Exim procedures

By:- Ankush Gupta Aseem Mahajan Ashish Malhotra Disha Gupta Gurpreet Singh Mehta Haroon Abbas Honey Khajuria Imran Hussan

Introduction
The Foreign Trade Policy of India is guided by the EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992. DGFT (Directorate General of Foreign Trade) is the main governing body in matters related to Exim Policy. The main objective of the Foreign Trade (Development and Regulation) Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. Foreign Trade Act has replaced the earlier law known as the imports and Exports (Control) Act 1947.

The Govt. of India, Ministry of Commerce and Industry announces Export Import Policy every five years. The current policy cover the period 2009-2014. The Export Import Policy (EXIM Policy) is updated every year on the 31st of March and the modifications, improvements and new schemes are effective w.e.f. 1st April of every year

 The target customer of market. The system of distribution. Degree of competition in the market. Due to the policy of import substitution for the last 42 years the structure of indian imports changed radicaly. At the time of independence almost the entire requirement of capital equipment components even nuts and bolt had to be imported from abroad. Today india is in a position to produce more than 75 percent of the capital of producer goods i.e.. Machinery , spare parts and components.

Factors on which successful international Marketing of a product depends

Enquiries and Quotation Receiving the order Getting the licences the quota Meeting Exchange Regulation Demanding Letter of Credit Getting shipping order Fixation of Exchange rate Packing and marking Customs formalities Mates receipt

Export Procedures

Bill of Lading Arrangement of Others documents (A) Letter of indemnity (B) Certificate of origin (C) Insurance cover Preparation of invoice Getting the invoice

Enquiries and quotations

Enquiry and quotations are the prelude to export transactions. In case of direct exporting , the enquiries and quotations are received before an order is received. In case of indirect exporting , it is the indent house or the export house that handles on the behalf of the exporter. Any inquiry is the written request by an importer for information regarding the price at which the goods required as to quality quantity , description , catalogue , grade and other specifications including the mode and time of exporting and delivery.

Receiving the order

The quotation given by the exporter or his agent are to be accepted or rejected. If accepted by the importer or his agent , it becomes an order or an indent giving full and clear instructions as to quality , quantity , packing , marking , mode of settlement , exchange rate and the price acceptable to the importer.

Getting licence and quota

After the indent is received by the exporter , he has to see whether the goods are free or falling under open general licence list (ogl) . If the goods do not belong to the ogl or free category , he is to obtain an export licence by applying to the export trade controller and pay prescribed fees by depositing the amount with Reserve bank of india or any government treasury . Such a licence is valid for three months and can be Extended by another three months . Along with licence , quota permit is also issued particularly in case of those commodities which are in short supply in the exporting country.

Meeting exchange regulations

In india , under foreign exchange Management act of 1998 , the exporter has to make a declaration that he will surrender the foreign exchange to the extent of full export value of the goods to the reserve bank of india within three to six months depending on the country involved. For this purpose , he has to fill four GR forms of which one copy is given to customs office at the time of shipment and three copies are handed over to the foreign exchange bank and such bank forwards two copies to reserve bank of india , *Nepal , tibet and bhutan are exempt from this formality.

Demanding letter of credit

In case of old and established importers only bank reference is enough. However , in case of new importers , the deal may b cash with order (CWO) or equivalent deposit of value of goods may be insisted by a bank in favour of an exporter whereby te bank undertakes to pay the exporter a given sum of money against the evidence of the trade documents. It is the responsibility of the importer to arrange for the letter of credit.

Getting shipping order

Once the exporter is satisfied with the credit standing of the importer,& accepts his order, he is to arrange for shipping of goods so exportable. Therefore he is to enter into an agreement with a shipping company or its agents for hiring the requisite space in a ship for the transport of the goods of the importer. The shipping company as a documentary evidence of such agreement issues a shipping order containing instructions to the captain of the ship to receive on the board of the ship the goods agreed to be carried from the concerned exporter. In case the exporter books the entire ship, such an agreement is called as charter party.

Fixation of exchange rate

International transactions are to be settled by the importer in the currency of the exporter. The rates at which the currency of a country is exchanged is called as exchange rate. The rate is not fixed . Further , there is a wide gap when the order is placed and the goods are reaching the destination. That is why both the parties of exchange are to settle the exchange rate at which the deal would be settled . This is done to avoid adverse effects on the parties of the trade.

Packing and marking

Packing of goods moving overseas is of special importance. It is to be done as per the specific instructions of the importer . Packing should be done scientifically . That is maximum protection to be provided with minimum of space . Normally , it is entrusted to specialised packing units . Equally important is marking . Each package should have markings as to the gross weight , net weight , class of goods by using geometrical figures giving the clues as to the initials of importer , place of destination indent number and so on .

Customs formalities
The exporter is to fill shipping bill containing details about the goods to be exported also the name of the ship carrying the goods. Along with the shipping bill GR FORM & export licence needs to be attached. These documents are to be presented latter in the shipping & ladding dues office of the port trust. After payments of the dues custom export pass is issued to the exporter.

Mates receipt
After getting the export pass , the goods to be exported are to be brought to the docks or the ship directly . If the goods are delivered at the docks , Docks receipt is to be issued to the ixporter ; if the goods are taken in the ship , the shipping order and the shipping bill are to be surrendered to the captain of the ship. If he is fully happy , he gives a lean mates receipt. Otherwise , he issues foulor dirtymates receipt.

Bill of lading
It is the document of title to the goods through which the importer gets the goods. The master of the ship hands over the goods only to the person or persons named in the bill of lading or to any other person to whom the bill might have been endorsed. Thus , Bill of lading is both receipt and written contract for the goods to be shipped.it contains the details as to the name of the exporter , particulars of goods , marks , the number of packages , port of destination , name of the ship , place of loading , freight , name of the consignee and the date.

Arranging the other documents

Letter of indemnity -> It is the letter addressed by the exporter to the shipping company , agreeing in return for clean bill of lading to indemnify the company for any claim on the part of the importer in respect of goods. Certificate of origin->it is a document issued as a proof of the fact that the goods have been produced in the country mentioned in it. This certificate is essential to enjoy certain favourable treatment in case of tariffs.

 Insurance cover:-The goods entering international boundaries are exposed to risks called perils of the sea. It is essential to insure the goods against such risks.

Preparation of invoice
Once the above mentioned formalities are complied with, the exporter is to prepare the invoice. The invoice is prepared in triplicate on the term agreed between exporter and the importer in the order.

Getting the payment

The actual payment that the exporter gets, takes at least four alternative courses these are: Through documentary bill of exchange. Through letter of hypothecation. Through letter of credit. Through mail transfer & drafts.

Special case.
Special provisions have been made for export of garment samples. Garment samples are allowed to be exported only by exporters who are registered with the Apparel Export Promotion Council (AEPC) or the Wool and Woolen Export Promotion Council for woolen Knitwears. Export of samples to be sent by post parcel or air freight are further divided into 3 categories, namely :

1.Samples of value upto Rs.10,000, 2.Samples of value less than Rs. 25,000, 3.Samples of value more than Rs. 25,000
Where the value of the articles is less than Rs. 10,000, the exporter should file a simple declaration that the sample does not involve foreign exchange and its value is less than Rs. 10,000.Where the value of samples is more than Rs. 10,000 but less than Rs. 25,000 you should obtain a value certificate from the authorised dealer in foreign exchange (i.e. your bank). For this purpose, you should submit a commercial invoice certifying thereon that the parcel does not involve foreign exchange and the aggregate value of the samples exported by you does not exceed Rs. 25,000 in the current calendar year.If the value of samples exceeds Rs. 25,000 you should obtain Gr/PP waiver from the Reserve Bank of India.

Import Procedure
Procuring Licences and Quota Getting Foregin Exchange Placing an indent Despatching the letter of credit Procuring Documentary Bill Clearing the Goods Making the Payments

Procuring license and quota

Indian importer requires prior permission from government to import goods from other countries. It is because , the imports are governed by the imports and exports control act of 1947.An importer can import which is governed either under a general licence or individual licence. Along with the licence , he gets quota certificate that specifies the quantity and the values of goods that the importer can importer.

Getting foreign exchange

In India , under the exchange control act , an application in the prescribed from is to be prepared by the importer. This is to be endorsed by the foreign exchange bank , on presenting the import licence. When an application is approved by the reserve bank of india , the importer is released the necessary amount of foreign exchange from the concerned exchange bank.

Placing an indent
With foreign exchange at his disposal , he is to place an indent or order . He can place his order directly or indirectly .Indent is a form of order sent abroad for goods to be imported within a specified time.

Despatching the letter of credit

The exporter asks the importer to send a letter of credit as proof of importers credit status . It is sent by either the importer himself or the indent house on his behalf.

Procuring documentary bill of exchange

Soon after the despatch of the goods by the exporter , he sends an advice note to be importer to that effect. The advice note contains the particulars of the date on which the goods have been despatched and the likely date on which the ship is expected to reach the port of the importer.

Clearing the goods

Soon after getting the documents of title , the importer is to clear the goods for which he is to comply with certain formalities. On the arrival of ship , he is to get delivery order from the shipping company.

Making payments
The actual payment depends on the nature of the agreement entered into by the importer and the exporter. As noted earlier , the bill can be D/A(Document Against Acceptance) or D/P.(Document Against payment)

Examples.
Computers including personal computers, Keyboards or monitor valued upto Rs. 1.50 lac and Rs. 7000/- respectively can be imported freely without any licence. Computer Software can also be imported freely without licence despite the fact computer software is regarded as Consumer Goods.

Textiles sector: Duty free import of specified trimmings, embellishment etc shall be available @ 3% on exports of polyester made-ups in line with the facility available to sectors like Textiles & Leather. It will promote export of products such as micro cloth, which has become popular in home textiles. Readymade Garment sector granted enhanced support under FPS(focused product scheme) for a period of further 6 months from October, 2010 to March, 2011 for exports to 27 EU countries.

 Engineering and Electronics

Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme will significantly benefit Bicycle parts and Grinding Media Balls exporters. Additional items of Engineering, namely, Pipes & Tubes, Electric Generating Sets, Cast Articles of Iron & Steel, Ferro Manganese and Ferro Silicon shall now be entitled for benefit @ 2% under FPS(focused product scheme)

 Telecom Equipments, Colour TVs, Audio Systems, Optical Media, Semi-conductors, Capacitors, Resistors, PCBs, LEDs, Conductors, Desktops and Notebooks shall now be entitled for benefits @ 2% of FOB value of exports to all markets under FPS instead of their exports to limited market under MLFPS earlier. A number of Engineering items namely, Machine Tools, Compressors, Iron & Steel Structures including Transmission Towers and Scaffolding, LPG Cylinders, Ductile Tubes & Pipes shall now be entitled for benefits @ 2% of FOB value of exports to all markets under FPS

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