Export Business Documentation, Policies, Incentives in India

Welcome to this 20th Course of VJ Exports Mastery Series of Course: EXPORT DOCUMENTS, PROCEDURES, POLICIES AND INCENTIVES IN INDIA. (Course Code: VJ EM 020)

I am excited about teaching this course and hope you are equally excited about taking it.

This is an asynchronous online course. What this means is that we will not have face-to-face class meetings. Instead, the content of this course will be delivered through UDEMY platform. UDEMY is a course management system that most of the reputed instructors and experts from all over the world, use to deliver the whole content of a particular course. If you have never used UDEMY before, you may find detailed information on how to get maximum out of the course in the Students Support section.

Hello, friends.

Welcome to this new course, a short course on export clearance, documentation and procedure from India. The basic concepts. So this is sort of a quick guide to explain to you the typical step by step method for export clearance, documentation and procedure from India. I'm Dr Vijesh Jain and I have very long experience in the export operations, clearance, logistics, documentation & procedures, Exporting a variety of goods from India. So with my knowledge in this area, I have created this course. Let us start this course. So friends, to start with, let us discuss the objectives of this course.

What are the main objectives of this course?

First, very important objective of this course is to understand the significance and purpose of the export documents. The typical documents, which are used for exporting goods from India and to understand step-by-step method of export documentation and the basic procedure involved in this process.

So what is the sequence of the procedure? These steps, which are carried out?

What documents are required? At what stage? why it is required? Who requires it?

All those things would be covered in this course. And thirdly, to understand the most important export documents in little detail. So we'll try to know the contents of commercial invoice, how a packing list looks like. What all are there in the packing list? So we will discuss on that.

And the role of these documents, important documents in the export transaction, a typical export transaction.

And we'll also learn about the role of different intermediaries which are involved in the exports of goods clearance and various export documentation, submission, filing, making the purpose of those documents relevant and in the procedure, whichever the intermediaries are there, we will try to understand what exactly are the role they play in that?

So friends, why we have created this course? why we are learning this courses? for the simple reason that the export clearance, documentation and procedure is an area of great importance. This is one very, very important area in the whole export operation, which actually can be a major factor in the success or failure in the export business.

So this is very, very important area. There are many things, many documents, many procedures, many terms which an exporter should be very much thorough with.

So this is the reason why this course has been created and this course will cover all these aspects. And friends the accurate and timely submission of export documents is of utmost importance.

Why is it important? I will be discussing in more detail about this, and this fact should be known that the documentation and procedures cannot be taken lightly by the exporters. And if they do that, definitely it is going to create problems in the export operation as well as in dealing with the overseas buyers.

So friends, a knowledge of each export document and its role in overall export shipment, has to be very, very thorough, very much crystal clear to every person who is involved in export operations so such knowledge this course can give. And the knowledge about the export documents can be obtained with the learning of this course and the step by step procedures can be learned. Definitely.

Friends, other important sections of this course deals with the topics like foreign trade policy of India and the different export promotion measures which have been provided in the policy by Government of India. So what are the different schemes are there for the export promotion in India? So objectives of these sections are mainly to understand the direction and approach of the foreign trade policy of the government of India, the foreign trade development and the promotion which is being done by the government of India.

What are the different methods which are being used? And I will also update later on the new policy, which is very soon is going to come in a few months. So I'll be updating the new provisions, which will come in the foreign policy as and when it is announced. So we'll talk about the new policy also. We will add new section also in this course, and we will also discuss and learn about the different export incentive scheme which are there.

What are the benefits, how the support is provided by the government of India through those schemes for the current scheme. So the new schemes which will be announced, what schemes will be carried forward and what new schemes will be there in the new policy? Those things will be added later.

So, friends, what exactly is the purpose of the export documentation system or the procedures which are laid down, which are followed by all the exporters across the world in so-called aligned document system or the standardized documentation?

So the purpose of these documents and this scheme of step by step procedure is to make sure that the description of the goods on the documents is accurate and exhaustive. It clearly defines the nature of the goods, the probable value of the goods and the eligibility of the goods for being transported from one country to another country on an international scale.

And secondly, the purpose is served by these documents is by ensuring the correct origin and destination of the goods. That is very important. You will soon realize why this knowledge of the origin and destination has to be absolutely accurate and correct, and the details about the seller, the contact details, the knowledge about the seller and the buyer, their office addresses, their establishment locations are clearly indicated in these documents.

Fourthly, friends complying with the home and host country regulations, taxation and other requirements is a major purpose of these export documents and the step by step procedure. In addition, friends, these documents and procedure also take care of the interest and the balancing of the risk between the buyer and the seller, because both the parties should not have a situation when the risk of one party's more than the risk of the other party in the normal situation.

So how do you take care of the interest of both? The parties balance the risk among the parties because the two parties are distant apart. They are in different countries and they originate from different nationalities, different laws and regulations.

So they are in a different ecosystem and they are exposed to different types of risk.

So how to take care of these things, these documents helps in doing that. They take care of the interests of both the parties and balance out the risks. So you will soon appreciate these things. I will be discussing little bit more in detail about this thing in this course. And another purpose of these documentation and procedure is to smoothly manage the international movement of the goods by different transportation modes, it maybe by air, it would be by sea, it may be by road or it may be by the Rails. Using the preferred choice of these different possible modes of transportation.

So any of these modes of transpiration, they have to be transported from one country to another country

in a very smooth manner, and these documents and process helps in doing that. And finally, friends to avoid the dispute and misunderstanding the differences between the buyer and the seller.

So how do you do that?

Because after doing so much in the export of a shipment, if the seller loses the buyer and he does not get the repeat business, so that will be the failure of the export business, while the seller may get the payment from the buyer for a particular transaction, but if he loose the buyer, so it is the loss of the future business. So these kind of disputes and misunderstanding has to be avoided, which can be done very effectively through these export documents and procedures step by step process.

So friends what in conclusion, we can say is that all the members of the export related team need to be fully conversant with the complete procedures and documentation. So it is not the work of a particular person. It is not the responsibility of a particular person in the organisation, since the benefits of export documentation and procedure are for all the departments, whether it is finance department, whether it is the operations department, the marketing department, whichever the department is, every department is affected by the loss of track with the documentation and procedures or the failure of the document process and the procedural failure. So if anything amiss happens, it affects all the people in the organisation, so all persons are responsible for the accurate, timely and complete export documentation and the right procedure. So accurate, timely and complete export documentation saves money, reputation as well as the future business.

And finally, what we now understand, what we conclude is that the international and local laws governing export import operations result into several formalities and documentation, so those has to be complied with. So now, with this lesson we know that the role and the significance of the documentation and procedure is not just for one purpose. There are several purposes. There are several entities which are involved which require these documents. Many regulations are there local as well as international, which has to be complied with.

So. So there are many different purposes and significance of these export documentation and procedure.

Then, Friends, the purpose and significance of the foreign trade policy and export promotion and these schemes incentive schemes, which are discussed in this course, are mainly to understand that what exactly is the direction of the foreign trade policy of India? which means, what is the approach of the government of India towards exports? How much serious is the government of India about promoting the exports from India and the overall foreign trade development?

What is the status of the export business in India? So these things will be discussed in these sections and Friends, the approach of Government of India towards foreign trade and its promotion, guides the nature of the efforts Indian exporters can make to boost their business internationally.

So that is the importance of understanding the foreign trade policy of India and the different export promotion measures which are enshrined in the policy. So it is important to understand Friends that the export incentives which are given in India to the exporters are not actually subsidy, but a means to rooting out or compensating for the inefficiencies and weaknesses of the domestic business environment, the logistics environment in India and the banking infrastructure in India.

So these inefficiencies weaknesses are being compensated, which is in line with the international practices. So what is the meaning of this that the export incentives given in India are in line with the WTO guidelines, the compliance with the WTO objectives and the international business practices? So Friends, in this context will be talking about these topics on the foreign policy of India and the different export promotion schemes in this course.

Exporting goods to foreign markets can be a lucrative business opportunity, but it also involves a range of regulations, procedures, and documentation requirements. Without a proper understanding of the export documentation process, it can be challenging to navigate the process successfully, leading to delays, extra costs, or even legal issues. This section will provide a comprehensive guide to the necessary export documentation, covering everything from the commercial invoice to the bill of lading and other transport documents. Whether you are an experienced exporter or just starting, this chapter will cover all the key concepts and provide practical tips to help you navigate the complex world of export documentation, and ensure a smooth and successful export process.

So friends, in section two, our focus is on understanding the typical export transaction framework. So why is it required? We are trying to know the flow of the goods, the flow of the documents and the flow of the payment. These are our three focus areas. We want to understand that how the movement happens of the goods, the documents and the payment in a typical export transaction framework.

In a situation when the two parties, the selling party and the buying party are at long distances, they are in different countries, they are in different lands with their different regulations, different culture and absolutely different demography. So the main objectives of this particular section are to understand the typical procedure for transacting goods internationally. What are the typical step-by-step procedures for doing that and to understand the role of the main intermediaries, the people, the channel members, the people who in between this transaction, they play a significant role.

So in a typical export transaction who are these intermediaries, the organizations, the entities? And what role they play? And to understand how does a documentary letter of credit work? And what is the role of documentary letter of credit in making sure that the seller gets the payment and the buyer gets the right goods, at the right time?

And finally, this section expects the learning of the understanding of the movement of the goods, documents and the payment, as I just mentioned to you in an international export transaction. So these will be the main focus areas in this particular section. And there are a couple of videos which are coming, and in these different videos, we'll focus on these different points.

Hi, The idea of this section is learn how the game of exports transaction plays out in the movement of goods from one country to country, with least risk, right cost and taking right amount of time to change hands.

This video discusses the typical export transaction framework focusing on the flow of goods, the documents and the payment. The framework assumes the international payment is effected through international banks using the documentary credit system, also popularly known as Letter of Credit of the bank. To know more about the letter of credit you may enroll to another VJ Exports Mastery Series Course titled - All about letter of credit and UCP 500/600.

Ok friends

Let us take one example. This example is about one company, which is known as Malhotra Exports, which is based in Mumbai, India and friends this Malhotra Exports receives one order from a company in Paris, France, the name of which is St. Lauren, and they require fashion garments worth 55000 euro on CIF basis. So the goods have to be supplied within three months after the exporter accepts the LC So the meaning of this is that the company has received this order against a letter of credit and this letter of credit, as per the agreement, will be opened in favor of Malhotra Exports for this amount. That is Euro 55,000.

So, Friends, as per the agreement, Malhotra Exports first sends the LC opening instructions to Saint Lauren as per the agreement. So the idea is that Malhotra Exports reminds the company that these conditions of the LC should match with the sales contract. So it is better Malhotra Exports sends this opening instruction so that ultimately Malhotra Exports has to accept the LC only then it will become active.

So St. Lauren, based on this LC opening instruction from Malhotra Exports, approaches the AXA Banque of France to open the LC for Euro 55,000, in favor of Malhotra Exports with the final LC opening instructions. So basically what the importer does, he creates a new LC opening instructions, which are quite similar to the one which is sent by Malhotra Exports without making any major changes.

And the same LC opening instructions are used by the bank in Paris to issue a letter of credit. So the bank issues the letter of credit and sends it to the Correspondent Bank in India, which is based in Mumbai, which is a Deutsch bank, for advising the LC to Malhotra Exports. So what happens? This bank in India, which is having arrangement with the Paris based bank, advises the LC to Malhotra Exports Malhotra Exports after looking at all the conditions which are given in the LC, accepts the letter of credit and starts preparing the goods.

The first thing what it does, it appoints a C and F agent to get the shipment cleared and move the goods to France as per the INCOTERM, which is agreed. And the Incoterms in this case is CIF Paris. Now after the goods are loaded on the ship, the C and F arranges all transport and other documents which it had promised and which are required actually by LC for submission to the negotiating Bank. This submission will be done by exporter So basically, the C and F agent will hand over the documents to Malhotra Exports, and Malhotra Exports will submit these documents to negotiating bank in Mumbai. Now this negotiating bank in this case could be Deutsche Bank also, but Malhotra Exports chooses its own bank, the Indian bank for negotiating purpose.

So basically what Malhotra Exports does, it approaches the regular bank, the bank where Malhotra Exports has account that is the Indian bank to negotiate the documents against the LC with the issuing bank that is the AXA Banque of Paris, France and provides all LC documents along with the Bank Draft. So I will tell you later in this course what is Bank Draft and these documents are submitted along with the covering letter.

So I will talk about the covering letter later. So Indian Bank, which is the regular bank of the exporter i.e. Malhotra Exports, after inspection of the presentation, after checking all the documents, the what is the status of these documents forwards the documents to AXA Banque in Paris. Now the AXA Banque in Paris, after being fully satisfied about the presentation, technically it is called the complaint presentation, which means the presentation complies with the LC conditions.

Being compliant to the LC releases Euro 55000 in favor of Malhotra Exports and what it does, it credit the Indian bank, not the beneficiary, that is the Malhotra Exports directly. So Indian bank credits the amount to Malhotra Exports's account after the exporter clears any dues which are there for the Indian bank.

So if any dues are there for the negotiating Bank, for example, negotiating charges or any other retiring charges. Whatever the charges are, after paying that only, Indian bank will credit the amount to Malhotra Exports. Now, at the same time, Friends goods are on the journey by sea to reach Paris, France and it should take around approximately 22 days. By that time as goods reaches, AXA Banque has already debited the LC amount from the account of the importer that is the St. Lauren and handed over the complete set of commercial documents, which actually were received by the AXA Banque through the LC conditions or the LC requirements.

And these documents are given to the importer, along with the No Objection Certificate in favor of the importer stating that the bank has no objection if the importer clears the goods and take the possession from the shipping company. So Saint-Lauren afterward instruct the C and F agent, i.e. the agent of the importer, to collect the goods from the shipping company with the original transport documents and get the goods cleared from the French border control that is customs.

So the documents, which were received by the bank, basically sold these documents to the importe by making sure that all the dues are cleared by the importer of the bank. So Friends in this section, what had been our learnings? The highlights are that a typical export transaction requires various intermediaries. There are roles of various intermediaries who play a very important role in the smooth flow of goods, payment and documents.

The documentation and procedures which this course will tell you step by step. The idea is to ensure interest of all, the parties are protected. So whether the first party that is the exporter, the second party, that is the importer and the other parties, which are the intermediaries, including the bank issuing bank, negotiating bank, advising bank, all the intermediaries. So basically, this documentation procedure has been designed in such a way that it is a win win for everybody.

So friends, physical distance and different local laws complicate the export process, basically. So the benefits are there of international transactions, overseas business, but the physical distance and different local laws play the spoilsport. So those has to be faced. Those challenges has to be faced, and that is the way the whole procedure and export documentation has been designed to make it comfortable and smooth.

And friends, banks operate internationally without any global common law, enforceable law and any regulation of the common nature. So it is not so. So the banks basically operate internationally with the help of their own accepted guidelines. The banking guidelines, which are published by ICC in the form of UCP that is uniform customs and practices for documentary credit.

So friends, the final learning from this section is that export operations are carried out based on a very logical game plan. This logical game plan is designed in such a way that the interests of all the parties, whether it is the exporter or the importer, it is protected and of the intermediaries. So that is the idea.

A typical export transaction is linked with a counter import transaction by the buyer and follows a logical flow of goods, documents and money. The letter of credit can help take care of interests of both exporter as well the importer while ensuring the international payment is made to the exporter more safely and in a timely manner. To know more about Letter of Credit and UCP 500/600 you may like to enroll to the VJ Exports Mastery Series Course On UDEMY titled - All about letter of credit and UCP 500/600

Answer the one that is best

Now friends in section three, we will be discussing the basic export procedure. So, step by step we will learn what exactly is the export procedure. You already have a fairly good idea about the way exporting is done, as we have learned in Section two. The typical export transaction framework.

So you will find that this export procedures comes from there only. So now it will come easy for you to understand what are the basic steps which are involved in a typical export procedure and why these steps are required to be carried out. So slowly when we go forward in this course, you will understand that all these steps, all the documentation makes things easier for the exporter, importer and all the other stakeholders in the business.

Correct and timely procedure help carry out the checks and balances in the movement of the goods across the border. The role of buyer, the seller, the banks, local government and other intermediaries can only be fulfilled with the help of right, accurate and timely documents and taking recourse to correct procedure. Learn to know about the typical steps involved in a typical export transaction.

Now, friends, the very initial step of the export procedure is the legal compliance, both by the exporter as well as importer. So exporter need some kind of export license or some kind of permissions in the home country. Similarly, importer also require to do the legal compliance with the local authorities to legally carry out the export import transactions. So, for example, in India, the legal compliance requires any exporter who's doing commercial export business requires an IEC no., that is the importer-exporter code no.

So this code no basically is monitored by the central bank that is Reserve Bank of India, but it is implemented by DGFT, that is Directorate General of Foreign Trade, and you can easily get this IEC no in India at a very, very nominal price by applying online on the website of the DGFT that is Directorate General of Foreign Trade, which comes under the Ministry of Commerce.

Then secondly, the requirement is for the registration of the exporter with the Export Promotion Council, the respective Export Promotion Council. Every promotion council deals with some specific product lines. So depending on what exports, what goods are being exported by the exporter, accordingly, the exporter has to register to the respective EPC that is the Export Promotion Council and get the RCMC that is the Registration cum membership certificate. This is the legal compliance in order to get the incentives. Otherwise, you will not get any export benefits or incentives if you are not registered with the Export Promotion Council. And also the exporters generally in all the countries require to register with the local tax authorities.

In India, the main tax, which is there, is IGST that is integrated goods and services tax. In certain very few items, you have the excise duty also. So the exporters in India have to get registered if they have some product where excise duty is there, then with the excise department or otherwise, they can simply register for GST purpose.

So, friends, after the legal compliance has been done by the exporter, the first step for the exporter is to receive the inquiry in the form of a letter of inquiry. So generally an importer, if it wants to import something and want to explore the prices, it will send a letter of inquiry to the potential exporter and it will request for a formal quote. Which is generally given in the form of a document which is called Proforma Invoice.

So what the exporter does, first of all, before giving the quotation, it is very prudent to screen the potential buyer and the country for the exporter because it needs to check whether the exporter can do business with that particular entity or with that particular buyer. So what it requires is to check against the various government lists, which may indicate that the name of the party, which has sent the letter of inquiry whether it exist in the list of denied and restricted party lists, maintained by the local governments in most of the COUNTRIES.

So it is always better to check the buyer and the country. Whether business can be done and screening software are available for that purpose. So if the exporter is satisfied that it can do business with the particular buyer and there is no basic or radical problems involved in doing business with the overseas party, based on the letter of inquiry, the exporter is supposed to provide a proforma invoice, which is basically a quotation.

So the price quotation, the quantity, how much quantity is available with the exporter. All this information has to be mentioned in the Proforma Invoice, which looks very similar to the Commercial Invoice. So if the order is confirmed, the commercial invoice will be prepared based on the Proforma Invoice. Also Proforma Invoice may be asked at later stages by the local customs and the banks, which I'll discuss later about. Now, Once the importer confirms the business, if the price is accepted by the importer, now is the time to finalize the sale.

So this is typically done after negotiating on the terms of sale. So price is OK, but there are many other things which have to be discussed. So a signed Proforma Invoice or a formal contract document or so-called purchase order has to be created, which would include after negotiation, the details like what are the payment terms, mode of payment, the incoterms that is the International commercial terms 2020, which is the latest INCOTERMS.

And what will be the mode of shipment by sea or by air or by any other means? Who will ship the goods? So whether the importer will procure the material from the exporter in the home country of the exporter itself, or it would lake the exporter to ship the goods and receive it in the home country of the importer? So those things have to be discussed and who hires the freight forwarder and / or the main carrier, that is the shipping line or the airline.

So who will hire and the person or the agency, entity, which will move the goods that is a freight forwarder or a C and F agent. So who files documents for the export clearance that is the clearance from the local customs at the Port of Loading and probably also the customs clearance of the goods at the Port of Discharge also? So whether it will be done by the exporter? which part will be done by the exporter? and which part would be done by the importers?

All those things, has to be discussed and should be in the written form in the signed proforma invoice or the formal export contract or document or purchase order, and who provides which documents? So there are a complete set of documents which are related to the export shipments and those different documents have to be checked up that who will procure, who will supply those documents. So all these things have to be part of the contract.

Now, once the export contract is ready and against which, the letter of credit has been opened by the importer and it has been received by the exporter, accepted by the exporter, the first thing the exporter has to do is to arrange for the export finance to prepare the goods. So the exporter has various options available for this purpose. It can either go for the packing credit from the bank against LC, almost 80 percent. For example, in India, almost 80 percent of the total LC amount the exporter can get as packing credit, which is normally below the market rate in India. That is the market rate of the interest, which has to be paid to the bank. So the promotional interest rates are given for the export purpose. Any losses to the bank on the interest is compensated by the local government that is the Indian government in India.

The exporter can also go for private loans from India, as well as from abroad, for the purpose of exports. Or it can go for international line of credit if it is offered by the importing country or with the help of the importer, the buyer. If any international line of credit is available that can be used as the export finance or it can be in the form of the partial advance from the buyer, which means the importer provide some advance, maybe 20 percent, 30 percent and rest of the amount is through LC or even against the LC depending on what type of LC it is, the partial advance may be available to the exporter to prepare the goods.

So there are many, many options available. Now, the exporter has to prepare the goods and arrange for the shipping documents. So it has to arrange for the export worthy packing. If it is by sea sea worthy packing, If it is by air then airworthy packing. And the exporter also has to arrange for the inspections of the goods. One is the regulatory inspection if it is required in the local country that is in India, The Indian government requires local inspection by the government agency for the shipments, which is above a certain amount so that inspection may be required and arrange for the shipping documents. And the inspection by the third party that is the international quality inspection agency in case the quality certificate is required as per the letter of credit.

Now, the exporter also has to arrange for the shipping documents, like in commercial invoice, the packing list, certificate of origin, the shipper's letter of instructions and the transport documents. The original main transport documents. It can be bill of lading It can be air way bill or it can be RR, i.e. railway receipt.

Now. Once the exporter has done all the initial work, including the arranging the export finance and preparing the shipment, packing and everything, inspection, before sending the goods, it is always good for the exporter to do a second restricted party screening using the screening software, if there is any update in the list and if the person is in the restricted category, country or the importer, then the goods may not be cleared in the customs.

So it is always better to do a last check before final shipment of the goods by the exporter. Now, in order to get the goods cleared from the customs, the exporter has to appoint a C and F agent or it can be a freight forwarder also and issue authorization letter, or the shipper's letter of instruction which helps the appointed C and F agent to file the documents on behalf of the exporter and clear the goods and move the goods internationally.

Also at this stage, the exporter also has to define the scope of work for the C and F agent that what are the things which the C and F agent has to carry out, depending on the contract, depending on the LC conditions and definitely the exporter has to provide a limited power of attorney to move the goods, which is normally part of the shipper's letter of instruction. So it is a kind of limited POA based on which the freight forwarder can sign certain documents which are required in the process of moving the goods internationally, and clearing the goods from the Customs and port and the shipping port.

And the exporter has to make sure to book in advance the shipping space. So either it has to be done by the C and F agent, or it has to be done by the exporter. But it has to be done in advance to make sure that the goods are exported before the latest date, which is given in the letter of credit, or the last date, which is given in the letter of credit, For the shipment of goods.

Now, depending on the requirement of the buyer and the Incoterms, the exporter would be requiring to arrange for the insurance and also manage different types of risks which are associated with the export shipment. So in order to insure the goods, the exporter has to look at the journey of the goods from the factory of the exporter to the importer. So the meaning of which is that it has to insure the goods in transit during transport for the inland transportation, as well as for the international transportation. So international transportation can be by sea, which is basically the marine insurance which has to be taken by the exporter, marine insurance cover.

It has to be taken for that purpose and for the inland shipment of the goods, the inland insurance has to be arranged, the exporter also has to insure against the foreign exchange fluctuations. Depending on the case to case. It can be in the form of some forward purchase from the bank, or it can be in the form of some foreign exchange swap contracts.

So there are different methods of taking care of the FX fluctuations. Also the exporter yo insure against the commercial risks that is the non-payment risk for which there are agencies like ECGC in India. The Exports Guarantee Credit Corporation can be approached to get the ECGC cover to cover for the non-payment risks or the commercial risks. Then the exporter has to arrange for the misc. documents.

What are the misc documents? Those documents, which are mentioned in the sales contract and it is obligatory for the exporter to arrange for those documents because those documents are required either by the importer or the importer's country. So as required in the LC, the bank has issued the LC or whatever is the means of payment. It is either through LC or bank collection, so whatever the requirement of the documents for that purpose has to be arranged, then the documents which are required by the freight forwarder or the C and F agent or which are required by the customs.

All these documents has to be arranged by the exporter and the documents like Bank Draft that is Bill of exchange has to be arranged and the documents which are as required by the regulatory mechanism of the local government or the customs, for example, filing of the export declaration. So those documents, which are required for the local compliance, the regulatory requirements, those have to be arranged. Then the exporter has to ensure the Customs and Port formalities.

As I just mentioned, the first step for that is to file export declaration, which can be filed upto 30 days prior before the expected date of dispatch of goods. So in the period starting 30 days to the actual dispatch of goods, in between. the exporter can file the export declaration. It is always better to file the export declaration much in advance. So provide all documents which may be required by the custom for this purpose. Export clearance purpose, which I will be discussing later in this course and pay for the customs fees or any handling charges, if any, for both customs as well as the port authorities.

So those has to be taken care. Then the next step is to ship the goods and get the goods loaded for this purpose and obtain the transport documents after the goods have been loaded on board. And these transport documents should be in compliance with the requirement of the letter of credit. So accordingly, those documents have to be arranged. Either C and F agent or the freight forwarder will arrange for these documents or otherwise the exporter has to obtain in these documents from the shipping company or the airline, as the case may be. And afterwards, as soon as the goods are loaded, the exporter has to urgently prepare the shipment advice for the buyer for the purpose of intimating that the goods have been loaded and the ship has already departed or about to depart, and that information has to be submitted immediately to the buyer.

Then the exporter need to present all the documents, which are required by the LC as of the LC conditions. And this complete set of LC documents has to be submitted to the issuing bank through. a negotiating bank. So it cannot be submitted directly by the exporter. It has to be sent through negotiating back along with the covering letter. So covering letter, Bank Draft and the complete set of the LC documents, as required by the LC has to be submitted. for the presentment. Then the post shipment formalities has to be carried out by the exporter, which includes things like claiming export incentives, getting tax refunds or settling tax bonds with the local authorities, for example, for excise if it is applicable or for the input tax, GST, IGST purposes. If any bond has to be settled, it has to be settled and comply with the Excise Control Regulations for which the exporter to ensure that the bank remittance certificate is available and bank has sent the intimation to the central bank that is the Reserve Bank of India. in the case of India. And the information has been sent that the FX has been received against the export shipment.

And then finally, after the completion of the export shipment, the record-keeping has to be done by the exporter for which the export typically prepares a set of record of the documents and ensure that the information like the purchase order number, the Lc detail, LC copy, copy of the commercial invoice, packing list, customs shipment number and other important details. Correspondence, email addresses, contact details of the key persons either of the bank, the intermediaries or of the buyer's place.

All this information has to be prepared and a complete file has to be prepared of the record keeping.

This is the animated video presentation of the step by step exports procedures. This video is to make understanding of the concept simple and serves as a starting point for learning the process. The details would be further discussed in this course in subsequent video lectures on exports procedures and documentation in India.

So, friends, in this step by step procedure, this is the summary of the different steps for a typical export transaction, the step one was the legal compliance. IEC no or RCMC or registration with the local tax authorities. In these step two, It was dealing with the inquiry of the letter, getting the business, arrangement for the export finance readying the shipment and appointing this C and F agent. And the step number three,

These were the shipping formalities, arranging the insurance as per the LC if it is required and booking the shipping space in advance. Step no 4 to carry out all the customs and port formalities, which includes customs clearance, export declaration and dealing with the port authorities for any handling of the shipment, loading of the goods on the ship.

Any charges for that. And in step number five, preparing the shipping advice. That means the intimating of the shipment of the goods to the buyer. And in step six bank formalities to secure overseas payments. as per the LC terms. And finally, in this step number seven, post shipment formalities, which includes incentive claims, tax refunds and record keeping.

So friends, this is the summary of the step by step typical export procedure. This checklist is available for your download purpose from the resource section of this lecture. So you can download this resource. And this particular chart gives you the pictorial view of the different steps involved. Starting with the export contract, request for the LC issuance in the form of a LC instruction, LC opening instruction, LC receipt and notification, review of the conditions by the exporter, securing export goods, then making arrangement for the inspection by the requisite authorities or the third parties for quality inspection and the export declaration in the form of export reporting to the Customs, Local Customs, providing the shipping instructions to the carrier, main carrier, shipping company or airline.

So depending on the nature of the goods to be shipped, the shipping instructions has to be given by the exporter and request for the ocean cargo insurance if it is required as per the Incoterms and the LC conditions, and appointing the negotiating bank to negotiate the documents after the goods have been shipped and receive the payment from the issuing bank via the negotiating bank. And the post shipment management.

So these were the pictorial steps. So friends in this section, we have discussed the step by step typical export procedure.

And the main highlights of this section was that the learning that the typically export procedure for export involves many, many steps. So those steps we have already discussed. Knowledge of these steps is very, very important for the exporter of as well as for the importer.

The whole procedure is based on the logical needs of these several parties involved in this. apart from the exporter and importer, the various intermediaries, which play very important role in this typical export transaction, and we learned that the export procedures are framed to comply with the several regulations governing international trade, which are implemented by the home country government or the host country government.

So, friends, these were the main learning from this section.

Answer the one that is best

So, friends, welcome back to the course. So this is section four and friends in this section. We are going to discuss some very important aspects of export documentation and procedures. That is to understand exactly the nature and types of different documents which are used in export operations. So friends, what is the objective of this section is to understand step-by-step this export documentation. Which means the different documents at different stages.

So I will try to cover almost all the documents, but the complete exhaustive list of documents is not practically possible because many of the documents are required on case to case basis in certain products. Certain documents are required for other products those documents may not be required for others I may not be able to cover the complete list, but I will try to touch upon most export documents, which are used in the typical export transaction. And I also will tell you the step by step sequence of these export documents, which are used at different stages.

So all these things we will be discussing in this particular section.

Correct and timely export documents help carry out the checks and balances in the movement of the goods across the border. The role of buyer, the seller, the banks, local government and other intermediaries can only be fulfilled with the help of right, accurate and timely documents and taking recourse to correct sequence of these documents. Learn to know about the most commonly used export documents.

The commercial invoice is a legal document between the  exporter  and the  buyer (in this case, the foreign buyer)  that clearly  states the  goods  being sold and the amount  the customer is to pay. The commercial invoice is one of the main documents used by customs in determining customs duties.  A commercial invoice is a bill for the goods from the seller to the buyer. These  documents are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used and other characteristics.  

Considerably more detailed and informative than a standard domestic packing list, an export packing list lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as conforming document. It is not a substitute for a commercial invoice. In addition, U.S. and foreign customs officials may use the packing list to check the cargo so the commercial invoice should reflect the information shown on the packing list.

So, friends, this I had discussed in the last section also. The very first document, which is generated by the exporter on receiving the letter of inquiry is the Proforma Invoice and we have already discussed this document. So I will just give you a small glimpse of this particular document. This document you can also download from the resource section one sample copy is given there. So friends it looks very similar to the commercial invoice, but it is not same.

A commercial invoice is a little different, which I will just explain in the next slide, and Proforma invoice contains information like details of the buyer and the seller, their location, their contact details. So minimum details to identified the buyer and the seller, but it contains a very good description of the goods. So it's quite detailed description of the goods. So that there is no discrepancy or there is no misunderstanding about the product.

So this description has to be very carefully included in this document, and it is better to have in Proforma Invoice the ITC HS code of the goods as per the letter of inquiry, so whatever the letter of Inquiry says about the product, even if the ITC HS code is not given by the potential buyer, you should include ITC HS Code that is very, very important because ITC HS code, that is, the international trade classification harmonized system, is the code which is universally used by the customs of all the countries to understand the product and levy any duties, So it is a very, very important code and of course, the price with Incoterms.

So what INCOTERMS you are proposing? buyer may not agree on that. It may change the INCOTERMS in which case the price will change, but you give the INCOTERMS on which your price is based and what are the payment terms which you propose. The delivery details how much time you require to prepare the goods and ship the goods. So those information has to be given in the Proforma Invoice and the currency of the contract.

So what is the currency which you propose in the contract? It is always a good idea to propose the home country currency that is the currency of the home country of the exporter, which means seller and date of issue of the Proforma Invoice, as well as the date of expiration.

Now, this expiration date is very, very important because the expiration date tells you that this Proforma invoice is valid for a certain period only. So with time things change, the prices change. So you would not like this Proforma invoice to be valid for a very, very long time, so it is not a good idea. So it is always better to give the date of expiration in the Proforma Invoice. Then friends The second document, which is generated by the exporter that is the seller after receipt of the order finalizing the order, is the

The Commercial invoice. Now this Commercial invoice is a very updated document based on the Proforma Invoice. So many of the information will be from the Proforma Invoice. That is why It looks very similar to Proforma Invoice, but it is not the same. So it has got a lot of updated information based on the negotiated terms of sales, which may include the updated incoterms. It may include the updated delivery time. It may include the updated payment terms. So there may be a lot of information, including it may also have the insurance details which at the time of quotation you may not have.

So it is a kind of a summary of the complete contract. So whatever the sales terms have been finalized, any contract has been signed or any purchase order is there or a signed copy of the Proforma Invoice is there. So it is a summary of that. So it contains all the highlights of the contract and it contains the details of the transaction, the transaction which is still to take place from the start to the finish. So it's a preview of the complete export shipment.

Then the document, which is complementary to the commercial invoice which goes along with the commercial invoice, is the Packing List. This document is very similar to the commercial invoice, but it does not contain the details about the financials. It does not talk about the unit price and it does not about the total cost. But in addition to what information is given in the commercial invoice, it contains a very exhaustive information on the export shipment. The type of boxes, the number of boxes, the markings on the boxes, the weight, dimensions, net weight, gross weight, volume, all the information, the container number, everything. It contains about the export shipment. So it is a physical description of the complete export shipment and it helps the freight forwarder to create ultimately the transport documents, like bill of lading or Air way bill and at a later stage, even bank may require it for making the payment against LC because banks deals with documents and they have not physically verified any shipment.

So Packing List gives a preview about the physical export shipment, and that is the reason Bank invariably ask for the packing list, even if it is not mentioned in the letter of credit, and customs will definitely require it in case they are doing the physical examination in order to locate and identify certain packets for that particular examination.

So without packing list, it is very difficult for customs to do the physical examination. And another purpose of packing list is to identify the shipment. It identifies the shipment for the shipping company for the captain of the ship or the ship crew members, the port authorities, which are handling the shipment. So the people involved in the handling of the shipment, they need to identify the particular shipment and packing list helps that. And it contains, as I had already mentioned, information like net weight, the gross weight, the dimensions of the boxes and the markings, etc. So friends, a sample copy of this document also is available in the resource section of this lecture, so you can download it from there also.

A Certificate of Origin (CO) is an important international trade document that certifies that goods in a particular export shipment are wholly obtained, produced, manufactured or processed in a particular country.

Now friends. Another very important document, which is part of the main document that is the commercial document, so-called commercial documents or these are also called the principle documents, is the certificate of origin. Now Certificate of Origin actually is a certificate which certifies the origin of the goods, which means the major portion of the manufacture of the goods where it does happen.

So in the quantitative terms, the goods, if more than 40 percent of the value addition has taken place in a particular country, it is certified as the origin of the country. So most importing countries require it. It is normally and typically signed by a semi government or official agency for example it can be a chamber of commerce of a country and electronic form of the certificate of origin is very, very popular because nowadays it is very, very difficult to wait for the certificate of origin to come by courier and even the issuing authority find it very, very cumbersome to handle the physical certificate of origin.

So in present times, electronic COO is very popular and generally it is available with less efforts. Now friends another form of the Certificate of Origin can be country specific certificate of origin or the GSP certificate I will tell you what it is. So these certificates of origin are the special certificates of origin, in short, we can say COO or special COO. So country specific specific or GSP COO are basically the result of the bilateral agreements between countries or multilateral agreements, so bilateral means to the agreement between one or two or three countries.

Smaller groups of the countries having a regional economic cooperation or a free trade area like the USA has with Mexico and Canada. The free trade agreement, which earlier used to be called as NAFTA. So what happens that the certificate of origin actually certifies that this shipment is originating from the countries within which these agreements exists , i.e. the bilateral agreements So this is a special COO. It helps in making the shipment Duty-Free or with the the concessional duty rates.

And another possibility can be the multilateral agreement like GSP Generalized System of Preferences, wherein it is obligatory for the rich countries to provide duty concessions to the goods coming from the poor countries. So these special COO actually have implications on the landed cost. So it reduces and saves cost for the importers. So these are very special certificate of origins and very, very important documents. So special government or semi-government agencies generally issues such certificates. Sometimes the consular offices also issue such certificates.

A Free Sale Certificate is a certificate issued by a national regulatory authority of an exporting country based on national legislation confirming that the product is freely sold in the country but without any indication that the product is evaluated for safety and efficacy and is registered for use in the country.

Then another very important certificate is called the certificate of free sale. It may not be required for each and every type of product to be exported, so generally it is required for export of certain specific items like food items or medical devices or cosmetics or biologics. So these are some of the categories where, the certificate of Free sale may be required. So the purpose of this particular document is to allow the legal and free sale of the goods in the open market.

So basically, what happens is that it is kind of authorization for the importer if it is a new in that particular market to allow him to sell the goods freely in the country. So generally approved govt. agencies is in the originating country, certifies this particular document and issue this document. So generally, buyer may request it from the seller if it is required, if it is new in the country of the buyer and if it is of the categories of these items, which I just mentioned to you.

And sometimes it is also called the Certificate of Exports or the certificate to the foreign government. So in which case it becomes a government to government certificate, which allows the second government, the second party or the second party government to freely sell or legally sell the goods which are coming from a particular country.

So, for example, I'll give you another example that in today's world of corona pandemic, many countries are manufacturing the vaccines. So once vaccines are exported by a particular company, generally the buyer will ask for the certificate of free sale. So it would be kind of the permission from the originating country and the country government that this product can be sold in the destination country.

Such kind of certificate would be generally very, very important for the import of the vaccines by the importer from various countries. And generally, as I just already mentioned, it is used for registering a new product in the foreign country. That is the destination country. That is the country where the goods would be sold by the importer. And importing country customs may also require it.

A shipper's letter of instruction (SLI), also known as the shipper's export declaration, is an authorization document that is issued by the exporter to its agents or freight forwarders

Then another very important document is called Shippers Letter of Instructions, which is issued by the exporter to the C and F agent or the freight forwarder appointed by it. It is sometimes also called as the authorization letter, so it contains information to enable the freight forwarder or the C and F agent to successfully move the goods from the country of origin to the country of destination, across borders.

And it works like a cover memo for all export documents submitted to different authorities, which would be actually done by the C and F agent or the freight forwarder on behalf of the exporter. So in order to make him capable of doing this, to authorize him to work on behalf of the exporter, to deal with the different authorities, to hand over the documents or to even issue the documents, and to even sign the documents, this particular shipper's letter of instructions helps, and it may generally include, a limited POA actually for the freight forwarder to act on behalf of the exporter.

And it may be very, very important, especially for filing the electronic export declaration, which is in India, it is called EDI, That is the electronic data interface. In other countries, it may be called as some other names. For example, in USA, it is called as AES, automated export system. So this export declaration, which is filed by, generally filed by the C and F agent or the freight forwarder on behalf of the exporter it is possible through this document. If this document is with the freight forwarder, he can legally do it.

Air Waybill

Air freight shipments require airway bills. An air way bill accompanies goods shipped by an international air carrier. The document provides detailed information about the shipment and allows it to be tracked. Air waybills are shipper-specific and are not negotiable documents (as opposed to “order” bills of lading used for vessel shipments).

Bill of Lading

A bill of lading is a contract between the owner of the goods and the carrier (as with domestic shipments). For ocean shipments, there are two common types: a straight bill of lading, which is non-negotiable, and a negotiable, or shipper’s order bill of lading. The latter can be used to buy, sell or trade the goods while in transit. The customer usually needs an original bill of lading as proof of ownership to take possession of the goods from the ocean carrier.

The friends, the goods sometimes have to be moved within the country also. So generally, if the place of manufacture is away from the sea ports or away from the international airports, the goods have to be moved from the factory to the sea port or the airport. So this movement of the goods require the transport document, which is called the inland bill of lading. So this inland bill of lading actually is for the domestic purpose.

Generally, it is not required by the buyer, so it is a contract between the exporter and the shipper, which is a contract of carriage between these two parties. And generally, it is not sent to the buyer. So that's why generally it is not discussed, but it is a very, very important documents. In INdia It is also sometimes called as Builty. So a copy of this document also you can download from the resource section of this lecture.

The main transport document, which is required by the buyer, is called the ocean bill of lading or the AWB. So we'll first talk about the ocean bill of lading. So this is the main transport document. Buyer needs it in most of the cases. It is a document of title because it is a negotiable instrument. It can be made negotiable and it is of two types. Straight bill of lading, consignee name which actually is not negotiable because it is consignee named.

So only consignee can use this document. Once the original copy is there, using the original copy consignee can go to the shipping company and take the possession of the goods. So any third party cannot do anything about it because it is consignee named. So it is not negotiable. But most of the ocean bill of lading, the most popular ocean bill of lading, are generally negotiable because of the bank documentary system, so banks to safeguard their interest. They generally ask for the negotiable ocean bill of lading so that they have the leverage to get any pending dues from the importer by selling these documents to him when the time comes.

So this is a main LC document for this purpose, on behalf of which only the banks can safely deal with the importer. So friends, copy of this bill of lading, Ocean Bill of Lading also is available in the resource section. You can download it. Then the other important transport document if the shipment is by air is called Air Way Bill, this is for the goods shipped by the air. It is just the receipt of the goods, so it is always consignee named. It is not required in the original form. Even a fax copy or email copy can work. So it is non-negotiable.

The reason is very, very simple that if it is made negotiable, the time taken by the document to reach the destination will be so much that there, there'll be a lot of losses for the airlines to keep the goods there will be lot of congestion at the destination airport and the goods will be lying on the airport and waiting for the original document to come through banks through LC route. So. It is not practical to have a negotiable AWB. Because of the speed at which the goods are transported from the country of origin to the country of destination by Airlines.

So this document is quite different from the Bill of Lading in the sense that it is not the negotiable document. So it is a very different type of transport document.

Then another very important document is the quality certificate or quality inspection certificate. So Friends, the main interest of the buyer is to get the right quality of the goods, and this can only be done by the quality inspection by some entity. Now if the buyer says that his rep will check the goods.

So generally, the exporter will not accept it because if the goods are not required by the buyer, the rep of the buyer will invariably reject the goods. So what is generally agreed between the buyer and the seller is for the third party inspection. So this is typically a third party document. So 3rd parties like, for example, the Swiss company SGS, which is very, very famous for this purpose. They do the inspection world wide, any places anywhere in the world. They do such kind of inspection and issue the quality certificate and which is accepted by most of the international traders.

And this quality inspection can be in process quality inspection or it can be the post process quality inspection also. And generally, it is done in the form of the random inspection. So it is more of a statistical kind of inspection where the whole shipment is generally not checked. The sampling is done for the checking of the goods.

And in most of the cases, it is the requirement of the buyer. So buyer require it to protect its interest that the goods have the right quality and since the chances are there, since buyer being in a different country, this kind of document is very, very important

Sanitary and phytosanitary (SPS) measures are quarantine and biosecurity measures which are applied to protect human, animal or plant life or health from risks arising from the introduction, establishment and spread of pests and diseases and from risks arising from additives, toxins and contaminants in food and feed.

Then Friends, generally, the importing country requires a certificate to protect the people of the country from the possible contagions or some bacteria or viruses or any diseases coming into the country via the export shipments. So proper scientific treatment has to be done of the shipments originating from the country to make sure that it does not create any havoc in the destination country.

So for this reason, the importing countries generally ask for the phytosanitary certificate which certify that the proper scientific sanitization of the shipment has been done at the country of origin before it was exported. And sometimes it also includes the environmental concerns or the sustainable export packing or the procedures which requires the concern for the environment.

Those things have been included now in the Phytosanitary certificate. So just one example of that is sustainable export packing. So this certifies that the export packing is sustainable, environmentally friendly packing.

An export insurance policy insures an exporter against the risk of not being paid under an export contract or of not being able to recover the costs of performing that contract because of certain events which prevent its performance or leads to its termination.

These risks can arise from

1. Transportation Risks

2. Foreign Exchange Fluctuation

3. Non payment due to insolvency of buyer or due to wrong intention of the buyer.

Different insurance tools are available for different types of risks. The most common form of transportation risk is to take a Marine Insurance Policy for shipment of goods by sea.

Then depending on the arrangement between the exporter and the importer, if the insurance has to be arranged by the exporter which has been factored into the price, then either the marine insurance policy or the policy certificate has to be arranged by the exporter So it depends on the Incoterms which have been agreed. And the purpose of this kind of policy is for claiming the damages during the transportation. So its a protection of the interest, financial interest of the exporter as well as the importer during the transportation.

So it can be the comprehensive transport insurance also that is place to place terms, which means irrespective of the multi-modal transportation of the goods from the point of manufacture to the point of the warehouse of the importer. This insurance can be taken. Complete integrated insurance can be taken for multi-modal transportation.

But in the case of these sea terms, that is the goods being loaded from the country of origin to the country of destination, the port of discharge. And if such terms are there and the obligation for the exporter is to ensure that there is a separate marine insurance policy in alignment with the sea terms, then a particular marine insurance policy has to be taken by the exporter.

And the fact remains that whoever buys this insurance policy and enter into a contract with the carriage in case of any untoward incident, other party can also claim the goods. So this is the principle which is generally followed. The certificates friends are required in case there is a long term bulk insurance policy taken for multiple consignments spread over a period of time may be three months, six months or may be one year.

So in that case, on shipment wise, a marine insurance certificate would be required to be furnished along with the other LC documents by the exporter to the bank for claiming the payment for the shipment.

For dangerous goods, prior to packing, this cargo information is provided to the carrier in the form of the Dangerous Goods Request (DGR) and after packing, in the form of Dangerous Goods Declaration (DGD – a.k.a MULTIMODAL DANGEROUS GOODS FORM) along with Dangerous Goods Labels..

The vessel only sees the Dangerous Goods Declaration on paper or on-screen and the labels on the container and have to use this information for purposes of stowage planning

Then, for certain items, which comes in the dangerous category, so dangerous goods documents or form is required. It is the requirement of the International Air Transport Association, IATA or the International Maritime Organization. So as per their guideline, the exporter has to declare status of the goods if they are dangerous in nature. in this particular document.

So it is required for the shipping of this type of special category items which are dangerous or can be hazardous goods, and it may affect the other goods which are being transported in the ship or in the aircraft. So this shipper's declaration of dangerous goods signifies the declaration of the experter that in the shipper that the goods are not only dangerous, but the shipper has made sure that the special packing has been provided to the goods so that it does not damage or become hazardous for the other goods which are going in the ship or in the aircraft, or to the crew member or the people who are handling the cargo.

So this special packing ensures that even the hazardous and dangerous goods are handled properly by the crew members. So a simple copy of this document is also available in the resource section, and you can download it. Friends for the local communication with the customs in the home country of the exporter, a export declaration has to be filed by the exporter, which is normally filed by the freight forwarder or the C and F agent on behalf of the exporter and normally filed online. In India, the system is called EDI, which I just mentioned to you Electronic Data Interface, or it can be some other name in other countries also. As I've just told you, normally it is filed by the C and F agent or the freight forwarder, and it is also called the shipping bill, or if it is being filed in physical form in India, it is called G R form

That is the guarantee remittance because this also is a document apart from the customs document, customs declaration, it is also a document which declares to the Exchange Control Agencies like, for example, in India, it is the RBI, the Reserve Bank of India that you are guaranteeing that the goods are being shipped and the proceeds, the remittance.

The money foreign exchange against those goods is the responsibility of the exporter which will be there in the account of the exporter within the stipulated and mandatory time period. For example, in India, this mandatory time period is 180 days. So basically this GR Form, which is also called the exchange control copy of the shipping bill or the export declaration, or sometimes it is also called the Bill of Export.

So this basically is a declaration to the customs also that what goods are being exported in advance and it is also a declaration to the exchange control entity like, for example, RBI that these goods are being exported and it is the responsibility of the shipper to make sure that payment will come. So custom declaration copy is the main copy in this case, whether it is online or whether it is offline.

And there are two copies of the RBI, that is the exchange control department of the RBI. 2 sets. One for the RBI and one for the bank. Because bank will tell when the remittance come and it will match this certified copy of the shipping bill with the copy, which was earlier sent to RBI. So once the money is realized by the bank by issuing the BRC, that is the bank remittance certificate and intimating the RBI. with this copy of the shipping bill, the case would be resolved and the fourth copy which is the port trust copy, which is required for the Port Authority's purpose.

So this custom copy that is the main copy, which is the shipping bill actually shipping bill copy, which is filed online, should specify, and it would be a different document for the different categories of the type of export, whether the goods are dutiable. That is one category or they are Duty-Free or the Duty-Free under bond. So a bond has been furnished for the sales tax purposes or in the case of India, now, it is GST or in some cases,

Excise purpose, a bond has been furnished, guaranteeing that the goods are for exports only and once export will be done, This bond will be retired. It will be settled by the shipper and the fourth category that is the goods are under the claim of duty drawback.

So the customs understands that a particular shipping bill has been filed in any of these four categories, so that the requisite treatment is done by the Customs Department and they follow the protocol for these different four categories, according to the logical requirement of the shipment.

Then Friends, the other documents, which are required for the purpose, which customs will be requiring for carrying a customs clearance, which most of these documents i have already discussed with you in detail is the commercial invoice, the packing list, the inspection certificate by the export inspection agency or Export Inspection Council as it is called in India or any export licenses if they are applicable, which have to be furnished with the Customs Department, which is a kind of permission from the requisite authority which allows it to be exported, that particular product and it may be required for certain items.

Most of the items it may not be required in India and the LC copy if applicable and Proforma Invoice, export order or export contract. The customs may ask for this, and customs may also ask for the technical brochure of the goods being

exported. wherever applicable. So these are the some of the important documents which are required for the customs clearance for the export

Then shipping and customs formalities, related documents include MR, i.e. the Mate's receipt which is issued by the captain of the ship, which checks whether the goods loaded on board the ship are in good order and condition, not damaged. The boxes are intact and in case there is any damage, the captain will specify such kind of damage if the damage is there. So this MR receipt has to be clean to get the clean on board

Bill of lading without which you cannot get the clean on board bill of lading so it is better to ensure that the Mate's receipt is issued as clean. It should be claused or dirty as it is called, so that would mean that there is either some damage or there is a short shipment.

So this MR, along with the NOC from the customs authorities and the port authorities, which also signifies that they are no dues of the customs or the port this no objection certificate or no dues certificate will be issued by the Customs and port authorities, along with the Mate's Receipt is required for opening the bill of lading or the AWB from the shipping company or the airline and after the shipment, the exporter is required to obtain the Customs Certified Shipping Bill copies, including the exchange control copy for the bank.

So one copy of Exchange Control is already sent directly by the customs to RBI.

Then friends, the documents, which are involved in the Post shipment formalities, the very first and the most important document is the shipping advice. So it has to be created by the seller and properly signed by the seller. And as soon as the goods are loaded on the ship, along with the non-negotiable copies of all major items like commercial invoice, the packing list and the transport documents like B/L or AWB, The same have to be sent by fax or by email to the buyer positively.

The idea is that buyers should know that the goods have been loaded on the ship, and the expected date of departure of the ship is there so that it can track the shipment and make the planning for receiving the goods. Then the documents, which would be required at the stage of bank formalities. That is after the shipment is the presentment of the documents against the letter of credit. So the documents which are mentioned in the letter credit, for example, commercial invoice, packing list, the certificate of origin, the transport documents like Bill of Lading or AWB, Inspection Quality Certificate, which are required by the buyer or the shipping bill copy, actually, which is not required by the LC or the buyer, but it is required by the bank.

The exchange control copy, so that after receipt of the payment, the negotiating bank, not the issuing bank, the bank in the home country of the exporter who is going to renegotiate the documents will require it. and the moment the money comes, it will be sending the copy This certifies shipping bill copy, EC copy exchange control copy to RBI for the matching with the earlier copy of the shipping bill , ensuring and certifying that the shipment has received the payment in FX and the Bill of Exchange, which is also called the bank draft, which is an unconditional order from the exporter to the bank to pay against the LC.

Whatever is the requisite amount and it is duly forwarded by the negotiating bank to the issuing bank. And the insurance / freight payment documents, if these are applicable, depending on what is the Incoterms, has been agreed between the buyer and the seller and what is the LC requirement. And sometimes a consular invoice may be required, which is actually the commercial invoice signed and endorsed by the consular office of the Importing country.

And wherever required, phytosanitary certificate wherever it is applicable. So these are the documents which will be required for the claiming of the remittance against LC for the shipment from the bank. So another are in the dealing with the bank for the exporter is to see if any discrepancy has been claimed by the issuing bank and whatever rectification is required for a discrepancy. If it is necessary, it has to be done. Obtaining the Bank Remittance Certificate from the bank.

Once the money comes from the issuing bank, Generally it is in the electronic form, which is called eBRC, and it is also required by the exporter. to claim the incentives and the exporter should also ensure that the bank actually sends the EC copy of the shipping bill to RBI, so that not to get blacklisted by the Reserve Bank of India for non receipt of the international payment. And this bank draft, which is the unconditional order from the exporter to the bank, is a very, very important document which is actually not required in the LC, but banks will require it to make the payment.

It is also called the documentary collection, as the case may be. It is attached with all the commercial documents. That is the LC documents, and the cover letter. Cover letter contains the instructions from the exporter, any special instructions and the list of the document, which is being submitted. And this bank draft helps in the transfer of the title and the responsibility of the different parties involved, that is the buyer and the seller, and it helps in the release of the funds to the seller. that means the exporter, in the banking language it is called as beneficiary. So it helps release of the funds for the beneficiary and may contain payment instructions and / or the transmittal letter issued by or the requested by the exporter. Then the documents, which would be required for claiming the export incentives. Or any Tax refunds.

The most important documents in those list of documents, which are related with this particular activity is the RCMC that is the Registration Cum Membership certificate. which is issued by the respective EPC that in the export promotion council. And another document which I have already mentioned to you is required for the claiming of the incentives, is the BRC or eBRC, which certify that the foreign exchange has been received by the country so that the concerned authority can do the refund or hand over the incentives. Customs certified copy of the shipping bill is required to confirm that goods have been actually shipped. This is certified by the customs.

So this copy is also required for claiming the incentives and the non-negotiable copies of the bill of lading or the AWB, whichever is applicable, as the transport document for the reconfirmation of the fact that the goods have been exported. And what is the mode of exports.

So, friends, now I will show you and quickly explain to you the summary of all the documents, which are categorized also as the pre shipment documents and the post shipment documents. And in the pre shipment documents, you have 2 categories of these documents, which I have discussed the commercial documents and the regulatory documents. And in the commercial documents, the main documents, which are required by the LC, which is also called the principle documents. And then there are certain secondary type of documents which are required for obtaining the principal documents.

These documents , secondary document are called auxiliary documents. But we have only discussed the main documents, these secondary documents, we are not discussed. They are actually required for obtaining the primary documents, which are also called, the principal documents, like commercial invoice, the packing list. The certificate of Origin, Certificate of inspection. Or the quality certificate or the bill of lading or the AWB or it can be combined transport document also in the place to place terms. That is from Point to Point, warehouse to warehouse consignment.

Integrated transport documents are also becoming very popular these days, which is called the combined transport document. And the bill of exchange, Shipment Advice and the Certificate of Insurance. So to obtain these main documents, the documents which are called auxiliary documents and the documents which are required to comply with the local government regulatory compliance by the exporter, which actually is not the concern of the buyer or the importer are I have already discussed the export declaration, which is for the customs and for the exchange control purposes.

And this in the physical form is called G.R. that is in the guarantee remittance for the exchange control purpose or if you are exporting the software, it is called softex If you are exporting the goods through post parcel, it is called PP and the shipping bill, which actually is the same thing in the electronic filing, but it is required for the custom purpose, which is the main copy and the certified copies after the goods have been shipped or the drawback copy. So depending on what category of shipping bill you have filed, If it is drawback shipping bill, you will get the drawback copy of the shipping bill. And the port trust copy which i have already discuss with you of the shipping bill and the export application or the dock Challan in the case of transport by road. And export certificate, in case the exporting of some goods are restricted, in which case the export certificate would be required for the compliance with the local government.

So these are all regulatory documents. Many of these documents we have discussed in very much detail, but this is just the summary. And The post shipment documents, as they're called. The shipment advice which I had already discussed, which is to be sent to the buyer as soon as the goods are loaded on the ship. Non-negotiable copies of the bill of lading, which has to be sent along with the shipment advice.

The commercial invoice copy also and the packing list. So these are the very important attachments with the shipment advice, which has to be sent immediately after the goods have been loaded on the ship and the negotiation documents, which have to be filed to the bank. The documents, which are required by the bank and the LC. So commercial invoice, bill of exchange, First and second original.

It is also called the bill of sight. And the GR form, shipping bill, certified copies. EC copy for bank purpose. Full set clean on board bill of lading in the original. All negotiable as well as the non-negotiable copies have to be submitted to the bank. Export order, if applicable. If contract is there then a copy of that. The packing list, the insurance policy, if it is applicable, consular and customs invoice, that is the invoice certified by the customs also, if it is applicable. And the letter of credit copy in original.

These have to be submitted to the bank and for the incentive claim purpose, for example, for GST/ Excise purposes, duplicate certified copies of ARE1 and ARE2 for the excise claim, which actually in India is now not really required, except for very few items where excise is applicable. If excise is applicable, then generally under bond, you will be requiring this ARE1 and ARE2 for the exemption from the excise duty through bond or for claiming the excise refund. You can use these documents. The commercial invoice and shipping bill for the GST purpose is required.

The certified copy of the customs of the shipping bill and the non-negotiable copy of the bill of lading that is the transport document. So these are required for the GST refund, or for the excise refund. And for duty drawback claim you would required drawback claim Performa, certified copy of the commercial invoice, non-negotiable copy of the Bill of Lading, certified copy of the shipping Bill and the RCMC that is registration cum Membership Certificate of the respective EPC and the BRC or eBRC from the bank, confirming that the FX has been received.

So these are the documents, many of which we have discussed in very much detail, and this was the summary of these documents.

So, friends, it is also important to know which are the parties who require different types of documents, which we have discussed. So as a reflection of all these documents, many of the documents were required by the buyer. For example, the commercial invoice, the packing list and the quality certificate, or the freight certificate, or the insurance certificate or the certificate of origin, because certificate of origin is very, very important because It saves money for the buyer because landed cost becomes cheaper because of certificate of origin of certain special type certificate of origin, ordinary certificate of origin is not very significant for the buyer, but it is required by the customs, certificate of origin, even if it is not for concessional duty or the free imports COO is required by the customs.

So buyer will ask for it, the buyer's bank that is the issuing bank. Some documents they require. Buyer's country, local government or the customs or the border control. They would be asking for certain documents, as I shared you about the certificate of free sale. So such kind of documents are required. Phytosanitary certificate which is required by the customs and the seller's country customs. That means the home country of the exporter, border control, they would be requiring certain documents or the local governments, they will be requiring certain documents.

Shipping company requires certain documents. Even the freight forwarder and C and F agent require some documents like shippers letter of instruction, which I had just mentioned. Airlines or the transport company. They would be requiring certain documents, which we have mentioned. Buyer's country, Local government would require certain documents.

Seller's Country, Local government will require certain documents. So friends, what I was trying to explain to you that there are many, many entities that require different types of documents which we have discussed, and that is the reason there is a whole set of very long list of documents, export documents which are required, and it is very, very difficult to cover all the documents in this type of course.

So we have discussed certain very, very important and popular documents in this particular section.

So friends in this example of Messrs Malhotra Exports who signed the export agreement with the St. Lauren of France. And this document, which is signed by Malhotra Exports, is the sales contract. This is the first document where it starts. Then the pre contract documents in this case before the sales contract was signed, were the letter of inquiry, which is sent by the buyer to the exporter of that, is Malhotra Exports.

And on the basis of which the exporter that is Malhotra Exports sent a Proforma Invoice, which is basically a quotation. So that is the document which is sent by Malhotra Exports and the post contract document that is after the sales contract had been signed, The LC opening instruction document was created by the exporter. That is, Malhotra Exports.

And based on which the final LC opening instructions were created by the importer that is Saint Lauren to AXA Banque. So this refers to the example, which I have alredy shared actually in this course. So in continuation to the same example, So I'm explaining you in this example that what all documents were created or generated. So based on the final LC instructions which is given by the importer that is the Saint Lauren Company of France to the French bank that is AXA Banque. The bank, which is the issuing bank, issues the letter of credit.

So this is the new document which is generated by the bank, and the same is advised by the advising bank in India to Malhotra Exports in Mumbai. And once the due diligence has been done by the Malhotra Exports of the letter of credit issued by the AXA Banque, the exporter that is Malhotra Exports generates a document which is called a LC acceptance letter, which we have discussed about and after the acceptance exporter ships the goods, and generated the LC documents, what are the documents, these are the documents which are required by the buyer. Which are the documents? The commercial invoice, packing list, Certificate of Origin, Quality Certificate. Freight Certificate. Insurance Policy, Phytosanitary Certificate. Transport document.

In this case, bill of lading because the goods were sent by sea, by ship and in this particular case, Azo Dyes free certificate. Because the European Union requires that any fashion garment or any clothing which is imported in Europe should be free of Azo Dyes which are harmful for the humans. And in the same process. Another document, which is called the Bank Draft, which we have discussed already, which includes the payment instructions, is generated by the exporter to be given to the negotiating bank along with the covering letter.

So these two documents are generated, then generation of the documents for the freight forwarder, which is appointed by the exporter. That is Malhotra Exports and the documents which are generated are the shippers' letter of instruction or the authorization letter. So it's a kind of power of attorney, so that the freight forwarder can move the goods. Then the document, which is generated by the exporter, for the local purposes, i.e. dealing with the Indian customs is the export declaration for this particular example.

And the shipping bill, which is actually electronic copy, and is same. But the shipping bill copies of the bank, the central bank and the export promotion incentives copy and refund claim copies. So these copies are generated, which are actually same as the export declaration, and the shipping advice is also generated by the exporter for Saint-Lauren, along with the set of non-negotiable LC and transport documents, to be sent after the shipment has been effected by the exporter.

So here is a take off animated video presentation to help you under stand some of the most important exports documents, so called LC documents.

So, friends, in this section, we discuss different documents, several documents which are generated by different parties required by buyers. And many other parties. So the conclusion from this section is that the international transactions require a very large number of documents. So whatever the documents which we discussed, they are not the complete document, they are not the complete set of documents.

As I mentioned in this particular example, last example that Azo Dyes free certificate has to be generated. So in different types of transactions, different types of orders, export orders and the requirements, there may be the requirements of some documents, which we have not discussed in this section, but there are a very large number of documents which are required and the common ones we have already discussed. Then we also learned that different intermediaries, entities are involved in exports transaction, and they require different types of documents for the different purposes, to play their role.

They need those documents because without documents, it is very difficult to really perform the role. It is not possible. So in order to play the role, the authenticity of the transactions are proved through documents. That's why every party require some kind of document. And also, we learned that the local regulations of both the exporting country as well as the importing country plays a very, very important role.

So the regulations in the home country and the host country, they have to be understood very well by the exporters.

Answer the one that is best

So, friends, welcome back to the course. In this section, let us try to generate the typical export shipping documents using a software for our example of Malhotra Exports, exporting fashion garments to France. So that example we will take up.

So our objective of this section would be to understand step by step generation of the export documents using any software. So any kind of software can be used. So we will take up the one of the software to generate these documents. And I will also explain to you what information has to be filled? Where? in this set of documents.

So these things we will be learning in this section. So let us start.

Taking our example of Export of Fashion Garments by Malhotra exports to France, let us now use a software to generate the most common export documents, using the same data all other export documents can be also generated.

So in our example, I will just review the example which we have been using this example in this course at several places that Malhotra Export, which is the exporter based in Mumbai, gets an order from Saint Lauren of France for the export of high fashion garments, ladies garments.

These are two pieces set of the garment and the business is of approximately 55,000 euro and paid by the letter of credit opened by the issuing bank of the importer, that is AXA Banque, Paris and advised through the Exporter's Bank, which is International Bank of India, Mumbai.

Now payment method, I had just mentioned to you that it is a confirmed letter of credit. So this particular set of documents will be accordingly created as per the requirement of the letter of credit. The last date of the delivery, which the buyer has suggested is 15th June 2022.

But for our documents we will keep it 28th May, 2022 just to be on the safe side. So 28th May, we will keep as our delivery date, so that there are no delays and everything is smooth. And the partial shipment is not allowed in this particular order. Trans shipment also is not allowed.

So, friends, the first thing what the exporter does that as it receives the letter of inquiry, based on that, the exporter, that is Malhotra Exports, creates a Proforma Invoice. Proforma Invoice also serves as the quotation, so it's like a quotation which has got the very basic details about what is expected out of this order by the exporter.

So he makes this Proforma Invoice, where the seller's name is there with the contact person detail. The buyer's name and address is there, the contact person detail is also there. Then the invoice number, it write. The issue date, that is 26th Feb, 2022. The buyer's reference number- LOI, that is the letter of inquiry. It can be any number just for the purposes of linkage, it is LOI 24 Feb. Due date of the Proforma Invoice, which means the quotation is valid till 25th March 2022 and delivery date for the purpose has been mentioned as 28th May 2022, but as it emerges later that the buyer is willing to give 15 June.

But for the safe side, the exporter would like to have the delivery by 28th May, which is suggested by the exporter and the method of dispatch would be by sea from Mumbai Port.

Ex Mumbai and this quantity, which is as per the letter of inquiry, can be fitted into one full container load and the port of Discharge will be Paris, France. The method of payment, which is demanded by the exporter, is confirmed irrevocable LC. And then the buyer writes the product code and the description of the goods as per the letter of inquiry. Ladies skirts and blouse set. 100 percent cotton, assorted adult sizes, assorted color themes, each 2 pc set. And the total quantity is 3,500. Unit type is set and the prices is 15 Euro. so total amount is euro 52,500.

Additionally, the special packing charges are there 2,500. So total becomes euro 55,000 and the additional information is mentioned here. The expected delivery date is 15 June 2022, but the buyer wants to insist on 28th May. So bank details are mentioned here, the LC from first class bank is required.

First class international bank is desired, advised through the nominated bank of the exporter that is international Bank of India, Mumbai, Main Branch. So this is the first document which is based on the letter of inquiry and which is generated by the exporter.

Now, based on the Proforma Invoice by Malhotra Exports, the buyer negotiates on things to make the details of the contract that is to be signed between the two parties. More firm with more details and the fine prints discussed between the exporter and the importer. And based on that, the exporter creates a sales contract which describes all the discussion, which is held between the exporter and the importer.

So this sales contract is like this. So in this sales contract, the seller's name is there. Buyer's name is there. Very similar to what was there in the Proforma Invoice. So instead of 1 contact person, there are 2 contact persons, and the product number is also given there. And the invoice number, which will be used later on in the main commercial invoice, is given here.

The date is given there and delivery date is kept as 28th May 2022. But orally assured, as well as in the email the buyer has assured that it can be extended for further few days till 15th June. And the method of dispatch is sea. Full container load shipment is there and the port of loading is given there. Port of discharge is given there. And terms of the payment is given there, which is confirmed LC. So it is very similar to what was there in the Proforma invoice.

So now more detail is given there. The product code, categories are given there of different sizes and colors, so same items are given, mentioned here. And in this sales contract the prices are also mentioned there and the total break up of different categories is given there. But the total amount with the special packing charges comes to the same, i.e. 55000 euro. And the conditions which were discussed in between, like a partial shipment not allowed, trans shipment not allowed. Documents required- clean onboard Straight Ocean bill of lading In original, three copies. Phytosanitary certificate, SGS inspection certificate, GSP Certificate of Origin.

Other documents as per LC. Which will be required by the bank or the bank' requirement and the latest date of shipment has been mentioned as 28th May 2022. Bank details, LC should be from the first class international bank advised through International Bank of India that is the nominated Bank of the exporter, Mumbai, Main branch and the details of the exporter is given here with signature.

So it has been generated by the exporter.

Now, this sales contract has been proposed and it has to be ratified by St. Lauren. That is the importer. And based on this, St Lauren will be issuing a purchase order. So the St. Lauren issues the purchase order, which looks like this. So as you can see here, this is the purchase order, which is issued by the importer, which has the details of the importer first, as against the sales contract, which was from the exporter, now it is from the importer to the exporter, Malhotra Exports. And the other details are given there, PO number has been kept as the Proforma Invoice reference.

No. Date, delivery date, all other things are just copied from the sales contract. There are no changes. And even the code number and the description and the quantity, price, everything is just replicated, from the sales contract and there is no change. It has been accepted by the importer. That is the buyer, with the special packing charges of 2500 euro, total 55000 euro and all the conditions are absolutely, simply the same, copied from the sales contract as was sent by the exporter.

So Importer endorses this purchase order and issues this purchase order and send a copy to Malhotra Exports.

So based on this purchase order Malhotra Exports creates the LC opening instructions to the importer on the basis of which the importer that is St. Lauren, creates the final LC opening instructions to give to AXA Banque and AXA Banque issues the LC.

And once the LC has been accepted, the exporter prepares the goods for shipping and creates a master file to be able to create all the documents. So this is the master file which it creates. So he writes down everything, invoice number, INCOTERMS as FOB, place, buyer's reference. Everything he writes and the shipper details, exporter's details, consignee details, buyer's details, all these things are mentioned here in the master file document.

Forwarding agent's name is also mentioned here in the master document and the product details, including the code numbers, description of each category. HS code, quantity, unit type, price, amount of each category of items and the shipping details by sea, FCL Country of Origin - India, country of final destination - France. Port of loading- Mumbai. Port of discharge, Final destination. Contains hazardous goods?

No, it doesn't contain any hazardous goods. Vessel name is there. Voyage no. is there, freight charges on 'collect' basis. So the transport document will be on collect basis. 'To Collect' and document instructions for the transport documents is to be received as original. So all these details he fills up in the master document along with the package details, so in the package details code number is given there, category is given there. For each category, there are 700 pieces and hundred cartons are in one pallet. So there are one, two, three, four, five pallets with 100 cartons. Each carton contains 7 pieces. So 700 quantity in 100 cartons, 7 sets of garment in one carton. And the net weight of the carton that is the package is 9.8 kg and the gross weight is 12.6 kg and the volume of one carton is 0.05 cubic metre. So based on this he prepares this list.

So here the total consignment details are there and the container details are given there. Container numner, contain seal no., description of the goods. Number of packages, which are 100 cartons of each category. So 500. The total net weight is 980 and the total gross rate is 1260 and the cubic meter volume, total volume is 25 cubic meter, which is very comfortable for one container load, one 20' container.

So all these details are given here in the master document. And the consignment total is also mentioned here. One container. So the exporter fills all this data into the master document and with this data, master data, it generates all the documents, starting with the commercial invoice. So Iwill just show you how the commercial invoice looks like. Let us see the commercial invoice. So the commercial invoice which is created using this data.

Looks like this. So this is the commercial invoice, as you can see here, which very much looks, very similar to the Proforma invoice and the details about the exporter

Consignee, the buyer is given there. You can leave this blank also because consignee and buyer is same. So you can leave it blank also and all these details invoice no, ref no., buyer's reference, bill of lading no.

All these are mentioned here, the copy of this commercial invoice you can download from the resource section of this lecture, and you can see how it looks like. And the method dispatch - sea. Type of shipment- FCL. The vessel name, voyage no, country of origin- India, country of final destination - France, Method of payment - Confirmed LC Port of discharge Paris. Final destination- Paris, France. The policy detail are still not there because it's a FOB contract and the policy, the Marine Cover policy has to be obtained by the importer that is St. Lauren. So these details are not given there. The letter of credit no. is given there which is available. Then the product description is exactly same as the PO with the same codes and same description, HS code the same. HS code is ITC HS code. It is required for the purpose of both the customs, the home country custom, as well as the host country custom.

So unit quantity is given there- 700 sets. Unit Type is set. Price is Euro 15 per set and total amount of each category is 10,500. So total 5 categories along with the special packing charges, which is 2500. So total price of the invoice is 55000 euro. And incoterms 2020 is used here and the actual chosen INCOTERM is FOB Mumbai. Currency is Euro. Signatory company that is Malhotra Exports. Bank details are also given there, exactly as per what was given in the sales contract and PO. So this has been automatically generated Commercial Invoice using the master data.

Now, let us look at the Packing List. How it looks like? Which is also based on the master data. So since in this case, the details are very simple, to understand, we can go for a simple Packing list, which is not so much detailed, because the shipment boxes types are same. Pallets are five. So everything is very, very simple. So we can go for the simple packing list. In special cases, you may require some detailed packing list.

But in this case, it is not required. You can download the packing list sample from the resource section of this lecture so you can get it. So packing list the initial details are exactly same as in the invoice. The exporter's name, consignee name, buyer's name, Export Invoice Number, bill of lading number, which will be provided by the freight forwarder.

The reference number, buyer's ref no. The method of Dispatch, type of shipment. Vessel name, voyage name, port of loading, port of the discharge, port of Final Destination, the place of final destination, Country-of-origin - India. Country of final destination - France and packing information is given there. Every box, Every carton has the marking as Jai Hind And these are cardboard cartons in five pallets. So 100 cartons in each pallet and each pallet volume is five cu meter, which is mentioned here in the description of the Packing List.

So in the packing list, it is different from the commercial invoice not in the product code, it is same. Description of goods is the same, quantity is same, kind of packages is mentioned here the cardboard cartons 100 pcs. You can write here cartons, so this can be corrected here. You can put cartons, cartons and 100, Net Weight 980, 980 and the gross weight is 1260 kg. Cubic meter is 5. Each pallet containing the 100 cartons, five cu m. So 5 pallets will be put in the container.

So price details are not given in the packing list. All other details are given here and packing instruction. 'Please pack appropriately'. Simple packing is there. So this again has been generated by the exporter. So this is how the packing list looks like.

Let us look at the other documents. Let us look at the declaration of origin, which is made by the exporter to obtain these certifcate of origin. So let us look at the declaration of the origin, which is submitted to the Chamber of Commerce, based on which the Chamber of Commerce, Local Chamber of Commerce for the GSP certificate of origin, will issue the certificate of origin.

So here the details are very similar on the top, as in the commercial invoice. Simply copied from there Method of dispatch, type of shipment. All these are very similar. There is nothing new in this. There is a space to write additional information here. The exporter writes that the garments are Azo Dyes Free, because these dyes, Azo dyes are not allowed in European countries because they are harmful for the human skin.

So the garment should be Azo dyes free. So this has been declared here. And the other details are given here, Marks and numbers - Jai Hind., Kind and number of packages. So cardboard cartons – 500 pcs.

So total 500 cartons are there. Ladies garments 2 pcs set. is mentioned here. Tariff code is mentioned there, the gross weight is mentioned there and the declaration. Very important is the declaration by the exporter in this, that which writes that I understand being duly authorized by the consignor and having made the necessary inquiries, hereby certify that, based on the rules of origin of the country of destination, all the goods listed originate in the country and the place of a designated.

I further declare that I will furnish to the customs authorities of the importing, or their nominee for inspection at any time, such as evidence as may be required for the purpose of verifying this entry so the goods were produced, manufactured, at India. Place and date of issue is given there, so this is a declaration by the that is the Malhotra Exports.

So based on this declaration only, the Chamber of Commerce can issue the certificate of origin and how this certificate of origin looks like? I will just show you the certificate of Origin. Looks like this. So this is the certificate of origin. As you can see here. So it is simply copied from the declaration itself. Experter's name. Consignee's name. All other details are simply copied from the declaration of the exporter.

In fact, this document also can be generated by the exporter, but it has to be signed by the Chamber of Commerce, local chamber of commerce or the authority which issues the GSP certificate. So since the requirements of the GSP certificate, so the format will be a little different for GSP, but more or less it will look like this only. So this is just a sample to show you how the certificate of origin looks like. Marks and numbers, kind of packages, simply copied from the declaration. Description also copied from the declaration. Or you can write the complete description as given in the letter of credit and the sales contract. It is always better. Just for the purposes of simplification. The whole details are not given here, but you can write Tariff code, gross weight, you can write here and this certificate of origin copy also you can download from the resource section for your review. And here the endorsement of the Chamber of Commerce is there, which mentions that the undersigned certifies on the basis of the information provided by the exporter that to the best of its knowledge and belief, the goods are of designated origin, production or manufacture. So place and date of issue is given here. The International Chamber of Commerce. The contact person name is given there and the signature of the Chamber of Commerce is there. Then declaration by the exporter is again replicated exactly same from the exporter's declaration document, which I just showed you simply copied from there. And this becomes the certificate of origin. The format may be different from Chamber of Commerce to chamber of Commerce, but the details will be similar like this.

Now, the exporter issues the shippers letter of instruction to the freight forwarder, so. So this shipper's letter of instruction looks like this, as you can see here, the shipper's name is there. consignee name is there. Forwarding agent's name is there. XYZ 3PL Private Limited and ref no, buyer's No and export declaration No. Export declaration no is the customs export declaration no. Shipping bill filing, which is done by the freight forwarder.

So he will provide it this particular document is required by the forwarding agent in order to work on behalf of the Exporter, so it is possible that the export declaration no may not be available at the time of giving this shipper's letter of instructions, but later on it can be added and the forwarding agent details are given there. notified party is not here because consignee and buyer is same and method of dispatch again is copied from the invoice that is the sea, FCL.

The vessel name is given there. Place of the receipt of the goods by the freight forwarder is JNPT that is Jawahar Lal Nehru Port Trust, Mumbai. Port of Loading is Mumbai. Date of departure is 28th May 2022 Now this date may be exactly same or it may be different, depending on the freight forwarder's fixing of the vessel, which vessel company he fixes.

So if the details are given there you have mentioned, if it is not there, it can be added later. So port of the discharge is given there, final destination is given there, then the bill of lading, the transport document has to be on COLLECT basis. This fact this has been mentioned Document instruction is Originals. The country of a final destination and country of origin is given there. INCOTERM used is FOB, Mumbai. Declared value is 55,000 euro and all other details are simply copied from the invoice.

Kind and No of packages are given there, description of igoods is exactly same. Gross weight has been copied already 1260 kg. Each pallet of five cubic meter. This we have already put in the master document and The fact that this consignment Contains hazardous/ dangerous goods - NO. So it is NO. So it is not hazardous. And is this resentment against the LC- Say Yes. And special instructions- please pack appropriately in export worthy sea worthy packing. And the issuing the issuing authority is the exporter that is Malhotra Exports which by this signing this shipper's letter of instruction, It provides limited power of attorney to the freight forwarder to enable him to move the goods on behalf of the exporter. So this is how the shipper's letter of instructions look like.

Now, the shipping instructions will be created by the freight forwarder or the exporter as the case may be, which would be very, very similar. So we can see this shipping instruction, which has to be actually given to the shipping line. So shipping instruction document will be very similar. As you can see here, it can be created by the freight forwarder also, or it may be in the Signature of the exporter also.

So it is almost the same as you can see here. Shipping instructions, exporter, consignee, ref no simply copied from the invoice. carrier is mentioned here Maersk Lines. The address is given there and the contact person name is given there and in this all other details are copied like method of dispatch, type of shipment. Vessel name, Voyage no, Place of receipt of the goods, port of loading, date of departure, port of discharge, final destination.

All these things are mentioned here. Country of origin of the goods, country of final destination. freight charges on Collect Basis. Document Instructions - Original. Same copied from the shipper's letter of instruction absolutely same. So out here the details which are be put here, is not possible in one page, so it can be put in the next page also. So that is possible. It is mentioned here, same details which were there in the shipper's letter of instructions and all other details are same.

The total weight is given there. Total cu meter is given there and the hazardous status is NO. LC status - Yes. Yes, all special instructions same, like in the shipper's letter of instructions, everything is same. So you can see here.

So this is the shipping instructions, which is going to the shipping company, which has been created automatically. Then the other things which are generated by the software is the bill of lading. So let's look at the bill of lading. Which has to be actually signed by the shipping line. And it may have a different format, a little bit different format, with the logo of the shipping line, but it will look very similar to this.

So this copy can be used by the shipping line to fill the details on the original bill of lading, which will be on the document, original document of the shipping line. It will look like this.

So shipper's name, consignee's name. all same details from the Commercial Invoice. Carrier name will be mentioned here. Shipper's reference number, bill lading number will be here because this is bill of lading and the other details, as mentioned here. Pre carriage by truck. This will be mentioned here that the goods are coming to the port by truck. Place is JNPT, Jawaharlal Nehru Port Trust, Mumbai. Additional information is given there that these are 5 pallets, each containing 100 cartons. Each pallet is 5 cu m. And the vessel name, voyage number is mentioned here. Port of Loading is mentioned port of discharge is mentioned, Place of delivery Paris, Final Destination is Paris, France, and details are simply copied from the commercial invoice and the packing list. So gross weight and net weight from the packing list cu m are copied from the packing list and all other details are as it is.

So in this software, there is some glitch. Because of this, this information is coming a little bit garbled so we can look at the actual document. What information is there? I'll just show you. So if we press edit button here in the software, you will see and get the correct copy. Bill of lading details are given here. So out here details were like this. The container number is given there, the seal, the custom seal number is there.

After the Customs have sealed and the size and type of the container is given their 20 ft container, steel dry cargo FCL, Total weight given there. cubic meter, which is visible in the bill of lading As I has just showed you. And all other details are given here. Number of original Bill of lading three, Incoterms 2020 is used, FOB, and it is just one container , payable at Paris So the amount of the freight has to be payable at Paris. That why it is freight 'collect' and shipped on board date is 28th May, 2022. Place and date of issue is Mumbai. Date is given there and the signatory company name is given there, which is the shipping line Maersk Line and the contact person name and signature are there. So it may be just the format. The actual document will be original and these details will be replicated on the original bill of lading.

Then finally, last document, which the software will generate. Is the Bill of exchange or Bank draft So let us look at that document. So the Bank draft or the bill of exchange is given here. So this is generated by the software. Reference number from the commercial invoice is given there. Amount in figure at the top is given there, which is euro 55,000. B/L date That is bill of lading date is a given there. So there is some mistake, so it should be 28th May, actually.

So this has to be corrected. Place of issue is Mumbai, date of issue is given there and this particular bill of exchange Bank Draft is drawn at sight because there is no usance period, so it is at sight. Pay to the order of 'ourselves', which means because this bill of exchange has been generated by the party, that is the exporter who is the beneficiary and who is the drawer of the amount of the LC

So that's how he's writing 'ourselves'. The sum of the LC, the total amount in words has to be mentioned here. Drawn under the LC no so and so. So whatever is the date of the LC that has to be mentioned here and signed for and on behalf of the drawee, that is the AXA Banque So this signature will not be available at this stage because the bill of exchange will go there and it will be stamped and signed by the bank. So you can simply put the name of the bank, which is the drawee and the drawer that is the exporter i.e Malhotra Exports with all complete address and signature.

So this bill of exchange has to be created. The software create 2 copies, because it has to be given in 2 copies, original copies. So this is the bill of exchange. So friends, this is how in this example of ours, we generates all the shipping export documents. And I explained to you the column wise and field wise what details have to be filled up.

Some of the most important benefits of using export documentation software are:

• Consistent Data Management

• Saves time to Create Export Documents

• Data Accuracy

• Stay Abreast with Changing Export Norms

• Easy Monitoring

Choose the one that is best

Documentation plays an important role in Exports and Imports especially when consignments are under Letter of Credit basis. Improper documentation in exports and imports causes loss in business in all means and inconvenience with waste of time on rectification. Learn about common errors and mistakes done by exporters in export documentation and procedures.

Hi, there. So let us talk about the six common mistakes which are made by the exporters while doing export documentation. So in this particular video, my objective is to explain what are the common mistakes which are done in exports documentation? So one by one, we will discuss these common mistakes and what can be the consequences of such mistakes? So these things we are going to discuss in this video.

Friends, the biggest mistake, which is done by the exporters while creating export documents, is giving the wrong information knowingly or unknowingly. So information like contact details of the buyer especially and sometimes even of the exporters and wrong details of the packing, the markings on the packages or the number of packets, the net weight and gross weight, and some details about the identification of the packages.

So mistakes are possible and these are very, very common. And wrong information with regard to payment information. So what exactly are the payment terms? The dates, when we payment has to be made So in different documents, these kind of mistakes are very, very common. Then Friends, one of the major mistakes sometimes done by the exporters while making export document is to identify wrongly the classification of the goods.

So for customs purpose, the main classification is the ITC HS Code. For example, for Indian exporters, it is the Indian Trade Classifications Harmonised System Code, which has to be put on the documents, especially for the documents which are meant for the customs. On the invoice also, international trade classifications, harmonised system code has to be put. In the case of online filing of the export declaration, any error in this can be really very serious.

So even if it is by mistake, there are chances the customs may assume that you have done it intentionally so it can create the distrust between the exporter and the customs, and it may also be categorized as a fraud. So what happens? The consequences can be a delay in customs clearance. It can be fines. It can be some major penalties also. Financial loss will be there for the exporters. And in this wrong classifications, sometimes you land up in a situation when you fail to know if there were any restrictions were there for the export of particular goods and you actually was requiring an export license and because of the wrong classification, you failed to identify this requirement.

So these kind of problems are very, very common. So let us take one example. In this example, Messrs. Sparkle Exports got an order to supply cut diamonds from a buyer in Belgium. Now, the exporter writes in the export declaration, which is filed online to the Indian customs that the Indian trade classification HS Code for the item is a 71051000, which actually is for the natural diamonds. Instead of the correct one, which was supposed to be 71049010, which is actually for the Lab created diamond. Custom tests the goods, and it finds in the physical examination that these diamonds are not natural diamonds, although they are of high quality, but they are lab. created diamonds.

So the correct ITC HS Code was different than what was written by the exporter. So in such a case, what happens is that the customs do not reject the shipment because it was not clear from the LC documents and export contract, which was submitted whether the ordered goods were supplied out of natural diamonds or not, so it was not clear. Nevertheless, customs levied heavy fines to the exporter for mis-declaration because the actual goods were not natural diamonds, they were the lab created diamonds.

So in this case, the documents did not mention about the requirement of the buyer as natural diamond or not. So this party managed with some fines. But if the requirement of the buyer would have been for the natural diamond, then it would have come in the category of fraud and it could have led to very serious consequences. Now, another very common mistake, which is done by exporters while creating export documents, is to write the wrong value.

So when you write the wrong value in the export documentation, the general inference of the evaluating authority, assessing authority is that you're either doing undervaluation or you are doing overvaluation. So errors in value does not match with the LC documents or the database, which is maintained by the customs about the classification provided by you for the product. For such classifications, the customs have the international database of pricing, so if the mismatch is huge, the customs will further investigate and try to find out the actual value of the consignment.

And it may be declared as under valuation or over valuation, and it may be akin to be declared as committing the fraud, in case there is a major gap. And the consequences, of course, can be the loss of reputation and financial penalties. So these kind of mistakes are very, very common. So these kind of mistakes have to be avoided at all cost. Now, another very common mistake done by the exporters while creating export documents is giving the wrong product description.

So, the product description in the documents should match with the LC description and the export contract or whatever purchase order you have from the buyer, which obviously will be very much matching with the LC description, so it should match with that. The failure to do that could lead to delay in shipments, problems in customs clearance or delay in the payments by the issuing bank, against LC. Another very common mistake, which is done by exporters while creating export documents is to wrongly and inappropriately filling the dangerous goods form.

Because the dangerous goods form has to be filled by a responsible, knowledgeable person who has the knowledge about the product, its consequences if it is in the dangerous category and how to pack it, what are the markings which are required? So a professional person who is in this field has to be involved. So smaller exporters generally make this mistake that they try to do it themselves.

It is always better to contact a professional agency for filling out the dangerous goods form. And accordingly, the goods should be packed and they should be fully protected. Right labeling has to be done for such boxes. The very professional work is required for this. So mislabeling of the goods can create havoc and it can lead to the delay in shipments or the stoppage of the shipments. And it can actually lead to a lot of financial losses.

Now, another very common mistake, which is done by the exporters, especially when presenting the documents to the bank for the payment, is to provide the wrong instructions in the covering letter to the bank. So instructions to the negotiating bank either lacks clarity or it is wrong information which spills over to the documents and the covering letter and the instructions sent by the negotiating bank to the issuing bank. So it can also lead to the wrong interpretation by both the banks.

If it is not very clear, clarity is not there or it is ambiguous, instruction is not properly made. So sometimes the exporters assume that the instructions are already given there and are inbuilt in the Bank Draft or any other main LC document.

So that's a myth, because generally banks do not go into the bank draft detail, the conditions therein or in the LC documents. Normally they don't go to that level, so they mostly rely on covering letter. So in this example, Messrs. Malhotra Exports gets export order of fashion garments to export Euro 55,000 worth of fashion garments to a French party on DA payment basis. So Malhotra exports prepares and dispatches goods by sea to the buyer in France and sends the original documents through negotiating bank in India to the French bank to hand over the documents to the French buyer on DA terms.

Plus, he wants the co-acceptance by the French bank, which means the documents to be given to the party, if the French bank that is the the bank nominated by the buyer, accepts the responsibility of nonpayment and is willing to pay in the case of default by the buyer. Now Malhotra exports writes the co- acceptance condition in the Bank draft, but not on the covering letter, and gives these documents along with the covering letter to the negotiating bank.

Now negotiating bank also fails to read the condition that is the co-acceptance condition on the bank draft and sends the same without alerting the French bank on the condition imposed by the exporter or requested by the exporter. Now, the French bank also fails to see the condition, which is given in the bank draft, while handing over the documents to the buyer on acceptance that is on the DA terms. So after the DA period, that is the acceptance period is over, money is not paid by the buyer, as by that time the French party is bankrupt. Now there at that point, French bank also refuses payment to Messrs. Malhotra exports. citing lack of explicit instructions of co-acceptance condition and not taking in cognizance the Co- acceptance condition, which was not clearly indicated by the negotiating bank to the bank nominated by the buyer in France.

So Friends in this case, since the clarity was not there in the covering letter and as per UCP 600, the banks are not obliged to go into the details given in the main documents. And generally they are advised to rely on the explicit instructions in the covering letter, which was missing, and M/s. Malhotra Exports felt that since Bank Draft contains that condition, so there was no need to write this very important condition in the covering letter.

And the result was that the French bank handed over the documents without even realizing that this condition has been requested by the exporter and ultimately the party claimed the goods but did not pay, And by that time, it was supposed to pay, the company was already bankrupt. So there was a huge financial loss for Malhotra exports in this case.

Now Friends in this video, I will talk about seven common mistakes done by exporters in the export process. So the objective of this video is to understand what these common mistakes are done by exporters in export procedures. And what can be the consequences of such mistakes? One of the very important and most commonly done mistakes, especially by the new entrants in the export business, is to not do the homework before soliciting any business.

So lack of preparation before soliciting export orders can lead to major problems, which sometimes may lead to early losses and the failure of the new company to survive. So the consequences of such mistakes can be that the exporter is maybe not able to execute the export order in the stipulated time.

There can be quality issues. There can be poor delivery, and the customer may feel frustrated with the exporter, it can also lead to financial losses. So to give you an example. In this example, Pashupati Exports, a new entrant in rice exports, received an export order for five containers of basmati rice from UAE on LC terms. After the receipt of the order, the client sent the artwork to print rice bags. The exporter realized that before doing that, he need to arrange for the food safety license, which he was not aware, of which he came to know only after getting the order.

And he also came to know from the C and F agent appointed later by the exporter that there are certain bank formalities that have to be done before being able to book the shipping space, which was to be done very fast because the time period required was not sufficient. Also for rice exports, the exporter had to arrange for LUT, the letter of undertaking for GST waiver and that has to be obtained, which would take a good amount of time, maybe one week, 10 days time, and time was a premium, at this stage. So further the miller of the rice is based around 600 kilometers from the head office of the exporter.

And a third-party inspection, which was to be done by SGS, required coordination of the exporter. And since the exporter was not having a good number of employees, he had to run around himself for this coordination. So this required a lot of time and the bag printing company had to be arranged near the Miller, and that was not done earlier. So this further required a good amount of time. So overall buyer's inquiries and monitoring indicated that the buyer was already getting panicky as the progress of the work was delayed and the buyer had his own commitments with his own forward clients in UAE, with whom the buyer was supplying these rice bags.

So finally, the delay was so much that the exporter had to ask for an extension of the LC validity from the buyer, which the buyer refused, and the exporter had already spent a lot of money on different aspects of the order. And there was a big financial loss for the exporter. Friends, another very common mistake done by the exporters in a typical export procedure is the failure to screen the buyer or the country, whether the due diligence has been done properly. So such failures are very very common. So lack of sources or methods of getting the data on the buyer and about the country, the right information is not there with the exporter or he's not yet prepared to find such information.

So these things lead to the failure of the exporter to screen the buyer and the country. And the lack of awareness of the local and overseas regulations governing a product export or destination, so these kind of things lead to such failures. So, another very common mistake done by the exporters in this regard is failure to negotiate the right Incoterms, international commercial terms. So the reason for this kind of situation may be the lack of bargaining power or poor negotiation by the exporter.

So generally the most balanced INCOTERM is the FOB, free on board, and sometimes to get the business, the exporter agrees to the D terms, without realizing the additional costs, which may be involved in taking the goods to the overseas market, getting it unloaded in the destination market, getting it cleared from the customs and moving from the port to the party and paying the import duties. So the total cost incidence of such kind of incoterms can be very, very high.

And because of the lack of bargaining power, the party is not able to even increase the price to that extent. And also, the failure to negotiate the right INCOTERMS can also be the result of the lack of knowledge about all the different INCOTERMS, the latest ones, and how these work. Another common mistake done by the exporter is the failure to secure the correct LC terms. Now LC is a very complicated banking process of documents and payments, so it can be in the form of the failure to secure the right payment terms itself.

So whether it is LC terms, whether it is DA terms, whether it is DP terms, or what kind of terms are there for the payment, the party may not be able to negotiate for different reasons. So this has to be avoided, especially if you're dealing with the buyer for the first time. And even if, it is able to secure LC terms, the party may be unable to secure the correct LC terms, which I'm talking about. And failure to identify common problems, with the LC conditions, so when LC is opened and the situation comes when the beneficiary that is the exporter has to accept or reject the letter of credit.

It may fail to identify the inbuilt or inherent common problems, prohibitive problems which can prohibit the exporter to be able to execute the export order. So the failure is the knowledge of the LC conditions and the right advice from the local bank. In the absence of such advice, problems can be there of this type, and sometimes it is also the failure to choose the right currency of the LC.

So generally, in order to protect the FX fluctuation risk, it is always advised to secure the LC currency as the home country currency of the exporter so that the exporter is protected from the foreign exchange fluctuation risk. But many times it is very, very difficult. And generally what happens is that the exporter and the importer agree on a third country's hard currency. Then Friends, another common mistake, or the common failure of the exporter in the process is the failure to book the shipping space in a timely manner because the shipping space timing has to be matched with the LC's latest date of getting the Bill of Lading which is the transport document. So this kind of failure can lead to delays in shipments or delays in payments by the banks.

Loss of future business, and cost of the transport, which may get increased due to the failure to book the shipping space in a timely manner and well in advance. So if that is not happening, the cost of transport is likely to increase drastically. Then very commonly, if the exporter is not experienced enough and for various reasons, he's picking the wrong service provider so the service provider can be the local bank, or it can be the freight forwarder, selected by the exporter, shipping lines if it has not been nominated by the buyer, which actually has to be avoided. Generally, the shipping line has to be selected by the exporter only, and it should be independent of the control of the buyer.

So failure to understand the consequences of the control of buyers on the intermediaries can also lead to major problems and picking of the wrong service providers or the inter modal transport providers. So any of these service providers, if picked up wrongly or some party which is influenced by the buyer, is picked up by the exporter, It can lead to major problems, or it can sometimes also lead to the buyer's fraud.

So in this example, Messrs. Ricela export from Raipur India received an order from Singapore to supply six containers of basmati rice on LC terms. So Ricela exports appointed a new CNF agent to handle the shipment of export clearance and to arrange the sea shipment of the consignment. Now, the company arranged very good quality of basmati rice and packed it as per the requirement of the buyer well in time and handed over the shipment to the CNF agent. Now the goods left Vizag port for Singapore. The exporter received the payment also against the letter of credit issued by the buyer's bank.

But on reaching Singapore goods received by the buyer, were found to be damaged due to the water seepage during the sea journey, since containers were damaged. Now the buyer asked for compensation, failing which it refused to deal with the exporter in the future. Now, it was the failure of the CNF agent to get good quality, proper containers for the rice bags because rice bags are normally jute bags or such bags where the seepage of any water can damage the product.

And that is what exactly happened. So it was a new CNF agent, and the exporter selected this CNF agent probably for saving some cost or in a routine manner. And the service provider chosen was not correct. It was not experienced enough and it could not provide good services. And ultimately it was the loss of the exporter, loss of the future business, loss of the reputation.

Then friends, finally, one of the major mistakes which are done by the exporters in a typical export process is the failure to do sufficient risk management of the shipment. So risk management of risks like transportation risks. So not having this sufficient insurance cover or the commercial risk, not having the ECGC cover if required, depending on the situation, and the failure to protect itself from the foreign exchange fluctuation risk, for example, by negotiating for own currency contracts or hedging through banks or swap contracts. So any failure to protect the shipment from such risk of foreign exchange fluctuation can also lead to major losses. Or overall inadequate protection of the different processes which are involved in the export process.

So these are the common failures of the exporters and seven major mistakes which are done by the exporters in typical export transactions.

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Now friends in this new section, which focuses on the foreign trade policy and the export incentives in India. We are going to discuss some very important role of the foreign policy we are talking about foreign trade policy of India, and how it helps the exporters to carry out their export operations export business smoothly and profitably.

And what are the different export incentives schemes which are available in India for the exporters? So the objectives of this section are what is the role of foreign policy in export promotion and in the growth of exports from India? So you will understand you will be able to appreciate the role of foreign policy in this section.

And other objective of this section is to understand what types of incentives are available currently in India and what are the benefits of these incentives. What kind of benefits are there for the exporters? And who implements these different incentives? How do they work and why are they important in the export business?

So these things we'll be discussing in this section?

The current five year Foreign Trade Policy, 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in keeping with the “Make in India” vision of the Prime Minister of India.

So Friends, as you know that India is a very large country and any government which comes to rule this large, very big country, they have a very big challenge to meet the expectations of ordinary Indians in terms of the economy, in terms of employment, in terms of the growth of the GDP and very importantly, competing with the big neighbors like China.

So at present, India is passing through a very difficult phase when it has to become strong both in terms of the economy, as well as in terms of a very strong power so that it can defend itself from the threats posed by many, many different quarters. So Friends, the country is looking at a target of becoming a five trillion dollar economy by 2025 and in order to become a five trillion dollar economy by 2025.

It is looking for one trillion dollar exports share in this total target. So without exports, it looks very, very difficult to achieve this target. And in any case, in order to earn money from outside India, export is the only answer. And this is the only way that India can actually become a strong member of this global village. So in order to do that, the Indian government is struggling to formulate a foreign trade policy, which includes the policies which are able to meet this target of 1 trillion dollar exports by 2025.

But it has been proved to be a very challenging task. So the reason of these challenges, which comes in the formulation of the FT policy are in terms of the difficulties posed by the requirements of the World Trade Organization, which does not allow all out incentives to be given to the exporters because that is akin to subsidizing the exports, which some of our neighboring countries had done in the past.

So the world order, world trade order requires that there are no subsidies. But the logical methods of the government intervention to improve the the export competitiveness of the goods in terms of the more efficient logistics, more efficient handling of the goods at the port, the very efficient manufacturing infrastructure, highly modern seaports, airports, seaports which allow very large ships to birth. So that the transportation costs can be reduced, Ocean Freight cost can be reduced drastically through things like mother ship. So these different directions, the foreign trade policy has to take in order to ensure that the provisions of the incentives and support which is given to the exporting community is in consonance with the requirement of the World Trade Organization.

And at the same time, it meets the expectations of the exporting community of India and the expectations of the ordinary citizen of the country. So this challenging task requires government of India to think in terms of providing the cash incentives support which cannot be given in the form of subsidy. But it can be given as the reimbursement for any cost enhancing taxes or the duties, import duties which the exporters might have given directly or indirectly to the government of India. Those can be reimbursed in a very, very logical method of reimbursement of such costs, which enhances the price of goods of exports from India. At the same time, the government of India provides the infrastructure, the supply side infrastructure in the foreign trade policy so that the export goods become competitive in the international market.

The demand side support is also provided so that the cost of distribution, The cost of penetrating the international markets. The marketing of the goods on the international platform become competitive, cheaper and smooth for the Indian exporters. So these supply side initiatives and demand side initiatives the government of India, provides in the foreign trade policies and expect that these become effective and they help in boosting the export of the country.

But in the past, many of these measures have not really given the expected results. So the result of that is that the current foreign trade policy, which came into effect in 2015 and it was a five year policy has still not been renewed, which was to be renewed in the year 2020. But it is expected to be renewed in 2022, effective from 1st April.

So this policy, the new policy, is taking time because of these kind of challenges. So Government of India, in compliance with the WTO requirements, the World Trade Organisation, which monitors the tariff and non tariff barriers across the world to make the international trade free and fair. So all the provisions of the foreign trade policy, which the Indian government has to formulate in the new policy, have to be directed towards the compliance with WTO, as well as the provisions which makes the export goods internationally competitive.

The right environment is provided to the manufacturing units and the facilities. The logistics. The transportation infrastructure is such that the cost of moving goods within the country and outside the country, either through by sea or by air, are competitive in line with the international costs of the most efficient supply chain. So these are the things which are covered in the formulation of these foreign trade policies.

So in the past, the government has provided many such provisions, but many of these provisions have been flagged by World Trade Organization and constantly the government of India is bringing innovative ways of making the Indian goods competitive in the international market. In the recent year, through the infrastructure initiatives like Bharat Mala or Sagar Mala and the large logistics parks, the government of India has spent already more than 80,000 crores and is on the way of investing more than 2.5 lakh crore in building the dedicated logistics infrastructure in the country to make the goods internationally competitive. And the results will be coming very, very soon.

So in this light, many schemes are already, in effect, and in this course, we will be discussing all these schemes.

In this animated video presentation highlights of India's foreign trade policy are explained in summary form. This is a good start to learn about the focus areas of FT policy of India.

So let us not talk about the different types of incentive schemes which are available to the exporters in India, and it makes a lot of sense to start with the duty drawback because this is one of the most important incentive scheme, which is very direct in nature and which is very significant also for the exporters.

So we will discuss about other incentive scheme also, but let us start with drawback. So objective of this lesson would be that what are the different incentive schemes which are available in India and what are the different types of incentives which are available for exports in India and how these schemes encourage exports?

So that is our idea of this chapter. So friends Let us first talk about the duty drawback scheme. What is duty drawback scheme? so. Duty drawback is the refund of the import duty paid on the inputs, which are used in the manufacture of the products for exports. So it's a post export refund of the import duty, which is in the form of the credit, duty credit, which is extended by the Customs Department in India. So exported goods may use either the entire amount of the imported goods or the partial amount, which means that it is not necessary that the goods which are imported has to be fully used for the export purpose.

But this drawback will be available only on that portion, which is actually used for the export purpose, and it is also available for the goods which are destroyed under a supervised authorized person. The Government Functionary Department. So if some goods for some reason have been destroyed for the safety reasons or for whatever, maybe the cause, the unused goods which are destroyed, the duty drawback can be claimed on that also. So the imported goods, which we are talking about, which would attract the drawback, should be clearly identifiable with the exported goods.

So it should be very clearly physically used for the goods which are being exported. So that should be very clear. There shouldn't be any dispute. Basically, this provision of the duty drawback comes from the Section 74 of the Indian Customs Act of 1962, which allows for the 98 percent refund of the import duty for the goods which are exported and they are exported within two years of the date of the import duty paid, not from the date of the actual import, when the duty has been that particular date and this two year can be extended in special circumstances with permission.

So if permission is granted, then this time can be extended by the Customs Department. And this refund, as I have just mentioned to you, is made in the form of the duty credit for the future use. to claim the duty exemption later. This is the duty drawback, direct duty drawback of the goods, which are identified and which are declared to the custom that they are being imported for the export purpose. So this particular description matches for that kind of goods. So there are certain goods which are imported without the prior knowledge that they will actually be used for the export purpose.

For example, the exporters of ready made garments, they use buttons, they use threads, they use dyes which are procured from the open market, and many of these goods are actually imported. So those are not actually covered in this kind of drawback. So there are separate provisions for such kind of imports, which are indirectly used in the export production. There also duty drawback is available, so that is a separate method of doing it. So I'll just tell you about it.

So as I have just mentioned to you, that in the directly used goods, the customs need to be made aware. So it means the goods when they are being imported, they should be declared that they are being imported for the export purpose. For other imported inputs, which I just mentioned, which are indirectly used, which were not already declared to the customs for the export purpose that they are being imported for the export purpose.

A separate schedule of drawback rates are there, which is announced by Government of India, and the exporters can claim that drawback rate for a specific item as per of the list. As per the rates available as incentives for the goods which are listed in that particular schedule, drawback rate, schedule. And these rates, which are mentioned there are according to the items like ready made garments or bicycles or many other items.

These rates are decided by the competent authority. Government authority taking into several factors like the importance of the industry where the goods belong to, their contribution to the exports, the product input output norms, technical calculations, estimates and many other factors, which are WTO compliant. World Trade Organisation compliant. So that is how the drawback rates are estimated and announced. Now what are the documents which are required to claim the duty drawback, either direct duty drawback or the indirect duty drawback, which I just mentioned to you.

You need documents like certified shipping bill of the exported goods, the goods against which the drawback is being claimed? The bill of entry of the imported goods, if it is the direct credit of the goods, which are directly imported for export purpose. So bill of entry is required and the import as well as the export invoice. So invoice of the goods which are imported and the invoice of the goods which are exported, therein manufactured using those goods. That export invoice has to be provided. Then duty payment receipt. As I told you that in the case of direct drawback, which means the goods which are directly used for exports and imported for the purpose of exports, the duty payment receipt be available, so that is required, and the export packing list. Export packing list gives you the physical description of the complete shipment.

So that is required. And the EDI facility, electronic data interface, which is between the exporter and the customs. This facility is available for this process of filing the duty drawback claims. So this facility is available.

So, Friends, what are the major export incentive schemes, including the drawbacks which I just mentioned to you. So in India at present, there are approximately 25 different incentive schemes, which includes the duty drawback which I just mentioned to you. And these schemes are either financial in nature or non-financial in nature.

So non-financial means there is a recognition given to the exporters. Status is given to the exporters. Acknowledged, their achievement is acknowledged and they are provided certain kind of facilities. Certain kinds of exemptions from the compliance. So these are non-financial incentives. And the financial incentives are generally in the form of compensation of the costs which are involved directly or indirectly in the production for the export purpose.

Procurement of the goods. The goods which are exported. So that compensation in the form of exemption or remission. So that is the financial part of the incentives, all the incentive schemes. And these incentives, which are given by the government of India. I'm talking about the financial portion of the incentives they are in the form of either subsidies, The purpose of which is to lower the export prices. To make the goods competitive in the international market in a logical method.

And tax concessions such as duty exemption schemes, which enable duty free import of the inputs for export production, which I had just mentioned to you. And the duty remission schemes which enable the post export replenishment of duty on the inputs used in the export products. So Duty Drawback Scheme also comes under the duty remission scheme. And it can also be in the form of the credit facilities to the exporters. such as low cost loans. Pre shipment credit, post shipment credit. So those kind of credit facilities.

And finally, the financial guarantees, such as provisions for covering the bad loans. So international credit lines, there are certain bad loans are there, domestic as well as international. So these financial guarantees are also part of the financial incentives. So generally, these are the major types of incentives which are available to the exporters in India. Many of these incentives are very similar to what are available in many of the countries for the export purpose.

So if we discuss about these schemes, first let's discuss the major schemes. So apart from the Duty Drawback scheme, the major schemes are like MIES, that is the merchandise exports from India scheme, which provide for two to five percent of the duty credit scrips based on the free on board FOB value of the goods which are exported. It is being replaced by another scheme which is called RoDTEP. So I'll talk about the scheme just now, so.

It is still in process in the sense that MEIS claims are still pending with the government of India. So this scheme is not totally scrapped, although it has been already replaced by this scheme. The other scheme, which is called SEIS, that is the services exports from India scheme, so herein the incentives of three to seven percent of the net foreign exchange earnings, which are done by the exporters, services exports companies.

So those companies which have active IEC no. that is the importer exporter code number, with a minimum FS earning, annual earning of a minimum dollar 15000, they are eligible for this scheme and these incentives. So which I was just talking about the RoDTEP. That is the Remission of the Duties and the Central, State and local taxes like Mandi tax, electricity, tax on electricity, the fuel taxes on the goods which are exported, and the scheme was introduced in January 2021. And this scheme actually replaces MEIS scheme.

But as I told you that MEIS scheme, the claims are still pending with the government of India, which are being disbursed.

Now, the other types of scheme, which are also duty exemption or remission schemes, financial in nature are the schemes like. AAS that is the Advanced Authorization Scheme, which allows for duty free, That means zero percent duty import of the raw material for the export production. So basically this is exemption, duty exemption scheme because this concession is available even before export is made.

So it is a advanced authorization to import goods without paying duty. The other scheme, very popular scheme is called DFIA, which means Duty Free Import Authorization. Now, this scheme is very similar to the AAS scheme that is the Advance Authorization Scheme, but the difference is that AAS is the advance authorization while DFIA is not advance authorization, which means it is applicable, post exports, after the export has been made, then the duty can be replenished. Then in the subsequent imports of the goods, The similar goods this import duty exemption will be available. Friends, as far as the Duty Drawback scheme is concerned, I had just discuss already in the earlier slides and I had mentioned to you that this is a very significant scheme for the goods imported and used for export production, directly or indirectly. So it provides for the drawback of the duties.

Then another scheme is our ROSCTL, which is very similar to RoDTEP. But this is applicable to the Apparel and made up sector, the items which are covered under Chapter 61 to Chapter 63 of the ITC that is the International Trade Classification, HS that is Harmonized System, Configuration, which is also Indian Trade Classification, which is same as the ITC, International Trade Classification. So Chapter 61 to 63 whatever the goods are covered in these chapters, this scheme applies, so this also provides for the remission of the duties and taxes, the central, state and local taxes. And a very significant scheme another scheme, which is called EPCG scheme, very popular scheme that is, the Export Promotion Capital Goods scheme, allows for the import of capital goods to produce the export goods, and these capital goods can be imported at zero percent duty.

Now, this scheme comes with the export obligation, which is equal to six times of the duty saved on the capital goods or procured from the domestic market. Whatever the taxes and duties which have been saved, so six times of that has to be exported within six years of the purchase. Then another duty exemption/ remission scheme is called EOU Export Oriented Units Scheme that allows for certain waivers and concessions in the compliance and taxation matters to  the units which are involved in export purely for the export purpose, that is the 100 percent exporting units.

So those units are eligible for this scheme and they can benefit from the waivers and concessions which are provided in this scheme.

Then, Friends, there are GST schemes because now GST is applicable in India. That is the goods and services tax.

So there are three schemes for the exporters under GST schemes. One is the LUT scheme that is the LUT bond scheme, which allows exports without paying GST or IGST. IGST means integrated GST under a letter of undertaking that is LUT bond. So by giving this LUT bond, the exporters can export without paying any GST or IGST. And this bond has to be released by the exporter with the requisite process after the export has been made.

Then the second scheme under the GST domain is the IGST refund, which means the integrated GST refund. So under the scheme, the exporters can export goods on payment of the IGST and later claim the refund. So this is also possible that post export, a refund is possible. Then there is another scheme for the merchant exporters, which is called the one percent GST scheme. So under this scheme, a concessional GST rate of 0.1 percent for goods procured for exports by the merchant exporters is available and these exporters merchants exporters by paying this 0.1 % concessional GST to the vendors can still claim any unused input tax credit, which may have at the end of the particular financial year. They can claim this ITC.

Then there are other schemes like TMA, which is the Transport and Marketing Assistance Scheme, which is available for the export of agricultural products. And in the TMA scheme, the reimbursement is made by the government of India, of the cost associated with the freight, The movement of the goods, transportation of the agricultural goods for export purpose under certain cap, that is the limits. So within limits, there are certain caps for the agricultural products and the exporters can claim this reimbursement under the scheme.

Then there is another scheme which is called the deemed export scheme. So under this deemed export benefits scheme, the exporters who supply goods to the export units within the borders of India for inputs of raw materials for the production of the goods for exports. They can claim similar benefits like exporters, so it is deemed exports scheme. The conditions of this supply are revised from time to time. So under certain situations, the supplies within the country, to the export units for the export purpose. They come under the domain of deemed export, and these situations and conditions are revised from time to time.

Then there is a scheme called the Star house or status of holder's schemes. So star export houses, status holder's certificates are issued in acknowledgement and recognition of the achievement of the exporters and their contribution to the India's exports, and they are provided the rating system. Under the rating system, Star ratings are provided to the export companies. It may be the manufacturer exporter, it may be the merchant exporter as a recognition to the eligible exporters based on their past performance of exports, and they receive privileges such as faster customs clearance exemption from compulsory negotiation of documents through banks only or exemption from furnishing bank guarantees, required for various export promotion schemes and GR waiver that is the guarantee remittance waiver, or extension of the period of the remittance of the FX, preferences in the payment of import duties and other different types of benefits.

So they enjoy these kind of privileges and benefits. Then there is MAI scheme that is the Market Access Initiative scheme. So under the scheme, financially support is given to the eligible agencies to undertake the Market Access Initiative, so its a demand side initiative by the foreign trade policy. So these initiatives, market access initiatives such as marketing, market research, promotion, product promotion and branding. So these kind of activities come under this scheme. Even the participation in international trade fairs, the exhibitions abroad, the scheme applies and with the help of the EPCs Export Promotion Councils and having the membership with the EPC, this financial assistance can be claimed by the recognized exporters.

Then another scheme is there, which is called TEE scheme, that is town of export excellence. So under the schemes, towns with the high export potential and those towns which are exporting goods worth more than rupees 750 crores, the financial assistance by Government of India is provided to the. Exporter's associations not to the individual exporter, in that particular town. Presently across the country in India, there are 37 TEE, The towns of excellence and they are getting these benefits. Then there is another scheme which is called the IES that is the Interest Equalization Scheme. So under the scheme, pre and post shipment export credit, pre shipment credit also called packing credit, which is provided by the bank.

So support is available for this kind of concessional rate credit. Now, this support is available to the tune of five percent for the MSME, and that is the medium, small and micro enterprises and three percent for the other exporters. So what are what is the shortfall of the banks on the interest on the loans the compensation is given by RBI, so RBI reimburses the banks to that tune the status of the exporter, the scheme apply. Then another scheme, which is called Nirvik scheme, which is run by ECGC that is the Export Credit and Guarantee Corporation. It provides High insurance cover, compared to the other kind of similar insurance covers available for the commercial risks, up to 90 percent in this case under the scheme. And these insurance cover, commercial risk cover are available at a reduced premium for the small exporters, and the claim settlement process is also simplified under the scheme for the commercial risks or the non-payment risk.

And as I just mentioned, it is offered by ECGC. that is a Government of India undertaking. So these are the various schemes which are available for the exporters in India. There are some more government initiatives which are being undertaken for the benefit of the exporters, and some significant initiatives among them are like PLI scheme that in the production linked incentive scheme. The purpose is to boost exports, which provides benefits worth rupees 1.46 crore. That is USD 19.72 billion, which will be available over a five year period to the selected high potential sectors. At present, there are 10, but they can be increased for them, including sectors like autos, battery cell sector, pharmaceutical sector, telecom, networking sector, food and textiles.

So under the scheme, the money is spent for increasing the export competitiveness for the goods produced in this sector. Then, another scheme, which is called the revamped SEIS scheme, that is the revamped services exports from India scheme, which widens the scheme to cover more sectors in the services sector. So up till now there are 9 sectors, but in this revamped scheme there are more sectors which have been included. and brought under the ambit of a SEIS scheme. So these were the major schemes and initiatives which are taken by the government of India, in addition to that government of India, is also putting in place the logistics infrastructure and spending almost 2.5 lakh crore on creating the world class logistics infrastructure, dedicated freight corridors, across the nation from the hinterland to the seaports.

And in these initiatives. The initiatives like Sagar, Mala or Bharat Mala or the logistics hubs Very Big Logistics Parks hubs are being created with this kind of investment so as to reduce the logistics cost, which at present is almost 14 percent of the GDP of the country to bring it to eight or nine percent of the GDP, which is the international average. So these initiatives are being made by the government of India to benefit the export sector.

IN this animated video presentation, an interesting historical perspective has been presented to provide you a digital chronology of the evolution of the several incentives schemes over the decades in the foreign trade policies of India, announced in the past.

In this animated video presentation, highlights of the different exports promotion measures, incentive schemes as enshrined in the foreign trade policy of India are given in an interesting way. To make the learning easy this animated presentation has been created in most innovative ways.

So, friends, in this section, we went through several lectures, The animated highlights of the different schemes with the help of these videos, we tried to understand what is the architecture of the foreign trade policy, which is in force at present in India and how they have been able to generate different types of export incentives for the exporters in India in compliance with the World Trade Organization.

So what we learnt in this section, what are the takeaways in this section are that India's foreign trade policy is actually struggling to introduce the new effective export promotion measures which are WTO compliant, which are actually able to boost the exports from India, which is becoming very very challenging in the competitive environment which exists in the International market. But we also learnt that the World Trade Organization, the goal of which is to ensure that the international trade is free and fair. Its directives play a very important role in what incentives can be given by a particular country, including India, and it is not possible to give all out incentives in the form of subsidies or in the illogical way which some of the countries were doing in the past, but at present, WTO is very very strong.

The guidelines of WTO are very, very clear. So it is not easy for any country at present time to favor their business people, the exporters, the local business community and the manufacturing units to give subsidies, which are not explainable. So it is not possible. So whatever incentives are given have to be WTO compliant and friends We also learnt in this section that export incentive regime in India has been constantly changing with every Five-Year Foreign trade Policy.

So that is happening because of the changing business environment, changing realities of the country, the different quarters from where the pressure comes from within the country as well as from the outside and very importantly, the pressure of WTO, the need for compliance with WTO. So because of these reasons, the different schemes are introduced by the government of India in each Five-Year Foreign Policy, and it is very, very challenging task.

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