{"id":21118,"date":"2020-12-05T15:26:09","date_gmt":"2020-12-05T09:56:09","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21118"},"modified":"2020-12-05T15:26:11","modified_gmt":"2020-12-05T09:56:11","slug":"how-to-export-goods-from-india-to-overseas-markets","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/how-to-export-goods-from-india-to-overseas-markets\/","title":{"rendered":"How to Export Goods from India to Overseas Markets?"},"content":{"rendered":"\n

The export and\nimport activities in India is regulated by the Foreign Trade Policy (FTP) under\nsection 5 of the foreign trade (Development and Regulation) Act 1992. The\nForeign Trade Policy 2015-20 is in effect since 1st April 2015. As per FT\nD&R act, the term “export” is referred to as an act of taking\ngoods outside India via land, sea, or air with an authentic transaction of\nmoney. <\/p>\n\n\n\n

In this write-up, you will learn about how to export goods from India to an overseas destination in a legal way. But before we get started with our topic i.e. how to export goods from India, let’s cover up some basic things first.<\/p>\n\n\n\n

How to Start an Exporting Business? <\/h2>\n\n\n\n
\"How<\/figure><\/div>\n\n\n\n

Export has\nvarious dimensions from a legal viewpoint. This is why exporters have to comply\nwith plenty of regulations before getting into international market. The\nfollowing steps would ease out complications related to the commencement of the\nexporting business.<\/p>\n\n\n\n

Setting up A Company<\/h3>\n\n\n\n

To commence the\nexporting business, the individual has to set up a legal entity such as a\nProprietorship or partnership firm as per predetermined procedure with a unique\nname and logo.<\/p>\n\n\n\n

Open a Current Account<\/h3>\n\n\n\n

A current bank account\nis mandatory for dealing with foreign exchange transactions. To open such an\naccount, you will be required to approach your bank and drop the request for\nthe same. <\/p>\n\n\n\n

Getting PAN (Permanent Account Number)<\/h3>\n\n\n\n

Every exporter\nneeds to avail a PAN from the IT department.A PAN card impart the legal status\nto the individuals. <\/p>\n\n\n\n

Obtaining (IEC) Number i.e. Importer-Exporter Code <\/h3>\n\n\n\n

Under the Foreign Trade Policy, it is compulsory to get an IEC number for cross-border trading from India. Para 2.05 of the Foreign trade policy, 2015-20 has underpinned the guidelines for obtaining an IEC number, which is PAN based.The application for obtaining the IEC registration<\/strong><\/a> is filed at DGFT’s official portal as per ANF 2A. An application seeks the inclusion of some important documents along with a fee of Rs 500 from the applicant. <\/p>\n\n\n\n

Registration cum Membership Certificate (RCMC)<\/h3>\n\n\n\n

For obtaining\nauthorization to export\/import under Foreign Trade Policy 2015-20, the\nexporters have to get an RCMC issued by the concerned authority. <\/p>\n\n\n\n

Products Selection<\/h3>\n\n\n\n

The Government\nof India has imposed some limitations on the export of certain goods. So it\nwould be a good idea if you go through the list of prohibited items for export\navailable on the DFGT website.<\/p>\n\n\n\n

Markets Selection<\/h3>\n\n\n\n

The market\nselection should be done based on competition, market size, payment terms,\nquality requirements, and benefits available under FTP. <\/p>\n\n\n\n

Locating Potential Buyers <\/h3>\n\n\n\n

Participating in\nexhibitions, trade fairs and B2B portals are conducive ways to locate potential\nbuyers. Creating a multilingual website with a goods portfolio, price, payment\nterms can also help find the right buyers. \n<\/p>\n\n\n\n

Sampling<\/h3>\n\n\n\n

Providing\non-demand samples to the potential buyer is the best way to generate export\norders. Under Foreign Trade Policy 2015-20, exports of technical samples and\nbonafide trade of exempted items would be allowed without any restriction. <\/p>\n\n\n\n

Pricing\/Costing<\/h3>\n\n\n\n

Pricing plays an\nimportant role in boosting sales as far as international competition is\nconcerned. The price ought to be worked out taking into account all expenses\nfrom sampling to export. The goal of obtaining export costing should be to\nmaximize the profit margin by selling large quantities of goods at the best\nprice. It is advisable to prepare an expert costing sheet against every\nexportable product. <\/p>\n\n\n\n

Negotiation with Buyers<\/h3>\n\n\n\n

After\ndetermining the interest of the buyer for the given product, ask for a\nreasonable allowance in the price might be considered. <\/p>\n\n\n\n

Covering Risks via ECGC<\/h3>\n\n\n\n

International\ntrade is vulnerable to payment risks due to insolvency issues with buyers or\ncountries. These risks can be curbed with an appropriate Policy from Export\nCredit Guarantee Corporation Ltd (ECGC).<\/p>\n\n\n\n

International\ntrading involves the risks of payment due to buyer\/ Country insolvency. To\ncover these risks, one has to take advantage of an appropriate Policy from\nExport Credit Guarantee Corporation Ltd (ECGC)<\/p>\n\n\n\n

Where the buyer is reluctant to make an advance payment on a particular order, it is recommended to procure a credit limit on the importer from ECGC for tackling the non-payment. <\/p>\n\n\n\n

Read our article<\/b>:A Detail Guide to Complete IEC Modification Online<\/a><\/mark><\/p>\n\n\n\n

What are the Steps to Export Goods from India?<\/h2>\n\n\n\n

One must follow\nthe given steps to process the export order. Remember not to skip any of the\nsteps to ensure order processing. <\/p>\n\n\n\n

Order Confirmation<\/h3>\n\n\n\n

The export order\nreceived must be examined thoroughly on account of specification, items,\npayment terms, packaging requirements, and delivery schedules. Now, this would\nlay down the ground for a formal contract between the exporter and overseas\nbuyer. <\/p>\n\n\n\n

Goods Procurement<\/h3>\n\n\n\n

After securing\nthe export order, it’s time to plan for production to meet the requirement. The\ngood’s quality should not be deviated as of the samples offered to the buyer in\nthe initial stage.<\/p>\n\n\n\n

Quality Control<\/h3>\n\n\n\n

In the current time, it’s imperative to align with the required quality standards while manufacturing the exportable goods. Edible items, agro-based products, and certain chemicals are exposed to mandatory pre-shipment inspection. Overseas buyers may have their standards\/specifications in place for quality control<\/strong><\/em>[1]<\/strong><\/em><\/a><\/sup>. Quality is something that should remain on par when it comes to exportable goods. <\/p>\n\n\n\n

Finance<\/h3>\n\n\n\n

Legal exporters\nhave the privilege to access a wide range of finances for pre and post-shipment\noffered by commercial banks at lower interest rates. Packing credit advance is\navailable for new exporters in the pre-shipment stage against the lodgment of a\nconfirmed order for one hundred & eight days to meet the work capital\nrequirement for raw material, manpower, packing, and logistic expenses. <\/p>\n\n\n\n

In general,\nfinancial institutions offer 75% to 90% advances of order value securing the\nbalance as margin. Banks essentially adjust the packing credit advance on\naccount of proceeds of export bills discounted, purchased, or negotiated. Post\nshipment finance is offered to exporters generally up to 90% of the invoice\nvalue for the basic transit period and in the event of usance export bills up\nto notional due date. To be exact, the maximum timeline for post-shipment\nadvances is one hundred & eight days from the shipment date. Advances\ngranted by financial institutes are adjusted as per the realization of sale\nproceeds related to export bills. <\/p>\n\n\n\n

Labeling, Packaging, and Marking<\/h3>\n\n\n\n

Accurate\nlabeling helps in recognizing the exportable products. So make sure labeling,\npackaging & marking should be done as per the convenience of the buyer.\nGood packing will ease out complications arising during the handling and\nloading of the shipments. It inherently reduces the shipping cost and boosts\nthe safety of the cargo. Marking includes, buyer’s address, package number,\nweight, destination, handling instructions, etc. renders identification &\ndetails of cargo packed. <\/p>\n\n\n\n

Insurance<\/h3>\n\n\n\n

The marine\ninsurance policy provides comprehensive cover to exportable goods against the\nrisk of loss in transit. In general, exporters use the CIF contract to arrange\nthe insurance, meanwhile, FOB and C&F is used by the buyers to obtain the\ninsurance policy.<\/p>\n\n\n\n

Delivery<\/h3>\n\n\n\n

It is the most\nimperative feature of export, and the exporter must align with the delivery\nschedule. There should be precise planning in place to ensure seamless and\ntimely delivery of the cargo. <\/p>\n\n\n\n

Customs Procedures<\/h3>\n\n\n\n

It is mandatory\nto avail PAN-based BIN ( Business Identification Number) from the customs\nbefore the filing of shipping bill related to the clearance of exportable goods\nand open a current account for crediting of any drawback amount. The current\naccount must be registered on the system. \nIn the case of Non-EDI, the export bill & shipping bills are needed\nto be filled as per the format given under in the Shipping Bill and Bill of\nExport (Form) regulations, 1991. An exporter must apply separate forms of\nexport bill & shipping bills of duty-free goods and dutiable goods. <\/p>\n\n\n\n

Under the EDI\nsystem, a declaration as per the prescribed format must be filed via the\nService centers of customs. A checklist is rendered for the data verification\nby the exporter\/CHA. After completion of the verification process, the data is\nsubmitted to the system which in turn generates a Shipping Bill Number for the\nexporter\/CHA. In the majority of scenarios, a shipping bill is processed\ndepending on the exporter’s declaration. Where the testing of the sample of\nexportable goods has to be conducted, the customs officer may pick up two\nsamples from the shipment and enter the details thereof along with particulars\nrelated to the  testing agency in the\nICES\/E system. Any changes in the checklist generated post declaration’s filing\ncan be made at the service center if the document yet to be submitted. <\/p>\n\n\n\n

Customs House Agents<\/h3>\n\n\n\n

Exporters may\navail services of Customs House Agents licensed by the Commissioner of Customs.\nThey are professionals and facilitate work connected with the clearance of\ncargo from Customs.<\/p>\n\n\n\n

Documentation<\/h3>\n\n\n\n

As per the FTP 2015-2020, the following documents are mandatory for import and export.<\/strong><\/em><\/p>\n\n\n\n