Export Communication

Export co-ordination, communication and documentation Presented by: Ashi As hish sh Om Omar ar Kris Kr ishan hanu u Bo Bose se Pram Pr amod od Ku Kuma marr Niti Ni tin n Ve Verm rmaa Neer Ne eraj aj Kr Kr.. Rav Ravii

 1 PREPARE A BUSINESS PLAN

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LEGAL REGISTRATION MARKET IDENTIFICATION

CHANNEL SELECTION IDENTIFYING THE POTENTIAL BUYERS/ CUSTOMERS

NEED ANALYSIS

AGENTS, DSTBTR, WHLSLRS, SALES REP., END USERS TRADE FAIRS/ INTERNET/ PERSONAL VISITS/

Going for procuring orders

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AGREEING UPON PRICING, FRIEGHT CHARGES,DOCUMENT, CURRENCY, DELIVERY ETC.

SIGNING OF CONTRACT

ADVANCE PAYMENT/ LETTER OF CREDIT/ OPEN ACCOUNT

DETERMINING THE PAYMENT TERMS

IMPORTER SENDS PURCHASE ORDER

PRODUCTION

CERTIFICATE OF QUALITY CONTROL

PACKAGING WAREHOUSE

PREPARE MARINE, AIR, AND DOCS

SUBMISSION OF DOCS TO BANKS

INSURANCE CERTIFICATE, SHIPPING BILL, MATE·S RECEIPT, BILLS

TRANSPORTATION MARITIME/ AIR/ ROAD

BANK SENDS DOCS TO IMPORTER·S BANK .PAYMENT IS DONE

Affecting factors: 

Political barriers to trade

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Scope of exporter's selected product

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Demand stability

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Preferential treatment to products from developing countries

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Market penetration by competitive countries .

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Distance of potential market

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Transportation Language

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Tariff and non-tariff barriers

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Distribution infrastructure and size of demand

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Life span of market and product requirements

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sales and distribution channels

Sources from

where we can collect

information:         

Export Promotion Council, Federation of Indian export Organization (FIEO) IIFT Indian Trade Promotion Organization (ITPO) Indian Embassies Abroad & Foreign Embassies in India Import Promotion Institutions Abroad Overseas Chambers of Commerce and Industries Various Directories, Journals, Market Survey Reports

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Primary research

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Secondary research

Step1:-Gather

information on a broad range of

markets. It includes: product/service. ce.  The demand for product/servi  The size of the potential audience.  Whether the target audience can afford product.  What the regulatory issues are that impact on exports of product. access to this market market ² proxi proximity mity/frei /freight. ght.  Ease of access  Are there appropriate distribution channels for product/ service

Step2:tep2:-R Research a selection of markets

in depth.

Questions to be answered in relation to the product 

Similar products

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Uniqueness

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Way of obtaining and use

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Providers

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Other source of import ,if any

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Local availability

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Competitor

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Market size

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Other ways to obtain o btain sales/representation

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Existing prices

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Mark-ups at different distribution levels

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Import regulations, duties or taxes, including compliance and professional registrations Translation of promotional material and packaging.

Addresses sources :

Friends and relatives

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International Trade Fairs and Exhibitions

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International Yellow Pages

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Private Indian Publications Directories

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International Trade Directories/  Journals/periodicals

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Monthly bulletins e.g. Indian Trade Journal.

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Embassies, Consultants

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ITPO, IIFT

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Contacting authorized dealers in foreign exchange with whom exporter is maintaining bank account. Advertising in newspapers having overseas editions and other foreign newspapers and magazines etc.

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Corresponding and sending brochures and product literature . Foreign markets and establishing personal rapport . Buyer-seller meets and meeting the members members of foreign delegation.

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International trade fairs and seminars.

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Overseas Advertisement .

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Exports through Export Consortia

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Export through Canalizing Agencies

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Export through Other Established Merchant

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Exporters or Export Houses, or Trading Houses

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Direct Exports

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Export through Overseas Sales Agencies.

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Necessary to get the best business deal

or F or 

successful negotiation:

Avoid conflict

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controversy and criticism

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Effective communication

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Coherence, creativity, compromise,

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concessions, commonality, consensus,

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commitment and compensation in business negotiations. Most important issue : Price

Acknowledgement Acknowledg ement of order Examin Exam inat atio ion n :Items, specifica specification,pre-shipm tion,pre-shipment ent inspection,p inspection,payment ayment conditions, special packaging, labeling and marketing requirements,shipment requirements,shi pment and delivery date, marine insurance, documentation requirement etc. 

If satisfied, confirmation is sent

3) Entering into an Export contract To avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms

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Product, Standards and Specifications Quantity Inspection Total Value of Contract Terms of Delivery Taxes, Duties and Charges Period of Delivery/Shipment Packing, Labeling and Marking Terms of Payment-Payment-- Amou Amount/M nt/Mode ode & Curre Currency ncy Discounts and Commissions Licenses and Permits Insurance Documentary Requirements Guarantee Excuse for Non-performance of contract Remedies Arbitration

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Important tool for promoting sales and facing international competition should be realistically Determining factors Range offered deliveries and continuity in supply after-sales service Product differentiation brand image frequency of purchase etc.

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Ex-Works: 'Ex-works' means that your

responsibility is to make goods goo ds available to the buyer at works or factory. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. This term thus represents the minimum obligation for you. 

Free on

Rail (FOR) & Free on Truck (FOT): These terms

are used when the goods are to be carried by rail, but they are also used for road transport. Your obligations are fulfilled when the goods goo ds are delivered to the carrier.

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Free

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Free

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Alongside Ship (FAS): Once the goods have been placed alongside the ship, your obligations are fulfilled and the buyer notified. no tified. on Board (FOB): responsibility ends the moment the contracted goods are placed on board the ship, free of cost to the buyer at a port of shipment named in the sales s ales contract. Cost

and Freight (C&F): You must on your own risk and not as an agent of the buyer, contract for the carriage of the goods to the port of destination named in the sale contract and a nd pay the freight.

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or Carriage Paid (DCP): While C&F is used for goods which are to be carried by sea, the term "DCP" is used for land transport only, including national and international transport by road, rail and inland waterways. Freight

EXS/EX-Ship: This is an arrival contract and means that you make the goods available to the buyer in the ship at the named port of destination as per sales contract.

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Delivered at Frontier (DAF)

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Delivery Duty Paid (DDP)

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Procuring

/ Manufacturing Goods

Compulsory Quality Control & Pre shipment Inspection :- Under the Export(Quality Control and Inspection) Act, 1963, about 1000 commodities

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Foreign buyers lay down their own standards / specifications specificati ons and may may insist insist upon inspection by their their own nominated agencies

Communicatio Communica tion n with with vendors

exporter Obtains sample as per buyer specification specification from vendor Sends sample for approval of buyer buyer After approval puts order in bulk with vendor Obtains material in bulk from vendor

shipment

Inspection as per standardized sta ndardized pre-shipment pre-shipment export documents ,inspection fee and following documents should sent be the nearest office of the respective Export 

Inspection Agency :- Copy of the Commercial Invoice, Copy of letter of credit, Details of packing specifications, specifica tions, Copy of the export order/contract.

If all criteria are satisfied the inspection agency issues, generally within four days of receipt of intimation for inspection, the necessary certificate of inspection to the exporter in the prescribed Performa in five copies. 

(1st original for custom, 2nd copy for foreign buyer, 3rd copy for exporter's use , 4th copy for data bank and fifth copy is retained with agency)

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In process process quality quality control(IPQ control(IPQC):C):- e.g. engineering goods chemicals etc. ISO 9000 :- TQ TQM M co conc ncep eptt a)series of standards b) quality assurance :-how a company can establish document and maintain an effective and economic quality control system

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Labeling:- Differ country to country, indicate quality, quantity and method of use .

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Packaging:- Vital role in getting product in top condition in market and representation of product .I should have conformity with the instructions issued issued by the importer.

Export documentation

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Commercial documents

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Auxiliary documents

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Regulatory documents

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Miscellaneous documents

A) Commercial Documents 

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For effecting physical transfer of goods and their title from the exporter to the importer. Example :- Performa invoice, commercial invoice, packing list, shipping instructions, intimation for inspection, certificate, certificate, of inspection of quality control, insurance declaration, certificate' of insurance, mate's receipt, bill of lading or combined transport document, application applicati on for certificate origin, certificate of origin, shipment advice and letter to the bank for collection or negotiation of documents

1)Commercial

invoice invo ice or Document of content Information related with exporter ,consignee, vessel, port of loading and discharge, origin of goods, Terms of delivery and payment, Marks and container number, Signature of the exporter with date etc. 2) Inspection Certificate : The certificate is issued by the inspection authority such as the export inspection agency. This certificate states that the goods have been inspected before shipment, and that they confirm to accepted quality standards.

3) Marine insurance policies: - There are

different types of policies such as Specific Policy, Floating Policy, Open Policy, Open Cover Policy. 4) Consular invoice: Consular invoice is a document required mainly mainly by the Latin American countries like Kenya, Uganda etc«.. 5) Certificate of Origin :- chamber of commerce logo, exporter and consignee co nsignee address, number of Vessel of Flight, number of containers and packages etc.

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Name and logo of chamber of commerce. Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel of Flight Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity. Signature and initials of the concerned officer of the issuing authority. Seal of the issuing authority.

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Bill of Lading: : The bill of lading is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order, provided the freight and other charges as specified in the bill have been duly paid.

7) Airway Bill :- An airway bill, also called an air consignment note, is a receipt issued by an airline for the carriage of goods.

BILL OF LADING 

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Name and logo of the shipping line. Name and address of the shipper. Name and the number of vessel. Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and package

AIRWAY BILL 

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Name of the airport of departure and destination. The names and addresses of the consignor, consignee and the first carrier. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity

8)

Shipment Advice to Importer

9)  Packing List 

10) Bill of Exchange: The instrument is used in receiving payment from the importer. The importer may prefer Bill of Exchange to LC as as it does not involve blocking of funds. A bill of exchange is drawn by the exporter on the importer, to make payment on demand at sight or after a certain period of time.

erform orma a  Perf

Invoi Inv oice ce ::-Name Name and address of exporter and importer, mode of transportation, port of discharge and final destination, port of discharge discharge and final destination, Buyer's and exporter·s reference number, packing description etc

 Intimation for Inspection: For the pre shipment inspection, necessary 

application is given to the concerned inspection agency for conducting the inspection and issue of certificate thereof .

 Declaration of Insurance: Where the insurance is to be covered by the 

exporter, the shipper has to give details of the shipment to the insurance company for necessary insurance cover. The detailed declaration will cover: Name of

the shippe shipperr \ expo exporter. rter. Name & address of buyer. Details of goods such as packages, quantity, value in currency  Name of the Vesse Vessell \ Aircr Aircraft. aft. Value for which insurance to be covered

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Application of the Certificate Origin: An application has to be made to the concerned authority with required documents.

Mate's Rec ecei eip pt : A receipt issued by the Commanding officer of the ship when the cargo is loaded, an evidence that goods are loaded in the vessel.

Shipping order: Issued by the Shipping/Conference Line intimating the exporter about the reservation of space for shipment of cargo.

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Shipping Instructions: when the documents are to sent for customs clearance, necessary instructions are to be given. It includes name of vessel, goods carried, freight amount, instructions for obtaining bill of landing.

Bank letter for negotiation of documents: A set of instruction for the bank as to how to negotiate or discount or collection for forwarding the same to the customer and also for realization of export proceeds.

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 Name and address of the buyer. Details of various documents being sent and the number of  the copies thereof.  Name and address of the buyer¶s bank if available.

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If the bill amount is to be adjusted against any forward exchange cover cover..

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In case of credit bill who has to bear the interest, either  exporter or if the same is to be collected from the buyer.

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Instructions in case non-acceptance/non-payment by the  buyer.

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Pre-shipment export documents Prescribed by the different government departments and bodies . export inspection, foreign exchange regulation, export trade control, customs, etc. Shipping Bill: The main customs document grants permission for the shipment of goods. A.R.E. 1 form (Central excise): In case goods meant for export are cleared directly from the premises of a manufacturer, the exporter can avail the facility of exemption from payment of terminal excise duty

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Exchange Con ontr trol ol dec ecla lara rati tion on Form : All exporters must declare the details of shipment for monitoring by thee Reserv th rvee Bank of India. Export App Export Applic licatio ation: n: The application to be made to the cust cu stom omss of offi fici cial alss be befo fore re sh ship ipme ment nt of go good ods. s. ehic icle le Veh

Ticket Tick et/  / Cart Ticket/Gate Pass etc : Before the goods are being taken inside the port for loading, necessary perm rmiission has to be obtained for moving the veh ve hic icle le in into to th thee custo toms ms are rea. a.

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Bank Cer erti tifi fica cate te of Realization: Th Thee ne nego goti tiat atin ing g ba bank nk declares the fob value of exports and for the date of real re aliz izat atio ion n of th thee ex expo port rt pr proc ocee eeds ds..

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Black List Certificate: This is required by certain nations who have strained political and economical rela re lati tion onss wit ith h th thee so call lleed ´B ´Bla lacck Lis iste ted d Co Cou untr triies esµ. µ. Language Certificate: Importers in the European Community require a language certificate along with the GSP certificate in respect of handloom cotton fabrics. reig ight ht Fre

Paymen Paym entt Cer erti tifi ficcat ate e : Th Thee sh shiippin ing g com omp pan any y may issue a separate certificate for payment of the freight charges instead of declaring on the main transport trans port docu document ments. s.

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Insurance Premium Certificate: This is the certificate issued by the Insurance Company as acknowledgement of the amount of premium paid for the insurance cover.

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Combined Certificate

of Origin and Value: This certificate should contain special details as to the origin and value of goods, which are useful for determining import duty.

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Customs

Invoice: This is required by the countries like Canada, USA for imposing preferential tariff rates.

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Legalized Invoice: It is just like consular invoice, which requires certification from Consulate or authorized mission, stationed in the exporter·s country.

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Octroi is the local tax levied by the civic body on goods ent nteeri rin ng in into to th thee city ty..

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Goods in transit are subject to risks of loss of goods arising due to fire on the ship, perils of sea, thefts etc. Marine insurance protects losses incidental to voyages and in land transportation. Marine Insurance Policy is is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods.

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Specific Policy: This policy is taken to cover different risks for a single shipment.

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Floating Policy:

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Open

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Open Cover

This policy is taken to cover all shipments sh ipments for same months &there is no time limit. Policy : This policy remains in force until cancelled by either party, i.e. insurance company or the exporter. Policy : This policy is generally issued for 12 months period, for all shipments to one or all destinations. destin ations.

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Insurance Premium: Differs upon from product to product and a number of other such factors, such as, distance of voyage, type and condition of packing .

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Insurance Policy Normally Contains:

The name and address of the insurance company. The name of the assured & description of the risk covered. A description of the consignment. The sum insured & the date of issue. The place where claims are payable together with details of the agent to whom claims may be directed & any other details, as applicable.

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The shipment of export cargo has to be made with prior permission of, and under the close supervision of the custo cu stom m aut author horiti ities. es. Goods cannot be loaded on board the ship unless a formal perm pe rmis issi sion on is ob obta tain ined ed.. Permission is given when satisfied that the goods being exported are of the same type and value as have been dec ecla lare red d by th thee exp xpor orte ter. r.

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Submis Subm issi sion on of Do Docu cume ment nts: s: The exporter or his agent submits the necessary documents along with the shipping bill to the Custom House. Verification

of Documents : The Customs Appraiser verifies the documents and appraises the value of goods. Carting  Order:

Carting Order is the permission to bring the goods inside the docks

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Storing the Goods in the Sheds : After securing the carting order, the goods are moved inside the docks & stored in the sheds at the docks. Examination of Goods: The customs examiner examines the cargo and records his report on the duplicate copy of the shipping bill. Loading Goods: The goods are then loaded on the ship. Obtaining

Bill of Landing: The shipping company issues bill of landing.

Pa Paym ymen entt

in ad adva vanc ncee Doc Docum ument entary ary Bil Bills ls Lett tter er of Cr Creedi ditt Le Open en Ac Acco coun untt Op Count nter er Tr Trad adee Cou

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Doesn·t involve any risk of bad debts.

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Pro rov vid ided ed en enti tire re am amou oun nt has bee een n re reccei eive ved d in adva van nce.

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At times, a certain per cent is paid in advance, say 50% and the rest on delivery ry..

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The exporter agrees to submit the documents to his bank along with the bill of exchange. There are two main ty typ pes of documentary bills: Docu cume ment ntss Do

again aga inst st Pa Paym ymen entt

Docu cume ment ntss Do

again aga inst st Ac Acce cept ptan ance ce

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Documents

against

Payment:

The documents are released to the importer against payment. This method indicates that the payment is made against Sight Draft. Necessary arrangements will have to be made to store the goods, if a delay in payment occurs. Document

against

Acceptance:

The document are released against acceptance of the Time Draft i.e. credit allowed for a certain peri pe riod od,, sa say y 90 days

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It is ´an undertaking by importer·s bank stating that payment will be made to the exporter if the required doc ocu ument ntss ar aree pre rese sent nteed to th thee ban ank k.µ It is a more secured method.

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Applicant: The buyer or importer

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Import orter· er·ss bank Issuin Iss uing g Ban Bank: k: Imp

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Beneficiary: The party to whom the L/C is addressed

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Advisin Adv ising g Ban Bank: k: Is Issu suin ing g ba bank nk·s ·s br bran anch ch in th thee ex expo port rter er·s ·s co coun untr try y

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Confirming

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Bank: Bank in beneficiary·s country which guar gu arant antee eess the cr cred edit it egot otia iati tion on Ba Bank nk:: The bank to whom the beneficiary present Neg his documents fo forr Payment Reimbursin ing g Bank: the bank which will reimburse the negoti neg otiati ating ng bank

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Name and address of the bank establishing the letter of credit Letter of credit number and date The letter of credit is irrevocable Date of expiry and place of expiry Value of the credit Product details to be shipped s hipped Port of loading and discharge Mode of transport Final date of shipment

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Details of goods to be exported like description of the product, quantity, unit rate. Type of packing Documents to be submitted to the bank upon shipment.

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Tolerance level for both quantity and value.

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Reimbursement clause

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Open

a/c: The money is transferred in account provided by exporter to buyer.

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Counter

trade: a system of providing goods in lieu of goods. Instead of providing with money they would provide with some other material, product or services.

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Special thanks to: Mr. Vishal Sn. Merchandise Merchandiser; r; Radhnik Expo Exports rts , Gurgaon Gurgaon

A guide on export, policy, procedure and documentation By: M.I. Mahajan Export management By: T.A.S. Balagopal Export management By: N.Ku N.Kumar mar and R.Mit R.Mittal tal Magazines: Garment line, Apparel online

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www.google.com

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www.exportindia.com

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www.exportpolicy.com

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www.expoinfo.com

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www.apparel.co.in

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www.indiandata.com