In this post, a basic idea about export procedures and formalities are explained. This export process is same in almost all countries with slight variation. I hope this post helps you in getting a basic training on how to export various products.

In almost all countries, a onetime licensing procedure to act as an Exporter/Importer is required to be completed. In India, IEC number (Import Export Code number) is required to act as an Importer or Exporter.

If you are an exporter, you would have already set up an Export company by following necessary government rules and regulations. By choosing your export product, you would have sent export samples to your international buyer if required and got approved. After necessary communication with your overseas buyer on terms of payment and terms of delivery, you arrange to issue proforma invoice, in turn you receive export order followed by purchase order from your overseas buyer. The terms of payment for your export contract could be advance payment, Documents against Acceptance DA, Documents against Payments DAP, or under Letter of Credit LC. If you as overseas seller require to cover credit risk against your overseas buyer, you can approach concerned authorities to cover insurance. In India, ECGC is the authorized agency who covers such credit risks for Indian exporters. Being an exporter, you will have an idea about other risks involved in export. The terms of delivery could be EX-Works, FOB, CFR, CIF, DAP, DDP or any other Inco terms. If you would like to arrange finance against export , you can approach your bank for preshipmentor post shipment finance against export orders obtained by you.

If any international quality check agencies like SGS,BVQI etc. are involved as per the terms and conditions between you and your overseas buyer, such inspection is arranged. After completing necessary quality check (QC) formalities, the goods for export are arranged for proper packing to meet export quality. Palletization or Crating is arranged for safety of cargo. If your export goods are shipped by sea mode of transport, you decide whether the export shipment is by LCL or FCL. Necessary information about shipping of LCL may be collected if sent as LCL. Type of container is decided based on your nature of export goods.

Ok, now the shipment is ready for export. The documentation department prepares export invoice, export packing list etc. based on the purchased order or LC. Application for certificate of origin(GSP – Generalized System of Preference) and other required documents required for importer are also prepared. Necessary documents required for export customs clearance purpose are forwarded to Customs broker. The export process at customs completes either by customs broker or your representative directly. You as an exporter decide whether your export shipment is FCL or LCL. Pre shipment inspections like Phyto sanitary, Fumigation etc. if required have to be completed before export of goods.

Bill of Lading or AWB is issued by carrier of goods. If consolidator involved, HAWB or HBL is issued accordingly. If On Board Bill of Lading required as per buyer’s requirement, you have to wait to get the export shipment go ‘onboard’ the vessel. If you export your goods from a dry port, you have to wait till the cargo to go onboard the vessel, if you need On board bill of lading from shipping carrier.

After completion of export customs clearance procedures and collection of AWB or Bill of Lading, necessary documents for bank and overseas buyer are prepared. The export bill can be disounted, arrange for collection of payment if on credit basis or negotiated if export shipment is on Letter of Credit basis. If you have availed packing credit from bank, the amount of discounted/negotiatedexport bill amount will be adjusted once bank receives export proceeds from your overseas buyer. If bank does not receive such export proceeds from your overseas buyer, your bank may crystalize such export bills, you/bank can approach credit insurance company (like ECGC in India) for claim, if such cover done by you or your bank.

What is Feeder Vessel? What is the size of a Feeder Vessel? How does Feeder Vessel serve?  How to differentiate Mother Vessel between Feeder Vessel? What is the capacity of a Mother Vessel? How does Mother Vessel serve? 


Feeder vessel and Mother vessels are part of vessel carrying network

Feeder vessel is normally small in size compared to Mother vessel. Feeder vessels serves between smaller ports and major ports. In other words, feeder vessels feeds cargo to mother vessel from smaller ports to large ports for exports and from major main ports to smaller ports for imports. Compared to mother vessel, feeder vessel is slow.

Average capacity of a feeder vessel is 300 to 500 TEUs (20’ containers). Feeder vessel serves short distance, either between  smaller ports, or between smaller ports  and major ports.

Mother vessel is big in size compared to feeder vessel. Mother vessels only serve between major big ports. Mother vessels have the capacity to carry thousands of containers. Mother vessel calls only main ports. The mother vessel covers large distance compared to feeder vessel.

Average capacity of a Mother Vessel is 10000 TEUs (Twenty foot Equipment Units).   In 1960s,  vessel capacity was maximum of  500 – 800 TEUs.  Mother vessel with a capacity of  15000 TEUs are available now. We can expect mother vessels with a capacity of 20000 TEUs by the year 2015.   Read – Difference between Vessel arriving and Vessel berthing 

Different types of containers are used in domestic and international trade to move cargo from one location to another. Some types of containers are Standard Dry Containers, Open Top Containers, High cube Containers, Refrigerated Containers (Reefer Containers), GOH Containers (Garments on hanger containers), Open Side Containers, Tank Containers , Half height Containers, Ventilated Containers, Car Carrier Containers, Hard top Containers, Insulated Containers, Tunnel Containers, Platform Containers, Flat rack Containers etc. These containers are used to transport different types of goods as per convenience, coastwise and time saving parameters. For example, Standard dry containers are used to move general dry cargo, temperature sensitive cargo is moved with refrigerated containers, liquid and powder type goods are moved with tank container so on. So each type of container is manufactured as per customer’s requirements.

Detailed article about each type of container has been described in separate post in this website to make you easily understand about each container. You can click below links to learn more about types of containers.

Standard Dry Containers (Click here for details) 
Open Top Containers (Click here for details) 
High cube Containers (Click here for details) 
Refrigerated Containers (Click here for details) (Reefer Containers) 
GOH Containers (Garments on hanger containers) (Click here for details) 
Open Side Containers (Click here for details) 
Tank Containers (Click here for details) 
Half height Containers (Click here for details) 
Ventilated Containers (Click here for details) 
Car Carrier Containers (Click here for details) 
Hard top Containers (Click here for details) 
Insulated Containers (Click here for details) 
Tunnel Containers (Click here for details) 
Platform Containers (Click here for details) 
Flat rack Containers (Click here for details)

I hope this article helps all traders in a business especially those who are in to Import Export business – how to handle disputes in import and export trade?

I sell goods to you, you buy them, you pay bill, you use my goods. Simple. Both are happy. Right? But is it that much simple in an international trade? I will say ‘YES’ depends up on how fast you are untying the knot. In other words, I will say, ‘Removing hindrances with least time and least money is business’ . Am I right?

Let me discuss firstly about causes for disputes under export import business. What are the reasons for Disputes in international business?

Reasons for disputes in international trade between exporter and importer can be many. 
 

As per my experience in import export trade for the past 25 years, the primary reason for disputes is quality of the goods exported. Under contractual terms in many export contracts, importer gets the opportunity to inspect the quality of goods only when the consignment reaches him. In many cases, by that time, the exporter would have got money. Even if the consignment is sent on collection basis, importer can check the quality only after retiring the documents. Other reasons for the disputes can be delayed shipment or non-shipment due to change in government regulations or market conditions, restricting exports, etc.

In any business there are two basic methods for dispute settlement – Litigation and arbitration. 
 

Litigation is highly suitable due to the proverbial delayed process, prohibition costs and uncertainty of decision. 
 

But what are the basic Limitations of Litigation? How fast a litigation can be in export import business? Is it easy to educate and convince on judgments with proper documentary proof? How convenient to both exporter and importer under Litigation in international business? Will it effect both importer and exporter on their business due to bad image among public? How to effect trade relationship for both seller and buyer under litigation? Are international laws and procedures simple to handle?  Let me discuss these area also here:

Slow Process: As you know, almost all civil process of litigation is slow. Court process proverbially takes huge time consuming and formalistic.

Avoidable Necessity of Export Witness and other Evidence: In international contracts, practices, procedures and customs are different. A judge however well versed may be, in law, can not be expected to know all these intricate matters. So, in courts, to educate the judge about these practices, witnesses who are experts and having knowledge in the field have to be produced to prove the practices, even before the evidence is established.

Inconvenience to the Parties: Court timing and date of hearings may not be convenient to litigants. Most of the time, cases are postponed and in that process months drag on even for completion of one witness. Even after day’s long waiting for hearing, one may know, at the end of the day, that the case is adjourned for two months due to non availability of the other advocate!

Adverse Public Image: Court proceedings are never secret. Media always covers the developments in important cases. Even the superior court judgments are published. Matters, which have been confidential till the case is brought to a court of law, become topics for public discussion that may bring notoriety, loss of goodwill and long-standing reputation.

Bitterness and Disruption of Trade Relationships: When a matter goes to a court of law, it is immaterial which party may win as the age old established relationship, after the case is brought to litigation in a court, comes to an end with only acrimony ad bitterness.

Different Laws and Procedures: International trade laws and procedures are more complicated. Litigation in foreign courts is more expensive and difficult in comparison to the domestic courts.

OK, Now let us discuss about Arbitration under Imports and Exports. How does arbitration helps exporters and importers if dispute arises? How fast arbitration can take place under a dispute between buyer and seller in export import business? How expensive compared to litigation under export import dispute between seller and buyer? How does an arbitration under international business effect Goodwill of both exporter and importer? What about the confidentiality about the dispute between importer and exporter in an international trade?

Let me explain basic advantages of arbitration in Export Import dispute compared to Litigation:

Quickness: Definitely, arbitration is quicker than litigation. Process of arbitration can be completed as fast as the concerned parties desire. Under Arbitration Act, the arbitrators have to make the award within four months from the date of completion of all proceedings. Usually, arbitration is settled within a period of four months to one year.

Inexpensiveness: Total incidental expenditure in arbitration is always much lower than litigation. Arbitration fees is around 2% of the claim value or less in institutional arbitration.

Promotes Goodwill: As the arbitrator is chosen by both the parties, based on their faith and his competence, arbitration becomes a normal process of goodwill. Arbitration proceedings and its outcome do not disturb the existing friendly relations between the exporter and importer.

Choice of Appropriate Arbitrator: As the arbitrator is chosen by both the parties and name incorporated in contract, who has the knowledge of customs and procedures of international trade, so separate expert witness for educating the judge does not arise.

Privacy: Arbitration proceedings are not open to public. Arbitrator’s award is not published in any newspapers. This preserves privacy of the parties. So, trade secrets as well as disputes arising from the contracts do not become public.

In next article, I will explain about HOW TO RESOLVE AND SETTLE DISPUTES BETWEEN EXPORTER AND IMPORTER UNDER INTERNATIONAL BUSINESS.

In this article, I have explained about Litigation and Arbitration under dispute between Exporter and Importer in an International Business. Had you experienced Litigation and Arbitration under dispute between you and your customer? Would you like to add more information about dispute between importer and exporter in International Business? Share below your experience in handling dispute between you and your customer in Export Import Business. 

Comment below your thoughts about this article – Dispute settlement in Imports and Export business, Litigation and Arbitration.

Are there any documents to be filed legally under export from India? If yes, what are those legal documents under exports? Why legal documents for exports? How do those legal documents work?

As you are aware, export means taking goods outside territory border of a country and imports means bringing in to the territory border of a country.

For each exports, foreign currencies flows into a country . As well as there should be proper record of details of description goods, value of goods and other details are to be recorded by the government of each country.

The major legal document for export is GR/PP form/SOFTEX form.

The exporter must file any one of GR,PP form or Softex form depends up on the nature of exports.

G.R.forms are issued by Reserved Bank of India to regulate and monitor foreign exchange transactions against export of goods under physical forms. Exporter has to collect blank G.R.forms from RBI. The forms are in duplicate. Exporter had to sign both copies and arranged to deliver to Customs House Agents for filing with customs. While filing shipping documents by customs house agents, a Xerox true copy of shipping bill to be impressed on the G.R.form. Once customs formalities completed, original G.R form is submitted with customs and duplicate copy of G.R. sends back to the exporter. Exporter submits duplicate GR form with their bank along with other shipping documents. Exporter’s bank sends back the said duplicate GR form to RBI for foreign exchange regulations. Customs department also sends back the original GR copy to RBI. PP form is used, if shipment by Post office. After introduction of online filing of shipping bill for export where in electronic filing system is available (EDI) , these procedures have been waived off by Reserve Bank of India as such GR details are electronically transferred from customs department to Reserve bank directly. However, GR forms are mandatory at export customs locations where EDI facility is not available.

SOFTEX forms are to be filed with STPI to regulate inward outward remittance by Reserve Bank under export of goods in non-physical form, either domestic or offshore. The products includes computer software, export of Video and TV software and all other types of software products and packages which are falling under goods of non physical form.

   

SOFTEX form is issued by Reserve Bank foreign exchange department. All software forms under STP units are eligible to obtain SOFTEX forms from Foreign exchange department of Reserve bank once after submitting self-certified copy of overseas buyer’s contract/purchase order or work order with STPI office as per 7(a) of SOFTEX form for declaration. SOFTEX forms are issued in triplicate. These SOFTEX forms are to be submitted by STP units within 30 days of issue of export invoice or within 30 days of last invoiced released in a month. Once exports effected, after necessary certification by STPI director’s office, the said SOFTEX forms are sent to Reserve bank. SOFTEX blank forms are obtained from foreign exchange department of Reserve bank by the STP units in triplicate. Once after effecting sales, the said SOFTEX forms in triplicate are submitted with STPI for necessary approval / endorsement by director of STPI under the jurisdiction of STP units. After certification of three copies of SOFTEX forms, original and duplicate are returned to STP units and triplicate copy is retained by STPI units. Once after exports effected, the duplicate copy of softex form is submitted with authorized dealer bank along with the necessary supporting documents. Original SOFTEX form is submitted with Reserve Bank’s exchange control department within the jurisdiction of STP unit. Once after receipt of foreign exchange under the said SOFTEX form, authorized bank returns the said duplicate copy of SOFTEX form to Reserve Bank.

PP forms are used under export through Post office. If you effect shipment through post office, PP form need to be filed up by exporter duly signed and sealed. PP form is a declaration by exporter mentioning the details of goods exporting through post office. These details contains the description of goods, value of goods, term of payment, terms of delivery, port of loading, port of discharge, country of destination, shipper details, consignee details etc.etc.

As you know finance plays prime role in any business, even in Export also. Each exporter of any country is highly supported by the government in all means to earn foreign exchange, one of the major indicators of wealth of nation.

In this article, let us discuss some of the export financial assistance provided by government agencies to promote export business. These financial assistance to exporters varies from country to country depends up on their policy adopted time to time. However most of countries extend a good financial support to exporters to earn foreign exchange from other countries to strengthen each country’s foreign exchange reserves, in turn financial strength.

Some of the major benefits supported by government are given below. These financial benefits to exporters may vary from country to country. I provide below the following financial benefits in general. You may cross check with your government authorities to get authenticated information. These details of financial assistance to exporters are given to let you know an idea on ‘how government supports exporters in assisting financial support’.

Financial support to exporters up to 90% of FOB value of exports are provided by most of the banks based on the instruction of government to boost exports. Some of the banks extend a financial support of 100% export value, with a narrow interest rate fixed by government time to time.

Most of the banks provide financial assistance to exporters with a low interest rate as 6% per annum. This rate of interest is very nominal which helps exporters to procure materials, packing or for other export related purposes.

Extending credit period up to 270 days is one of the supports under financial assistance to exporters by government through authorized bank. A credit of almost 10 months is a good period for an exporter with least rate of interest on financial assistance to help him to utilize this fund for export purpose. During this period of 270 days, an exporter can procure material, export, and collects his amount of sale of exports to repay such loan amount.

Packing credit is one of the other financial assistance to exporters provided by bank. Getting financial assistance before shipment of goods is a great help for any exporter is concerned. Here, an exporter can avail finance before shipment which is called Packing Credit. Packing credit is pre shipment financial assistance to exporters allotted by banks on the basis of export stocks available for exports. The exporter has to produce copy/original of necessary export orders along with the details of stocks available for exports. The bank authorities inspect the exporter’s premises and collect data of such stock ready for export and assess the value. Based on such valuation of stock, the exporter is allotted packing credit loan by banks with a very narrow interest rate.

Exporters are also eligible to avail financial assistance in the form of short term credits from authorized banks. Short term credits are provided by banks on the basis of instructions provided by government time to time to help exporters to meet their financial requirements.

Financial assistance to exporters after exports in the form of Bill discounting/negotiation is provided by banks with a low interest rate. This financial support also helps exporters to procure/manufacture new products for exports for next export consignment. Once after completing the procedures of an export consignment, the exporter submits all required documents to send to overseas buyer. If the export sale contract between buyer and seller is on credit basis, normally the export bills are sent to buyer for collection of payment on maturity date, mutually agreed. When submitting such documents, if the exporter requires finance for upcoming export consignments, he can apply for post shipment finance by discounting of export bills already exported. In the case of Letter of credit, negotiation procedures are followed to avail post shipment finance.

In short, as per government’s policy, no exporter should suffer for want of funds to export goods. Most of the government supports up to 90% of FOB value of goods with very least rate of interest up to 270 days. This is a great chance for any business man to be attracted to earn foreign exchange.