Learn about Export Procedure | Class 11 Business Studies | iKen

Summary

The video script outlines the comprehensive steps involved in export trade, from receiving inquiries and sending quotations to securing payments. It details the process of assessing importer creditworthiness, obtaining necessary licenses, arranging pre-shipment finance, and conducting inspections. The script also covers the logistics of reserving shipping space, packing and marking goods, dispatching them, obtaining customs clearance, and finally, ensuring payment through bills of exchange.

Takeaways

• 🌐 Export trade involves selling goods from one country to another and requires a series of formalities due to the involvement of foreign exchange and cross-border movement.
• 📄 The process starts with receiving an inquiry and sending quotations, known as a proforma invoice, which includes details like price, quality, and payment terms.
• 🛍️ Upon acceptance of the quotation, the importing firm places an order or indent, which contains descriptions of the goods, prices, and delivery instructions.
• 🔍 Assessing the importer's creditworthiness is crucial to mitigate the risk of non-payment, often secured by a letter of credit from the importer's bank.
• 📑 Obtaining an export license is necessary and involves having a bank account with RBI authorization and an Import Export Code (IEC) number.
• 💵 Pre-shipment finance is essential for procuring raw materials, production, and transportation of goods to the port of shipment.
• 🏭 Production or procurement of goods must align with the importer's specifications and is a key step before shipping.
• 🔎 Pre-shipment inspection ensures the quality of exported goods and is mandatory in some cases by authorized agencies.
• 📄 Excise clearance is required for manufactured goods, though exemptions may apply for exports.
• 📍 A Certificate of Origin may be needed to prove the manufacturing country of the goods, beneficial for tariff concessions.
• 🚢 Reservation of shipping space involves securing space on a ship and signing an agreement with a shipping company for a shipping order.
• 📦 Proper packing and marking of goods with necessary details like the importer's address and weight is important for identification and tracking.
• 🤝 Appointment of a forwarding agent helps in handling formalities on behalf of the exporter for a commission.
• 🚂 Dispatch of goods requires transportation arrangements to the port and obtaining a railway receipt, which is endorsed to the agent.
• 🛡 Insurance of goods is crucial to protect against loss or damage during transit.
• 🛃 Customs clearance is mandatory, involving submission of various documents to the Customs appraiser.
• 📝 Obtaining the mate's receipt after loading goods on the ship is an acknowledgment of the cargo's condition.
• 💼 Payment of freight and issuance of a bill of lading or airway bill is the confirmation of the shipping company's acceptance of goods for transport.
• 📈 Preparation of a foreign invoice states the quantity of goods sent and the amount to be paid by the importer.
• 💰 Securing payment involves the exporting firm sending shipment details and documents through a banker, with instructions for payment upon acceptance of the bill of exchange.

Q & A

What is the main theme of the video script?

The main theme of the video script is the process of export trade, focusing on the steps involved in exporting goods from one country to another.

What is the difference between selling in the domestic market and exporting goods?

Selling in the domestic market does not involve crossing national boundaries or dealing with foreign exchange, whereas exporting goods requires a number of formalities, including movement of goods across borders and the use of foreign exchange.

What is the first step in the export process mentioned in the script?

The first step in the export process is the receipt of inquiry and sending quotations, where potential buyers request information about the product and the exporter sends a quotation in response.

What is a 'performa invoice' and why is it used?

A 'performa invoice' is a document sent by the exporter in response to an inquiry, containing information about the product's price, quality, grade, size, weight, mode of delivery, type of packing, and payment terms.

What is the purpose of assessing the importer's creditworthiness?

Assessing the importer's creditworthiness is to ensure there is no risk of default and payment for the goods, and it often involves obtaining a letter of credit from the importing firm's bank.

Why is an export license necessary for exporting firms?

An export license is necessary to legally conduct export trade, and it requires the exporter to have a bank account with an authorized bank, an Import Export Code number, and registration with various authorities.

What does pre-shipment finance cover and why is it needed?

Pre-shipment finance covers the costs of procuring raw materials, processing, packing, and transporting goods to the port of shipment. It is needed to undertake export production before the goods are shipped.

Why is a pre-shipment inspection of goods compulsory in some cases?

Pre-shipment inspection is compulsory to ensure that only good quality products are exported, maintaining the reputation of the exporting country and adhering to international trade standards.

What is the purpose of obtaining a certificate of origin?

The certificate of origin serves as proof that the goods have been manufactured in the exporting country, which may be required by the importer to avail tariff concessions or other exemptions from their government.

What is the role of a forwarding agent in the export process?

A forwarding agent, also known as a clearing and forwarding agent or CNF agent, performs all the formalities on behalf of the exporting firm before shipping the goods, for which they receive a commission.

How does the payment process work after the shipment of goods?

After the shipment, the exporting firm informs the importing firm about the shipment and sends various documents through its banker. The banker delivers the documents after acceptance of the bill of exchange, which is an order for the importing firm to pay a certain amount to the exporter.