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Basic Guidance on How to Export

HOW TO START EXPORT

 

Export/Import Trade is regulated by Directorate General of Foreign Trade (DGFT) and its regional offices. However, in the export/import trade, transaction in foreign exchange is involved and such transactions are governed by Foreign exchange Management Act, 1999 under which Foreign Exchange Management (Export of goods and services) Regulations, 2000 were framed. These Regulations have been notified vide Notification No. FEMA 23/2000-RB dated May 3, 2000 as amended from time to time.

 

Other facets having bearing on credit such as facilitation of exports through Establishment of Branch Office/Liaison office, Formation of Joint Venture, Wholly-owned Subsidiary, Exports to Warehouse, Merchanting Trade, Cross Border online transactions are also regulated by the RBI.

 

This publication highlights the existing provisions, as on December 05, 2017, brought out by the Reserve Bank of India (RBI) governing Export/ Import of Goods and Services which are subject to the Foreign Trade Policy and Handbook of Procedure (Vol1).

Export in itself is a very wide concept and lot of preparations is required by an exporter before starting an export business.

To start export business, the following steps may be undertaken:   

 

  

1.   EXPORTABILITY OF PRODUCT 

Exports and Imports shall be free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force.  The item wise export and import policy shall be, as specified in ITC(HS)  published and notified by Director General of Foreign Trade, as amended  from time to time is available at www.dgft.gov.in

The Director General of Foreign Trade may, however, specify through a Public Notice  such  terms  and  conditions  according  to  which  any  goods,  not  included  in  the  ITC(HS),  may  be  exported  without  a  license/  certificate/ permission. 

Schedule 1 of ITC (HS) gives the Import Policy Regime and Schedule 2 of ITC (HS) gives the Export Policy Regime. Schedule 2 categorizes products as:-




 

2.         IMPORTANT ASPECTS WHILE EXPORTING
 

Sampling

 

Providing customized samples as per the demands of Foreign buyers help in getting export orders. As per FTP 2015-2020, exports of bonafide trade and technical samples of freely exportable items shall be allowed without any limit.

Denomination of Exports Contracts

 

All  export  contracts  and  invoices  shall  be  denominated  either  in  freely convertible  currency  or  Indian  rupees  but  the  export  proceeds  shall  be realised in freely convertible currency. 

Pricing/Costing

 

The price should be worked out taking into consideration all expenses from sampling to realization of export proceeds on the basis of terms of sale i.e. Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost & Freight(C&F), etc. Goal of establishing export costing should be to sell maximum quantity at competitive price with maximum profit margin.

Payment Term

Deciding on the best payment term (L/C,DA, DP etc) as given in chart.

Customs House Agents

 

Exporters may avail services of Customs House Agents licensed by the Commissioner of Customs. They are professionals and facilitate work connected with clearance of cargo from Customs.

Mandatory documents for export of goods from India

1. Bill of Lading/Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt.

2. Commercial Invoice cum Packing List

 

3. Shipping Bill/Bill of Export

(In specific cases of export or import, the regulatory authority concerned may electronically or in writing seek additional documents)

Customs Procedure

No goods can be exported without clearance of export consignment by customs which issues the Let Export Order afteare filing of shipping bill.

Submission of Export Documents To Bank

 

Within 21 days from the date of export, exporter should lodge the copy of EDF together with relative shipping documents and an extra copy of the invoice with the Banks.  In  cases,  where  exporters  present  documents  pertaining to exports after the prescribed period of 21 days from date of  export,  Banks  may  handle  them  without  prior  approval  of  the  Reserve  Bank, provided they are satisfied with the reasons for the delay.

 

 

 

 

 

 

 

Mode of Payment of export

 

The amount representing the full export value of the goods exported shall  be  received  through  a  Bank  in  the  manner  specified  in  the  Foreign  Exchange Management (Manner of Receipt & Payment) Regulations, 2000 in the following manner: 

 

      ·         Bank draft, pay order, Banker’s or personal cheques. 

      ·         Foreign currency notes/foreign currency travelers cheques from the buyer during his visit to India. 

      ·         Payment out of funds held in the FCNR/NRE account maintained by the buyer 

      ·         International Credit Cards of the buyer. 

 

Note: When payment for goods sold to overseas buyers during their visits  is  received  in  this  manner,  EDF  (duplicate)  should  be  released  by  the  Banks  only  on  receipt  of  funds  in  their  Nostro  account  or  if  the  Bank concerned  is  not  the  Credit  Card  servicing  Bank,  on  production  of  a  certificate by the exporter from the Credit Card servicing Bank in India to  the effect that it has received the equivalent amount in foreign exchange,  Banks may also receive payment for exports made out of India by debit to  the  credit  card  of  an  importer  where  the  reimbursement  from  the  card  issuing Bank/ organisation will be received in foreign exchange.

Realization of Export Proceeds

 

As per FTP 2015-2020, all export contracts and invoices shall be denominated either in freely convertible currency of Indian rupees, but export proceeds should be realized in freely convertible currency except for export to Iran.Export proceeds should be realized in 9 months.

 

PAYMENT TERM 

  

3.         CUSTOMS PROCEDURES 

It is necessary to obtain PAN based Business Identification Number (BIN) from the Customs prior to filing of shipping bill for clearance of export good and open a current account in the designated Bank for crediting of any drawback amount and the same has to be registered on the system.

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to apply different forms of shipping bill/ bill of export for export of duty free goods, export of dutiable goods and export under drawback etc.

Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made by the exporters without any human intervention. Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency in the ICES/E system. 

 

·   The goods have not yet been allowed "let export" amendments may be permitted by the Assistant Commissioner (Exports).

 

·       Where the "Let Export" order has already been given, amendments may be permitted only by the Additional/Joint Commissioner, Custom House, in charge of export section.

 
In both the cases, after the permission for amendments has been granted, the Assistant Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the shipping bill to the Dock Appraiser for cancellation before amendment is approved on the system.

 

 

 

 
 
Basic Guidance on How to Export