EXPORT PROCEDURE AND DOCUMENTATION PROJECT REPORT ON EXPORT PROCEDURE & DOCUMENTATION PREPARED BY DIVYA THINGALAYA UNDER THE

GUIDANCE OF Prof. MONA SUBMITTED TO UNIVERSITY OF MUMBAI INPARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELOR OF MANAGEMENT STUDIES ACADEMIC YEAR 2006 - 2007 1 EXPORT PROCEDURE AND DOCUMENTATION DECLARATIONI Miss. DIVYA THINGALAYA OF VIVEK COLLEGE OF COMMERCE OFT.Y .B.M.S. (SEMESTER VI) HEREBY DECLARE THAT I HAVE COMPLETEDTHIS PROJECT ON EXPORT PROCEDURE AND DOCUMENTATION IN THEACADEMIC YEAR2006 2007. THE INFORMATION SUBMITTED IS TRUE ANDORIGINAL TO THE BEST OF MY [Link]:PLACE: (SIGNATURE OF THE STUDENT) 2 EXPORT PROCEDURE AND DOCUMENTATION CERTIFICATEI Prof. MONA HERBY CERTIFY THAT Miss. DIVYA THINGALAYA OF VIVEKCOLLEGE OF COMMERCE OF T.Y .B.M.S. (SEMESTER VI) HAS COMPLETEDTHE PROJECT ON EXPORT PROCEDURE AND DOCUMENTATION IN THEACADEMIC YEAR 2006 2007. THE INFORMATION SUBMITTED IS TRUE,ORIGINAL AND AUTHENTIC TO THE BEST OF MY [Link] OF PRINCIPLE SIGNATURE OF PROJECTGUIDE(Prof. SUNIL .B. MANTRI) (Prof. MONA) 3 EXPORT PROCEDURE AND DOCUMENTATION ACKNOWLEDGEMENT IT IS THE MATTER OF GREAT PLEASURE AND PRIVILEGE TO BEABLE TO PRESENT THIS PROJECT REPORT ON EXPORT PROCEDURE ANDDOCUMENTATION. THE COMPILATION OF THE PROJECT IS A MILESTONE IN THE LIFEOF THE MANAGEMENT STUDENT AND ITS EXECUTION IS INEVITABLEWITH THE COOPERATION OF THE PROJECT GUIDE. I WISH TO RECORD ADEEP SENSE OF RESPECT AND GRATITUDE TO MY PROJECT GUIDE, [Link] FOR HER ENCOURAGEMENT TO COURSE OF MY WORK. IT IS DUETO THE ENDURING EFFORT AND GUIDANCE OF MY GUIDE THATULTIMATELY MADE IT SUCCESS. I ALSO TAKE THIS OPPORTUNITY TO EXPRESS MY DEEP REGARDSAND GRATITUDE TO THE PRINCIPLE SUNIL MANTRI AND WOULD LIKE TOTHANK THE HEAD OF B.M.S. DEPARTMENT PROF. MONA WHO GAVE USGUIDANCE TO TAKE UP AND PURSUE THE PROJECT I CANNOT JUST CONDONE THE VALUABLE OPPORTUNITY GIVE TOME BY THE UNIVERSITY OF MUMBAI FOR COMPILING AND SUBMITTINGTHE PROJECT, WHICH I FEEL IS AN OPPORTUNITY TO EXPRESS MY VIEWSABOUT EXPORT PROCEDURE AND DOCUMENTATION. I ACKNOWLEDGE MY INDEBTNESS TO VARIOUS AUTHORS FORMAKING USE OF VALUABLE INFORMATION LIBERALLY . IT IS MY PROUD PRIVILEGE TO EXPRESS MY DEEP SENSE OFAPPRECIATION AND GRATITUDE TO MY PARENTS AND FRIENDS FORTHEIR SUPPORT AND CO-OPERATION IN THE COURSE OF THE PROJECTEITHER DIRECTLY OR INDIRECTLY INVOLVED IN TIME WITH THEIRVALUABLE CONTRIBUTION. 4 EXPORT PROCEDURE AND DOCUMENTATION INDEXSERIAL CONTENT

PAGENUMBER NUMBE R 1 INTRODUCTION 6 2 HOW TO SET UP AN EXPORT ORGANISATION 8 3 HOW ONE BEGINS TO DO EXPORT 14 4 EXPORT SALES & CONTRACT TERMS & 17 CONGITIONS 5 TERMS OF SHIPMENT INCOTERMS. 20 6 PROCESSING AN EXPORT ORDER 27 7 FINANCIAL RISK INVOLVED IN FOREIGN 28 TRADE 8 EXPORT DOCUMENTS 29 9 OCTROI 53 10 QUALITY CONTROL & PRE-SHIPMENT 57 INSPECTION 11 SHIPPING ANG CUSTOMS FORMALITIES 60 12 SALES TAXES EXEMPTION PROCEDURE 66 13 METHODS OF RECEIVING PAYMENTS 68 AGAINST EXPORTS 14 THE LETTER OF CREDIT 71 15 PREPARATION AND SUBMISSION OF 88 DOCUMENTS FOR BANK NEGOTIATIONOR PURCHASE 16 SHIPMENT THROUGH COURIERS 91 17 CUSTOM PROCEDURE FOR EXPORT UNDER 92 EDI SYSTEM 18 THE ECGC COVER. 112 INTRODUCTION India has a mission to capture 2% of the global share of trade by 20010, upfrom the present level of less than 1%. Export is one of the lucrative business activities inIndia. The government also provides various promotional schemes to the exporters for 5 EXPORT PROCEDURE AND DOCUMENTATIONearning valuable foreign exchange for the country and for meeting their requirements forimporting modern technology and essential inputs. Besides, the income from exportbusiness is also exempted to the specified extent under the Income Tax Act, 1961,Refund of Central Excise and Custom Duty on export is also made under the DutyDrawback Scheme of the Government. There is no Sales Tax on products meant forexports. Exports can be of goods which can be moved physically from one countryto another or can be of service rendered. Detailed list of services are given in the ForeignTrade Policy covering more than 160 items e.g. Insurance, Hospital, Postal andTelecommunication [Link] CLASSES OF EXPORTS: Physical Exports: If the goods physically go out of the country or servicesare rendered outside the country then it is called as physical export. Deemed Exports:Where the goods do not go out of the country physically they can be termed as deemedexports. This will be subject to certain conditions as prescribed by the DGFT. UnderDeemed Exports, the goods may be supplied to the manufacturer exporter who ultimatelyexport a finished product of which this supply forms a part and ultimately go out of thecountry. E.g. Supply of fabrics to the garment exporter who exports the garments madeout of the said fabric. The government may announce from time to time the types of suppliesthat may be considered as deemed export. The Foreign Trade Policy gives the list ofsupplies considered under the Deemed Export Category. The policies and procedures aredifferent for Physical Exports and Deemed Exports as also the benefits available. In anutshell, Deemed Exports do not enjoy all the benefits that are available under PhysicalExport. The Foreign Trade defines exports as taking out of India any goods by land, sea,air. Although the act does not term them as Physical Exports, we have to put phrase todistinguish it from Deemed Exports which is sales in India but considered as exportsfor limited purpose. 6

EXPORT PROCEDURE AND DOCUMENTATIONTYPES OF EXPORTERS: Exporters can be basically classified into two groups Manufacturer Exporter: As the exporter has the facility to manufacturer the product he intends to export and hence he exports the products manufactured by him. Merchant Exporter: An exporter who does not have the facility to manufacture an item. But, he procures the same from other manufacturers or from the market and exports the same. An exporter can be both a manufacturer exporter as well as a merchantexporter, he can export product manufactured by him or he can export items bought fromthe market. Once it is decided to export, it is mandatory on your part to follow certainprocedures, rules and regulations as prescribed by various regulatory authorities such asDGFT, RBI, and Customs. These procedures, rules and regulations are laid down in theExim Policy 2004-09, Exchange Control Manual, Customs Act etc. Accordingly Exportdocuments are required to be prepared keeping in view of the requirement of the foreignbuyers and our regulatory authorities. HOW TO SET UP AN EXPORT ORGANISATIONThe proper selection of organization depends upon Ability to raise finance. Capacity to bear the risk. 7 EXPORT PROCEDURE AND DOCUMENTATION Desire to exercise control over the business. Nature of regulatory framework applicable to anyone If the size of the business is small, it would be advantageous to form a soleproprietary business organization. It can be set up easily without much expenses and legalformalities. It is subjected to only few governmental regulations. However, the biggestdisadvantage of sole proprietorship business is limited ability to raise funds whichrestricts the growth. Besides the owner has unlimited personal liabilities. In order toavoid this disadvantage, it is advisable to form a partnership firm. The partnership firm can also be set up with ease and economy. Businesscan take benefit of the varied experiences and expertise of the partners. The liability ofthe partners though joint and several, is practically distributed amongst the variouspartners, despite the fact that the personal liability of the partner is unlimited. The majordisadvantage of partnership firm of business organization is that conflict amongst thepartners is a potential threat to the business. It will not be out of place to mention herethat partnership firms are governed by the Indian Partnership Act, 1932 and, thereforethey should be formed within the parameters laid down by the Act. Company is anotherform of business organization, which has the advantage of distinct legal identity andlimited liability to the share holders. It can be a private limited company or a public limited company. A privatelimited can be formed by just two persons subscribing to its share capital. However, thenumber of its shareholders cannot exceed 50, public cannot be invited to subscribe to itscapital and the members right to transfer their share is restricted. On the other hand, apubic limited company has a minimum of seven members. There is no limit on themaximum number of its members. It can invite the

public to subscribe to its capital andpermit the transfer of share. A public limited company offers enormous potential forgrowth because of access to substantial funds. The liquidity of investment is high becauseof easiness of transfer of shares. However its formation can be recommended only whenthe size of the business is large. For small business, a sole proprietary concern or apartnership firm will be the most suitable form of business organization. In case it is 8 EXPORT PROCEDURE AND DOCUMENTATIONdecided to incorporate a private limited company, the same is to be registered with theRegistrar of [Link] APPROPRIATE MODE OF OPERATIONS:You can choose any of the following modes of operations Merchant Exporter i.e. buying the goods from the market or from the manufacturer and then selling it to foreign buyers. Manufacturer Exporter i.e. manufacturing the goods yourself for export. Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of the seller and charging the Commission. Buying Agent i.e. acting on behalf of the buyer and charging Commission. Service provider i.e. providing service from India to another [Link] THE BUSINESS Whatever form of business organization has been finally decided, namingthe business is an essential task for every exporter. The name and style should be soft,attractive, short and meaningful. Open a current account in the name of the organisationin whose name you intend to export. It is advisable to ope