Exporting products to other countries is an exciting endeavour for manufacturers, but it’s not always as simple as just shipping the goods. Before any shipment can take place, there are a number of export documents that must be completed and submitted in order to ensure compliance with international trade regulations. These documents provide proof of origin, product descriptions and pricing information, among other things.
In this article we will discuss the different types of documentation required when exporting products and explain how they help protect both buyers and sellers.
Export documentation procedure is important because it ensures that goods are accurately and properly documented, enabling the customs authorities of each country to identify the goods being exported. It also helps exporters ensure they comply with international trade regulations and laws, as well as those of their own country. Furthermore, accurate export documentation can help facilitate smooth clearance at ports of entry and avoid costly delays in shipments due to incorrect or incomplete paperwork. Finally, proper export documents provide proof of delivery which can be used for insurance claims if necessary.
Export Documentation Process
Exporting is the process of selling products or services from one country to another. It involves a number of steps that must be taken in order for the transaction to be successful.
- Research: The first step in exporting is researching potential markets and customers, setting goals, evaluating risk factors, and creating an export plan.
- Financing: After determining which market you will target and what you will sell, it's important to secure financing for your export business. This could include loans from banks or other financial institutions, venture capital investments, or government grants and subsidies.
- Document Preparation: Once funding has been secured it’s time to prepare all necessary documents including commercial invoices, export licences, and certificates of origin.
- Logistics: Secure the appropriate transportation for your goods as well as any other services needed such as warehousing or customs clearance.
How are the Export documents used in the Export process?
Export documents are used throughout the shipping process to track and manage shipments. Export documents include bills of lading, packing lists, invoices, export declarations and certificates of origin. These documents provide important information about the shipment such as weight, dimensions, cost of goods and other details related to its movement from point A to point B. They also help facilitate customs clearance at international borders by providing necessary documentation for import/export compliance regulations. Finally, they can be used as evidence in disputes between carriers and shippers or among different parties involved in a given transaction.
Step By Step Export Documentation Process
Following steps explains the export documentation procedure:
- Obtaining Export Licence: The exporter must obtain an export licence from the Director General of Foreign Trade (DGFT). This is required to be done before commencing exports.
- Registration-cum-Membership Certificate (RCMC): Exporters are also required to register with Export Promotion Councils or Commodity Boards and obtain a RCMC, which enables them to avail various benefits such as duty exemption schemes, etc.
- Receive an Inquiry: The first and initiation step in the Export documentation process is when a buyer inquires about the products. The potential buyer sends a letter of inquiry enclosing a request for a quote.
- Generate a Proforma Invoice: After receiving and studying the buyer details, the exporters are required to issue a proforma invoice to the buyer providing details of the goods or services to be provided and their associated costs. It serves as an estimate of what will appear on the final invoice and acts as a form of agreement between both parties involved in a transaction.
- Finalising the Sale: This step involves the order placement and order acceptance process. If the buyer agrees to the offer in terms of pricing, payment terms, delivery, etc., then the order is placed. Once the order is received, it is advisable for the Exporter to immediately acknowledge the order.
- Pre-Shipment Documentations:
The next step involves preparation of documents like
(i) Commercial Invoice: A detailed invoice that includes the value of goods being shipped, payment terms and other relevant details.
(ii) Certificate of Origin: This document is used to certify where the goods originated from and may be required for certain types of shipments in order to qualify for preferential tariffs or duty exemptions.
(iii) Packing List: A list containing descriptions and quantities of items packed in each shipment container or box, as well as measurements, weights and volume information.
(iv) Letter of Credit (L/C): An agreement between a buyer’s bank and seller’s bank that guarantees payment upon completion of conditions stated by both parties involved in the transaction (i.e., delivery on time, quality of goods).
(v) Bill of Lading (B/L): A document issued by the carrier or freight forwarder that serves as a receipt for goods shipped and evidence of title.
(vi) Export Licence: Depending on the commodity, country destination and other factors, an export licence may be required for certain goods before they can be legally exported.
(vii) Insurance Certificate: This document is used to provide proof that goods are covered under an insurance policy while in transit between two countries or points within a single country.
(viii) Dangerous Goods Declaration: This document is used when shipping hazardous materials and provides details on the type of goods being shipped, as well as safety information for handling them properly.
- Shipping Bill Filing: After the goods have been inspected by Customs Authorities at the port of loading and all necessary documentation has been prepared in accordance with custom regulations, shipping bills are filed electronically on ICEGATE by either CHA or exporter through their digital signature certificates (DSC).
- Submission Of Documents To Bank For Realisation Of Payment: Once shipments have taken place successfully, necessary documents along with proof of shipment are submitted to bank for realisation of payment from importers’ side against letter of credit or advance payment received from buyers’ end prior to shipment or any other mode agreed upon between buyer & seller for payment purpose.
- Claiming Duty Drawback And Benefits From Government Schemes: Depending upon eligibility under applicable government schemes such as Merchandise Exports from India Scheme (MEIS) , Service Exports from India Scheme (SEIS), Advance Authorization scheme etc., claims can be made for duty drawback & other benefits available within due time limits prescribed under respective schemes .
- Submission Of Post-Shipment Documents To Bank For Realisation Of Payment: The exporter then submits post-shipment documents such as bill of lading, commercial invoice and packing list to the bank for realisation of payment against shipment made by them.
- Obtaining Certificate Of Origin & Other Trade Documents: Depending upon nature of goods exported, certificate of origin and other trade documents may be required to be obtained from competent authority like Chamber of Commerce for claiming preferential tariff benefits or any other purpose as per requirement in various countries.
- Track shipment until it reaches destination: Once your goods have been shipped out of the country, make sure that you keep track of their progress until they reach the buyer. This will help you to ensure that everything is going according to plan and that the goods have been received in a timely manner.
5 mistakes beginners make in the export industry
- Not researching the target market: Many beginners fail to research the target market they are entering, which can lead to costly mistakes and missed opportunities.
- Underestimating costs: Shipping, duties, taxes and other fees can add up quickly when exporting goods abroad. Beginners often underestimate how much these costs will be and end up with a lower profit margin than expected.
- Failing to understand regulations: Every country has its own set of rules and regulations for importing goods, so it’s important that exporters familiarise themselves with them before doing business in each new market they enter into.
- Not seeking professional advice: Experienced export consultants can provide invaluable advice on topics such as pricing strategies, logistics and marketing. Beginners often overlook the value of seeking professional advice, which can lead to costly mistakes down the line.
- Not having a clear plan: Exporting is a complex process, so it’s important that exporters have a clear plan for each step of the process from product selection to delivery. Without planning ahead, beginners can easily become overwhelmed by all the details involved in exporting goods abroad.
Best practices in the export industry
- Develop a comprehensive export plan: A successful export strategy requires detailed planning and research. Your plan should include market analysis, product selection, pricing policies, logistics requirements and payment terms.
- Understand the laws governing international trade: It is important to understand the legal aspects of exporting before entering into any agreements with foreign buyers or distributors. Laws can vary from country to country so it is essential that you do your due diligence in order to avoid potential problems down the line.
- Ensure Proper Documentation: The paperwork associated with international shipments can be complex and confusing; however, having all required documents in place will ensure smooth transactions between parties involved in an export transaction. These documents may include commercial invoices, certificates of origin, bills of lading and export declarations.
- Choose the right shipping option: Choosing the most appropriate method of shipment is critical in order to ensure that your goods arrive at their destination on time and in one piece. Consider factors such as cost, transit times, insurance coverage and safety when selecting a mode of transportation for your exports.
- Find reliable partners: Having a good relationship with foreign buyers or distributors will go a long way towards ensuring successful international business transactions. Make sure you are dealing with legitimate companies by conducting thorough research before entering into any agreements or contracts with them.
The export documents procedure is a vital part of the exporting process. It is important to ensure that all documents are accurate and complete before they are sent out for shipment, as this can help avoid delays or other issues during international trade. By understanding the different types of documents required for each transaction, exporters can create an efficient and effective document management system that will help them succeed in their business endeavours.
Top websites that help with creation of Export documentation:
A platform especially for freelancers, agencies, creators and small businesses with free invoicing tools and templates.
A B2B SaaS platform built especially for manufacturers to generate the export documents in seconds and download them in multiple formats.
A GST billing software that helps you to track sales, manage inventory, customers and vendors.
An online platform to create quotations online and download them in pdf format.
Create business quotes with Billdu’s quote maker. Preview, save it or share it directly with your customers.
Special Export Policy in Indian Export Industry
The Export Policy in India is governed by the Foreign Trade (Development & Regulation) Act, 1992 and its amendments. The policy provides for a liberalised export regime with an aim to promote exports from the country. However, The Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list is an export control list maintained by the Government of India. It comprises a list of items that are subject to certain restrictions when exported from India. The aim of the SCOMET list is to ensure that these goods do not get into the wrong hands or used for activities which could harm Indian interests or national security. The SCOMET List includes chemicals and materials with potential military applications as well as micro-organisms and advanced technologies such as artificial intelligence.
Frequently Asked Questions
- What is the process of Obtaining an Export Licence?
To obtain an Export Licence, register with the relevant government agency or department responsible for issuing export licences in your country.
- Why is obtaining a certificate of origin necessary?
Obtaining a Certificate of Origin is necessary in order to prove that the goods were produced or manufactured in the stated country, thus allowing them to receive preferential treatment under various international agreements like free trade agreements.
- What is the process of Registration-cum-Membership Certificate (RCMC)?
The process for obtaining RCMC involves submitting an application form along with necessary documents such as PAN card, GST registration number and other export related documents. After verification of all the documents submitted, the Export Promotion Council issues the RCMC to the applicant.
- What is the difference between a pro forma invoice and commercial invoice?
A pro forma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. It details the type and quantity of goods being sold, as well as their value.
A commercial invoice is an itemised list of goods provided by a seller to a buyer that includes information such as descriptions of the items, quantities, prices, terms of sale, and contact information for both parties.
- What is the MEIS scheme?
MEIS stands for Merchandise Exports from India Scheme. It is a trade promotion program established by the Indian government to incentivize and promote exports of goods produced in India.
- How does the MEIS work?The scheme works by providing duty credit scrips to exporters based on their export performance, which can be used to offset customs duties payable on imported inputs or services that are used in the production of goods exported under MEIS.