Export procedures are really laborious as foreign trade involves a lot of risks. India being an export oriented economy, entrepreneurs should have a sound understanding of these procedures to mitigate risks and ensure faster turnaround time. Here’s how you can go about it:
Becoming an Exporter- Registrations:
To become an exporter or importer, one should get formally recognised as an exporter/importer by obtaining an Importer- Exporter Code (IEC) from DGFT (Director General of Foreign Trade). IEC is a ten digit number issued by DGFT, and it forms the basis to obtain various benefits for exports from DGFT, Excise, customs and export promotion councils. It is issued only to business and not to individuals.
Since the export proceeds are in foreign currencies, remember to get the authorised dealer code from a bank that is authorised to deal in foreign exchange.
Apart from the above requirements, it is also necessary to get RCMC (Registration Cum Membership Certificate) from respective export promotion councils to avail various benefits under export-import policy.
Above all, ensure that your current account is operational with a designated bank. The next step is to obtain PAN based Business Identification number (BIN) from DGFT. Additionally, if the export is under export promotion schemes, the exporter should also ensure that he registers licenses, DEPB, advance license, etc., at the customs office.
Cargo insurance is indispensable because the cargo during the transit is subject to various kinds of losses due to theft, pilferage, natural calamities and wars. It is advisable to opt for insurance policies with Institute Cargo Clause (All Risks) because it covers almost all important risks. Additionally, all exporters should get acquainted with INCOTERMS 2010 as it clearly defines the obligations of the exporter and importer not only with respect to insurance but also costs and freight charges.
For customs clearance, the shipping bill is the most important document for the shipment by air or sea. The shipping bill requires details like description of goods, quantity and value, exporter and consignee details, invoice number, etc. There are five different forms of shipping bill based on the requirements of the exporters like export of goods under claim for duty drawback, export of duty free goods, export of duty free goods ex-bond, export of dutiable goods and export under DEPB scheme.
• GR/SDF/SOFTEX Form under FEMA:
As per RBI regulations, the shipping documents have to be submitted along with GR or SDF, a mandatory document. The GR (Guaranteed Receipt) has to submit if the shipping bill is processed manually, and SDF in case of electronic processing. Both serve the same purpose of guaranteeing the regulator that full export proceeds will be realized under each shipment. SOFTTEX form is for export of computer software in non-physical form.
• ARE-1 form (Excise):
This form is proof of export for excise purpose, and it is certified by the customs officer that exports have indeed taken place. This form is then submitted to the Maritime Commissioner. This form is only applicable for manufactured goods cleared for export.
• Duty Drawback formalities:
Relevant documents have to be produced in case the exporter plans to avail duty drawback for his exports. Duty drawback is allowed by the government and the exporter has to make the endorsement on the shipping bill for making this claim.
Apart from the above documents, other documents include
• Commercial invoice
• Packing lists
• Certificate of origin
• Insurance policy
• Letter of Credit (if applicable)
• Letter showing the BIN number
• Declaration of value.
Processing of shipping bills:
The shipping bills are either processed through EDI (Electronic Data Interchange) method or Non-EDI method (Manual method). The examination and verification of the goods by the customs officer and appraiser at the port is same under both the methods.
In case of Non-EDI method, the shipping bills are manually filled by the exporter or his agent as per Shipping Bill and Bill of Export (form) regulations 1991. The completed shipping bill is presented to the customs officer, and on his further instructions, the bill is subsequently submitted to the appraiser at the dock for examination of the goods. The appraiser then gives the ‘let export’ order using which the goods are loaded on to the ship.
But under the EDI method, a dully filled and signed declaration is submitted at the service centres of the customs. This declaration is used to input the data and generate a duly endorsed checklist, which is handed over to the exporter. The checklist along with other original documents is presented to the customs officer and then to the appraiser, who examines the goods and provides the ‘let export’ approval. Based on this approval, two copies of shipping bill are generated, and the shipper uses the exporter’s copy to load the goods onto the ship. The customs preventive officer oversees the loading of goods and gives the ‘shipped on board’ endorsement on the exporter’s copy of the shipping bill.
Although the above outlined procedure is the general procedure followed under exports, there are quite a number of exceptions and special procedures for different export schemes. However, Government notifications and RBI guidelines from time to time provide necessary guidance in this respect.