Thursday, February 7, 2008

EXPORT TRADE

Meaning :


When goods are sold to a trader in any foreign country it is known as export trade. For example when India sells goods to other countries it is called as export trade.

Export trade procedure :

Imports and exports (Control) Act 1947 regulates the exports of goods from India. The procedure involved in exporting goods differs from country to country. However, the following procedures are followed:

1. Receiving enquiries :

In the first stage, the exporter receives a trade enquiry from an importer about the price, quality of goods and terms and conditions of export.

2. Receipt of order or indent :

In second stage the exporter receives the orders directly from the importer or through some specialized agency like indent houses.

3. Obtaining letter of credit:

After receiving the confirmed order, the exporter enquires about the credit worthiness of the importer. Generally, the exporter asks the importer to send a Letter of Credit to him.

4. obtaining Export License or Quota :

The export trade is regulated by the Import and Export (Control) Act 1947 and also by the Foreign trade (Development and regulation) Act 1992. Goods which are subject to control cannot be exported without getting a valid export license.


5. Compliance of foreign exchange regulations :

As per foreign Exchange Regulation Act 1947 (FERA), every exporter has to furnish a declaration that the exporter will surrender the foreign exchange to the extent of full value of goods to the Reserve Bank of India within a prescribed time.

6. Packing, marking and forwarding :

Packing and marking are made as per the instructions of the exporter. This is made to ensure the safe delivery of goods. Certain formalities are to be fulfilled before boarding the ship for export. Forwarding agents may fulfill these formalities.

7. Preparation of Invoice and Consular invoice :

The next step after receiving the forwarding agent’s advice or after shipping the goods is the preparation of invoice by the exporter. It contains details about the name of the ship, particulars about the shipments, destination, indent numbers, details regarding packing and marking, price of the goods and other expenses. It is prepared as per the terms and conditions agreed between the parties.

8. Obtaining certificate of origin :

To avail the concessions in payment of duties, the certificate of origin has to be obtained by the exporter for sending it to the importer.

9. Receiving payments :

The exporter receives the payments for the goods exported from the importer as per the agreement between them. The various methods of receiving payments are given below.

1. Documentary bills of exchange:

The exporter draws a bill of exchange for the value of goods and sends necessary documents to the importer along with bills of exchange. If the documents are released against payment, the arrangement is called Documents against Payment (D/P).

2. Discounting documentary bills of exchange :

If the exporter needs immediate payment, then the bills can be discounted with the bank. For document authorizes the bank to sell the goods in case of dishonour of the bill by the importer.

(a) Documentary letter of Credit

(b) Payment through foreign draft

10. Obtaining various export incentives:

To encourage export, the government gives various types of incentives such as duty draws backs, import replenishment license and excise duty refund and various income tax incentives.

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