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A PROJECT REPORT ON

IMPORT - EXPORT PROCEDURE AND DOCUMENTATION

SUBMITTED TO MAEER’s MIT SCHOOL OF BUSINESS

BY

AZAZAHEMAD JAT

321545.

32ND BATCH

IN PARTIAL FULFILLMENT OF

POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)

Marketing

2014-16

MAEER’s MIT SCHOOL OF BUSINESS PUNE

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Table of

C O N T E N T S

Chapter No.

Topic Page No.

deceleration from student 3

Certificate from company 4

certificate from Guide 5

Acknowledgement 6

Executive Summary 7

I Introduction 9

1.1 Company Profile 12

1.2 Objectives of study 14

1.3 Limitation of study 14

II Research Methodology 15

2.1 Secondary data 16

2.2 instruments of data collection 16

III Theoretical Background 19

3.1 Data processing and analysis 22

IV Findings 36

V Recommendation 45

VI Management Lessons 46

VII CONCLUSION 50

VIII Bibliography 51

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DECLARATION

I, Mr. Azazahemad Abdulaziz Jat

Hereby declare that this project report is the record of authentic work carried out by

me during the period from 1st April 2015 to 31st May 2015 and has not been

submitted to any other University or Institute for the award of any degree / diploma

etc.

Azazahemad Jat

Date

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Certificate from company:

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Certificate from guide

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Acknowledgement

IT IS THE MATTER OF GREAT PLEASURE AND PRIVILEGE TO BE ABLE TO PRESENT THIS

PROJECT REPORT ON IMPORT/EXPORT PROCEDURE AND DOCUMENTATION.

THE COMPILATION OF THE PROJECT IS A MILESTONE IN THE LIFE OF THE MANAGEMENT

STUDENT AND ITS EXECUTION IS INEVITABLE WITH THE CO-OPERATION OF THE PROJECT

GUIDE. I WISH TO RECORD A DEEP SENSE OF RESPECT AND GRATITUDE TO MY PROJECT

GUIDE, PROF. SHWETA SHIROLKAR FOR HER ENCOURAGEMENT TO COURSE OF MY WORK.

IT IS DUE TO THE ENDURING EFFORT AND GUIDANCE OF MY GUIDE THAT ULTIMATELY

MADE IT SUCCESS.

I ACKNOWLEDGE MY INDEBTNESS TO VARIOUS AUTHORS FOR MAKING USE OF

VALUABLE INFORMATION LIBERALLY.

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Executive Summary

This project is aimed at understanding Import -Export procedure & documentation.

It begins with what Import and export is all about and which documents are required

for Import and export

Methodology used for the data collection is secondary which is collected through

Invoices and Sales report of Company.

All the data collected is kept in a systematic manner starting from procedure to

documents required for the carried out this activity

Then the different terms of shipment and international commercial terms are

discussed in detail on which business deals are done like FOB,CIF,FCA etc. and

then covering different types of risks involved in export like currency risk, credit

risk, country risk and carriage risk is discussed.

Import Export document which are required are divided into 3 parts A. commercial

documents, B Auxiliary Documents, and c regulatory documents. Further Octroi

which is the local tax levied by the civic body on goods entering into the city.

Further Export (Quality Control and Pre-Shipment Inspection) Act 1963 were

Compulsory Quality Control and Pre-Shipment Inspection of over 1050 items of

export, Systems of Quality Control: Self-Certification, In-Process Quality Control,

Consignment Wise Inspection

And then SHIPPING AND CUSTOMS FORMALITIES (As per the Prevailing Law

i.e., ICA 62) the goods cannot be loaded on board the ship unless a formal permission

is obtained from the custom authorities.

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There are different methods of payment depending upon the terms of payment, and

each method of payment involves varying degrees of risks for the exporter. The

methods are:

Payment in advance, Documentary Bills, Letter of Credit, Open Account, Counter

Trade

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INTRODUCTION

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Import and export:

International trade is one of the hot industries of the new millennium. But it's not

new. Think Marco Polo. Think the great caravans of the biblical age with their

cargoes of silks and spices. Think even further back to prehistoric man trading shells

and salt with distant tribes. Trade exists because one group or country has a supply

of some commodity or merchandise that is in demand by another. And as the world

becomes more and more technologically advanced, as we shift in subtle and not so

subtle ways toward one-world modes of thought, international trade becomes more

and more rewarding, both in terms of profit and personal satisfaction.

Types of Import/Export Business:

Export management company (EMC): An EMC handles export operations

for a domestic company that wants to sell its product overseas but doesn't

know how (and perhaps doesn't want to know how). The EMC does it all--

hiring dealers, distributors and representatives; handling advertising,

marketing and promotions; overseeing marking and packaging; arranging

shipping; and sometimes arranging financing. In some cases, the EMC even

takes title to the goods, in essence becoming its own distributor. EMCs usually

specialize by product, foreign market or both, and--unless they've taken title-

-are paid by commission, salary or retainer plus commission.

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Export trading company (ETC): While an EMC has merchandise to sell and

is using its energies to seek out buyers, an ETC attacks the other side of the

trading coin. It identifies what foreign buyers want to spend their money on

and then hunts down domestic sources willing to export. An ETC sometimes

takes title to the goods and sometimes works on a commission basis.

Import/export merchant: This international entrepreneur is a sort of free

agent. He has no specific client base, and he doesn't specialize in any one

industry or line of products. Instead, he purchases goods directly from a

domestic or foreign manufacturer and then packs, ships and resells the goods

on his own. This means, of course, that unlike the EMC, he assumes all the

risks (as well as all the profits).

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Company Profile:-

Freight Desk Agencies (P) Ltd. was established in 2009 and today is one of

prominent Shipping and Logistics solution provider. The company have an

established presence at all the major ports of Gujarat, India - Kandla, Mundra, and

Pipavav.

Freight Desk Agencies (P) Ltd. is involved in International Freight Forwarding,

Custom Clearance, Warehousing, transportation, Project Handling, Vessel

Chartering, and Vessel Agency.

Highly experienced staff stands ready to provide various services like

documentation, customs assistance, insurance, packing, shipping, storage and inland

transportation. Our staff handles everything from pre-shipment to post-shipment

formalities. We specialize in export packing and crating, shipping all types of cargo

from household goods to general cargo, automobiles.

Company strive to provide a high standard, timely and cost effective freight services

to the clients.

Vision

To be recognized as the leading shipping agency, freight forwarding and logistics

company nationally and internationally.

Mission

To provide cost-effective and efficient one stop solution to your every Logistics

need.

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Objectives of the Study:

• To know what is Import and Export.

• To understand about all different Documents required for Import and export

• To understand Procedure of import and export

Limitation of Study:

• The study is Conducted only on Company’s Mundra office

• Many of the Documents are very Confidential so I cannot present those

documents here

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RECEARCH

METHEDOLOGY

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Collection of Data:

There are several ways of collecting the appropriate data which differ

considerably in context of money, cost, time and other sources at the disposable of

the researcher. There are two types of data:

•Primary data

•Secondary data

Primary data

Primary data are those which are collected a fresh and for the first time and thus

happen to be original in character.

•Observation

•Direct communication with respondent

•Personal interview

Secondary data

Secondary data are those which have already been collected by someone else and

have already been passed through statistical process.

In this project report secondary data is used

Methods of Data collection

Invoice

Sales report

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After Globalization and liberalization policies in 1992-93, Foreign Companies got

encouraged to come in India. A trend started where now doors were open for the

overseas companies in India. More FDI was allowed now. Policies took further

change in late 1990’s where more encouragement was given to the foreign

companies to invest in India, FEMA replaced FERA. Indian government started

managing Foreign Exchange instead of adopting restrictive attitude.

These policies were effective to a big extend and country conceded a big success in

order to improve performance of Balance of Payment and Balance of Trade of the

country. Outsourcing helped to generate employment where IT Sector have seen the

remarkable success that has never been faced before. Success at initial level has

given further encouragement to the foreign investors to give an eye to the other

sectors such as Retail, Real State, Commodities, Insurance, Automobile and banking

etc. Such kind of growth on global level has given a driving push to the Indian

economy in order to grow rapidly and become one of the fastest growing economies

of the world.

Talking about more positive impact of this positive change that took more than 10

years to come in to practice, this impact was exactly reverse of what happened in

early 1990’s where foreign companies came in India, but this time it was Indian

Companies that were going global and of was the proper globalization where

Indian companies were also eying other countries in the leadership of Indian

Business Houses

Shipping and Clearing Agencies plays an important role while importing or

exporting of goods. They make work easier to a big extend both for Importer and

exporter. They take responsibility for all legal and operational complications faced

while doing cross country trade. Followings are some responsibilities of shipping

and Clearing Agencies.

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Furnish, whenever required by the Licensing Authority, an authorization

from each of the firms or persons by whom he is employed to act as their

Customs Agent.

He knows that a client has not complied with the law or has made any error

in or omission from any documents which the law requires such client to

execute, advise his client promptly of the fact of such non-compliance, error

or omission and immediately bring the matter to the notice of the

appropriate officer of Customs in writing.

Not appear, plead or act in any proceedings. Under Sections 179, 193, 194 or

196 of the Customs Act’1969, for and on behalf of any person other than the

person for whom he acted as licensee in relation to matters out of which the

proceedings have arisen.

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Theoretical Background

Shipping and Clearing Agencies plays an important role while importing or

exporting of goods. They make work easier to a big extend both for Importer and

exporter. They take responsibility for all legal and operational complications faced

while doing cross country trade. Followings are some responsibilities of shipping

and Clearing Agencies.

Furnish, whenever required by the Licensing Authority, an authorization

from each of the firms or persons by whom he is employed to act as their

Customs Agent.

He knows that a client has not complied with the law or has made any error

in or omission from any documents which the law requires such client to

execute, advise his client promptly of the fact of such non-compliance, error

or omission and immediately bring the matter to the notice of the

appropriate officer of Customs in writing.

Not appear, plead or act in any proceedings. Under Sections 179, 193, 194 or

196 of the Customs Act’1969, for and on behalf of any person other than the

person for whom he acted as licensee in relation to matters out of which the

proceedings have arisen.

Exercise due diligence to ascertain the correctness of any information which

he imparts to a client with reference to any Customs business.

Intimate to the Licensing Authority any change of address immediately after

such change is affected.

promptly pay over to Government when due, all sums received for payment

of any duty, tax or other debt or obligation owing to the Government and

promptly account to his clients any money received for them from

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Government, or received from them in excess of Governmental, or the other

charges properly payable in respect of the clients Customs business.

not procure or attempt to procure, directly or indirectly, information from

Customs records or other Government sources of any kind to which access is

not granted by proper authority

Three Major Features of custom clearance

Clearing and forwarding of goods that comes by foreign post.

Goods cleared through Sea-ports.

Goods cleared through Airports

Essential services provided by C&F Agencies

Providing warehousing facility to the exporters for warehousing the goods

before their transportation to the docks/port.

Transportation of goods to the docks and arrangements of warehousing at

the port.

Arrangement of containers required for shipment of the goods.

Booking of shipping space or air freighting.

Advising the exporter as regards the relative cost of sending the goods by

different airlines/shipping lines as well as selection of the route of the

flight/ sea route.

Arranging for marine/cargo insurance of the shipment. Preparation and

processing of shipping documents required for custom clearance.

Arranging for various endorsements/issue of certificates from various

agencies.

Providing assistance in the packing of the shipment.

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Forwarding the documents to the exporter for their negotiation with the

bank.

Some Optional Services are

Providing warehousing facilities abroad at least in some of the major

international markets in case the importer refuses to take the delivery of the

goods for any reason.

Providing assistance to bring the goods back to India if the situation so

demands.

Providing assistance to locate the goods in case of shipment is misplaced or

the cargo is stranded at some port.

Making arrangements for assessment of damage to the goods to title claim

with the insurance company.

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DATA

PROCESSING AND

ANALYALISIS

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Import/Export Procedure:

Image source: Google

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Import and Export Documents:

Importer and Exporter Both have to prepare Documents accordingly

There are mainly 3 types of Documents

Commercial Documents

Financial Documents

Government Documents

Documents Prepared by Exporter:

Commercial Documents:

• Quotation :

An offer to sell Goods and should state clearly the Price, Details of quality quantity,

trade terms, Delivery terms and payment terms.

Sales Contract:

An agreement between the buyer and the seller stipulating every details of the

transaction. It is a legally binding document. It is therefore advisable to seek legal

advice before signing the contract.

Commercial Invoice:

It is a formal demand note for payment issued by the exporter to the importer for

goods sold under a sales contract. It should give details of the goods sold, payment

terms and trade terms. It is also used for the customs clearance of goods and

sometimes for foreign exchange purpose by the importer.

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Packing List:

A list with detailed packing information of the goods shipped.

Inspection Certificate:

A report issued by an independent surveyor (Inspection Company) or the exporter

on the specifications of the shipment, including quality, quantity, and/or price, etc.;

required by certain buyer and countries.

Insurance Certificate:

An insurance policy is an insurance document evidencing insurance has been taken

out on the goods shipped, and it gives full details of the insurance coverage. An

insurance certificate certifies that the shipment has been insured under a given open

policy and is to cover loss of or damage to the cargo while in transit.

Fumigation Certificate:

A pest control certificate issued to certify that the concerned products have been

undergone the quarantine and pre-shipment fumigation by the approved fumigation

service providers.

Consular invoice:

A document required by some foreign countries, showing shipment information

such as consignor, consignee, and value description, etc. Certified by a consular

official of the importing country stationed in the foreign country, it is used by the

country's customs officials to verify the value, quantity and nature of the shipment.

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Financial Documents:

Stand By Credit:

An arrangement between customer and his bank by which the customer may enjoy

the convenience of cashing cheques, up to a value. Or a credit set up between the

exporter and the importer guaranteeing the exporter will pay the importer a certain

amount of money if the contract is not fulfilled. It is also known as performance

bond. This is usually found in large transactions, such as crude oil, fertilizers,

fishmeal, sugar, urea, etc.

Instruction of Collection:

An instruction given by an exporter to its banker, which empowers the bank to

collect the payment subject to the contract terms on behalf of the exporter.

Bill of exchange:

An unconditional written order, in which the importer addressed to and required by

the exporter to pay on demand or at a future date a certain amount of money to the

order of a person or bearer.

Government Documents:

Export Deceleration:

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A statement made to the Director of Customs at port of entry/exit, declaring full

particulars of the shipment, e.g. the nature and the destination/exporting country of

the ship's cargo. Its primary use is for compiling trade statistics.

Export License:

A document issued by a relevant government department authorizing the imports

and exports of certain controlled goods.

Custom invoice:

A document specified by the customs authorities of the importing countries stating

the selling price, costs for freight, insurance, packing and payment terms, etc., for

the purpose of determining the customs value.

Documents Made by Importer

Shipping Guaranty:

Usually a pre-printed form provided by a shipping company or the bank, given by

an importer's bank to the shipping company to replace the original transport

document. The consignee may then in advance take delivery of goods against a

shipping guarantee without producing the original bill of lading. The consignee and

the importer bank will be responsible for any loss or charges occurred to the shipping

company if fault is found in the collection. It is usually used with full margin or trust

receipt to protect the bank's control to the goods.

Documentary Credit:

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A bank instrument began (issuing or opening bank), at the request of the buyer,

evidencing the bank's undertaking to the seller to pay a certain sum of money

provided that specific requirements set out in the D/C are satisfied.

Trust Receipt:

A document to release a merchandise by a bank to a buyer (the bank still retains

title to the merchandise), the buyer, who obtains the goods for processing is

obligated to maintain the

Sales contract:

An agreement between the buyer and the seller stipulating every details of the

transaction. It is a legally binding document. It is therefore advisable to seek legal

advice before signing the contract.

Promissory Note:

A financial instrument that is negotiable evidencing the obligations of the foreign

buyer to pay to the bearer.

Import Deceleration:

A statement made to the Director of Customs at port of entry/exit, declaring full

particulars of the shipment, e.g. the nature and the destination/exporting country of

the ship's cargo. Its primary use is for compiling trade statistics.

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Import License:

A document issued by a relevant government department authorizing the imports

and exports of certain controlled goods.

Documents made by other person:

Dock receipt:

A receipt to confirm the receipt of cargo on quay/warehouse pending shipment.

The dock receipt is used as documentation to prepare a bill of lading. It has no

legal role regarding processing financial settlement.

Bill of Leading:

An evidence of contract between the shipper of the goods and carrier. The customer

usually needs the original as proof of ownership to take possession of the goods.

There are two types: a STRAIGHT bill of lading is non-negotiable and a negotiable

or shipper's ORDER bill of lading (also a title document) which can be bought, sold

or traded while goods are in transit and is used for many types of financing

transactions.

Sea way Bill:

A receipt for cargo which incorporates the contract of carriage between the shipper

and the carrier but is non-negotiable and is therefore not a title document.

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Packing Note:

A list providing information needed for transportation purpose, such as details of

invoice, buyer, consignee, country of origin, vessel/flight date, port/airport of

loading, port/airport of discharge, place of delivery, shipping marks / container

number, weight / volume of merchandise and the fullest details of the goods,

including packing information.

Shipping Bill:

Shipping bill is the main customs document, required by the customs authorities for

granting permission for the shipment of goods. The cargo is moved inside the dock

area only after the shipping bill is duly stamped, i.e. certified by the customs.

Shipping bill is normally prepared in five copies:-

Customs copy.

Drawback copy.

Export promotion copy.

Port trust copy.

Exporter's copy.

Contents of Shipping Bill

Name and address of the exporter.

Name and address of the importer.

Name of the vessel, master or agents and flag.

Name of the port at which goods are to be discharged.

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Country of final destination.

Details about packages, description of goods, marks and numbers, quantity

and details of each case.

FOB price and real value of goods as defined in the Sea Customs Act.

Whether Indian or foreign merchandise to be re-exported

Total number of packages with total weight and value.

Significance of Shipping Bill

a) Shipping bill is the main customs document, required by the customs

authorities for granting permission for the shipment of goods.

b) The cargo is moved inside the dock area only after the shipping bill is

duly stamped, i.e. certified by the customs.

c) Duly endorsed shipping bill is also necessary for the collection of

export incentives offered by the government.

d) It is useful to the Customs Appraiser while determining the actual value

of goods exported.

A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central

Excise rules for export of goods. In case goods meant for export are cleared directly

from the premises of a manufacturer, the exporter can avail the facility of exemption

from payment of terminal excise duty. The goods may be cleared for export either

under claim for rebate of duty paid or under bond without payment of duty. In both

the events the goods are to be cleared under form A.R.E-1 which will show the

details of the goods being exported, the relevant duty involved and if the duty is paid

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or goods being cleared under bond, details of goods being sealed either by the

exporter or Central Excise officials etc.

Exchange Control declaration Form (GR/PP/SOFTEX): under the exchange

control regulations all exporters must declare the details of shipment for monitoring

by the Reserve Bank of India. For this purpose, RBI has prescribed different forms

for different types of shipments like GRI, PP forms etc. These declaration forms

must be presented to the customs officials at the time of passing of export

documentation. Under the EDI processing of shipping bill in the customs, these

forms have been dispensed with and a new form SDF has to be submitted to the

customs in the place of above forms.

Export Application: this is the application to be made to the customs officials

before shipment of goods. The prescribed form of the application is the Shipping

Bill/Bill of Export. Different types are required for shipment like ex-bond, duty free

goods, and dutiable goods and for export under different export promotion schemes

such as claims for duty drawback etc.

Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken inside

the port for loading, necessary permission has to be obtained for moving the vehicle

into the customs area. This permission is granted by the Port Trust Authority. This

document will contain the detail of the export cargo, name and address of the

shippers, lorry number, marks and number of the packages, driver’s license details

etc.

Bank Certificate of Realization: this is the form prescribed under the Foreign

Trade Policy, wherein the negotiating bank declares the fob value of exports and for

the date of realization of the export proceeds. This certificate is required for

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obtaining the benefit under various schemes and this value of fob is reckoned as fob

value of exports.

D. Other Document:

Black List Certificate: it certifies that the ship/aircraft carrying the cargo has

not touched the particular country on its journey or that the goods are not from

the particular country. This is required by certain nations who have strained

political and economic relations with the so called “Black Listed Countries”.

Language Certificate: Importers in the European Community require a

language certificate along with the GSP certificate in respect of handloom

cotton fabrics classifiable under NAMEX code 55.09. Generally four copies

of language certificate are prepared by the concerned authority who issues

GSP certificate. Three copies are handed over to the exporter. A copy is sent

along with the other documents for realization of export proceeds.

Freight Payment Certificate: in most of the cases, the B/L or AWB will

mention the transportation and other related charges. However if the exporter

does not want these details to be disclosed to the buyer, the shipping company

may issue a separate certificate for payment of the freight charges instead of

declaring on the main transport documents. This document showing the

freight payment is called the freight certificate.

Insurance Premium Certificate: this is the certificate issued by the

Insurance Company as acknowledgement of the amount of premium paid for

the insurance cover. This certificate is required by the bank for arriving at the

fob value of the goods to be declared in the bank certificate of realization.

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Combined Certificate of Origin and Value: this certificate is required by

the Commonwealth Countries. This certificate is printed in a special way by

the Commonwealth Countries. This certificate should contain special details

as to the origin and value of goods, which are useful for determining import

duty. All other details are generally the same as that of Commercial Invoice,

such as name of the exporter and the importer, quality and quantity of the

goods etc.

Customs Invoice: this is required by the countries like Canada, USA for

imposing preferential tariff rates.

Legalized Invoice: this is required by the certain Latin American Countries

like Mexico. It is just like consular invoice, which requires certification from

Consulate or authorized mission, stationed in the exporter’s country.

8. OCTROI

Octroi is the local tax levied by the civic body on goods entering into the city.

There are three procedures for clearing goods which are meant for export.

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Procedure – 1, Export on payment of octroi duty and refund thereof after

export.

Pay the Octroi Duty and apply for refund of payment made.

At Octroi Naka form B is issued with cash receipt for the payment of Octroi

Duty.

Cargo is moved to the docks.

At Docks Octroi officer prepares form “C” & endorses Shipping Bill Number

& Steamers Name.

After shipment exporter prepares claim for refund by submitting following

documents:

Covering Letter for refund of Octroi Duty.

Original receipt of Octroi paid.

Original Form B.

Original Form C.

Invoice under which material was bought to the city.

Export invoice issued by the Exporter to the importer.

Export Promotion Copy of Shipping Bill – Photo Copy.

Bill of Lading or Airway Bill Copy.

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Procedure – 2, Export without payment of Octroi Duty.

N Form Procedure.

Prepares form N in 3 copies.

Checking of documents Shipping Bill, Carting order, Export Invoice by

Octroi officer.

Under taking that the goods will be cleared for export within 7 days of

clearance through the octroi post.

Octroi officer at Docks will endorse the Shipping Bill number & shipment

details on N form.

Proof of export... N form with above endorsement to be submitted to the Head

Office along with copies of Shipping Bill, Bill of Lading, Export Invoice etc.

Procedure – 3

E.P (Export Promotion) Form.

Registration form + IEC / RCMC + CA Certificate.

Number will be allotted.

Fees Rs. 500/-

Documents Checked

Factory Challan cum Invoice.

ARE –1.

EP forms 3 copies.

Export order.

Shipping Bill.

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FINDINGS

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According to Foreign trade policy 2015-20

Mandatory Documents Required For Export of goods from India

• Bill of lading

• Commercial invoice cum packing list

• Shipping bill

Mandatory Documents Required For Import of goods into India

• Bill of leading

• Commercial invoice cum Packing list

• Bill of entry

o As per Foreign trade Policy Government reduce the mandatory Documents

The Term on which business deals are done

FOB {+the named port of origin)

Free on Board: The delivery of goods on the board the vessel at the named port of

origin (Loading) at seller’s expense. Buyer is responsible for the main

carriage/freight, cargo insurance and other costs and risks. In the export quotation,

indicate the port of origin (loading) after the acronym FOB, for example FOB

Vancouver and FOB Shanghai.

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CIF {+named port of destination}

Cost, Insurance and Freight: The cargo insurance and delivery of goods to the

named port of destination (discharge) at the seller’s expense. Buyer is responsible

for the import customs clearance and other costs and risks.

FCA {+the named point of departure}

Free Carrier: The delivery of goods on truck, rail car or container at the specified

point (depot) of departure, which is usually the sellers premises, or a named railroad

station or a named cargo terminal or into the custody of the carrier, at seller’s

expense. The point (depot) at origin may or may not be a customs clearance center.

Buyer is responsible for the main carriage/freight, cargo insurance and other costs

and risks.

In the air shipment, technically speaking, goods placed in the custody of an air carrier

are considered as delivery on board the plane. In practice, many importers and

exporters still use the term FOB in the air shipment. The term FCA is also used in

the RO/RO (roll on/roll off) services

In the export quotation, indicate the point of departure (loading) after the acronym

FCA, for example FCA Hong Kong and FCA Seattle. Some manufacturers may use

the former terms FOT (Free on Trucks) and FOR (Free on Rail) in selling to export-

traders.

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Risk Involved:

Currency Risks:

As regards covering the currency risk, due to the exchange rate fluctuations, you can

request your banker to book a forward contract.

Credit Risks:

You can cover your credit risk against the foreign buyer by insisting upon opening

a letter of credit in your favor. Alternatively one can avail of the facility offered by

various credit risk agencies. A specific insurance cover can also be obtained from

ECGC (Exports Credit & Guarantee Corporation) to cover your country risk besides

covering credit risk.

Country Risk:

ECGC provides cover to protect the exporter from country risks. A detailed

procedure how an exporter can get himself protected against the above risks are

given in separate chapters later.

Carriage Risk:

The carriage risk can be covered by taking an appropriate general insurance policy.

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Payment method

A. PAYMENT IN ADVANCE

This method does not involve any risk of bad debts, provided entire amount has been

received in advance. At times, a certain per cent is paid in advance, say 50% and the

rest on delivery. This method of payment is desirable when:

The financial position of the buyer is weak or credit worthiness of the

buyer is not known.

The economic/ political conditions in the buyer’s country are unstable.

The seller is not willing to assume credit risk, as the case of open account

method.

However, this is the most unpopular methods as a foreign buyer would not be willing

to pay advance of shipment unless:

The goods are specifically designed for the customer, and

There is heavy demand for the goods (a seller’s market situation).

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DOCUMENTARY BILLS:

Under this method, the exporter agrees to submit the documents to his bank along

with the bill of exchange. The minimum documents required are

full set of bill of lading

commercial Invoice

Marine Insurance policy and other document, if required.

There are two main types of documentary bills:

Documents against Payment,

Documents against Acceptance.

Documents against payment (D/P): The documents are released to the importer

against payment. This method indicates that the payment is made against Sight Draft.

Necessary arrangements will have to be made to store the goods, if a delay in

payment occurs.

The risk involved that the importer may refuse to accept the documents and to pay

against them. The reason for non-acceptance may be political or commercial ones.

In India, ECGC covers losses arising out of such risks. Under this system, as

compared to D/A, the exporter has certain advantages:

The document remain in the hands of the bank and the exporter does not

lose possession or the ownership of goods till payment is made,

Other reason may include that the exporter may not be able to allow credit

and wait for payment.

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Documents Against acceptance (D/A): The document are released against

acceptance of the Time Draft i.e. credit allowed for a certain period, say 90 days.

However, the exporter need not wait for payment till bill is met on due date, as he

can discount the bill with the negotiating bank and can avail of funds immediately

after shipment of goods.

In case of D/A as compared to D/P bills, the risk involved is much greater, as the

importer has already taken possession of goods which may or may not be in his

custody on the maturity date of the bill. If the importer fails to pay on due date, the

exporter, will have to start civil proceedings to receive his payment, if all other

alternatives fails. The risk involved can be insured with ECGC.

LETTER OF CREDIT (L/C):

This method of payment has become the most popular form in recent times, it is

more secured as company to other methods of payment (other than advance

payment).

A letter of credit can be defined as “an undertaking by importer’s bank stating that

payment will be made to the exporter if the required documents are presented to the

bank within the variety of the L/C”.

Generally, though exporters are complacent once they get the letter of Credit on hand

feeling that their payment is secured, let me say it is as much a dubious instrument

as is a safe instrument.

If one does not understand the implications of the terms and condition of a letter of

credit, the provisions under UCP 500, how co-operative are the exporter’s bank and

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how good are the L/C opening bank and the reimbursement bank, he is sure to land

in trouble at once stage or another.

There are ample cases of frauds under the Letter of Credit. More and more ingenious

methods are adopted to circumvent the provisions of UPC 500 by fair or foul means.

Hence, even the safety and security under the Letters of Credit may prove to be no

better than a mirage for a man in the desert.

Hence, sufficient care is to be taken by the exporter to ensure that instrument is

received in order and the conditions of the L/C can be well complied with, and there

are no clauses of ambiguity.

CONTENTS OF A LETTER OF CREDIT

A letter of credit is an important instrument in realizing the payment against exports.

So, needless to mention that the letter of credit when established by the importer

must contain all necessary details which should take care of the interest of Importer

as well as Exporter. Let us see shat a letter of credit should contain in the interest of

the exporter. This is only an illustrative list.

name and address of the bank establishing the letter of credit

letter of credit number and date

The letter of credit is irrevocable

Date of expiry and place of expiry

Value of the credit

Product details to be shipped

Port of loading and discharge

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Mode of transport

Final date of shipment

Details of goods to be exported like description of the product, quantity, unit

rate, terms of shipment like CIF, FOB etc.

Type of packing

Documents to be submitted to the bank upon shipment

Tolerance level for both quantity and value

If L/C is restricted for negotiation

Reimbursement clause

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Recommendations

• Company need to work according to Foreign Trade Policy 2015-20. It is

observed that requirement of Document according to new policy is less then

requirement of Documents according to 2009-14 policy.

• Company need to Have a separate employees for import and export

• Company should expands in other ports in India.

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Management lessons

1. Hard work will always work:

Working hard towards your work will always prove

helpful. It help me because I worked hard to get work done such as

carting, stuffing and preparation of documentation.

2. Be confident enough to accept your faults:

If you go wrong anywhere then accept it because it

reduces the chance of defaults and loss.

3. Learn from past:

Trying not to repeat your mistakes and learning from

them is the best technique to improve.

4. Education is best investment you can make :

After working in the company I realized that

whatever I have learnt was useful in some or the other way.

5. Never make decision in hurry:

Steps taken in hurry always results in loss. This

was my experience when I got the wrong document signed. It also

causes loss of time.

6. Give respect to others at work place:

Be it your junior or senior respect them and they

will respect you back. This the way we maintain good official

relationship.

7. Don’t discriminate at work place:

There is no one superior or inferior to you. Never

discriminate anyone and listen to everyone.

8. Don’t be afraid to start:

Be it a new thing for you, just give it a start it

might be helpful for you.

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9. Calculate and then take risk:

Taking risk in business is a part of it but being

calculative about it takes you to success.

10. Boss is not always right:

Though the boss is always right but cross

checking the instructions given by him and then politely telling the

truth to the boss will be beneficial for the business.

11. Don’t approach employees randomly:

Don’t go for all that politics which is going on in

the company.

12. Explore as much as possible:

Search and explore for option wherever possible.

As more options will mean the selection of the optimum one.

13. Be clear with your objective as an intern you almost every time cross

path with someone:

Be sure about the work given to you and if

possible restate it to your boss or the person who have assigned you

the work.

14. Pay attention to detail:

Be attentive to each and every instruction and

work given to you. If not understood then ask even the minutest

detail of it.

15. Always focus on time management:

Time management is a must else you lose on

business because the time of ships arriving at ports, their halt time

and leaving time is fixed.

16. Always learn to adopt:

Learn to adopt to changes be it the environment

you work in or the people you work for.

17. Gratitude and appreciation is matter: This works well for the

customers as they response you quickly.

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18. Be hungry for knowledge if you don’t ask you don’t get :

Ask to avoid mistakes and clarify your queries.

19. Working with different personalities:

At the work environment you have to work with

different people and manage to work well with them because you

have no option.

20. Use quantitative support to make decisions:

Analyzing the data for better results minimizes the

risk.

21. Don’t be overly helpful if you are new in organization:

This is true because then existing people try to

take advantage of you.

22. When things get complicated, go back to basics:

Do not complicate things when you are

already in complications, just go back to basics and check for

defaults.

23. Continuously make network in organization it always helps you:

It helps to build good relationship both

personal and official.

24. Consider a person senior to you more knowledgeable:

The person senior to you is always more

powerful at his knowledge.

25. Days always fill up faster than you’d expect:

Be ahead of the time and plan well in advance

26. Stop multitasking when you are new :

Concentrate on few things rather than working

for more tasks.

27. More workforce doesn’t mean more productivity :

Sometimes only one person is more than

enough to handle the task, many people lead to mismanaging the

task.

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28. Always take notes :

It is better to take notes and look up at them when

you are in need.

29. Always seek feedback:

Ask for the valuable feedback and work

according to it.

30. Clear all dues in time :

Clear all the duties assigned to you well in time.

Punctuality matters.

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Conclusion

After doing study for 2 months for understanding Export Process and Import-Export

Documentation, I would like to conclude that Globalization is spreading its wings

throughout whole world and India is not remained untouched in anyways. After

liberalization of Indian economy in early 1990’s, growth has been remarkable,

especially after introduction of new FDI Policies in late 1990’s.

As result export was encouraged and a lot of new players came forward to do

global trade and International Business became one of the rapidly growing fields in

India. From past few months growth has been slow down to a little extent because

of global recession but hopefully soon it will pick up the pace again.

Custom house agents are the main chain for Importing-Exporting goods. They

facilitate the documentation part of it which is again very complicated. They also

help to arrange containers and clearing the shipment of imported goods. They have

to remain in continuous contacts with customs and excise.

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Bibliography

Books:

Foreign Trade policy

Export import procedures and documentation- by Thomas E Johnson &

donna l bade

Documents received from Organization

Websites:

www.fdapl.in

www.infodriveindia.com