTEM
• Many Export documents gets repeated in various other documents.
• Each country may prepare the export documents as per their own customs.
• Hence there is a need to standardise documents.
• The system is called Aligned Documentation System.
• System was first introduced in Sweden in 1956, and later accepted by all
countries.
• The different documents are aligned to one another in such a way that
common items of information are in the same relative slots in each
document.
• This enables preparation of a “Master Document” containing all the
information common to all documents.
 PRINCIPAL EXPORT DOCUMENTS
• 1. Commercial Invoice :
• Formal demand note for payment issued by the exporter to the importer for
goods sold under sales contract. It gives details of goods sold, payment terms &
Trade terms. Also used for custom clearance. In certain importing countries insists
on legalised commercial invoice known as Consular Invoice.
• 2. Packing List :
• A list with detailed packing information of the goods shipped.
• 3. Bill of Lading / Air Way bill :
• Evidence of contract between the shipper of the goods and the carrier. It is
receipt of goods by the carrier and also it is title of goods. It is quasi Negotiable
Instrument.
• 4. Certificate of Inspection / Quality control –
• Export Inspection Agency on being satisfied about the compliance of the export
cargo with the standard norms for quality and also requirements of Importer’s
specifications issues certificate of Inspection.
 PRINCIPAL EXPORT
• 5.
DOCUMENTS
Certificate of Origin –
• COO is required by the Importer when imports the goods for classifying , monitoring import
quota, maintaining statistical data, health regulations, determining levy etc. This is issued by
Chamber of Commerce, Export Promotion Councils.
• 6. Bill of Exchange :
• An unconditional written order signed by the drawer (exporter) instructing drawee (importer) to
pay a certain sum of money for consideration of exports to the order of a person or a bearer.
• 7. Shipment Advice –
• This is prepared in order to provide information to the overseas importer about the shipment of
goods.
• 8. Insurance Certificate –
• It is mandatory for an exporter to arrange for marine insurance cover for his export cargo.
Exporter therefore obtains a specific insurance cover indicating the amount of the insurance
cover and the coverage of various risks under various Institute cargo clause.
 SUPPORTING EXPORT
• 1.
DOCUMENTS
Proforma Invoice –
• It is in the nature of quotation and a demand from the importer. It serves the purpose of
providing the details of the export goods and terms and conditions on which such goods
shall be exported. The Proforma Invoice forms the basis for evolution of the export
contract eventually.
• 2. Intimation for Inspection (to the Export Inspection Agency) –
• According to the Export Quality control and Inspection Act, 1963, an exporter is
required to get the export goods inspected, before they are exported from Export
Inspection Agency. Exporter therefore makes an application in the prescribed form to
the Export Inspection Agency requesting them to carry out the inspection of cargo.
• 3. Shipping Instructions (to the freight forwarder)
• The freight forwarder undertakes job related to the booking of space in the ship for
the export cargo and ensuring their safe reaching the importer’s country. Exporter needs
to give proper instructions, known as Shipping instructions so that importer receives
goods without any problem.
 SUPPORTING EXPORT DOCUMENTS
• 4. Insurance Declaration –
• The exporter can take an open policy to cover their regular exports covering the
regular risks. The open cover is not a policy but is a contract for particular period.
When the export goods are ready for dispatch, the exporter should apply to the
Insurance Company for availing insurance under open policy contract.
• 5. Application for Certificate of Origin –
• An application made to the Chamber of Commerce giving all details with a
request to issue Original Certificate of Origin.
• 6. Mate’s Receipt :
• Issued by the first officer of the vessel confirming receipt of goods pending
shipment. It needs to be replaced with Bill of Lading issued by the Sipping
Company. It has no legal role regarding processing financial settlements.
• 7. Letter to Bank for Collection / Negotiation –
• Instructions given by the Exporter to his bank, how and which manner bill
should collected or negotiated. It spells out name of collecting bank abroad, who
should bear charges and instructions for protesting, etc.
 REGULATORY EXPORT
DOCUMENTS
• 1. ARE Form ( for Central Excise )
• Excise Duty is levied by the GOI on all excisable items as specified
under the Central Excise Act. For the purpose of claiming rebate,
when excise duty is paid, exporter is required to submit to the
Superintendent of Central Excise form ARE
• 2. Shipping Bill / Bill of Export ( for Customs )
• As per the provisions of the Indian Customs Act, 1962, the goods
cannot be loaded on the board of the carrier unless the permission
from Customs Authority has been obtained. Such permission is
accorded by the Customs Authority to the Exporter on the Shipping
Bill.
 REGULATORY EXPORT
DOCUMENTS
• 3. Exchange Control Declaration – GR/PP form
• The FEMA, 1999 rules have prescribed certain forms to be used by
the Exporter for declaring the foreign exchange that they shall bring to
the country. The declaration is required to be made to RBI in the
appropriate form.
• 4. Freight Payment Certificate –
• This is the certificate which shows that the freight for the goods meant for
exports has been paid.
• 5. Insurance Premium Payment Certificate –
• The shipping company demands an Insurance Payment Certificate
for insurance cover of the goods as do not want to be held responsible
for the loss or damage of the cargo