Export Import Procedures

and Documentation
S. No Reference No Particulars Slide
From-To
1 Chapter 1 International Trade 4-27

2 Chapter 2 Regulatory Framework of Export-Import 28-52

3 Chapter 3 Export Documentation 53-80

4 Chapter 4 Documents Related to Invoice 81-100

5 Chapter 5 Documentation Related to Shipment 101-121

6 Chapter 6 Documentation Related to Payment 122-139

7 Chapter 7 Documents Related to Inspection and 140-163
Special Documents
8 Chapter 8 Export Procedure 164-184

9 Chapter 9 Shipment and Export Assistance in India 185-209

10 Chapter 10 Import Procedure 210-244
 Method of teaching
• Each slide will be explained.
• Questions can be asked anytime through chat
• Additional information pertaining to subject can be
discussed
• Any question based on the personal and work experienced
can be shared and discussed for the benefit of students
• We will have question and answer session at the end of
each chapter
• Active participation of students will benefit all
• Videos will be shown and explained.
• Students can ask questions about the chapter taught in the
next session to clear the doubts
Chapter 1: International
Trade
 Chapter Index

S. No Reference No Particulars Slide

From-To

1 Learning Objectives 6

2 Topic 1 International Trade 7-14

3 Topic 2 Theories of International Trade 15-18

4 Topic 3 International Trade Barriers 19-20

5 Topic 4 Trends in International Trade 21-24

6 Let’s Sum Up 25
• Explain the significance of international trade

• Discuss the theories of international trade

• Describe the barriers in international trade

• State the recent developments in international trade

 Course Introduction

• There is not a single country in the world, which can claim itself self-sufficient
and produce all the goods and services required by its residents. This is because
each country is unique in terms of natural resources, technology, and level of
development.

• International trade has made it all possible by providing the platform to the
world to interact and exchange the resources for their own benefit.

• Strong global presence not only helps in the economic development of the country
but it also contributes significantly in the prosperity of the whole world.

• In every country, the international trade is governed by a set of rules and

regulations, which are known as foreign trade policies. These foreign trade
policies laid down the guidelines for the export and import of goods and services.
 1. International Trade

• International trade allows different countries to exchange products and services

that are not accessible in their home country.

• International trade includes commercial transactions that comprises of sales,

investments, and shipment.

• These transactions are carried out between two or more different countries for
political and profit motives.

• Liberalisation and change in political environment has also played a major role in
making global trade popular.
 2. International Trade

• There are various reasons that have given rise to international trade which are
as follows:

– Technological expansion

– Free cross-border trade and movement of resources

– Advancement of services that facilitates international business

– Increased pressure from customers

– Growing competition

– Continuously changing political scenarios

 3. International Trade

Need For International Trade

• It acts as a platform for manufacturers and distributors to seek out products,
services, and components produced in foreign countries.

• It is an important part of development strategy and can be an effective tool of

economic growth, employment generation, and poverty alleviation.

• It provides the opportunity to companies for learning new technologies that

further helps in increasing production as well as productivity, reducing cost, and
increasing quality.

• It enables firms to acquire resources that are not available within the country.

• It gives customers an increased number of options to select from.

 4. International Trade

Reasons For International Trade

Cheap Resources

Access to New Technology

Diversification of Risk

Government Regulations

Non-availability in Domestic Market

 5. International Trade

Methods of International Trade

Exporting

Licensing

Methods of International Franchising

Trade
Turnkey
Projects
Wholly Owned
Subsidiaries

Joint Venture

Strategic
Alliance
 6. International Trade

Methods of International Trade

• Exporting: It refers to the process in which goods and services are sold and
shipped from one country to another. It is of two types namely direct exporting
and indirect exporting.

• Licensing: It refers to an agreement that allows foreign organisations to

manufacture owner’s product either exclusively or non-exclusively for a specified
time period in a particular market.

• Franchising: According to T.W. Zimmerer “A system in which semi-independent

business owners (franchisees) pay fees and royalties to a parent company
(franchiser) in return for the right to become identified with its trademark, to sell
its products or services, and often to use its business format and system.”
 7. International Trade

Methods of International Trade

• Turnkey Projects: A project in which contractor is paid by the client for designing
and constructing new facilities as well as training personnel is called turnkey
project.

• Wholly Owned Subsidiaries: These are of two types, namely Greenfield

Investment and Acquisitions.

– Greenfield Investment: It refers to the establishment of wholly owned new

subsidiary and generally it is considered to be a complex and costly process.

– Brownfield Investment or Acquisition: Under this type of investment the

organisation acquires (i.e. it purchases) an already established production
facility or business in the foreign country.
 8. International Trade

Methods of International Trade

• Joint Venture: It can be arranged as a partnership firm, corporation, or any other
form of business organisation as selected by the participating firms. Under the
Indian Companies Act, 1956, a joint venture can be incorporated or established as
a private or public company.

• Strategic Alliance: It refers to a cooperative agreement that is signed between

different firms for the purpose of shared research, formal joint ventures, or
minority equity participation. The advantages of this alliance are technological
exchange, healthy global competition, industry convergence, economies of scale,
and alliance becoming an alternative to merger.
 1. Theories of International Trade

Theories of international trade are as follows:

Theory of Absolute
Advantage

Theory of
Theories of International Trade
Comparative
Advantage

Product Life Cycle

Theory

Theory of Market
Imperfection

Heckscher and Ohlin

Theory

Theory of Imitation
 2. Theories of International Trade

• Theory of Absolute Advantage: The theory of Absolute Advantage was

propounded by Adam Smith in 1776. According to this theory,

• Any country can be more efficient in producing a certain kind of product in

comparison to other countries. This condition will be beneficial for all countries to
engage in trade.

• Absolute advantage: In economics, the principle of absolute advantage refers to

the ability of a party (an individual, or firm, or country) to produce more of a
good or service than competitors, using the same amount of resources.

• The capability to produce more of a given product using less of a given resource
than a competing entity., country.
 Theory of Absolute Advantage
• Described the principle of absolute advantage in the context of
international trade, using labor as the only input

• Since absolute advantage is determined by a simple comparison of labor

productivities, it is possible for a party to have no absolute advantage in
anything;

• in that case, according to the theory of absolute advantage, no trade will

occur with the other party.

• The metric of Absolute Advantage is the ability of an absolute unit to

produce goods with fewer resources compared to another similar entity
 Absolute advantage example
• Fictional example

• Brazil vs China in the production of coffee and garments.

• Brazil requires 30 hours to produce a bag of coffee while China requires 60 hours
to do the same.

• China requires 10 hours to produce a bolt of clothing while Brazil requires 40 hours
to do the same.

• Considering the number of working hours required by each country to produce

these goods as a homogenous source, Brazil has the Absolute Advantage in
producing coffee while China has the Absolute Advantage in producing garments.
 Theory of Comparative Advantage:

• Smiths theory falters when a certain country has

the Absolute Advantage in producing the
maximum number of goods.

• In mutual trade, even if one country possesses an

absolute advantage in producing all commodities

• This theory states that two countries can engage.

 Theory of Comparative
Advantage
• In this case the country would be almost self sufficient and has no
need to participate in international trade.

• To counter this fallacy, economist David Ricardo suggested the

theory of Comparative Advantage which also takes into account the
opportunity cost of producing goods in addition to the number of
working hours.

• Thus, countries rely on relative advantage of goods production to

participate in international trade.
 Theory of Comparative
Advantage
• This theory considers the concept of opportunity cost

• States that one country has a greater opportunity cost of manufacturing

particular goods while the other country has a greater opportunity cost of
manufacturing other goods;

• Even if the first country has an absolute advantage in manufacturing both kinds
of goods, they can still involve in trade.
 Theory of Comparative Advantage
• Both theories have practical limitations due to inherent assumptions.

• Trade does not work precisely the way the theory of comparative
advantage might suggest, for the following reasons

– No country specialises exclusively in the production and export of a

single product or service

– All countries produce at least some goods and services that other
countries can produce more efficiently
 Theory of Absolute Advantage
• As per this theory, a third world country can product any product more efficiently thant a
developed country.

• But they cannot identify their end customers residing in developed countries or transport
their inexpensive products to them

• As a result, developed nations continue with the manufacturing of products

 Product Life Cycle Theory

• Product Life Cycle (PLC) theory was given by Raymond Vermon, which is an
economic theory.

• It takes into consideration two important factors that were ignored by the other
theories

• New products are developed as a result of technological innovations

• Trade patterns depend on the market structure and the phase in a new
product’s life

• According to this theory, rich and developed countries can carry forward the
Research and Development (R&D) for producing new products as they have stable
patent protection system and people have money to buy or at least try new
products.
 Product Life Cycle Theory
• Introduction – when the product is introduced and struggles to gain brand
recognition.

• Introductory prices are normally higher in the initial stages

• Normally standardisation of products not done due to heavy labour involvement

and uncertainty of market

• Growth – advertising and word of mouth helps the product to increase sales. As
sales growth, more firms are willing to stock the product which helps the product
to grow even further.

• Maturity – When the product reaches peak market penetration.

• Decline – the product gets eclipsed by new products, price and product
competition and customer’s demands for improved versions, etc
Theory of Market Imperfection
• The deviations from perfect condition are known as market
imperfection.

• This imperfect competition results in high volume of intra industry

trade between similarly endowed countries.

• It results in emergence of cross-country technology gaps and helps to

identify the determinants of dynamic comparative advantage.

• The explorations of trade with imperfect competition have also deepened

substantially our understanding of the costs and benefits of trade policy.
Theory of Market Imperfection
• Imperfect markets do not meet the rigorous standards of a
hypothetical perfectly or purely competitive market.

• Imperfect markets are characterized by having competition for

market share, high barriers to entry and exit, different products and
services, and a small number of buyers and sellers.

• Perfect markets are theoretical and cannot exist in the real world;
all real-world markets are imperfect markets.
 Heckscher and Ohlin Theory

• Modern Theory of International Trade: According to Heckscher and Ohlin theory,

a country would export products, which it produces by using the abundant factor
of production.

• However, it would import goods, which require use of scarce resources. Countries
trade with each other because they have different factor endowments.

• .
 Heckscher and Ohlin Theory
• According to Ohlin, the underlying forces behind differences in comparative costs are twofold:

• 1. The different regions or countries have different factor endowments.

• 2. The different goods require different factor-proportions for their production.

• It is a well-known fact that various countries (regions) are differently endowed with

productive factors required for production of goods. Some countries posses relatively more

capital, some relatively more labour, and some relatively more land.

• The factor which is relatively abundant in a country will tend to have a lower price and the

factor which is relatively scarce will tend to have a higher price. Thus, according to Ohlin,

factor endowments and factor prices are intimately associated with each other.
 Theory of Imitation
• This theory states that international trade can
take place between two countries having similar
factor endowments and consumer tastes.
• Trade starts between two countries as a result
of gap between innovation of products and their
imitations present in other countries
 Theory of Imitation
• Demand lag is the difference between the time & new or
an improved product is introduced in one country & the
time when consumers in the other country start demanding
it .
• Imitation lag is the difference between the time of
introduction of the product in one country & time when
the producers in the other country starts producing it .
 1. International Trade Barriers

• Trade barriers can be explained as the restrictions or limitations that are

imposed by the government on exchange of goods and services among countries.

• Government has introduced various trade barriers that include tariffs, foreign
exchange restrictions, trade agreements, and trading blocs to name a few.

• Objectives of trade barriers are as follows:

– To protect home industries from foreign competition

– To promote new industries and R&D

– To conserve foreign exchange reserves

– To maintain favourable balance of payments

– To protect national economy from dumping

– To make economy self-reliant

 2. International Trade Barriers

The types of trade barriers are as follows:

• Tariffs: Tariffs can be explained as customs duty or tax levied on products that
cross the border of a country. It is one of the most effective trade barriers. Tariffs'
are imposed by the government in the form of custom duties and taxes for
reducing the imports of certain commodities. Tariffs are basically imposed for
maintaining BOP and discouraging the consumption of imported goods.

• Countervailing Duties: These duties are levied on the subsidised goods that are
imported by the home country. Its main purpose is to reduce the advantage that
the exporting country enjoys on trading the subsidised goods. A government can
provide export subsidy by rebating certain taxes on exported goods.
 1. Trends in International Trade

• Trade in Agricultural and Manufactured Goods: In the past two decades, world
merchandise trade has observed above average growth rate in the manufactured
goods sector, which does not include mining products.

• Trade between partners of Regional Trade Agreements (RTAs): Due to increase in

the registration of new RTAs, the trade between them has witnessed a quantum
jump. It is predicted that the numbers will increase over a period of time because
of present negotiations.
 2. Trends in International Trade

• Developing Countries’ Trade: The merchandise trade pertaining to developing

countries has increased significantly over the past years with shares jumping to
31%. More and more products are being exported to developed nations with
predictions that it will continue to increase in the near future.

• South-South Trade: The countries in southern hemisphere are accounting for

about 13% of the world merchandise trade with an annual increase of 11%. Lion’s
share of export of the developing countries is channelised to the other developing
countries. The trade among Asian countries has increased in present time since
the growth of East Asian economies.
 3. Trends in International Trade

• Air or Express Cargo: Although the share of the air or cargo in world trade is
miniscule but still it is growing at a healthy 10% growth rate annually and it is
expected to rise in near future. Globalisation accompanied by real time supply
and distribution is a primary reason for the explosive growth. The air cargo is
considered to be the fastest mode of transfer of goods. However, the rising fuel
price has impacted the cost of the product by making it expensive.

• Global Production Network: Global production of manufactured goods has

increased in recent times, followed by the trade between different countries
located across the globe. All the exported goods comprise of the import of
intermediate goods. It has helped to enhance the quality of the product by many
notches.
 4. Trends in International Trade

• Intra-Firm Trade: Intra- firm trade comprise of 30% of the total world trade.
Trading in developed countries consists of supply of goods from the
manufacturing units to the distributors.

• E-commerce: Electronic commerce is an electronic form of business that has

proved to be a vital component of the international trade. Internet has been a
dominant factor in bringing the suppliers and customers together so that
transactions of goods can take place in an effective manner.

• Just-in-Time System: Just-in time system has been immensely successful in

meeting the demands of the consumers because there is negligible time lag
between the manufactured goods and their eventual delivery to the intended
destination.
 Let’s Sum Up

• International trade refers to a trade between two or more nations.

• The major theories which explain the need for international trade are theory of
absolute advantage, theory of comparative advantage, product life cycle theory,
theory of market imperfection, modern theory of international trade, and theory
of imitation.

• Trade barriers are artificial restrictions practiced by governments to protect

industries of their own country. There are two major types of trade barriers
namely the tariff and non-tariff barriers.

• Various new trends are narrowing the gap between developed and developing
countries.
Chapter 2: Regulatory
Framework of Export-
Import
 Chapter Index

S. No Reference No Particulars Slide

From-To

1 Learning Objectives 31

2 Topic 1 Export-Import Policy 32-38

3 Topic 2 Highlights of Export-Import Policy 2009- 39-41

2014

4 Topic 3 Foreign Trade (Development and 42

Regulation) Act 1992

5 Topic 4 Foreign Exchange Management Act 1999 43

6 Topic 5 Customs Act 1962 44

7 Topic 6 Export (Quality Control and Inspection) 45

Act 1963
 Chapter Index

S. No Reference No Particulars Slide

From-To

8 Topic 7 Customs Tariff Act 1975 46

9 Topic 8 Central Excise Tariff Act 1985 47-49

10 Let’s Sum Up 50
• Discuss export-import policy

• Explain new export-import policy

• Define Foreign Exchange Management Act 1999

• State Customs Act 1962

• Explain Export (Quality Control and Inspection) Act 1963

• Outline Customs Tariff Act 1975

• Discuss Central Excise Tariff Act 1985

 1. Export-Import Policy

• The EXIM policy (export-import policy) aims at regulating and managing imports
and promoting and maintaining exports.

• Its main objectives are as follows:

– Deriving maximum benefits from expanding opportunities in the global

market.

– Stimulating economic growth by providing essential raw materials,

components, and capital goods for production.

– Generating new employment.

– Encouraging the attainment of internationally accepted standards of quality.

– Providing quality products at reasonable prices

 2. Export-Import Policy

Salient Features of Export-Import Policy

• It introduced the removal of quantitative packaging restrictions on agriculture
export.

• It started providing transport assistance for agriculture based goods.

• Export thrust on items identified in Medium Term Export Strategy.

• The EXIM policy favoured the continuation of existing duty neutralisation

schemes, until Value Added Tax (VAT) became fully operational.

• It advocated the increase of time period from 8 to 12 years for executing export
obligation under Export Promotion Capital Goods (EPCG) scheme.
 3. Export-Import Policy

Salient Features of Export-Import Policy

• Special Economic Zones (SEZs) were allowed to establish offshore banking units
and they were free from statutory requirements like CRR (Cash Reserve Ratio)
and SLR (Statutory Liquidity Ratio).

• This policy simplified the external commercial borrowing norms by allowing less
than three years tenure loans.

• EXIM policy provided a provision that allowed to repatriate export earnings

within 360 days rather than 180 days.

• It helped in retention of entire export earnings in Export Earners Foreigners

Currency Account (EEFCA).
 4. Export-Import Policy

Salient Features of Export-Import Policy

• EXIM Policy provided tax benefits of sales from domestic tariffs to SEZ.

• It also helped in reduction of processing fees and made provisions for receiving
license in the same day of application from all the offices of DGFT (Director
General of Foreign Trade).

• This policy also helped in eliminating all the disputes related to classification by
introducing common classification for DGFT and custom department.

• No license was needed for relocation of overseas industrial plants in India.

• Introduced Market Access Initiative (MAI) funds, which were given for the
development of infrastructure in the industrial areas, such as Zirakpur, Panipat
and Ludhiana.
 5. Export-Import Policy

Evaluation of Export-import Policy

The following benefits can be seen if we evaluate the export import policy:

• Comprehensive: The policy focuses on almost all the sectors including

agriculture, cotton, handicraft, and cottage industry.

• Supportive to Small, Cottage, and Handicraft Industry: These industries were

once the backbone of the Indian economy, however now they need support to
survive.

• Growth oriented: The policy aims to reduce the India’s trade deficit by its
progressive and export friendly policies.

• Boost to agriculture export: The Indian economy is based on agriculture and

supporting the export of agriculture is the need of time.
 6. Export-Import Policy

Evaluation of Export-import Policy

• Setting up agri-export zones: The government has agreed to set-up 32 export
sector zone that would be totally dedicated to agriculture.

• Exploring new export market: The country is seeking to develop new market
apart from USA and EU nations as these countries can be a promising market for
the Indian products.

• Overseas Banking Units: The EXIM policy also makes the way for the overseas
bank to open their branches in SEZs. It will facilitate the export transaction as
well. It helps Indian exporter to obtain loan for the trade at low interest rate.

• Encouragement to Hardware Industry: The EXIM policy promoted the export of

the computer hardware helping the market to grab a booming market.
 7. Export-Import Policy

Evaluation of Export-import Policy

• Encouragement to Jewellery Industry: Elimination of duty on rough diamonds,
concession to gems and jewellery industry, and reduction of value addition rates
from 10 to seven percent on export of plain jewellery has encouraged and boosted
the market.

• Boost to Industrial Growth: Concession on the duty levied on the import of raw
material capital goods and technology for the promotion of industrial growth.

• Setting of a Business Center: Helping the exporter to learn about the intricacies
of the foreign trade.
 1. Highlights of Export-Import Policy 2009-2014

• Higher Support for Market and Product Diversification

– Incentive schemes have been expanded by way of addition of new products

and markets.

– 26 new markets have been added under Focus Market Scheme. These include
16 new markets in Latin America and 10 in Asia Oceania.

– The incentive available under Focus Market Scheme (FMS) has been raised
from 2.5% to 3%.

• EPCG Scheme Relaxations

– To increase the life of existing plant and machinery, export obligation on

import of spares, moulds etc. under EPCG Scheme has been reduced to 50%
of the normal specific export obligation.
 2. Highlights of Export-Import Policy 2009-2014

• Technological Upgradation

– To aid technological upgradation of our export sector many initiatives have

been taken. These include:

– EPCG Scheme at zero duty for certain engineering products, electronic

products, basic chemicals and pharmaceuticals, apparel and textiles, plastics,
handicrafts, chemicals and allied products and leather and leather products.

– The 3% EPCG scheme has been simplified for the convenience of exporters.

• Support for Green Products and Products from Northeast

– Focus Product Scheme benefit extended for export of ‘green products’; and for
exports of some products originating from the North East.
 Highlights of EXIM Policy 2015-20
• http://dgft.gov.in/exim/2000/highlight2015.
pdf
• Please go thru this site to understand the
highlights of EXIM Policy 2015-20.
 3. Highlights of Export-Import Policy 2009-2014

• Agriculture Sector

– To reduce transaction and handling costs, a single window system to

facilitate export of perishable agricultural produce has been introduced. The
system will involve creation of multi-functional nodal agencies to be
accredited by APEDA.

• Leather Sector

– Leather sector shall be allowed re-export of unsold imported raw hides and
skins and semi-finished leather from public bonded ware houses, subject to
payment of 50% of the applicable export duty.
 Foreign Trade (Development and Regulation) Act 1992

• Foreign Trade (Development and Regulation) Act, 1992 regulates the import and
export activity in India.

• The salient features of the Act are as follows:

– According to this new act, the Central Government is given power for
creating arrangements that ensures development and regulation of foreign
trade.

– The Central Government is given the power to restrain, hinder, and regulate
the goods for the purpose of export or imports. The act authorises the Central
Government to formulate EXIM Policy

– This act also gives the power to Central Government for appointing a
Director General of Foreign Trade.
 Foreign Exchange Management Act 1999

• The Foreign Exchange Management Act (1999), also known as FEMA was
implemented to replace earlier Foreign Exchange Regulation Act (FERA). FEMA
became active on the 1st day of June, 2000.

• The objective of introducing Foreign Exchange Management Act (1999) was to

consolidate and amend foreign exchange law with objective of facilitating
external trade and payments.

• The act also focuses on the promotion of the orderly development and
maintenance of foreign exchange market in India.

• FEMA is accepted and followed all over India. The act is also applicable to all
branches, offices, and agencies outside India owned or controlled by a person who
is a resident of India.
 Customs Act 1962

• The Central Board of Excise and Customs is the nodal national agency, which is
designed to manage the Customs, Central Excise, Service
Tax, & Narcotics in India.

• It was established in the year 1855 by the then British Governor General of
India. It is one of the oldest government departments of India.

• The department is responsible for implementing and exercising customs laws in

India and also for the collection of import duties or land revenue.

• This department comes under the Department of Revenue, Ministry of Finance.

The department is headed by IRS officers. These officers are first appointed as
Assistant Commissioners and later they are promoted to the post of Chief
Commissioners.
 Export (Quality Control and Inspection) Act 1963

• The Export (Quality Control and Inspection) Act, 1963 was launched to augment
overseas trade of India by focusing on quality management and assessment.

• Powers under this act are discussed below:

– Its task is to notify commodities that need to pass quality control or

inspection or both before the export procedure.

– This act also helps in identifying that what inspection procedure or quality
control a specific commodity has to follow.

– Under this act, one or more standard specification for a notified commodity
are established, adopted, or recognised.
 Customs Tariff Act 1975

• Customs Tariff Act 1975, defines the duty or taxes that would be levied on goods
imported into India and goods exported out of India.

• The main purpose of this act is to decide the rate of customs duty. The act has the
power to consolidate and amend the law of customs duties.

• This act may be called as the Customs Tariff Act, 1975.

• It is active and implemented all over India.

• In the first and second schedule of this act, the rates are specified for charging or
collecting customs duty.
 1. Central Excise Tariff Act 1985

• The Central Excise Tariff Act, 1985 deals with various goods on which central
excise duty is surcharged. The act also decides the surcharge rate on which taxes
are levied.

• The basic duty of central excise tax is levied at rate set in the first schedule of
Central Excise Tariff Act, 1985. Commodities such as Pan Masala, fall under the
specific duty of excise and its tax structure is covered in Schedule II of the
Central Excise Tariff.
 2. Central Excise Tariff Act 1985

Central Excise is levied based on the following which can be classified as 4 Ms:

• Manufactured in India: It implies that central excise tariff is levied on the goods
that are manufactured in India.

• Moveable: It implies that central excise tariff is levied on the goods that can be
easily transferred from one location to another.

• Marketable: It implies that central excise tariff is levied on the goods that can be
sold both in domestic market and to other countries and do not come in the list of
restricted items.

• Mentioned in the Tariff act: It implies that duty should be levied on the goods
that are mentioned in the Central Excise Tariff Act.
 3. Central Excise Tariff Act 1985

The Central Excise Duty is charged on the basis of following:

• Specific Duty: It is calculated on the basis of the physical feature of a product.

• Tariff Value: The government can decide the base for charging central excise on
the products or services. The duty is charged on the value declared by the
government and on the actual value of the goods.

• Maximum Retail Price: It was introduced to control the malpractice of

manufacturers. A new valuation method was introduced based on the MRP of the
product.

• Ad-Valorem Basis: The first three methods are applicable on limited goods.
However in the case of large number of goods, the central excise duty is
calculated on the basis of the value of the goods, known as assessable value.
 Let’s Sum Up

• The classical theories of international trade were formulated by Adam Smith and
David Ricardo. According to them, when a country enters into foreign trade, it
benefits from two factors—specialisation and efficient resource allocation.

• All trade theories are based on rules and assumptions, and are not practically
valid in the real world.

• The export–import policy was announced by the Government of India, Ministry of

Commerce and Industry; it is called the EXIM policy or foreign trade policy. It is
announced every five years and updated on 31st of March, every year.

• Regional economic integration refers to the agreement between the group of

countries to reduce/minimise and finally remove all the tariff and non-tariff
barriers, and to allow free flow of goods or services and factors of production
among themselves.
Chapter 3: Export
Documentation
 Chapter Index

S. No Reference No Particulars Slide

From-To

1 Learning Objectives 55
2 Topic 1 Factors on which Export Documentation is 56-59
Based
3 Topic 2 Essential Documents 60-62
4 Topic 3 Registration of Exporters 63
5 Topic 4 Registration with Export Promotion 64-65
Councils
6 Topic 5 EDI Registration 66-67
7 Topic 6 IEC certificate 68-73
8 Topic 7 Export Assistance in India 74-77
9 Let’s Sum Up 78
• Explain the factors on which export documentation is based

• Discuss the essential documents required for export

• State the process for registration of exporters

• Define the process for registration of export promotion councils

• Describe EDI registration

• Explain the meaning of IEC certificate

• Explain the procedure for export assistance in India

 1. Factors on which Export Documentation is Based

• In international trade, the commercial part is that both buyer and seller should
agree on a fixed price rate.

• The buyer accepts the price for purchasing goods from the supplier’s or seller’s
warehouse or on delivery to his or her warehouse.

• The purpose is to simplify the process of business as it is easier for the buyer or
seller to deal with the formalities including insurance of the goods from one place
to another in the same country.
 2. Factors on which Export Documentation is Based

• The scenario of international trade is little complex and it includes three separate
contract for carriage of goods, which are explained as follows:

– Firstly, for moving the goods within the seller’s country from his/her
warehouse

– Secondly, for shipping the goods internationally within the buyer’s country

– Thirdly and lastly, sending the goods to final destination that is buyer’s
warehouse within his or her country
 3. Factors on which Export Documentation is Based

Basic export documents are as follows:

• Invitation to quote

• Quote

• Pro-forma Invoice

• Order confirmation or acknowledgement

• Bill of Lading (B/L)

• Ocean Bill of Lading (Ocean B/L)

• Airway bill

• Marine (other) insurance policy

• Commercial invoice
 4. Factors on which Export Documentation is Based

• Consular invoice

• Certified invoice

• Certificate of origin (C/O)

• Packing list or weight note

• Specification sheet

• Manufacturer's analysis certificate

• Health, sanitary, phytosanitary, and veterinary certificates

• Quality inspection certificate or certificate of value

• Independent third party inspection certificate

• Dispatch advice note

• Dangerous goods declaration

 1. Essential Documents

Commercial documents include:

• Commercial invoice and Pro-forma Invoice

• Packing list or weight note

• Shipping instructions

• Certificate of inspection and quality control

• Insurance declaration

• Certificate of insurance and Mate’s receipt

• Bill of Landing (B/L) or combined transport documentation

• Application for Certificate of Origin (C/O)

• Shipping or export consignment notes

• Letter to bank for collection or negotiation of documents

 2. Essential Documents

Important documents are explained as follows:

Commercial Invoice: It is also called the ‘Document of Contents’ because it contains

all the information required for preparing all the other documents.

Packing List: This list is prepared by the shipper and it consists of itemised
classification of all the items that would be shipped.

Certificate of Inspection: Its pre-shipment inspection that is done to confirm that all
requirements and regulations are fulfilled.

Bill of Lading: It is a legal document that is issued by the carrier of the goods to the
shipper of the goods for the receipt of goods.

Certificate of Origin: It is a document that is prepared by the manufacturer of the

goods and a certified by quasi-official authority
 3. Essential Documents

•Insurance Certificate: This is an important document which covers the items

against loss or damage that may occur during its shipment.

•Bill of Exchange: It is a negotiable instrument, which the shipper or seller issues for
the buyer when the goods are shipped It is an instrument by which the payment is
received.
 Registration of Exporters

• An organisation needs to register itself with various government authorities

before it can start the export of its product in the international markets. First
and foremost every organisation needs to get registered under the Company’s Act
1956.

• The registration depends upon the type of organisation i.e., whether the
organisation is a proprietary firm or a private limited organisation or a shop or
an establishment.

• The aspiring exporter needs to register the organisation with 5 government

organisations, namely the Reserve Bank of India (RBI), Director General of
Foreign Trade (DGFT), Commodity Boards, Income Tax Authorities, and Export
Promotion Council (EPC).
APPENDIX-2 LIST OF EXPORT PROMOTION COUNCILS ... - DGFT

• www.dgft.gov.in/exim/2000/download/Appe
&ANF/2.pdf

• The above website will give the complete

details of all Export Promotions councils.
 1. Registration with Export Promotion Councils

• Export Promotion Councils (EPC) are registered as non-profit organisations

under the Indian Companies Act or the Societies Registration Act.

• The purpose of this body is to promote various goods exported from India in
international market.

• EPC works in collaboration with the Ministry of Commerce and Industry,

Government of India.

• EPC is more like a platform or a connecting link between the exporting

community and the government. EPCs are established for encouraging exporters
to earn foreign exchange and boosting international trade for the country
manufactured products.
 2. Registration with Export Promotion Councils

• For the importer, it becomes important to obtain a Registration Cum Membership

Certificate (RCMC) from the EPC.

• To get membership, the interested organisation should send application for

registration, along with a self certified copy of the IEC number. The organisation
has to pay a membership fee in the form of cheque or draft after confirming the
amount from the concerned EPC.

• The RCMC certificate is valid from 1st April of the licensing year, till five years,
ending 31st March of the licensing year, unless otherwise specified.
1) Apparel Export Promotion Council

2) Basic Chemical, Pharmaceuticals & Cosmetics (CHEMEXCIL)

3)Carpet Export Promotion Council
4)Cashew Export Promotion Council of India
5)Chemical and Allied Export Promotion Council of India (CAPEXIL )
6)The Cotton Textiles Export Promotion Council
7)Council for Leather Exports
8)EEPC INDIA ( Formerly Engineering Export Promotion Council)

9)Electronics & Computer Software EPC

10) Export Promotion Council for Handicrafts
11)Export Promotion Council for EOUs & SEZ Units
12)Federation of Indian Export Organisations (FIEO)
13)The Gem & Jewellery Export Promotion Council
14)Handloom Export Promotion Council
15)Indian Oilseeds & Produce Export Promotion Council
16)The Indian Silk Export Promotion Council
17) Jute Products Development and Export Promotion Council
18)Pharmaceuticals Export Promotion Council
19)The Plastics Export Promotion Council

20)Powerloom Development & Export Promotion Council

21)Project Exports Promotion Council of India
22)Services Export Promotion Council
23)The Sports Goods Export Promotion Council
24)Shellac & Forest Products Export Promotion Council
25)Synthetic & Rayon Textiles Export Promotion Council
26)Wool & Woollens Export Promotion Council
27)Wool Industry Export Promotion Council
28)Telecom Equipment and Services Export Promotion Council (TEPC)
29)Coffee Board
30)Coir Board
31)The Rubber Board
32)Spices Board
33)Tea Board
34)Tobacco Board
35)Agricultural and Processed Food Products Export Development Authority (APEDA)
36)Marine Products Export Development Authority
37)Coconut Development Board
 1. EDI Registration

• Indian Customs EDI System (ICES) is the beginning of a new era in the country.
It marked the beginning of paperless trade as well as trade facilitation rather
than control.

• It is the result of joint efforts made by ICES along with officers of Central Board
of Excise and Customs (CBEC) and National Informatics Centre (NIC).
 2. EDI Registration

The main objectives set for an Indian Customs EDI System by the Customs were:

• Fast action to the needs of the trade.

• Digitalisation of import/export, ex-bond clearance of stored goods, goods imported

with regard to export promotion schemes, and regulation and monitoring of
export promotion schemes.

• Lessen the interaction of the trade with government agencies.

• Easy access to information. It means that one can retrieve information from other
custom locations to have uniformity in assessment and valuation.

• Beneficial for policy making as it generates accurate information on

import/export statistics which it provides to Director General of Commercial
Intelligence and Statistics.
 1. IEC Certificate

• IEC certificate is a unique 10 digit code issued by Director General of Foreign

Trade (DGFT), Ministry of Commerce and Government of India to Indian
Companies. It stands for “Importer Exporter Code”.

• IEC certificate is mandatory to carry out export and/or import business in India.

• The applicant is required to submit an application to Registered/Head Office to

the nearest Regional Authority of Directorate General Foreign Trade, along with
the prescribed documents.
 2. IEC Certificate

The following categories of importers or exporters are exempted from obtaining

Importer - Exporter Code (IEC) number:

• Importers covered by clause 3 (1) [except sub-clauses (e) and (l)] and exporters
covered by clause 3(2) [except sub-clauses (i) and (k)] of the Foreign Trade
(Exemption from application of Rules in certain cases) Order, 1993.

• Ministries/Departments of the Central or State Government.

• Persons importing or exporting goods for personal use not connected with trade
or manufacture or agriculture.

• Persons importing/exporting goods from/to Nepal provided the CIF value of a

single consignment does not exceed Indian Rs. 25,000.
 3. IEC Certificate

Check list of documents to apply for IEC certificate:

1. Covering Letter on your company's letter head for issue of new IEC Number.

2. Two copies of the application in prescribed format (Hayat Narayan Form ANF 2A)
must be submitted to your regional Jt. DGFT Office.

3. Each individual page of the application has to be signed by the applicant.

4. Part 1 & Part 4 has to be filled in by all applicants. In case of applications

submitted electronically.

5. No hard copies of Part 1 may be submitted. However in cases where applications

are submitted otherwise the hard copy of Part 1has to be submitted.

6. Only relevant portions of Part 2 need to be filled in.

 4. IEC Certificate

7. Rs. 250.00 Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing

payment of application fee in terms of Appendix 21B.

8. Certificate from the Banker of the applicant firm in the format given in Appendix
18A.

9. Self-certified copy of PAN issuing letter or PAN (Permanent Account Number)

Card issued by Income Tax Authority.

10. Two copies of passport size photographs of the applicant duly attested by the
Banker of the applicant.

11. Self-addressed envelope with Rs.25/- postal stamp for delivery of IEC certificate
by registered post or challan/DD of Rs.100/- for speed post.

12.Application can be submitted in person or by an Authorised Employee of the

Company at the R & I counters in the office or it can be sent by post or courier.
 5. IEC Certificate

Mandatory requirements to apply for IEC certificate:

1. Covering letter

2. Fill Part A, B & D of the application form.

3. Application must be accompanied by documents as per details given below:

A) Bank Certificate from the bank on Bank letter head as per pro-forma (Part B)
given in the application.

a.In case of Proprietorship firms, please furnish:

i) Date of Birth of individual and ii) Number of IECs

b. In case of Companies, please furnish:

i) Extract of Board of Resolution and MOA with Form 32 and ii) ROC in case of
change in Directors.
 6. IEC Certificate

c.In case of others:

i) Notarised Partnership Deed showing date of formation

ii) No Objection Certificate from other partners/HUF.

B) Self certified copy of Permanent Account Number (PAN) issued by income Tax
Authorities.

C) Two copies of passport size photographs of the applicant. The photograph pasted
on the banker’s certificate must be attested by the banker with Seal and Signature of
the applicant.

4.The application must be submitted in Duplicate.

5.Each individual page of the application must be signed by the applicant.

6.Self-addressed envelope stamped with Rs. 25 (Local Address) & for others Rs.30/-.
These documents may be kept secured in a file cover.
 • Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Udyog Bhawan, New Delhi-110 011
• Public Notice No. 09/2015-20
New Delhi dated 29 June, 2017
• Subject: Modification in para 2.07 (b) of Handbook of Procedure (2015-
20) -regd.
• In exercise of powers conferred under paragraph 2.04 of the Foreign Trade
Policy 2015-2020, the Director General of Foreign Trade hereby modifies
para 2.07 (b) (Handbook of Procedure) – IEC Number Exempted Categories
as under:
• Following permanent IEC numbers shall be used by non- commercial PSUs
and categories or importers/ exporters mentioned against them for
import/ export purposes:
 Revised list of Permanent IEC
Sr. No Existing Revised Categories of Importer / Exporter
. Permanent Permanent IEC
IEC numbers
1
100000011 AMDCGOIllE All Ministries / Departments of Central Government

and agencies wholly or partially owned by them.

2
100000029 ADSGA0129E All Ministries / Departments of any State

Government and agencies wholly or partially

owned by them.
3
100000037 DCUN00137E Diplomatic personnel, Consular officers in India

and officials of UNO and its specialized agencies.

4
100000045 IABBRO145E Indians returning from / going abroad and claiming

benefit under Baggage Rules.

5
100000053 IIHIE0153E Persons /Institutions /Hospitals importing or
exporting goods for personal use, not connected
with trade or manufacture or agriculture.
 Revised list of Permanent IEC
Sr. No. Existing Revised Categories of Importer / Exporter
Permanent IEC Permanent IEC
numbers
6100000061 IIEGN0161E
Persons importing/exporting goods from
/to Nepal
7100000070 IIEGM0170E
Persons importing / exporting goods from /
to Myanmar through Indo- Myanmar
border areas
8— IIEGB0180E
Persons importing/ exporting goods
from /to Bhutan
 Revised list of Permanent IEC
Sr. No Existing Revised Categories of Importer / Exporter
. Permanent Permanent IEC
IEC numbers
9100000096 ATAEF1096E
Importers importing goods for display or use in fairs/
exhibitions or similar events under provisions of ATA
camet. This IEC number can also be used by
importers importing for exhibitions/fairs as
per Paragraph 2.63 of Handbook of Procedures of
ATA camet.
10100000100 IDNBG1100E Director, National Blood Group
11100000126 ICIRN1126E
Individuals /Charitable Institution/ Registered NGOs
importing goods, which have been exempted from
Customs duty under Notification issued by Ministry
of Finance for bonafide use by victims affected by
natural calamity.
 Revised list of Permanent IEC
Sr. No. Existing Revised Categories of Importer
Permanent IEC Permanent IEC /Exporter
numbers
12 100000134 IIEGC1134E
Persons importing/exporting permissible goods
as notified from time to time, ,from /to China
through Gunji, Namgaya Shipkila and Nathula
ports, subject to value ceilings of single
consignment as given in Paragraph 2.07
(a) above
13 100000169 NCIEE1169E
Non-commercial imports and exports by entities
who have been authorized by Reserve Bank of
India.
Rema 0100000088 FORD
rk FOUNDATION
IEC DELETED
 1. Export Assistance in India

• EXIM Policy 1992-97 accompanied with globalisation has opened doors for India
to participate in international trade.

• It allowed financial assistance from external sources such as World Bank. For
assisting global trade many regulations have been introduced by the Government
of India (GOI). These are as follows:

– Export Credit Guarantee Corporation (ECGC)

– Bureau of Indian Standards

– Export Inspection Council (EIC)

– Indian Council of Arbitration

– Export Promotion Councils

– India Trade Promotion Organisation (ITPO)

 2. Export Assistance in India

• Export Credit Guarantee Corporation (ECGC)

Export Credit Guarantee Corporation, a central government undertaking body is

designed to save the interest of the exporter. The corporation offers a credit
guarantee on the default of payments by the buyer. This body works as an insurance
firm that guarantees export payment in case the buyer fails in making the payment.

• Bureau of Indian Standards (BIS)

The Bureau of Indian Standards (BIS) is the National Standards Body of India. This
body is governed and guided by the Ministry of Consumer Affairs, Food & Public
Distribution, Government of India. It was established in 1986.However,it came into
effect on 23 December, 1986 only.

Earlier it was known as Indian Standards Institution (ISI) and was registered under
the Societies Registration Act 1860
 3. Export Assistance in India

• Export Inspection Council (EIC)

• The Export Inspection Council (EIC) was formulated and established by the
Government of India under Section 3 of the Export (Quality Control and
Inspection) Act, 1963.

• The main objective of this council is to confirm that quality standards are met for
the goods to be exported for ensuring sound export development.

• The Export Inspection Council is located at Delhi and is headed by a Chairman.

• The Executive Head of the Council is the Director of Inspection & Quality Control
who is responsible for day to day functioning of the Council.

• The assurance to quality and safety is provided through either a consignment

wise inspection or a quality assurance / food safety management based
certification through its field organization.
 Export Inspection Council (EIC)
• The Export Inspection Agencies (EIAs) located at Mumbai, Kolkata,
Kochi, Delhi and Chennai with a network of 30 sub offices backed by
the state of art, NABL accredited laboratories at various places.
• EIC provides mandatory certification for various Food items namely
fish & fishery products, dairy product, honey, egg products, meat
and meat products, poultry meat products, animal casing, Gelatine,
Ossein and crushed bones and feed additive and pre-mixtures
• while other food and non-food products are certified on voluntary
basis
 Indian Council of Arbitration
• The Council helps in settling all international commercial disputes by
using the process of arbitration.

• According to Arbitration and Conciliation Act, 1996, the rules of arbitration

have been amended in recent times.

• The members of the council include

– Government of India

– The Federation of Indian Chambers of Commerce and Industry (FICCI)

– Other Important Chambers of commerce and trade association in India

– Export Promotion Councils (EPCs)

– Public Sector Undertakings (PSUs)

 4. Export Assistance in India

• Export Promotion Councils

Export Promotion Councils (EPC), are registered under the Indian Company Act or
the the Societies Registration Act. It is a non-profit organisation and the purpose of
this body is to promote various goods exported from India in international market.

• India Trade Promotion Organisation (ITPO)

India Trade Promotion Organisation (ITPO), is a nodal agency, that is regulated and
guided by Ministry of Commerce and Industry (India). The main head office of this
organisation is located in Pragati Maidan, New Delhi. The main purpose of this
agency is the promotion of and providing assistance in country's external trade.
 Let’s Sum Up

• Export documents are the basic documents that are submitted by both importer
and exporter for shipping the goods.

• Essential documents include commercial invoice, packing list, certificate of

inspection, bill of lading, certificate of origin, insurance certificate, and bill of
exchange.

• Before starting export process, a firm has to register with RBI, DGFT, commodity
boards, central excise, and income tax authorities.

• As per Indian Companies Act, it is important for a firm to register with Export
Promotion Council (EPC) also whose main purpose is to promote Indian goods in
international market.

• Government of India provides export assistance with the help of ECGC, BIS, EIC,
Indian Council of Arbitration, EPC, and ITPO.