Learn about Export Procedure | Class 11 Business Studies | iKen

Iken Edu

4 Sept 201216:22

Summary

TLDRThe 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.

Outlines

00:00

😀 Introduction to Export Trade and Initial Steps

The video script introduces Garv, a successful businessman who manufactures and exports shoes to the USA. He meets his friend Sanjie, who is planning to start an export business. Garv offers to help Sanjie understand the process of export trade, which involves selling goods to another country and dealing with formalities such as foreign exchange and customs. The script outlines the initial steps in export transactions, including receiving inquiries, sending quotations, receiving export orders, assessing the importer's creditworthiness, and securing a guarantee for payments.

05:02

📚 Detailed Steps in the Export Process

This paragraph delves into the detailed steps an exporter must undertake after receiving an order and a letter of credit. It includes obtaining an export license, pre-shipment finance, production or procurement of goods, pre-shipment inspection, excise clearance, obtaining a certificate of origin, reserving shipping space, packing and marking the goods, appointing a forwarding agent, dispatching goods, and insuring the goods. Each step is crucial for the successful export of products and ensuring that all legal and logistical requirements are met.

10:04

🚢 Shipping and Customs Clearance for Exports

The script explains the process of shipping and customs clearance for exported goods. It covers the steps of obtaining customs clearance, loading goods onto the ship, obtaining the mate's receipt, and the issuance of the bill of lading or airway bill. The CNF agent plays a key role in presenting the mate's receipt and computing the rate for shipping. The bill of lading serves as evidence that the shipping company has accepted the goods for transport to the designated destination.

15:04

💼 Finalizing Export Transactions and Payment

The final paragraph summarizes the concluding steps in the export process. It includes the preparation of the foreign invoice, securing payment after shipment, and the exchange of documents between the exporting and importing firms through their respective banks. The documents exchanged include the invoice, bill of lading, packing list, insurance policy, certificate of origin, and letter of credit. The payment is secured once the importing firm accepts the bill of exchange, and the exporting firm's bank receives and credits the payment to the exporter's account.

Mindmap

Keywords

💡Export Trade

Export trade refers to the process where goods are sold from a firm in one country to another firm in a different country. It is central to the video's theme as it explains the various steps and formalities involved in exporting goods internationally. For example, Garv, a businessman in the script, is involved in export trade by manufacturing and exporting shoes to the USA.

💡Quotation

A quotation in the context of the video is a response to an inquiry from a prospective buyer, providing details about the price, quality, and terms for the export of goods. It is a key step in the export process, as seen when Garv would send a 'performer invoice' after receiving an inquiry from a potential buyer.

💡Export Order or Indent

An export order, also known as an indent, is an order placed by a prospective importing firm for the goods they wish to purchase. It is a confirmation of the exporter's quotation and includes details such as the description of goods, prices, and delivery terms. In the script, the exporting firm receives an indent after the importer finds the terms acceptable.

💡Creditworthiness

Creditworthiness is the ability of a buyer to fulfill their payment obligations. In the export trade, assessing the importer's creditworthiness is crucial to mitigate the risk of non-payment. The script mentions that the exporting firm inquires about the creditworthiness of the importing firm and demands a letter of credit as a guarantee.

💡Letter of Credit

A letter of credit is a document issued by the importer's bank guaranteeing payment to the exporter up to a certain amount. It is a critical financial instrument in export transactions, ensuring that the exporter receives payment as per the script's narrative where the exporting firm demands a letter of credit from the importing firm.

💡Export License

An export license is a government-issued document that allows a firm to export goods. It is necessary for legal compliance in export transactions. In the script, the exporting firm applies for an export license after becoming assured about payments, which is a requirement for the export process.

💡Pre-shipment Finance

Pre-shipment finance is the financial support an exporter obtains to cover the costs of production, procurement, processing, and transportation of goods before shipment. It is essential for the exporter to fulfill the export order, as illustrated in the script where the firm gets pre-shipment finance after receiving a letter of credit.

💡Pre-shipment Inspection

Pre-shipment inspection is a mandatory process in some countries to ensure that the quality of exported goods meets the required standards. It is conducted by authorized agencies and is a step to maintain the reputation of the exporting country, as mentioned in the script regarding the government of India's regulations.

💡Excise Clearance

Excise clearance is a certificate obtained after a pre-shipment inspection, indicating that the manufactured goods are exempt from excise duty when intended for export. It is a part of the export formalities in countries like India, as described in the script where the exporter needs an excise clearance certificate.

💡Certificate of Origin

A certificate of origin is a document that certifies that goods have been manufactured in the exporting country. It serves as proof for the importer and may be required to avail tariff concessions or exemptions. In the script, the exporter may need to obtain this certificate from the trade consulate to support the export process.

💡Shipping Space Reservation

Reserving shipping space is the process of securing adequate space on a ship for the loading of goods. It is necessary for the logistics of exporting goods, as the script describes the need for the exporting firm to sign an agreement with a shipping company to issue a shipping order.

💡Packing and Marking

Packing and marking involve properly packaging goods and labeling them with necessary details such as the importer's name and address, weight, and destination. It is a crucial step in preparing goods for shipment, as highlighted in the script where the goods are packed and marked before dispatch.

💡Forwarding Agent

A forwarding agent, also known as a clearing and forwarding agent or CNF agent, is appointed by the exporting firm to handle all formalities on its behalf before shipping the goods. This role is essential for streamlining the export process, as depicted in the script where the exporting firm appoints such an agent.

💡Dispatch of Goods

Dispatch of goods refers to the arrangement made by the exporter for the transportation of goods to the port. It includes obtaining a railway receipt and endorsing it in favor of the agent, as mentioned in the script where the exporting firm receives and endorses the railway receipt.

💡Insurance of Goods

Insurance of goods is the process of getting the goods insured with an insurance company to protect against the risks of loss or damage during transit. It is a precautionary measure taken by the exporter, as described in the script after the goods have been forwarded.

💡Customs Clearance

Customs clearance is the process of obtaining permission from customs authorities to load goods onto a ship. It involves submitting various documents to the customs appraiser, as outlined in the script where the exporting firm submits documents including the shipping bill and commercial invoice.

💡Mate's Receipt

A mate's receipt is a document issued by the ship's mate or captain acknowledging the receipt of goods on board. It contains details about the shipment and cargo condition, as mentioned in the script where the port superintendent hands over the mate's receipt to the CNF agent after payment of port dues.

💡Bill of Lading

A bill of lading is a document issued by the shipping company as evidence that the company has accepted the goods for carriage to a specified destination. It is a crucial document in the shipping process, as described in the script where the CNF agent presents the mate's receipt to obtain the bill of lading.

💡Foreign Invoice

A foreign invoice is the invoice prepared by the exporting firm for the dispatched goods, stating the quantity and the amount to be paid by the importer. It is part of the documentation process after the goods are shipped, as illustrated in the script where the exporting firm prepares this invoice.

💡Securing Payment

Securing payment is the final step in the export process where the exporter receives payment for the shipped goods. It involves sending various documents through the banker with instructions for delivery upon acceptance of the bill of exchange, as detailed in the script where the exporting firm informs the importer about the shipment and sends documents for payment.

Highlights

Export trade involves selling goods from one country to another, requiring formalities beyond domestic sales.

Major steps in export transactions include receiving inquiries, sending quotations, and assessing importer creditworthiness.

Exporting firms need to obtain an export license and have a bank account authorized by the Reserve Bank of India.

Pre-shipment finance is crucial for procuring raw materials, production, and transportation of goods to the port.

Pre-shipment inspection ensures only high-quality products are exported, with some agencies authorized by the government.

Excise clearance is required for manufactured goods in India, with exemptions in many cases for exported goods.

A certificate of origin verifies that goods are manufactured in the exporting country and may be needed for tariff concessions.

Exporting firms must secure shipping space and sign agreements with shipping companies to issue shipping orders.

Goods must be properly packed and marked with details like importer's name, weight, and destination country.

A forwarding agent is appointed to handle formalities on behalf of the exporting firm before shipping goods.

Insurance of goods is essential to protect against risks of loss or damage during transit.

Customs clearance is required before loading goods on a ship, involving submission of documents to customs appraisers.

Mate's receipt is issued by the ship's captain after loading goods, containing information about the cargo and shipment.

Bill of lading or airway bill serves as evidence that the shipping company has accepted goods for transport to the designated destination.

Exporting firms prepare a foreign invoice stating the quantity of goods sent and the amount to be paid by the importer.

Securing payment involves sending shipment details and documents through the exporter's banker for bill of exchange acceptance.

Export transactions require a series of formalities and steps to ensure smooth cross-border trade of goods.