All Export Documentation & Procedures | Any Origin

In this section, Dr. Jain discusses a real-life case study focusing on the trading of fresh produce from the UAE. The opening case study tries to break the ice for this course, helping you to understand how much learning you need to make out of this course and what topics will help you master this subject.

Welcome back, friends, to this course. As we step into this new module, that is, module two, we begin with an exciting and realistic opening case study titled Trading from Al Aweer Market, Dubai.

This case study serves a very important purpose.

It offers a 360-degree view of the trading ecosystem, both exports as well as imports, with a special focus on real-world applications of documentation and procedures, which we will be learning throughout this course, focusing on export documentation.

Now, although our primary focus in this course is export documentation and procedure, it is essential to start with, in this opening study, to understand the import side as well.

Because in international trade, what's an import for one country is an export for another.

In this case study, we will touch upon both sides, both the perspectives, giving you a complete picture of the global trade flows.

Let me introduce you to the central character of this case. Meet Mr. Joseph, a freshly graduated MBA from

Harvard Business School in Boston, USA, has just been offered a position as a trader at a major international trading firm based in the Al Aweer Market of Dubai.

His new role is to manage the import and export of fresh fruits and vegetables across various countries.

An exciting challenge full of complexity and learning opportunities.

Now, the Al Aweer market isn't just any other marketplace; it is the wholesale trading hub for fresh produce in Dubai, serving both the domestic market of the UAE as well as the international markets. Nearby markets. European markets. Gulf markets while sourcing goods from around the globe.

Before Joseph can begin trading, he must build a deep understanding of things like market dynamics and seasonal patterns.

Global supply chains for fresh produce, documentation and compliance, as well as the institutional framework that governs this kind of trade in the UAE, especially. Before Mr. Joseph joined this position. What is he required to do?

He needs to carry out both desk research as well as on on-ground learning to answer key questions.

What are these key questions?

Who are the key suppliers and buyers in this industry?

What are the seasonal trends and pricing mechanisms in this particular sector?

How do demand and logistics affect these kinds of trade outcomes?

And what are the basic documentation and procedures that are to be learned about to smoothly conduct the business as a trader in this market?

Most importantly, Joseph must become familiar with the core documents, international trade documents involved in both importing as well as exporting of the fresh fruits and vegetables.

This includes import export permits, phytosanitary and health certificates, certificate of origin, packing list and invoices, and customs clearance paperwork. Mr. Joseph must also understand how to deal with Dubai regulatory bodies such as the Dubai Municipality for Food Safety and Hygiene, and Dubai Customs, for smooth import export operations.

MOCCAE for agricultural and environmental compliance.

To top it off, Joseph must get comfortable with commercial terms and trade practices common in the region and in that particular market, actually.

For example, what are the commercial terms like FOB, CIF, landed cost, and standard payment terms used in the Al Aweer market also?

What is the purpose of this opening case study?

What we are going to learn from this case.The

Let's see that. Through this case study, we will follow Mr. Joseph's learning journey.

And in doing so, we will gain valuable insights into how the world of documentation, compliance, and trade operates.

This case will also help us set the stage for the more technical content we are going to explore throughout this course, and will also give you a reference point as you relate theory to the practice in this area of export documentation and procedures.

Let's dive in and explore what it really takes to manage global trading operations from one of the Middle East's busiest fresh produce markets.

See you in the next lecture.

In the next lecture, Dr. Jain discusses the fruits and vegetable industry overview.

Welcome back.

Coming from the first lecture of this opening case study, let's have this agenda for Mr. Joseph Ah for carrying out this desk and field research.

And the agenda will include an understanding of the fruits and vegetable industry as an overview, the global industry, and the basic documentation from the Al Aweer market point of view, also and in general. The terms and business-related information for that particular business hub and institutional framework in Dubai.

And what are the online resources available to help Joseph keep understanding and studying continuously, to understand the intricate details of documentation and procedures in the Al Aweer market?

Let's first look at the industry overview.

What we find, uh, about this industry is fresh fruits and vegetables.

It is a dynamic, fast-evolving industry that plays a vital role in things like ensuring food security, driving economic growth, and meeting the diverse dietary demands of a growing world population.

This overview, which we are going to discuss, was derived by Mr. Joseph, will provide insight into things like what are the market trends globally, key supply hubs in the international market, trade dynamics, pricing factors, and the future outlook.

These things we are going to discuss in this particular industry overview.

Global industry overview of fruits and vegetables.

Fresh fruits and vegetables.

If we talk about the industry significance and global trends of fresh produce, rising demand is there for fresh produce. The market is growing. Why? Because consumer awareness regarding health and nutrition is increasing.

There is a shift towards healthier diets, which require value addition.

Obviously market will grow.

And secondly, we see another trend.

There is a globalization of supply chains, especially catalyzed by technological advancements of supply chains.

You can source produce from almost any part of the world today.

Distance is not a problem.

Source is not a problem.

Time is not a problem because technology is so fast and storage is so good. It is possible.

What happens because of this globalization of supply chains, it enables year-round availability of fresh vegetables and fruits.

Then, as I had mentioned, technological innovations are driving the growth of this industry globally.

Cold chain logistics to digital trading platforms.

They are helping spur the growth of this industry, and improving the efficiency and traceability of the fresh produce in this supply chain is possible due to the advancement of technology.

And another significant industry and global trend is the shift towards sustainability and organic fresh produce.

These are the trends.

There is an increasing environmental concern and consumer preference for organic produce.

And this is why traceability becomes important, because traceability can only prove that, yes, the goods that have gone through various supply chain members globally, there is traceability, which can prove the right practices for distribution and the organic nature of the produce. Without traceability, it is impossible.

This kind of brand of sustainability and organic fruits and vegetables is prompting growers and traders to adopt sustainable practices that have to be proven.

These efficient, sustainable practices have to be traceable.

That is the thing that Mr. Joseph found out.

Moving forward in the next lecture, Dr. Jain points out the trade dynamics and supply chain complexity involved in the trade of fresh produce on a global scale

Welcome back, continuing further in this Industry Overview, another thing that Mr. Joseph found out was the trade dynamics and supply chain complexity, as far as the trade of fresh produce is concerned on a global scale. So, the nature of the supply chains in fresh produce is integrated, involving farmers, exporters, logistics providers, importers, and even retailers. Very effective coordination is crucial to carry out this kind of trade efficiently. And then there is a major significance of knowledge of risk management in this particular trade of fresh produce.

Things like understanding of the type of insurance that has to be done or understanding about the robust cold chain systems, and also an understanding of the flexible trading terms are essential. So, these are some of the things that come under the trade dynamics and supply chain. And in addition, another very important thing in this particular trade dynamics is the regulatory challenges.

Strict compliances are required with food safety standards or phytosanitary measures and international trade regulations; rigorous documentation and quality checks are involved in this trade. That is why this particular case study gives you a very good exposure to the understanding of the trade documentation and procedures.

Then, another very important feature of this trade, the global trade of fresh produce, is the digital transformation that has happened. Digital tools have been employed very frequently now in this trade for things like real-time tracking, for inventory management, and electronic documentation, also, at least on a local level.

On an international level, electronic Documentation has not yet been adopted in its totality. So, in conclusion, Mr. Joseph writes that the global trade in fruits and vegetables is a multifaceted industry characterized by dynamic market trends, complex supply chains, and a broad network of producers and consumers. Therefore, its success hinges on understanding seasonal cycles, managing logistics challenges, and staying abreast of regulatory changes and technological innovations. So, as consumer demand continues to rise globally and global trade in fresh produce becomes more interconnected, stakeholders across the supply chain must adapt to maintain the delicate balance between supply and demand, ensuring that fresh, high-quality produce reaches consumers around the world efficiently.

This was all Mr. Joseph could observe as far as the industry overview is concerned.

In the next 3 lectures, Dr. Jain discusses the basic documentation required to operate in the Al Aweer market. This basic documentation will give you an idea that what are the significance of different documents in international trade.  Let us start with the initial basic documentation required for starting the trading business in Al Aweer Market, Dubai.

As the second task in this, as we have discussed, he tried to find out what the basic documentation is that is required in this particular global trade of fresh produce, and especially about the Al Aweer market in Dubai, which is a re-export hub.

With regard to this basic documentation, the agenda Mr. Joseph writes to consider is business setup and licensing documents, export and re-export documentation, import documentation, commercial and financial documents, local trading and wholesale documents, other essential permits and documents, especially about the Al Aweer market.

That is the main focus of this case study.

As far as the business setup and licensing documents that are required, the chief among them is the trade license.

That is the commercial license.

And in this particular case of Al Aweer market, it is issued by the Dubai Department of Economic Development.

That is DED or Dubai Multi Commodities Centre.

That is DMCC, if trading from free zones.

If we talk about Dubai, there are two possibilities.

One is trading from the Al Aweer market, which is a traditional market, and another is the free zones.

In Dubai, where a very large scale of international trade is done, as far as fresh produce is concerned, apart from other commodities.

As far as free zones are concerned, the Dubai Multi Commodities Centre is the authority that issues the license.

But otherwise, in the case of the Al Aweer market, it is the body that is the Dubai Department of Economic Development.

And the license should specify import-export trading activities for fruits and vegetables.

It is required as a prime document for opening a bank account in Dubai, applying for customs registration, and leasing a warehouse.

Without this license, it is not possible to carry out these activities, initial activities, or business setup.

Then another very important document is the company registration certificate, if applicable, depending on the nature of the company that is set up.

Legal proof of the company's registration with the Dubai Economic Department, again, DED is required to carry out this kind of business, and it must be renewed annually to avoid fines.

Then, another basic documentation for business setup is the customs code registration, which is to be registered with Dubai Customs.

For example, in India, it is called the IEC, Importer Exporter Code number.

Every importer and exporter must register with Dubai Customs and obtain a customs code to process import-export clearances.

Without this code, it is not possible to process these import-export clearances.

Then, another very important document in basic documentation for business setup and licensing is the Ejari, which is a tenancy contract if applicable, and market registration.

If you are leasing a shop or a cold storage, or a warehouse inside Al Aweer market, a trader must register the lease contract — the Ejari — with the Dubai Land Department.

Then, some sections of the Al Aweer market also require a separate Market Trader Permit from Dubai Municipality.

That is case-to-case and depends on the situation.

As far as the import documentation is required, the very important document is the import declaration submitted via Dubai Trade Portal, which is dubaitrade.ae, for each shipment. It is required in whatever way you are importing the goods, either by sea or by air.

If it is generally, if it is by sea, it is Jebel Ali port, and if it is by air, it is Dubai Airport Cargo. The commercial invoice is another very important import document that is to be issued by the exporter, that is the seller, to the importer, that is the buyer.

And it must include things like exporter and importer details, should have descriptions, types of, for example, fruits and vegetables, in quantity and price per unit, total value of the shipment,

Incoterms, whether it is FOB or CIF, like that, and payment terms, whether it is LC, whether it is advance payment, whether it is credit, and whatever may be the case. Then another very important document is the packing list.

This packing list is very similar to the commercial invoice, but it does not have the price details. It lists details of the shipment, including, for example, weight, quantity, and type of packaging, whether it is cartons or crates, or jute bags; it may be different types of packaging.

Then batch numbers and expiry dates, if applicable, and temperature control instructions. Then another very important import document in this case of importation in Al Aweer market, is the phytosanitary certificate, which is issued by the exporting country's agriculture authority. And it confirms that the produce, fresh produce that is being exported, and the shipment entering Dubai is free from pests and diseases.

It is compulsorily required by the Dubai Municipality Food Safety Department.

Without this, customs clearance will not happen. In case of import documentation, some more documents that are required are, for example, a health certificate, which certifies that the fruits and vegetables are safe for human consumption. It is issued by the food safety authority of the exporting country. Certificate of origin (COO, which is issued by the seller's country's Chamber of Commerce for exporting the goods from their country.

It confirms the origin of the goods, which is required for customs duty exemptions in Dubai. Then another very important document in import documentation is the transport document, which is a bill of lading or airway bill, depending on whether the shipment is coming by sea or by air.

A bill of lading is for the sea shipment, and an airway bill is for the air shipment, which is issued by the shipping line or the airline, as the case may be. It acts as proof of ownership of goods during transit.

Another very important import document is the Dubai Municipality Food Import Permit. The importer must obtain it via a trade portal, which is called FIRS in Dubai. Food Import and Re-Export System before importing.

It ensures compliance with Dubai's food safety regulations.

Another very important document in this case of import of fresh produce in Dubai is the Customs Duty Payment Receipt, which is the proof of duty payment.

Then power of attorney is also required if you are taking the services of a CNF agent or a customs broker. So, whatever the case may be, a power of attorney may be required. So, why have I listed out this import documentation? For the simple reason that sellers who wish to export fresh produce or similar items to Dubai will have an idea of what documents are required for exports. Because an importer will ask and discuss all these documents with you, wherever the role of the exporter is required to obtain these documents, they must be obtained by the exporter.

That is the reason why we have listed out all these important documents. And similar exercise is done for any goods, any country that is to be exported from anywhere in the world.

Now, in the next lecture, Dr. Jain lists out the Export and Re-Export Documentation Required in Al Aweer Market.

Then the export and re-export documentation, again, is an export declaration that should specify that the importation is for the re-export purpose, and it is again submitted via the Dubai trade portal that I had referred to.

It is required for shipping goods out of Dubai's ports or airports for re-export.

Then, another very important document, a basic document, is the re-export certificate. Required if goods are being re-exported without modification.

It is to be obtained from Dubai Customs. Then another very important document in this case is the re-export health certificate.

If the goods are being re-exported to GCC countries, especially a new health certificate may be required, but for other destinations also, on a case-by-case basis, it may be required again.

Then, repacking approval is required if applicable.

If goods are being repacked, labelled, or re-labelled in Dubai before exports, which means re-export approval from the Dubai Municipality is required.

Then, commercial and financial documents are also required to carry out these kinds of trading activities.

For example, a sales contract or purchase order, or an import contract, whatever the case may be.

It is an agreement between the buyer and the seller on an international level specifying things like very basic things, whether type, quantity, and price, and delivery terms, whether it is Ex Works or CIF or FOB, or whatever may be the case. Or payment terms, whether it is letter of credit, whether it is CAD, that is, cash against documents, or telex transfer, advance, whatever may be the case.

Then the letter of credit, if it is the case, offers a secure payment method that is issued by the buyer's bank, which guarantees payment upon compliance with agreed shipping terms.

Then, there may be needed documents like bank guarantees or trade credit facilities.

Many suppliers require a bank guarantee or PDCs, postdated checks, for large transactions.

By experience, it has to be understood that this whole ecosystem, what kind of payment system is there, what kind of international commercial terms are there, and what all details are very important, depending on which item is being exported in fresh produce, and which kinds of fruits and vegetables are being handled.

Then, local trading, distribution, and wholesale documents. Let us discuss that also. Mr. Joseph listed out things like a tax invoice, which is the VAT invoice in the case of Dubai, since the UAE has 5 percent value-added tax (VAT).

All sales invoices must include the trader's VAT number, customer details, total price plus VAT amount — it has to be mentioned.

The delivery note, which is used when supplying goods to local retailers — those goods which are imported from other countries and are being supplied to local retailers, supermarkets, or hotels in the UAE — confirms the quantity being delivered and is signed by the receiver.

It is proof that delivery has been made.

A delivery note is required.

The warehouse receipt is another very important document in this particular category, especially if you are using cold storage at Al Aweer market, which is issued by the cold storage facility inside the market.

It confirms the storage period, temperature settings, and inventory quantity.

Another very important document is the Dubai Municipality inspection report.

Random inspections are conducted to ensure food safety compliance. Any violations result in fines or shipment rejection.

Then let us also talk about another document that is required in the local trading distribution or wholesale category of documents, that is the warehouse and cold storage contract. Required for rented storage facilities in Al Aweer market.

Then a distribution agreement may also be required if you are having partnerships with supermarkets and restaurants for the local sale of the imported goods in Dubai.

Then there are some more miscellaneous documents, which are essential permits that are required to carry out these trading activities in the Al Aweer market. These include things like municipality market registration, if applicable.

Some areas of the Al Aweer market require traders to register their shops or stalls with the Dubai Municipality.

Another very important document in this category is the waste disposal and recycling agreement, required for traders disposing of unsold, spoiled fresh produce in the designated market waste area.

And then food labeling and packaging approvals if selling branded imported packaged fruits and vegetables locally.

The Dubai Municipality requires Arabic as well as English labeling for packaged fresh produce.

Then, approval for the release of the import consignment for the local market is required. Another approval is required, which is to be obtained by the Dubai Municipality, which is a prior approval that is required.

These were all the basic documents.

You can understand that there is a plethora of documents when it comes to fresh produce trading, export, as well as imports on a global scale.

In every different category, you will find this kind of ecosystem.

This particular part of the case study helps you to understand what the ecosystem is.

As we go further in this course, we will discuss very important documents, very basic and important documents that are required in almost all types of situations. Those we will be discussing in this course.

In the next 2 lectures, Dr. Jain focuses on different business terms on which a trader operates in an international trading hub like Al Aweer Market. These business terms help you conceptualize the significance of procedures involved in international trade. Let us start with the common payment and delivery terms used in Al Aweer Market trades.

Then Mr. Joseph also had worked, as we had discussed in the agenda, on the terms and business-related information for trading in the Al Aweer market.

Let's discuss that now, terms and business-related information, Joseph writes the agenda.

What he found out, including things like common payment terms in the Al Aweer market, common delivery terms, that is Incoterms, which are used in trading in the Al Aweer market, common trading practices in the Al Aweer market, e-business terms used in trading agreements, competitive landscape, and market strategy in the global market, is then an important regulatory and compliance consideration.

These were the terms of business and business-related information that Mr. Joseph had on this agenda to find out.

Let's first discuss what the common payment terms are in the Al Aweer market.

A very important common term in the Al Aweer market is the spot payment.

That is the cash transactions. This is also called in local language ready money System, which is the most common method for small to medium transactions. Herein, payments are made immediately upon delivery of the goods.

It is mostly preferred by farmers, small-scale suppliers, and market stall owners.

It is used mainly for local UAE purchases and re-exports. Then another very important common payment term is the PDCs, that is, the post-dated cheques, which are common for large orders in the Al Aweer market.

Large buyers and supermarket chains often pay with PDCs. Common terms in PDCs include maybe 30 days PDC or 60 days, or 90 days from the date of delivery.

It ensures a secure payment system for future payments but requires financial credibility.

Then another very important common and popular payment term in the Al Aweer market is bank transfers, which is also called in technical terms as TT, i.e., telex transfer.

Although telex is not used nowadays, but is the binding language that is used.

It is used for bulk imports and international transactions sometimes. Payment is sent via SWIFT or TT transfers before or after the shipment.

It is used when dealing with large international suppliers of fresh produce.

Another common payment term is a letter of credit,

LC, for high-value imports, and especially when you are dealing with some suppliers who are new.

It is used for big international purchases where buyer and seller don't know each other very well, because it is a costly proposition, so it cannot be used in every transaction.

In this case, the bank guarantees payment once goods are shipped as per agreed terms to the seller, that is, the exporter.

It is commonly used for container load shipments from continents and countries like Africa, Europe, or even India, and many times in China.

This is another very important and common payment term.

Another Important payment term refers to credit agreements, that is, for trusted buyers.

Some traders extend credit for 15 to 60 days to trusted customers in the Al Aweer market in Dubai. Credit terms depend on business relationship and reputation, credit history, and financial standing of the party in the Al Aweer market.

Volume and frequency of the transaction also play an important role in deciding whether credit agreements can be carried out.

The common delivery term, Incoterms, which is used in the trading market, is sometimes ex-works, where the buyer picks up from the market or cold storage.

The buyer arranges pickup and transportation from the seller's warehouse or cold storage.

It is commonly used when local retailers and supermarket buyers collect produce for local purchases.

And FOB comes free on board for export shipments.

The seller, in this case from Al Aweer market, arranges delivery to Dubai Port or the airport.

Buyer arranges shipping, insurance, and customs clearance in their own country.

It is very common for exports to regions like the GCC or African continent countries, and CIS countries from

Al Aweer market.

Another very common delivery term is the CIF, Cost Insurance and Freight, which is mostly common for import shipments in the Al Aweer market. The exporter, that is, the supplier, covers the shipping cost up to Dubai port, whether it is an airport or a seaport. Dubai Trader handles customs clearance and local transportation. Used when importing from mainly countries like India, Egypt, Turkey, or some parts of Europe.

Then DDP is also very commonly used, which is delivered duty paid, which is a full service delivery. The supplier delivers to the trader's warehouse, including customs clearance in Dubai. Used for smaller shipments where the buyer prefers hassle-free delivery.

Now, Dr. Jain takes up the question- What are the Common Trading Practices in Al Aweer Market One Should Know About?- in the next lecture.

Welcome back.

In the last video, we talked about the common business terms that are in the Al Aweer market and which Mr. Joseph is researching.

Now continuing with the last video, let us continue with this particular, uh, aspect of Mr. Joseph's research, which relates to the common business terms.

Let us talk about common trading practices in the Al Aweer market.

What are these common trading practices that one should know about?

The first very common trading practice in the Al Aweer market relates to the pricing of the commodities there.

These prices are generally auction-based.

These prices fluctuate daily based on supply and demand.

And this kind of auction, which decides this pricing daily, starts early in the morning from 3 a.m. to 6 a.m., and decides the day's pricing for bulk produce mainly. Traders bid on fresh shipments that arrive overnight before 3 a.m..

Then, another very common practice in the Al Aweer market refers to spot buying versus contract buying.

Spot buying is the buying daily at market rates, which is best for small traders and retailers.

While contract buying is also common in Al Aweer Market, which is an agreement to buy fixed quantities at pre-agreed prices, it is common for purchases by supermarkets and restaurant suppliers.

It includes the imported produce that is coming into the Al Aweer market.

Another very common practice in the Al Aweer market is commission-based trading.

Traders act as commission agents for the farmers or the exporters, and these commission rates vary from 2% to 5% per transaction based on the value.

It is very common for Indian, Pakistani, and Egyptian fruit imports, those shipments that are coming from these countries.

Another very common practice in the Al Aweer market trading practice refers to the booking, especially for high-demand produce.

In this particular practice, traders pre-book seasonal fruits and vegetables, for example, commodities like mangoes, cherries, or dates, to lock in the supply before peak demand settles in.

Another very common practice refers to the cold storage and warehousing fees. So rent for cold storage in the market is based on things like per pallet or per metric ton.

Or it can be for a short term, which is normally high, and it can also be for long-term storage. Some traders own their own cold storage, while others rent space daily. So accordingly, the prices are there.

Mr. Joseph also researched key business terms that are used in trading agreements in the Al Aweer market. Very common thing.

The first key business term refers to the product quality terms.

What are the different qualities of products, and how are they recognized and nomenclature is there?

What kind of nomenclature is there for such products?

It can be grade A-type products, which are generally premium products, or export-quality products, which are obviously higher priced.

Then it can be grade B products, which are slightly lower quality and which is generally sold at discounted rates.

Then the third category is grade C product quality, which is used for processing or local bulk sales.

Then another key business term refers to the standard packing units that are very common in the Al Aweer market, which can be in the form of cartons of five kilograms or 10, or 15kg.

It can be even crates, depending on what commodity is to be used, which may be made of plastic. or it can also be of wood.

Then there is a concept of jumbo bags, also, which are also normally used for bulk onions and potatoes.

Then there can be plastic clamshells, mainly for berries, cherries, or grapes.

Then another key business term, which is very common in the market for trading agreements, refers to transportation arrangements, which can be generally of two types.

Refrigerated trucks, which are called reefer trucks or non-refrigerated trucks.

Reefer trucks are generally used for sensitive produce like berries and leafy greens, and that is a costly proposition for transportation, while non-refrigerated trucks are generally used for bulk produce like potatoes, onions, and bananas.

Then another key business term refers to the storage and handling charges in the Al Aweer market.

Generally, cold storage fees in the market vary from 50 to 150 dirhams per ton per month, and handling charges of the packing units that we refer to generally vary from 2 to 5 dirhams per carton, for the labour to load or unload these cartons.

Then, in this flow of this particular part of understanding the business terms, common business terms for trading in the Al Aweer market, he also tried to find out what the important regulatory and compliance considerations are in the Al Aweer market.

We have discussed a few of them already.

There may be a little bit of repetition, but it is okay.

The first very important regulatory compliance comes from the Dubai Municipality food safety rules.

All fruits and vegetables must be approved and inspected before sale, especially for local sales.

Spoiled or expired goods must be disposed of properly as per guidelines. Food safety labeling laws apply to all packaged foods that are traded in the Al Aweer market.

These things should be kept in mind while trading in this market.

Another thing refers to the VAT and tax regulations.

There is a 5% VAT that we had talked about earlier, also, which applies to local sales within the UAE.

And exported goods are zero-rated as far as VAT is concerned.

These are the regulations that are there in the UAE, especially in Dubai. And with regard to customs duties and import taxes that we had talked about earlier, 5% import duty is there on most fruits and vegetables, unless these are duty-free under any kind of free trade agreement.

Some of the items are actually exempt from such duties, which may include, for example, bananas or apples, or oranges.

And some more items are there. In this part of his research,

Mr. Joseph concluded that understanding these common business terms, which are very common in the Al Aweer market, is very, very essential for being successful.

Also, an understanding of the trade practices and the marketing strategies, which are proven strategies that can be adopted, is essential for successful trading in this market.

Any trader who is in the Al Aweer market should have a strong grasp of things like pricing or payment terms, delivery arrangements, and quality standards that will ensure a smooth entry into the competitive fresh produce trading business in Dubai and in the Al Aweer market.

That was the conclusion of Mr. Joseph about this particular aspect of his research.

What kind of institutional framework exists for international trade in different markets? The next 2 lectures provide you with comprehensive details about the types of institutions that impact the documentation and procedures in international trading activities. Let us start with a list of key government authorities and what are their role in overall trading activities in Al Aweer Market.

Moving forward as per his agenda. His next agenda referred to the institutional framework and online resources that could be helpful as a new entrant as a trader in the Al Aweer market.

Let's first discuss this institutional framework.

And thereafter, we will talk about the online resources.

The institutional framework will include different regulatory and local bodies, including customs, which we have discussed a little bit earlier.

Again, we may be discussing some part of it, but it is useful for a better understanding of this institutional framework.

Let's go into this.

To find out the framework of these institutional bodies in Dubai that influence trading in the Al Aweer market, Mr. Joseph made this agenda of things to find out, starting with key government authorities and their roles, and which are the free zones and trade platforms where fresh produce is dealt with.

Then what are the compliances with UAE food safety standards, and what are the online resources that can be useful?

These things, Mr. Joseph tried to find out as far as this part of the research is concerned.

If we look at the first part of his agenda in this particular aspect of his research, which refers to key government authorities and their roles.

The first and foremost is the Dubai Municipality (DM, especially concerning food safety and market regulations in their role.

The Dubai Municipality plays a critical role in ensuring that all fruits and vegetables sold in Dubai meet safety and quality standards.

Therefore, the responsibility of Dubai Municipality includes things like market regulation and licensing, where DM manages the Al Aweer fruit and vegetable market through its Food Safety Department, and it ensures proper hygiene standards in market premises.

Also, the responsibility of food safety inspections and quality control, wherein every imported shipment of fresh produce is inspected at Dubai Ports and also in markets.

Products must comply with UAE food safety standards and maximum residue limits for pesticides.

Another responsibility of Dubai Municipality refers to issuing health certificates and approvals, wherein traders must obtain a food import and re-export health certificate to sell fresh produce in Dubai and for re-export.

Re-exported goods need special clearance, actually from the Food Safety Department of the Dubai Municipality.

Another responsibility of the Dubai Municipality refers to cold storage and waste disposal regulations in Al Aweer market, as well as in other parts of Dubai, wherever this trading is carried out, including free zones.

Here, proper cold chain facilities are required for perishable items, as per the protocols defined by Dubai Municipality. And spoiled goods disposal must be done as per Dubai Municipality waste management policies.

Traders must be very, very clear about these policies and regulations, which are handled by the Dubai Municipality.

Then the second most important key government authority refers to Dubai Customs, which enforces import and export regulations.

Dubai Customs controls all cross-border trade transactions, ensuring compliance with duty payments, documentation, and customs procedures.

The key responsibilities of Dubai Customs include customs clearance of imported fruits and vegetables, wherein traders need to register with Dubai Customs to import or export fresh produce, and they have to ensure that the goods undergo physical inspection and X-ray scanning upon arrival.

Another key responsibility of customs refers to import duty and tariff rules.

There is a 5% duty that we have discussed earlier, also, which applies to most fruits and vegetables, with some exemptions.

Goods imported from GCC countries and free zones are often duty-free.

Another very important thing to know is that Dubai Customs follows the Harmonized System of the ITC HS code classification.

International Classification of Goods and Commodities, including fresh produce.

Traders must declare the correct HS code for each product to determine what the duties and compliances are.

For example, for fresh produce, the six-digit HS code is 070190. And for bananas, the six-digit HS code is 080310, which is actually in alignment with the international ITC HS code.

Another key responsibility of Dubai Customs refers to re-export clearance and documentation.

For re-exports also, traders need to obtain a Certificate of Origin, and an export declaration has to be filed with Dubai Customs.

These are the major touchpoints with Dubai Customs as far as trading in the Al Aweer market for fresh fruits and vegetables is concerned.

Then there is another entity, which we have not discussed in this particular case study, which is Dubai Economy and Tourism, which is actually a trade licensing authority.

All trading businesses in Dubai need a valid trade license from Dubai Economy and Tourism (DET).

The key responsibility of DET includes issuing trade licences for fresh produce, such as a general trading licence for bulk trade, an import-export licence, or a wholesale and retail trading licence.

DET is also responsible for licence renewal and market compliance.

Generally, a trader's license must be renewed annually, as with many other licenses in Dubai. Businesses operating in Al Aweer Market must comply with DET commercial regulations.

Another responsibility of the Dubai Economy and Tourism, DET, includes investor and partnership agreements.

For foreign traders, especially, partnership agreements with a local UAE national sponsor may be required in many cases, unless you are operating as a foreign trader in a free zone in Dubai. This is very important.

Another key government authority in this institutional framework is the Dubai Chamber of Commerce and Industry, which primarily has a role in trade facilitation.

The Dubai Chamber supports fresh produce traders by providing market insights, trade dispute resolution, and networking opportunities.

Key responsibilities of the Dubai Chamber include issuing a Certificate of Origin, which is mandatory for exporting fruits and vegetables to foreign markets and confirms the origin of the goods for customs purposes.

Another responsibility of the Dubai Chamber is trade dispute resolution, which helps resolve payment disputes between importers and exporters and provides legal assistance for such contract disputes.

This chamber does that.

It also has the responsibility with respect to market intelligence and business support.

It regularly publishes reports on fruit and vegetable trade trends, market insights in Dubai, and supports traders in finding new export markets across the world.

Moving forward, Dr. Jain lists out the online resources that can help with smooth trading in Al Aweer Market. IN this next lecture, Dr. Jain also lists out the main questions concerning this course that come to our mind from this case study.

Then, in this particular part of the research, going forward, Mr. Joseph also found out which are the free zones and trade platforms for fresh produce in Dubai.

And he finds the most important and largest logistics hub, which is Jebel Ali Free Zone, or in short, it is called JAFZA.

Many large fresh produce importers and exporters operate from JAFZA, which offers 100% foreign ownership, zero tax, and duty-free re-exports.

It provides advanced cold storage and logistics facilities, also.

He also found out about an organization called Dubai Multi Commodities Centre, which actually works as an agri-trade hub and focuses on agricultural commodities trading.

It is ideal for traders involved in bulk fresh produce distribution all over the world, and especially in the Dubai market.

Then, of course, as the case study is focused on this particular subject, there is also the Al Aweer Fruit and Vegetable Market, which is a very, very important wholesale hub for fresh produce in Dubai.

It is the largest physical market for fresh produce trading anywhere in the world.

No import taxes are there on GCC-origin products in fresh produce that are sold in this market.

Major buyers in this market for local purposes include hotels, restaurants, caterers, and retailers.

Then, moving forward, Mr. Joseph also listed down what the different compliances with the UAE food safety standards are.

Highlighting this particular aspect, he writes that traders must comply with the UAE's food safety laws for fresh produce, including things like MRLs — that is, the maximum residue limits for pesticides — wherein the Dubai Municipality conducts pesticide residue tests on all imported fruits and vegetables, and if products exceed MRL limits, they can be rejected or destroyed.

The traders must also comply with the labeling and packaging requirements of the UAE, which should generally be in Arabic and English labeling, which is mandatory, and it must mention the country of origin, expiry date, and handling instructions.

Another compliance for traders refers to temperature control and storage regulations, under which fresh produce must be stored in approved cold storage facilities only.

Temperature logs must be maintained and monitored.

These archives must be maintained for the temperature logs.

These are some of the essential online resources for success in the Al Aweer market.

I will not read out these resources. You can download this complete list of online resources from the resource section of this lecture.

In conclusion, on this institutional framework and online resources, Mr. Joseph concludes by saying that Dubai's institutional framework for the fruit and vegetable trade is highly organized, with multiple regulatory bodies that ensure smooth operations, quality control, and compliance with food safety laws.

Traders operating in the Al Aweer market must be well-versed in export-import procedures, food safety standards, documentation requirements, and business licensing regulations to ensure seamless business operations.

Now we have come to the end of this case study, and the idea of this case study was to provide you with a 360-degree view of the ecosystem under which these export documentation and procedures operate.

This particular case study will help you understand the basic purpose of each and every basic and important export documentation, as well as the procedure.

Some of the questions raised by this case study include:

What are the basic documents required generally for things like fresh produce, including fruits and vegetables, into Dubai, and in general? And why are they important to be understood by the exporters, and what documents that exporters have to arrange?

That complete picture should be very clear to the exporter.

And what is this picture?

That is the main question that is there to start with.

The second question refers to which key documents must be prepared for exporting fresh produce from Dubai to other countries, and how they are to be obtained.

What are these documents?

What is their purpose?

Going forward in this course, you will have a better understanding of these export documents. Then in detail:

What is a commercial invoice, and why is it most important in any commodity like fresh produce, fruits, and vegetables trading?

What is the role and what is the purpose of a commercial invoice?

How is it prepared?

What details must be included in a packing list for an export or import shipment?

Especially, we will be talking about the export, because as I have told you, if something is exported for somebody, the same shipment is an import for somebody. But the packing list is the same, and it has to be prepared by the exporter only.

What details must be included in the packing list and why?

These things have to be answered.

Another question refers to: what is the bill of lading, a transport document, and how does it help in the movement of fresh produce and other similar commodities?

Another question is: what role does a phytosanitary certificate play in the fruit and vegetable trade, as well as in other sectors? This is very clear from this case study.

Another question is: which import permits or approvals are needed before bringing fresh produce into Dubai and similar items in other trading hubs?

The last question that this case study raises, and which we will be taking up in this particular course: what are the key trade terms, Incoterms, and other business terms used in the fresh produce business, in Al Aweer Market in particular, and in other sectors in general?

These are some of the very important questions raised by this case study.

And on these questions, we will build this course.

We will try to understand the answers to these questions in more detail, going deeper into these documents.

Let's go into this course further.

Thank you very much.

Hello there.

Welcome back to this next module.

In this module, we will be exploring the basics of understanding export management, especially for the basis of export documentation and procedures.

Let's go into this module.

As you can see from this progress tracker, we have already covered the opening case study of Mr. Joseph, who joined as a trading partner at Al Aweer Market in Dubai.

After that, our next module is exploring the basics.

Let's see what we are going to cover in this particular module.

Welcome to this new module, which is titled Exploring the Basics.

In the last module, we completed our understanding of a realistic case study, which gave you a very comprehensive idea of the kind of ecosystem that encapsulates the total functions of export documentation and procedures.

One thing is very clear from this opening case study: it is not just about learning the names and the roles of different documents, and a list of steps involved in export documentation and procedures.

It is also about understanding the ecosystem, the environment, the foundations of the complete gamut of the things that encapsulate the requirements of different export documents and procedures, and the intermediaries and the channel members that are involved in this whole system, and that must be carried out.

Now our agenda is to explore these basics that will serve as the foundation for a deeper understanding of export documentation and procedures.

Therefore, I take the liberty to first pick up this second module to help you understand the very foundations of this export process.

Let's see.

In this module, we will explore things like: what are the rules of the game, what is the beginning of this game, and what are the basic concepts and steps you would need to know before we go deeper into various aspects of export documents and procedures?

Therefore, in this particular module, we will be predominantly exploring the fundamental export transaction framework or typical export transaction framework, and a very basic and typical procedural cycle from the process perspective, that underpins most common export transactions globally.

By the end of this module, you will have a basic understanding of how the global trade process works and where the role of export documentation and procedures fits in. Throughout this course, going forward, I will make sure that I speak of the concepts that fit well with export documentation and procedures valid for export transactions anywhere in the world.

With various origins of the shipments and several destinations around the world.

Let's start by getting an overview of what this module entails.

If you are new to the world of exports, this module will serve as an essential primer for you.

And if you are already familiar with the basics, consider this module a refresher because there is always room for extra and repeated learning.

Here is a glimpse of what we will cover in this section.

The first thing we are going to cover refers to the fundamental setting for the game of export and import, meaning what the basic steps are involved in this game, and under what limitations.

What is this framework we are going to talk about first?

In this understanding of the export framework, a typical export transaction framework, we will begin by discussing these very typical steps that govern international trade. As we had seen in the opening case study, there were some kinds of patterns that connected both the sellers and the buyers in the international market with lots of intermediaries.

Lots of these intermediaries played very important roles also.

Understanding these basic steps is crucial to avoiding pitfalls and ensuring that you understand the basics of the game plan.

In the second aspect of this module, we will be looking at the typical procedural steps to set up a new export business.

If you are looking to start your own export venture, you will find this particular part of the module very valuable.

In that part, I will guide you through the steps to set up your export business in a summary form.

The focus of this course is more on the operations side than on talking in detail about setting up the export business. That is not the purpose of this course, actually.

The third focus of this module is a discussion on the understanding of the basic procedural cycle from the process perspective.

A typical procedural cycle of an export transaction.

What is this procedural cycle?

What are the steps involved?

We will break down the export process into manageable steps, typical steps, making it easier to grasp the whole concept that is valid for any origin and any destination anywhere in the world and in any circumstance.

That commonality is the basis.

And then I will also talk about what else you should know before we go deeper into the export documentation and procedures.

Here, we will wrap up this particular module by touching on additional key aspects that every exporter should be aware of.

We may not be discussing in detail those aspects that will be taken up in the latter part of this course.

Before I wrap up this particular lecture, I want to talk about why this particular module matters to you.

Understanding the typical export transaction framework and basic procedural cycle from the process point of view is the foundation of successful and smooth operations involving international trade documentation and procedures.

This module is designed for a very wide audience.

Business owners looking to expand into global markets, professionals involved in international trade, such as export-import managers, or anyone interested in gaining insights into the world of international trade will find this section useful.

Your journey into the world of export transactions begins right here.

I encourage you to take notes, ask questions, and actively engage with the material.

Learning about these procedures and frameworks is not just about passing a test.

It is about equipping yourself with the right knowledge and tools to thrive in the global marketplace and become confident.

Are you ready to dive in?

Great.

Let's start by exploring the rules of the game in this international trade.

In the next lectures, therefore, we will be unravelling the typical export transaction framework.

I look forward to guiding you through this exciting module, and I will see you in the next video lecture.

In a typical export transaction, the documents are generally routed through the banking channels in the exporter's and the importer's country to minimize the risk of non-payment by the importer and the risk of non-receipt of goods from the exporter.

As soon as the export contract is finalized and the payment terms are decided, the exporter initiates action for the procurement or manufacturing of goods. As a part of international commercial practices, the bill of lading is handed over to the buyer by the buyer's bank only after the payment has been made or the importer commits to make the payment at a future date if it is a Usance document.

This ensures the receipt of payment to the exporter on one end, while the receipt of cargo to the importer on the other end. Therefore, an international marketing manager has to have a thorough understanding of the export procedures and documentation practices in international trade. Therefore, the goods can be claimed at the destination only by the bona fide holder of the B/L.

In the next few videos, an attempt has been made to create a typical export scenario and game plan. Keep watching. Let us start with understanding the rules of the game.

Welcome back, friends.

As I had indicated in the last lecture, let us discuss in this lecture a very important part that you need to understand at this stage.

Which is: what are the rules of the game?

This game of exports as well as imports.

How is this game played internationally, and what are the broader perspectives about things like the movement of goods, the movement of payments, or the movement of documents in this typical framework?

I mean, we should be clear about it. And very importantly, what steps are required to complete a typical export shipment?

Many of these details will be discussed in this lecture in a very simple way.

I am just giving you a synopsis of this framework, assuming a typical situation, which is based on a documentary credit with the involvement of an LC-issuing bank that opens a letter of credit, and the payment terms are through a letter of credit.

The same framework can be applied to other business terms as well as payment terms.

And that is the idea.

Just as an example of a letter of credit.

This will give you the exact, or at least representative, picture of what happens in a typical international transaction framework.

Let's go into it.

Before I tell you about it, I just want to give you half a minute to have a look at this typical export transaction framework based on this assumption of payment terms, as the letter of credit.

Just have a look at it and see what is given here.

Just spend some time.

After setting up your export business entity, you normally start with market and product research.

If you can identify the right products for exports with the right price, the right strategy, and the right destination — meaning the country where you want to export — you can get the right match of the importer, and you can get the export order. Based on your export strategy, whether it is right or wrong, you may be either working as a manufacturer exporter, or you may be buying the goods from the domestic market or somewhere else and selling them as a merchant exporter.

Whatever the strategy you have, the idea is to get the export order.

Once you have the export order, the next step is to sign an export contract.

And that is where we are going to discuss this export transaction framework.

That is where the operation part starts.

In this operational export framework, as you can see here, the exporter and the importer come into contact with each other.

The exporter wants to sell the goods.

The importer requires those goods.

And matchmaking happens.

Once this matchmaking happens, both parties reach an export contract.

Based on this export contract, the exporter is now interested in ensuring that the payment due to be paid by the importer is paid to him, and the importer is interested in ensuring that the goods sold and dispatched to him are in good order and condition, and delivery is made at the agreed place and on the agreed schedule.

What happens to make it possible is that the importer approaches a local bank in his own country. He approaches this bank, which we are calling the importer’s bank, where he requests that the bank make it possible for him to pay the exporter only if goods are shipped as per the agreed terms of the contract.

Here, the importer is also aware of the interest of the seller, and he wants the bank to take care of the interests of both parties.

What does the bank do?

The bank opens a letter of credit, so-called or documentary credit in technical terms, in favour of the exporter, based on the LC opening instructions — a document provided by the buyer, who has already consulted with the seller so that both parties are on the same page.

What is this letter of credit, which is opened by this importer’s bank, which we are calling the LC issuing bank?

It is a conditional guarantee by the issuing bank that once the goods are shipped from the borders of the exporter and the exporter can satisfy the bank that the shipment of the goods has been made in time and in good order and condition, as per the agreed terms, the importer’s bank will guarantee that the payment will be made to the exporter.

This is a very small description of the letter of credit.

A small definition.

What has happened in this kind of situation is that the exporter is assured that once the goods are shipped in good order and condition and in the right manner, and he can satisfy the bank to this effect through documents, he will get the payment.

Why?

Because typically a bank, an international bank is supposed to be a reputable bank, and the payment is guaranteed by this intermediary, which is a bank, not by the importer.

The interest of the exporter is taken care of by this system of introducing a bank as an intermediary.

Similarly, the bank is giving this conditional guarantee by only ensuring that the exporter makes the shipment on time and with the right quantity and quality of the goods.

Conditions imposed by the bank are in some kind of original, powerful documents that have to be produced by the exporter to ensure that the interests of the importer have been taken care of.

In this kind of system, the international system, the interests of both the exporter and the importer have been taken care of by the bank, which has opened the letter of credit.

Normally, this bank, as I have just mentioned, we are called the LC issuing bank, or in short, the issuing bank.

Now what happens?

The bank does not open this letter of credit just like that and sends it to the exporter directly.

No, it’s not like that.

It opens the letter of credit and sends it through a local bank in the exporter’s country.

It wants this involvement of another bank, knowing very well that the exporter can accept the letter of credit or reject the letter of credit. The exporter will accept the letter of credit only when the conditions — meaning the documentary conditions in it — he is able to meet.

That letter of credit, which is normally in very technical language, in a kind of banking language, is advised by the local bank in the country of the exporter, which acts as an advising bank.

This letter of credit, which is advised to the exporter about its applicability and its conditions through this local bank, becomes a very simple business language.

The role of this bank in conveying this condition becomes very important because it makes the conditions simple to understand for the exporter.

The involvement of a local bank ensures that the exporter is at liberty to ask all kinds of questions to the local bank — that is, the advising bank — comprehensively understanding before accepting the letter of credit, those things that are related to the conditions imposed by the importer’s bank, that is, the LC issuing bank.

In this system, which I just mentioned, the role of two banks has been created.

One role is that of the issuing bank, which is the importer’s bank, and the other role is that of the advising bank, which is located in the exporter’s country.

By involving these two banks, this whole system has now become practically possible to serve the interests of both contracting parties.

These parties are located in two different countries, possibly at a large geographic distance and with potentially different local legal frameworks of their own.

This kind of international payment and the dispatch of goods can now happen in this arrangement of international trade financing by the banking system or a particular commercial bank.

This is how it happens.

Once the letter of credit has been opened by the importer’s bank and advised by the advising bank in the exporter’s country, the exporter is now confident that if he dispatches the goods in time and in the right order and condition, he will receive the payment after presenting the documents, which should be compliant with the letter of credit conditions.

What he does is prepare the goods and, through the port of loading, either by sea or by air, or by any means of transportation, depending on the case, he exports the goods on time, which are received by the importer through this system of letter of credit.

How he sends the goods, how he dispatches the goods, should all be in line with the LC conditions.

At the same time, the exporter prepares all the export documents as per the LC terms and presents those documents to the LC issuing bank via another local bank, or maybe the same advising bank, which will receive the guaranteed payment on behalf of the exporter.

This bank negotiates these documents with the LC-issuing bank and now serves as a negotiating bank.

Using the same original documents received by the importer from its own bank, the buyer now claims the goods in his own country at the port of discharge.

This is how this typical export-import transaction framework takes place.

And the role of both the importer’s bank and the exporter’s bank — meaning the issuing bank and the advising bank — comes into the picture.

And this is how the system works.

In the next lecture, I will explain this framework in some more detail, highlighting the roles of both the issuing bank as well as the local bank of the exporter, or the banks, which means the advising bank as well as the negotiating bank.

Now, in the next lecture, we will discuss the significance and role of several intermediaries in this typical game of export of goods from the origin to the destination.

Hello friends.

Welcome back.

As I had discussed with you in the last lecture, documents are provided by the exporter to the LC issuing bank via its local bank, which acts as a negotiating bank.

This is typically called the document's presentation to the LC issuing bank, which should be compliant with the letter of credit conditions.

If the whole set of documents is actually compliant as per the LC requirements, the importer’s bank, which is the LC issuing bank, will pay against the letter of credit that it had opened and within the validity period of the letter.

It is the duty of the importer’s bank to pay, because the guarantee is given by the importer’s bank, not by the importer, actually.

In the meantime, goods have already reached the port of discharge, and now the interest in the goods is of the importer.

What will the importer do?

The importer will approach its bank, which had opened the letter of credit, that is, the LC issuing bank, which is a local bank that has the complete set of original documents, including transport documents that were originally issued by the main carrier in the exporter’s country.

These documents are required by the importer to collect the goods from the main carrier and get the goods cleared also from customs, their own customs or border control, that is, the customs of the host country.

That means the importer’s country.

That is the interest of the buyer now.

What will the importer do?

The importer will settle any dues that are there with the LC-issuing bank, including the main payment for the goods, if it has not already been paid. All these dues will be cleared by the importer before getting the original documents.

Therefore, the account of the importer may be debited by the issuing bank against the payment, if the importer has an account with the same bank, or by any other means.

Whatever the payment has already been made by the importer’s bank, that is the LC issuing bank, to the exporter, and whatever the bank charges or any other payables by the importer to the bank — for example, any interest charges — those payments will be debited from the importer’s account by the issuing bank.

If everything is fine, if payment has been made by the importer in totality, the documents will be handed over to the importer along with a no-objection certificate (NOC) from the LC issuing bank.

In case this is done, and if the transport documents are consigned to the bank — which is normally the case, that is, the LC issuing bank, because the consignee name here is the bank — the importer cannot claim the goods without this NOC.

In such a case, an NOC will be given to the importer with respect to the collection of the goods from the main carrier for taking physical possession of the goods. Because without the NOC, the main carrier will not hand over the goods to the importer, and he will wait for the actual consignee.

This happens if the transport is through sea shipment. With this NOC and all the original documents, the importer can now approach the main carrier, that is, the shipping company, to take physical possession of the goods and get the goods cleared by the local customs of their own country, border control.

In this typical export transaction framework, what is important is to understand the role of different intermediaries that we have already discussed, some of them.

What is, for example, the role of the LC issuing bank, that is, the importer’s bank?

What is the role of the advising bank, that is, the local bank of the exporter’s country?

What is the role of the negotiating bank, which can be the same as the advising bank, and again, the local bank of the exporter’s country?

What is the role of the home country’s customs or border control?

What is the role of the host country’s customs or border control?

And finally, what is the role of the main carrier, which can be a shipping company or an airline?

In this particular export transaction framework, we had assumed that it was an LC payment.

And we also focused on the sea shipment, actually, because air shipment can be a little more complicated, of a different type.

At this stage, you can understand this framework.

And slowly it will be very clear about the air shipment, for which I have a completely exclusive focused module — exporting by air — later in this course.

In addition, it is important to understand what is the role of the freight forwarder or a CNF agent if hired for goods clearance by both the exporter as well as the importer.

If this intermediary has been hired — which is generally the case — then what is the role of this intermediary also has to be understood.

These are some of the very important intermediaries who are involved in this complete, typical export transaction framework that I have just discussed.

In this typical export transaction, you will understand what are the rules of this interesting game of exporting and importing.

What is the logic of the different aspects that are involved with respect to the movement of the goods, the movement of the documents, and the movement of the payment?

That is very, very important.

You can, from this description, understand that when the transaction is between two countries — that means two different countries with different legal systems, laws of the land — these complications can only be sorted out through this kind of export transaction framework.

There is no other way.

These are the rules of the game, actually. Whatever you want to understand with respect to the export operations and export transactions, this framework will give you the right background.

And this is the basis.

This is the foundation that you have to understand. And the rest — about getting the orders, finding the markets, finding the buyer — those are the things that come from your ingenuity.

Depending on your hard work in your market research and marketing, and depending on the product research that you have done.

What is your product strategy?

What is your market strategy?

Those things we are not going to focus much on in this course.

We will just have passing references to those things, because our focus is on the operations part in this course.

This was all about the export transaction framework, a typical export transaction framework that will serve as a very good foundation for your understanding, going forward in this course.

In the next lecture, I will take up the step-by-step procedure — in a very brief way — for setting up your export business.

Let's go into that.

We will try to look into the things that we had discussed in the opening case study, what kind of business setup is required in that case study, and what the different scenarios are under which the export business has to work.

We will be talking about these things in the next lecture.

Stay tuned with me.

In the next 3 lectures, Dr. Jain discusses a brief overview of what is the typical process involved in setting up a new export firm. Let us start with the basic things we have to do to get the export business going.

Hello friends.

Welcome back.

In the last lecture, we discussed a typical export transaction framework.

We learned the basic rules of the game, basic rules.

Continuing further in the same module, where we are talking about the basic things, very basic things.

Let us now talk about another very important area that you should know briefly, at least from the perspective of this course.

That is how to set up your new business.

We have already discussed a few things in the opening case study, where a trading business was to be set up to trade, export, and import fresh produce.

We had discussed the process and the documents that are required to set up a new business.

That was specific to the fresh produce and specific to Dubai.

In this, we will be talking in very general terms, and we will try to talk in such a way that you can relate these things to any specific sector, similar to what we discussed in the opening case study.

That is our objective.

Let me tell you that the topic of this lecture is not really the core focus area of this course.

However, basic information in this respect can be helpful.

That's why we are doing this.

Things like how do you start your export business?

What is the procedure involved in doing that?

And how do you start getting export orders at the beginning of your business, which means taking off?

I will just give you passing references to some of these aspects in this particular lecture.

As I had just mentioned in our opening case study, we mentioned this example of the process and documents involved in setting up a new trading business in Dubai for exports and imports of fresh produce.

Your focus now should be to find out similar ways of doing initial compliances to set up your business in any sector you may be in, for export or also import, basically because setting up is quite similar for both exports and imports.

How do you, for example, set up your business in your specific sector? That is how you have to relate to this lecture.

What are the different approaches to setting up your business in your specific sector? That you will learn when you go into the business, based on the basic information that we are going to discuss.

And what are the costs involved in starting your export business in different countries, which may vary significantly?

And how do you find information and do the desk research and field research to get complete knowledge of the international market at the beginning of your business?

In this course, our focus is more on the operational side of export management.

In order not to make it too complicated, I will just give you a brief idea about these aspects before we go into the export procedural cycle from a process perspective in the next lecture.

That's our focus area in the next lecture, which we will be talking about.

Let's continue with this lecture.

Here, I just want to tell you that in order to start your business, invariably in different countries, you will need certain kinds of export-import licenses or so-called codes.

I hope you remember that in our opening case study, we talked about the customs code that was required in Dubai to start trading in Al Aweer Market.

It is the same thing basically. In India, this customs code, for example, is called IEC, which is the Importer-Exporter Code. This means that similar codes with different names are there in many other countries.

For example, in Europe, it is called EORI, or in colloquial language, we call it EORI.

The cost of getting this code may vary from country to country.

The cost of getting an IEC, for example, in India is not very much, maybe a few dollars.

But the purpose of these licenses, or so-called codes, is actually for the central banks and countries, customs, or border control, to monitor the inflow and outflow of goods and foreign exchange.

The purpose is to align all export and import transactions and the foreign exchange transactions in the balance of payment, that is, the current account or capital account of any country.

How do you make a foreign currency and goods transaction?

What is being exported?

What is being imported?

It requires individual digital codes for each and every exporter or importer in any country.

Basically, this is the first step after you have already set up your company.

Some form of company is there, which may be a proprietary company, a partnership company, a public limited company, or some kind of business entity you have to create, depending on the country in which you are.

Whatever is more suitable to you in that particular country, in your situation, in your product line, and in your business history.

What is the background of your company and yourself in business?

Most governments internationally do not specify that, for export purposes, you have to have a specific kind of formation of company.

It is all based on the code number that I just mentioned.

You can form a company of any type. And you have to have a business account — a bank account, actually. In India, for example, it is called a current account.

In different countries, the name may be different. In different countries, this business account may also have different types and features, but the need for a business account is generally there.

You need to form a business entity, which you start, and then you apply for this license or code, which I just mentioned to you.

In India, this code is given by an organization called DGFT, the Directorate General of Foreign Trade, which comes under the Ministry of Commerce, Government of India. In Dubai, it is given by Dubai Customs.

In different countries, there are different organizations specifically for the purpose of giving a customs code or an importer-exporter code.

Whatever you call it. This license or code can generally be applied for online.

In many countries, this kind of license or code can be applied for online.

The process may be very simple, and sometimes it may also be very complicated in certain countries.

As I have already mentioned, the cost also varies from country to country for getting this code.

For example, in Japan and the UAE, it can be substantial.

In some countries, like the US, even your tax identification number can work as this code or license to carry out import-export activities.

If you do not want this importer-exporter code number or license in the US, you can use your tax ID number as your importer or exporter code.

This facility is available in some countries.

This is how you basically build up and start your organization.

And in the opening case study, we saw that there were certain kinds of local compliance depending on your product and your sector.

For example, in the Al Aweer market, you need some compliance with the Dubai Municipality and some more compliance with Dubai Customs and different organizations in Dubai that we discussed in the opening case study, which is applicable in all countries, depending on your sector of operation.

Then comes the compliance related to local taxes and import duties.

There can be some mandatory statutory compliances of that type to be done with the local tax authorities.

For example, in India, this tax is predominantly GST, that is, the Goods and Services Tax.

This is a single tax in the entire country, which is a very large country, India.

You register in India with the GST Council as an exporter.

A similar thing has to be done in other countries.

There may be VAT, for example, as we discussed in Dubai in our opening case study.

It was not GST; it was VAT, Value Added Tax. And you need to file details about your newly formed company with the respective tax authorities. In different countries, the compliance and the requirements may be different.

In the case of our opening case study, we discussed different compliances regarding tax compliance for doing business in the Al Aweer market.

Those compliances obviously vary from country to country and product to product being traded internationally from that particular country.

Apart from GST or VAT, there may be some kind of excise duties and taxes. In India, for example, there are excise duties on a few items, but now this is being slowly phased out.

You may have to, for example, register with the excise department in different countries if excise duties are there. That applies to manufacturing.

You actually need to find out locally what the different compliance requirements related to tax and other regulatory provisions are in those countries in different situations.

You carry out these compliances by doing this kind of local research and desk research that is required.

Do not get too many complicated ideas on this.

When you start your business, you will find that you can do it in a few days, maybe in a few weeks, depending on which country you are in and what sector you are in.

You can do it. There is no problem.

After setting up your export company, comes the question of how to start getting business. In the next lecture, Dr. Jain talks about simple ways you can consider to get your first export order.

Then the next question comes that how do you get the overseas orders to start with as a new company? Once you have started the export operation, you need to know at least the starting points. So I will give you some ideas. So I have just mentioned to you that this complete detail, the in-depth knowledge about it, doing the desk research and the field research, and in the process of soliciting international orders. I have a separate training course. But I just want to tell you that all of it starts with the desk search and the field search.

Many times, visiting international markets can also, by visiting international trade fairs or some kinds of international meetings. At the same time, you need to find opportunities with your local trade promotion bodies, with things like international buyer-seller meets or some kind of delegations that are going and sponsored by the local trade promotion bodies. Basically, you need the support of the local trade promotion bodies, initially at least.

For example, in India, you have trade promotion bodies like ITPO, which is the Indian Trade Promotion Organisation. In our opening case study, we discussed it in Dubai. What are the Chamber of Commerce and local trade bodies that promote trade from Dubai? And then many new exporters start selling their goods on digital platforms, also international digital platforms. There are many, many such kinds of digital platforms to test and sell your products initially on, for example, a B2C basis in small quantities, and also even a B2B basis also in some of the platforms.

One of the largest e-commerce platforms, for example, for international trade is Amazon Global Selling, which has these platforms in many, many different regions of the world. It is provided by the Amazon e-commerce company, which is the largest e-commerce company in the world. As I just mentioned, the Amazon Global selling example has platforms in many marketplaces like the North American Platform, or Japanese Amazon market platform, or UK market, and the Middle Eastern market. On these different marketplaces, you can register on a global, Amazon Global Selling, and start selling your goods, either B2C basis or a B2B basis. You may start with B2C, and then you can graduate with time into B2B sales also. So, how do you do this, for example, on Amazon Global Selling? I have a separate training module for this.

I do not want to make this course too complicated by going deeper into this aspect, either. So you can gain in-depth knowledge of the step-by-step process. How do you carry out your export business through Amazon Global Selling through several learning resources online?

Those things I have mentioned in a separate course. So my idea of this course is to tell you that there are different avenues of getting international orders. Ultimately, the fact remains that the large orders basically come through some kinds of methods where there is are good possibility of face-to-face contacts. Even today, in this world, the importance of face-to-face contact cannot be ruled out. And that provides you much more sustainable, strong, and large business.

At the same time, international marketing still requires your local knowledge about that market. For example, in our opening case study, the kind of local knowledge we had tried to provide those kind of knowledge is required. It still requires your presence, also, sometimes in those markets. It still requires you to have the capability to gauge the market-changing trends, their changing fashions in those international markets, and different markets. So my idea basically in this particular lecture is to understand this procedure and the documentation part.. That is the operational part. After you get the orders and you sign the export contract, how do you handle that? I hope you found this lecture useful. Keep watching. Thank you.

In the next 3 lectures, Dr. Jain talks about a typical flow of the procedural cycle that governs a typical export transaction. These basic concepts will help you have a solid foundation of the concepts that work behind export documentation and procedures worldwide. Let us start with the first lecture about learning the Procedures.

Welcome back, friends.

In this section, I am going to talk about how to find overseas markets and buyers for exporting your goods.

This is not really my focus in this course, in a very detailed way, for which I have a separate course in the VJ Export Import Mastery series of courses.

You can look at this specialized course titled Practical Export Marketing and Generating Leads.

This course is already there.

If you look at that course, you will get a detailed view of how to find overseas markets and buyers for your export goods.

I will try to give you a synopsis of what is involved in finding overseas markets and buyers for your export goods in this particular section of this course.

As you are already learning the core documentation and procedures in this training program for exporting your goods, this section can serve as a practical extension of your last section, where I discussed things you should know before plunging into the core area of export documentation and procedures.

This section will show you how to begin selling abroad after setting up your export company legally in whichever country you belong to, as we also discussed in the last section.

In this section, let us start with this structured explanation, which I want to share with you on this subject.

Let us start with this.

In this lecture, I will be talking about finding overseas markets and buyers for newcomers, people who are new.

That's why I am saying that once you have started setting up your export company, how do you find overseas markets and buyers?

Once you have completed all the legal formalities of establishing your export company, such as company registration, tax identification, obtaining an export license, and opening a business account, the next critical step is to identify markets and connect with overseas buyers.

This process involves market research, networking, digital outreach, and participation in trade platforms.

There are a variety of such trade platforms. To do this, there are certain steps.

I have explained in the next slides.

Let's look at these different steps one by one.

The first step is market research and selection.

In this step of market research and selection, you have to study international demand for your product or product category using some tools.

What are these tools that I can recommend?

There can be many tools, actually. I will just give you some very popular tools.

They are online tools, basically.

Starting with the ITC Trade Map.

That is the UN data on import and export.

And World Integrated Trade Solutions.

There is a portal called WITS – World Integrated Trade Solutions.

Then there are plenty of government export promotion portals.

If we take some examples, such portals like DGFT in India have their own portal through FIEO – Federation of Indian Export Organizations – that is the Indian Trade Portal.

Then we have another portal called ITA, for example, in the USA. A similar portal exists in Australia, which is called Austrade.

Using these portals, you can check product demand trends, which is the first thing to do when you find out things like: which countries import most of your products? Which of these markets is growing?

Once you have shortlisted some of the markets, then, in the next step of this process of market research and selection, you need to evaluate market entry conditions.

What are these conditions I am talking about?

These are conditions such as import duties and certification requirements to enter those markets. Some very advanced markets, like European markets or US markets, have non-tariff barriers in the form of certification requirements or product standards.

That is another tool of a non-tariff barrier used mostly by advanced countries in Europe and the USA.

So product standards — what standards are required, and what is the competition level?

You have to evaluate your market entry conditions by looking at these parameters.

There can be more. These are general parameters I have shared with you.

Then, based on this process of market research and selection, what do you do?

This is my recommendation, actually. You can vary from my recommendation. I am just giving this recommendation.

You narrow down to 2 or 3 target countries as a new entrant.

These countries should be such that demand is strong, or the possibility of demand is strong.

You can look at the data, and this data will tell you about your products that you have researched and finalized for exports.

And the entry requirements in those countries should be manageable.

This is how you narrow down to 2 or 3 target countries.

This is my recommendation.

Now, in the second step, you identify buyers.

What happens in this step of identifying buyers?

Use things like B2B marketplaces and directories to start with.

Register and showcase your products on platforms like Alibaba, or maybe Indiamart if you are exporting from India, or Global Sources.

There is an online portal called Global Sources.

You can use that to showcase your products.

Another example is Trade Key or EURO Pages.

These are examples of B2B marketplaces.

Then you can use certain directories, like Kompass or Yellow Pages, or directories maintained by chambers of commerce in different countries.

Whichever country you belong to, you will find many chambers of commerce that maintain commercial data and market intelligence in the form of directories.

They also have online platforms to share that market intelligence with you.

Then there are government as well as private export promotion agencies.

Many governments — in fact, most exporting countries — maintain buyer-seller matchmaking platforms or arrange trade delegations.

For example, in India, there are many export promotion councils, sector-wise, industry-wise (EPCs).

They provide buyer-seller matchmaking platforms as well as arrange trade delegations.

In the United States, there are commercial service matchmaking programs.

You can take advantage of these programs and trade delegations.

Therefore, you can use these to identify buyers.

Some additional things you can do to identify buyers include participation in trade fairs and exhibitions.

You should participate in international trade fairs related to your product.

For example, Germany organizes many international trade fairs, such as Heimtextil for home textiles, and many such trade fairs are held.

You can attend.

You can participate.

You can even visit those trade fairs and make contacts with people.

You can attend many of these trade fairs and exhibitions virtually as well, in addition to attending them physically, to build direct connections with importers, wholesalers, and distributors.

Then you can take advantage of the support provided by chambers of commerce and trade associations in your country, as well as in the host country where you want to export.

For example, you can join bilateral chambers.

What are bilateral chambers?

These are chambers between two countries, such as the Indo-US Chamber or the India Business Council.

These bilateral chambers of commerce or trade associations generally arrange buyer-seller meetings and many B2B events.

Another very important thing involved in identifying overseas buyers is online presence and digital outreach.

In the present time, it is very important.

Start by creating a professional website with your product catalogs, certifications, export credentials, and a very clear mention of your contact details, including your physical address, email ID, contact number, and the name of the contact person.

You can leverage many digital communities on social media like LinkedIn, Instagram, Facebook groups, and B2B forums.

There are many B2B forums on Facebook.

You can join those forums and start showing your presence — where you are located and information about your product — with the help of the product research you have already done.

Here, you promote your products and connect with potential overseas buyers for exporting your goods.

You can also resort to email outreach.

Here, what do you do?

You build a buyer database through directories or social media communities like LinkedIn and Facebook.

Try to get email addresses from the contacts you interact with and send tailored introduction emails.

This is how you show your online presence and digital outreach.

The next step is approaching the potential buyers who you think can give you orders.

For this, prepare a company profile and digital product catalog, complete with HS codes of your product categories, specifications, MOQs (minimum order quantities), packaging, as well as certifications if you already have some.

You should write a professional email introduction offering samples, pricing, and willingness to comply with the buyer's as well as the host country’s product standards.

You should show your capability of meeting those standards.

Then you should also follow up with those contacts politely but consistently.

Importers often need trust-building before placing their first orders.

A very important step here is the right method of negotiation and trust-building.

As a newcomer, it is very important.

Offer to start with small trial orders at first to reduce buyer hesitation, in whatever way you have got the buyer contact, and if someone has shown interest in your product, whether through a trade fair, digital outreach, or anything else.

After doing due diligence on the buyer, you can offer small trial orders.

Use recognized trade terms like Incoterms 2020 and secure payment methods.

This can be a letter of credit, which is the safest method of getting payment, or, if possible, ask for advance payment, an escrow account, or export credit insurance.

Try, for example, the ECGC cover.

You should also be ready to provide quality certificates and ensure timely communication while negotiating and building trust.

Without this, trust-building cannot happen.

Another very important step is getting support from the complete export ecosystem that exists in your country.

It can be in the form of export promotion councils — for example, in India, EPCs for different sectors and products.

These agencies often publish buyers' inquiries and market studies, and they also provide face-to-face support.

You can visit them.

You can talk to them.

There are certain government financial schemes in some countries.

For example, in India, they have something called MDA — Market Development Assistance.

These kinds of government financial schemes sometimes support participation in exhibitions for newcomers, for new entrants, and even for market study trips abroad.

For international marketing efforts, these schemes exist.

You can also take advantage of support from freight forwarders and logistics companies locally.

Some of these freight forwarders and logistics companies may connect exporters like you, who are new to this field, with overseas buyers and distributors.

It is possible.

You have to meet them.

You have to talk to them.

Finally, I want to give you a tip for growing your business or finding buyers and markets as new exporters or new entrants.

You should start with 1 or 2 well-researched markets.

This is the best approach. Focus on building relationships with a few reliable and safe buyers.

Safety is very important at the start.

Over time, your business matures, and then you can expand your reach using your success stories and references from these reliable and established buyers.

In the next lecture, I will discuss a similar topic on growing your export market and finding new buyers for people who are already doing exports, who are not new to the market.

For existing exporters, I will discuss that in the next lecture.

Thank you.

Hello friends.

Welcome back.

In this particular lecture, I will be talking about growing export markets and finding new buyers for existing exporters.

That's my idea.

Now, once you have already started exporting and you have gained certain experience with things like documentation, logistics, and you also know how to manage international clients, the next goal should be market expansion.

That is what we will focus on in this particular lecture.

This particular market expansion involves strengthening existing buyer relationships and systematically entering new markets.

That's the idea.

What you will be doing in this first step is focusing on strengthening your current buyer relationships.

How do you do that?

Offer product diversification, which means you can introduce new product lines, provide improved packaging, or give private label options to your existing buyers.

Now you can also resort to upselling and cross-selling.

You can do this upselling and cross-selling to your existing buyers who already trust you.

This trust is already there.

It is possible to do upselling and cross-selling.

Then you can provide superior customer service.

Your focus should be on how you can do it.

Can you provide superior customer service, timely delivery, proactive updates, and flexible minimum order quantities?

These are a few suggestions that I am giving, which can make you the preferred supplier of the existing buyers who are generally safe, trustworthy, and may be big buyers.

And the last suggestion I can give for strengthening your current buyer relationship is to seek a referral.

Now, what happens is that the satisfied buyers who are already there, your buyers, often know other importers and distributors in their own network, especially in the local market.

They may be competitors, but there may be some products in which they may not be interested.

They can give you references, and you can use the contact, which means your existing buyers.

You can share that contact with the new buyers with the proper permission of your existing buyers.

And if they agree, you can do this. You can seek referrals like this.

The second thing you should be focusing on to grow your market is to expand into new countries.

How do you expand into new countries?

You can do this by, first of all, leveraging export data. Now, what is this export data that I had discussed in the earlier lecture?

You can use tools like the ITC Trade Map, government export portals, and many others that I had shared with you.

The idea is to identify countries where similar products are being imported in large quantities.

You have to find that, actually.

Another thing that you can do is to devise a marketing expansion strategy.

Correct strategy.

If you can do that.

What can be the correct strategy?

It actually will depend on your product line.

It will depend on your situation.

But one example I can give you.

For example, if you are selling your existing products, your existing line of export, to developed markets like the US or EU, then you can try expanding into emerging economies like African nations, Southeast Asia, or Latin America.

You can do that.

Or the second situation can be that you are already selling to developing countries or emerging markets.

In that case, you should consider targeting premium buyers in advanced markets and developed markets, who generally value quality and branding.

Accordingly, you have to devise this strategy.

This is one example I have given you.

You can have your own strategy.

How do you diversify?

That's the most important thing.

You have to diversify your markets.

That's very, very important.

Another very important area that you should think about and consider is participation in international trade fairs and B2B missions. You are already exporting, you already have the experience, so it becomes even more important to participate in such events.

For example, you can attend major global trade fairs both in person, which is preferable, or virtually.

In the present time, you can do that.

You can consider, for example, major global trade fairs like the Canton Fair in China, Ambiente, or Heimtextil in Germany.

Another very good example I can give you is the Gulfood Fair, a trade fair organized in Dubai.

It's a very big food fair for food items.

Then you should also think of joining buyer-seller meets more frequently.

These buyer-seller meets are organized by export promotion councils.

For example, in India, EPCs or similar organizations in other countries, and different chambers of commerce regularly organize such events.

These platforms can allow you to meet actual bulk buyers, distributors, and retailers in new markets, in new regions, in new parts of the world.

This is how you grow your market.

Another thing you should be focusing on is digital growth and branding.

How do you do this digital growth and branding?

Some things I can share with you for digital growth and branding: One is the professional website upgrade.

This is very, very important as you want to grow. A professional website upgrade is very important, and it should be constantly upgraded.

That should be a constant process.

You can, for example, add stories with your existing buyers, case studies, testimonials, and export certifications.

You can think of innovative methods, such as adding multilingual content.

This is how you do the professional upgrade of your website.

Then you should consider e-commerce and B2B platforms.

That is very, very important in present times.

For example, you can think of selling on Amazon Global Selling, which has so many international marketplaces.

Then you can consider eBay International, which is another very popular e-commerce platform, and industry-specific marketplaces.

Another idea I can give is to consider and focus on LinkedIn outreach.

LinkedIn is a very big platform.

You can run targeted LinkedIn campaigns to connect with buyers, procurement officials, and procurement managers in large companies, and even distributors in different countries.

You can do that.

In fact, you can also resort to digital advertising, which means inorganic marketing.

In that case, if you think of doing that, you will have to invest in search engine optimization and Google Ads payments.

Those Google Ads will be targeting the buyers in your chosen markets.

Professionals can do that.

They know how to do it.

In present times, this becomes very important.

Another way to grow your market as an existing exporter is to consider strategic partnerships.

What are strategic partnerships?

Here, you collaborate with local distributors and agents in different countries, in new markets, who already have retail and wholesale networks.

For example, in countries like Japan, this becomes very, very important.

Actually, their distribution, wholesale, and retail are very dense.

You have to do this very professionally in countries like Japan.

You can also do partnerships with your local freight forwarders, banks, and trade finance providers, who often have connections with importers.

You should also think of exploring joint ventures or franchise models.

It depends on your product and your industry.

If you want to have deeper penetration in specific regions, this can be very, very important.

Another thing to consider is exploring institutional and government buyers.

You can do a few things that I am just sharing as ideas.

Maybe you can bid for government tenders in importing countries, for example, tenders for food supplies, uniforms, or medical equipment.

There can be more product lines.

You can also supply to large international retailers.

Which are these large international retailers?

I can give you some examples, like Walmart in the USA, Carrefour, or Tesco.

By becoming part of their approved vendor list, you can provide regular supplies to these large international retailers in different countries.

Another idea is to work with NGOs, UN agencies, or even aid organizations, maybe the Red Cross or other organizations that have money to purchase your items.

They generally procure goods in bulk for development programs across the planet in different countries.

International NGOs, international agencies — I am talking about them.

When you are growing your export markets, it is very, very important to focus on export risk management while you are growing your business in different nations.

The geopolitical situation changes very fast.

As you enter new countries, carefully check, for example, the creditworthiness of the buyers.

You can use export credit agencies and their services, like ECGC, COFACE, or Atradius.

These are some examples I am giving you.

You should be very, very careful about local compliance with packaging, labeling, and meeting the product standards.

Check whether you have the certifications and whether your products meet local compliance.

Sometimes, there can be international compliance also in certain markets, which may be very important.

You have to do that.

Finally, in export risk management while expanding, it is very important to be sensitive to political and currency risks in the new markets.

Every market has a different political situation, and currency risks can be different in different countries.

You should be aware of these things.

Very important.

Finally, I want to give you a few tips for growing your business in new markets as an existing exporter.

One of the things I want to share with you is: don't spread yourself too thin.

Why am I saying this? Because expansion is most effective when you build on your strengths.

This means you should focus on products that you already export successfully.

You already know what sells, where, and how much it sells.

Build upon that. And then replicate that success in two or three more new markets at a time.

In the next lecture, I will take up two case studies to illustrate these points that I have discussed in this lecture and the last lecture.

I will do that.

Thank you.

Welcome back, friends. I'm very happy to share with you that we are now moving to the closure of this module on Basic Things, which was focused on understanding the foundational knowledge of this course about export management, focusing on export documentation procedures. In the last few lectures of this module, I shared with you many of the basic things you need to know before we discuss the different documents and their procedures to use in detail, including ideas on setting up an export entity that I discussed in the last lecture itself. My idea was to tell you that in order to understand the export documents correctly and deeply, what their shapes are, what their significance and everything about them.

You need to understand that apart from dealing with the buyer and the banks, different banks, you also have to learn the process and the purpose of dealing with several other intermediaries, like the local customs, that is, the border control, basically, a shipping company that is the main carrier. It may also be an airline. And dealing with other intermediaries like port authorities or container yard management people, or dry port that is ICD or the main port that is the wet port, trusts or their management or insurance companies, and several other intermediaries.

You have seen in the opening case study that there are several types of intermediaries and local and international regulating agencies that you need to deal with, depending on a particular product. For example, in the opening case study, it was fresh produce.

And the goods that you export to the international buyers smoothly and with all the compliances, their role is very, very important among all these intermediaries. These last few lectures have now laid the foundation for a further discussion on a typical procedural cycle from the process perspective that I can now talk about much more comfortably and in some detail from this export perspective, that is, from the export procedures point of view.

However, you must understand that there are other things also, you need to know for a better understanding of the export documentation procedures. I will tell you later in this module what those things are and when we will be taking up for discussion these other things in the same course.

I will take it up later in this module itself in the last lecture, that is, the next lecture actually. What we will do now that first we will talk about the different basic steps involved in a typical export transaction procedure. For simplicity, again, we assume payment terms by a documentary credit. That is the letter of credit that involves an overseas bank. That is the LC route. And shipment of the goods by ship, as we had done in other lectures of this module.

The same assumptions will carry forward for simplicity. In that process, we'll also be talking briefly about dealing with several other important intermediaries as part of this whole game of export documentation and procedures. Therefore, this lecture will serve as an extension of things that we have already discussed in this module in earlier lectures. Although you already have a fairly good idea of what the typical roles of several other intermediaries other than banks are that you may encounter, irrespective of the nature of your products or the sector you are operating in?

Basically, we have covered a lot of ground in this module already, and we have already tried to build up our knowledge on the things we have discussed in the opening case study of this course. So we have already spent time on understanding a typical export transaction framework, and now we are in a position to discuss the procedures in this brief session.

Starting in the procedural cycle, the first basic step in export procedures includes setting up an export entity if it is not already set up. That is, a company or an export firm. Then you solicit your initial export orders, and if you get your orders, for example, your first order, you sign an export contract with the buyer. Overseas buyer. Based on this export contract, you generally prepare a draft LC opening instruction. If the payments are through a letter of credit, which we have assumed, we and send this draft of the LC opening instruction to the overseas buyer as per the contract terms. The buyer then requests the LC issuance to the local bank of his own country. That is, the issuing bank.

The local bank that is the issuing bank of the buyer, based on the final LC opening instructions prepared by the importer itself, issues an LC with the exporter as its beneficiary. Now, the advising bank in the country of the exporter, that is of the seller actually, which is generally called an advising bank or a notifying bank, receives this letter of credit and notify or advise the seller about all details of this letter of credit, its documentary conditions, the authenticity of the letter of credit, reputation of the bank, issuing bank that has opened this letter of credit.

Now the seller can himself or herself review the conditions of the letter of credit, if he understands the technical language, which are basically documentary conditions, or he can take the help of a third party, which may be the notifying or advising bank itself by paying certain consultancy fees or any other third professional entity or reviewing institution. That is also possible because many of the letters of credit, which are of high value and which are of a complex nature, require deeper consultations.

Specialized reviewing consultants can advise you about their suitability. That is the suitability of those kinds of LCs. And it is always better to use a third party in such cases, because this is a very important stage, and the point where the exporter has yet to accept or reject the letter of credit that has been issued by the overseas Bank. There is no financial or major commitment from the seller's end at this stage, actually. Basically, this is the starting point for the seller in the export shipment process because right now, nothing has happened. No goods have been procured generally, typically, or no goods have been manufactured most probably.

This is the point to be very sure that the documentary conditions mentioned in the letter of credit are doable, and it is in line with the agreed terms in the signed export contract with the overseas buyer, or in general communications, also with the overseas buyer. There is no discrepancy, actually, in the letter of credit. If the reviewing institutions or a third-party consultant are positive about the letter of credit and review of the exporter itself, or of the advising bank, it looks like a good exporter may accept this letter of credit and start procuring or manufacturing the goods to be exported as per the LC terms.

In this typical process, the preparations start for many, many things, including final packing and acquiring the documents that are mentioned in the letter of credit. Space booking on the ship through the main carrier is requested through a document, which is called shipping instructions, given by the exporter or its freight forwarder if it is through a freight forwarder.

And very importantly, depending on the documentary conditions of the letter of credit, a third-party quality inspection process may also be required, and preparations have to start for that, also. Because inspection may sometimes be an in-process inspection that is to be conducted during the manufacturing or procurement stage itself. If it is post-process inspection, which is generally the case, then it can be taken up at the time of or before the final packing, or before final shipment also.

Depending on the nature of the goods being exported, the inspection point in the whole cycle may vary, but in most cases, inspection is done post-manufacturing at the time of final despatch. An assigned inspection authority, third party, which has been requested by the importer, should not be very specific. Importers should not give any specific instructions to this effect, actually. It should just mention the nature of that third-party inspection or an independent international reputable inspection agency, which is of the choice by the exporter, may be hired by the exporter, for third-party inspection, Quality inspection. That third-party inspection that meets the LC conditions has to be notified in advance.

That means the party has to be invited by the exporter for quality inspection of the goods, at the appropriate time and in an agreed manner. In addition, a local government agency in the exporter's country may also have mandatory inspection requirements on a case-by-case basis, depending on the nature of the goods that are to be exported, and as per the protocols and guidelines, and criteria prescribed by the local government of the exporting country. For example, you should recall the role of Dubai Customs and other agencies.

Requirements for mandatory inspection of the fresh produce export shipments from Dubai, as discussed in the opening case study. In another example of India, it is mandatory, for example, in India, to invite a local government inspection agency, which is called EIA. The Export Inspection Agency in India to come and inspect the export goods and shipments, based on certain protocols and criteria that are already published by EIA. Whether EIA actually does the physical inspection or not, based on your inspection, invitation, or application, that is up to the inspection agency, but the inspection, invitation, or application itself, if the particular agency is the assigned agency of the Government of India.

For example, in this case does not come for inspection, physical inspection, then automatically your application or invitation for the inspection itself serves as the inspection certificate for export clearance purposes at the Indian border control at the port. So this is the system which is followed in India, and similar systems may be there in other countries, depending on the nature of the goods and the country of origin.

Then customs office or the border control office, the local customs, or the border control has to be notified about the upcoming export shipment well in advance. All the details that are required to be filed have to be done in advance. For example, in India, it is done through something called an export declaration, which is also called the shipping bill. And it is very similar to what we discussed in the opening case study, also, where we had mentioned about export declaration required at Dubai Customs for the export of fresh produce. So we will talk about it later in the next module about this regulatory document, where we will be discussing different types of documents in detail, including the regulatory documents.

Here, basically, what you are doing is that you are reporting to the customs, well in time, that the export shipment is expected to depart from a pre-selected port or airport on some approximate future dates and schedule based on the shipping order issued by the shipping company. Now, this shipping order is a document that has to be procured from the main carrier as proof of the booking of the space in the cargo ship, without which this export declaration cannot be made.

This shipping order is based on actually the shipping instructions which were given by you to the main carrier, that is the shipping company, or by your freight forwarder, because basically, the shipping instruction given to the main carrier and the carrier's shipping order will indicate about what are the approximate dates or schedule, depending on the expected arrival of the selected ship. And well before the last date of the shipment, as mentioned in the letter of credit. So all these steps are to be synchronized and managed professionally. Shipping instructions, notifying the customs or the border control, that is an export declaration. Inviting the third-party inspection agency or preparing for the packing of the export material.

All these things have to be matched with each other and synchronized. So it has to be a very professional work to manage it on a project basis. It is very, very important to comply with the documentary conditions and the commercial terms, international commercial terms, as prescribed in the letter of credit and the documentary needs of the issuing bank. There may be, for example, a requirement for arranging the insurance also by the seller itself, that is, the exporter, depending on what is given in the letter of credit and depending on the international commercial terms.

What Incoterms are applicable? So, in which case, the request for ocean cargo insurance or air cargo insurance also has to be made and synchronized with this whole process. And the insurance company has to be suitably contacted by the exporter. An insurance contract also has to be signed with the insurance company, and an export cargo insurance policy or certificate may have to be procured by the exporter, depending on the LC documentary conditions and the incoterms that have been agreed. Then, when all these things are done, goods have been cleared by the customs or border control and loaded on the ship, original copies of the transport documents have to be procured by the exporter from the main carrier.

Exporter then has to approach with all these documents to the local negotiating bank in the country of the exporter itself, for the negotiation of these main documents, as mandated and demanded by the LC in the original. Now, this negotiating bank further negotiates all these original documents with the issuing bank, and if everything is in order, that is all the documents are compliant with the LC conditions, it collects the payment in the prescribed time period, depending on the nature of the LC and the version of the LC, and credits this payment to the beneficiary, that is, the exporter, after subtracting any dues which it may have from the exporter.

After all these steps, the exporter has to carry out post shipment management of these documents and activities, which include things like dealing with the central banks of any country through its own money receiving bank. Actually, not directly. So you have to provide, for example, evidence of remittance of foreign exchange to your central bank through your commercial bank, that is, the money receiving bank, which does all these things based on your export and regulatory documents, which I will discuss later in this module. You will have a fairly good idea what these documents look like and what their categories are, what their functions are. All these things we are going to discuss in the next module.

And in this whole procedural cycle of starting with things like the export contract, requesting the LC issuance through draft LC opening instructions, the receipt of the LC by the notifying bank or the advising bank, review of the LC conditions by the exporter, procuring the goods to be exported, and readying the export shipment. Carrying out the third-party inspection and local government regulatory inspection. Giving the shipping instructions to the shipping company or the airline, and reporting and declaring the export shipment to the local customs or the border control, and requesting ocean cargo or air cargo insurance, and engaging the negotiating bank to negotiate the documents with the issuing bank and collect the payment in favor of itself as a beneficiary of the LC.

All this process has to be crystal clear to you. So all these typical steps are involved in a typical export shipment process. You will now be able to appreciate the very concept of this whole export documentation and procedure. This is the crux, and this is the basis. So I think now you are getting a good understanding of it all. This is how your further progress will happen in this course. In the next lecture, finally, I will discuss some more areas that you need to learn about in more detail to fully understand the export documentation and procedures. Let us go into the next lecture of this module. Thank you very much.

In the next lecture, Dr. Jain talks about the foundational topics that you should be aware of to master the export documentation and procedures. However, taking a break, some of these topics will be discussed in later sections of the course. The basic foundation already created in this course would be sufficient for the time being, before we delve into more advanced topics later in the course.

Then customs office or the border control office, the local customs.

Hello, friends. Welcome back to the course. I am happy to share with you that this is the last session of the module. As you can see in this progress checker, we have climbed one more step in the course and are moving ahead comfortably. After the opening case study, this module, which focused on the basic concepts, is now completely over, except that in the next session, I will be taking up some key takeaways from this module. In this last session, I will tell you about a few things we still have not covered, and we will cover these topics at an appropriate time in this course, later. In the next few modules, our focus will be on learning about the core areas of export documents and deepening our understanding of export procedures.

Let us first list out, based on our learning from the opening case study, what the other missing links are in our understanding of the complete ecosystem of export documentation and procedures that we are trying to understand. You already have some fairly good idea of what the role of customs is? That is the border control. And we have also discussed a little bit about the role of shipping companies or airlines. And eventually you will also learn about the role of, for example, port authorities that you will be learning later, or the ICDs or CFS, that is the container yards at the dry ports.

Moving forward in this course, I will be giving you more details about these things. You will have a fairly good idea of how to deal with these agencies and intermediaries. I will particularly devote a full module to learning all about exporting by air. And what are the documents that may be a little bit different, or what is the procedure that may be a little bit different in the case of exporting by air? We will try to understand. Further, our learning from the opening case study suggests that we need to have better knowledge about the different methods of receiving international payments.

What are the different options available to exporters to receive international payments? And how does, for example, a letter of credit work? Then it is also very necessary to discuss the international commercial terms in more detail, to understand what the different terms available are for the exporters to negotiate with the overseas buyers, and what the risks, costs, and responsibilities of the seller are in the event of the choice of different international commercial terms that are there? For example, I have mentioned in one earlier session that, depending on the choice of a particular incoterm, an exporter may also have to arrange for the cargo insurance, that is, the main marine insurance. Main cargo insurance.

Further, it is important to learn about the legal framework that governs international trade and export operations. Here we will also have a brief discussion on the regulatory and export control environment that exists in the world today, under which all export transactions need to comply, to avoid disruptions of the supplies or penalties, or disruptions in business. So we will talk about all kinds of national as well as international export control mechanisms, regulations, and regimes typically encountered by exporters from across the nations in the world. Further, we will also talk about the special provisions involved in the export of certain specialized categories of items, like, for example, metal scrap or electronic scrap, or export of pharmaceuticals, export of personal items, gifts, business samples, etc..

In the next module, I will be talking about the different documents, the commercial documents, so-called auxiliary documents, and the regulatory documents, which are broadly categorized mainly into two categories: Pre-shipment documents and post-shipment documents. These things we will be discussing in the next module, and I will tell you what these documents are, what their significance is, and what they look like. I will also show you some samples of some of these documents. All these things we will be covering in the next module, which is a very, very important part of this course. As we focus on these documents, try to understand their significance. Try to link the flow of the procedural cycle with them, the different steps that are there, and how they fit into these different documents. So I think now you are reasonably equipped with the knowledge to understand the documentation part deeply, which is the most exciting part of this course.

Finally, now let's talk about what we learned in this module. Keep watching.

Welcome back, friends. We have covered a lot of foundational knowledge in this module, including things like understanding the typical export transaction framework and the typical procedures for a typical export transaction. What are the basic steps involved? Now let's distill the key takeaways from this section before we move on to the next module. Here are some of the key takeaways from this module. The first takeaway from the module was that certain universal rules of the game form the foundation of all international transactions in goods and services across the world.

These understandings of the rules of international trade transactions are fundamental to export operations. Adhering to this typical export transaction framework is always essential to avoid costly mistakes and not to get entangled with any other type of legal or regulatory issues. That is what we learned in the understanding of the rules of the game in this module. Thereafter, we also talked about what are the basic steps in setting up a new export entity. We learned about a simplistic overview of it. We basically discussed the steps involved in establishing a new export venture. This knowledge can be valuable to you if you are considering entering the world of global trade afresh.

Then we also learned about a typical basic procedural cycle of a typical export transaction, wherein we broke down the export process into different types of understandable steps, logical steps, making it easier to navigate and understand this otherwise complex procedural cycle. We have also talked about additional key aspects that you should know to understand the focus area of this course, that is, the export documentation and procedures, deeply. We touched upon various such aspects that every exporter should be aware of, including international payment methods, Incoterms, legal aspects, export control regulations, and compliance. Special provisions are involved in exports of certain categories of exports, and other similar topics that we will be taking up later in this course in more detail.

What is next? I encourage you to review these key takeaways and reflect on how they apply to your own situation, your own business, and whether you are already doing export business. If in this case. Or whatever, what are your plans in the near future? Whether you are a business owner looking to expand internationally or a professional in the trade and industry globally. These insights will be invaluable to you. Here, I wish to congratulate you on having completed the three main modules of this course. As I had shown you in this progress checker, we have climbed these steps. Now, how about reviewing and rating this course? It would not involve much time for you. Write your comments also, if you can. Rate this course; it will be very, very helpful to me to make this course even better. Thank you.

In the next lecture, Dr. Jain talks about how you can contribute to the course while offering a complimentary copy of the eBook with the same title as this course.

Hi there! Congratulations on your new milestone achieved in this course. I wanted to take this moment to congratulate you for your remarkable progress that you have made in this course. Your dedication and your commitment to learning in this subject area are really commendable. As a token of appreciation for your hard work, which you are doing in this course, I would like to offer you a complimentary copy of my recently updated edition of this book on similar topics and the subject area of this course that you are learning, which I believe will further strengthen your learning and grip on this course. And this e-book will serve as your best companion for this course.

Why? Because you will notice that most of the topics in this particular book and their flow, as given there, are aligned with this course. Different chapters, different lectures. You will find a lot of similarities. So you can download a PDF copy of this ebook from the resource section of this lecture. Thank you once again for your dedication and enthusiasm. Keep up with the fantastic work that you are doing, and remember, I am here to support you every step of the way. Together, let's continue our journey of learning and growth in this course.

In this section, it becomes necessary to jump into some of the most common terms and terminologies used in the export documentation and procedures. These references will be very helpful later in the course. If you are already conversant with these terms, you may choose to skip this section altogether.

Hello and welcome back to the course, All Export Documentation and Procedures, Any origin. I am very glad to have you with me as we begin the brand new module, which is titled An Introduction to Common Terms Used in Export Operations. Now, before we dive into the content of this module, I want to briefly address something quite important. In our last module, A Guide to Understanding Basics of Export Management, I had mentioned that we would soon move into the core area of export documentation and procedures.

And yes, that's very much the plan. But before we go there, we need to take one important step. What is this step I want to share with you? This particular module actually acts as a precursor to that core area that we are moving into. Think of this module as a necessary foundation. The terms we are about to explore are more than just jargon. They are building blocks of export documentation and procedures.

Without understanding these common technical terms, it becomes difficult to properly grasp the documents and procedures we will soon be discussing in depth. Let's quickly recall what we have already covered in the previous module. We examined a typical export game plan, looked into the role of key intermediaries involved in export transactions.

We also understood how to set up a new export firm briefly. We walked through a standard procedural cycle, also for an export transaction, a typical export transaction, and we wrapped up with a curtain raiser for what's ahead in this course. So we are keeping track of the things that are happening. Now, in this module, our focus shifts to terminologies and the technical terms and phrases you will encounter repeatedly in export operations, also in this course. Whether it is terms related to logistics, distribution, documentation, contracts, or payment mechanisms, a solid grasp of these terms will equip you to understand the why and how behind every export document, the process, or the steps.

Take this module seriously. Consider it your language guide to the world of export trade and operations. By the time you complete this particular module, which I have just added as a precursor to the main module, you will be in a much better position to move confidently into the core module on export documentation and procedures. Let's get started.

Do you know that a customs bonded area serves as a free trade area, where goods are lying with import duties and taxes unpaid. Let's learn more in the next lecture.

Before we go forward, let's try to understand the common terms that are used in export operations.

All these terms will be covered in this course in subsequent lectures.

You will get a full explanation of these terms.

Just listen to this lecture and try to remember these terms.

That's the only thing that is required in this lecture.

I'll be taking up these terms one by one.

I'll give you some explanation. Brief explanation.

Before I discuss these common terms,

I will just throw some light on the fact that there can be different reasons for people or companies to go into the international markets.

There are certain advantages. There are certain pull factors. There are certain push factors.

Some people go for the glamour, some people go for a better future. Some people go for better learning knowledge.

Some companies go international because they have no other option except to go international. After all, the domestic market is saturated already, and they want to expand, but they are unable to expand.

And in many countries, the market is so small that these companies have to go international. I will just give you an example.

If you take the example of, for example, Nestlé, which is a Swiss company.

Now the Swiss market is so small that they have to go international.

They have to become global.

You will be surprised to know that 95% of the revenue of Nestlé comes from the international market, not from the Swiss market.

You can understand the companies, whether they are small, they are medium, or large.

They have their different reasons to go international.

Many small exporters have some relatives some friends living in a potential market.

And they feel that with the help of these contacts, they will be able to make good inroads in that market and will make a good amount of money for themselves.

And it does happen. Many times, depending on the situation, depending on the product, depending on your strategy, the profit margins can be really good in the international market.

It is very, very difficult to list out the reasons for exports.

It is not possible.

Let's first try to understand what these common terms mean.

I will start with, uh, something called Customs Bonded Area.

This is an area that may be in a dry port or a wet port, or it can be near the customs office or some kind of warehouse that is in control of the customs department.

And it may be true for any country that comes under the control of those local customs. Without the examination, without the permission of customs, goods cannot go out.

Another term very commonly used in export operations is export general manifest (EGM).

An export general manifest is a document that is published by the shipping company after the ship has left the port.

After goods have been loaded, export goods have been loaded.

The ship has already finalized and finished the loading of whatever goods were to be loaded, and it has already sailed from the particular port.

For that particular port, it issues something called the Export General manifest that lists out all the shipments that are already loaded.

Then there is something called dry port.

Now, dry ports are nothing but international ports, where goods can be cleared from customs that are away from the seaports.

Customs are there, goods can be cleared, and their goods can be loaded on the train or any other means that is under the control of the customs, with a customs seal and customs clearance in the particular inland port, which is also called an inland port.

Dry ports are those ports where all the facilities are available.

Because everything cannot be done on the seashore, it will become too crowded and difficult to manage.

That's why the concept of dry port is there, and then wet port.

Wet port is the seaport.

That is where the actual ship comes, and it takes berth.

Those are the wet ports.

Then Inland Container Depot is nothing but a dry port only. The word used for a dry port is Inland Container Depot, because Inland Container Depot actually means that the goods are being moved using containers.

And in the world today, almost 90% of the cargo moves by container.

What has happened that the dry ports are typically handling only containers?

These are called Inland Container Depot (ICD).

And when we say dry port, dry port is nothing but an internal container depot.

Then there is something called container freight stations.

The concept of container freight station (CFS) is that the Inland Container Depot becomes too crowded because of so much of goods being exported and imported.

What happens is that there are goods that will take more time to get cleared from customs or become a full container load.

They are less than container load, which means they need consolidation.

They need more goods to be clubbed with them.

Certain areas are very similar to Inland Container Depot, but without the facilities of customs.

They are a little away from the inland Container depot, where the land cost is cheaper, and the space is more.

Warehousing can be done much more easily and affordably.

These are called container freight stations.

Their purpose is to hold the goods before they are actually moved to either the Inland Container Depot, that is, the dry port. Container freight stations help in the consolidation and finalization of the goods.

That is the purpose of the container freight stations.

There is another term called compliant documents.

What are compliant documents?

The documents are presented to the bank against the letter of credit.

A letter of credit is nothing but an instrument for making international payments.

And for that, the documentary conditions are there in the letter of credit. Based on those documentary conditions, the particular exporter has to arrange these documents when the goods have already been shipped from the port of loading. These goods, along with the transport documents and whatever other documents, documentary conditions are there in the letter of credit, these documents are arranged by the exporters and presented to the bank.

If the documents are compliant with the letter of credit payment, this is called nothing but the compliant documents.

Compliant documents are very significant because they get you payment from the bank.

I have already discussed the document's presentation.

Documentary presentation to the bank is very, very important.

And then there is something called an AD number.

An AD number is nothing but an authorized dealer number.

Authorized dealers' AD numbers are generally given to the bank.

Whichever bank you have the account with, where you will receive your international payment, this is the authorized dealer.

An AD number is required to be registered with the port from which you want to ship your goods.

In different countries, this number may have a different, uh, terminology, which is some other nomenclature that is used.

In India, for example, it is called an AD number.

In different countries, the names may be different.

Then the IEC number is nothing but the importer-exporter code number.

This is issued by the requisite authority, which is a kind of export license.

Now, in different countries, the name may be different.

In India, it is called IEC, which is importer Importer-Exporter Code number, which is issued in India by the requisite authority.

In the case of India, it is DGFT: Directorate General of Foreign Trade.

This IEC number is generally used by the central banks.

For example, in India, it is the RBI.

The idea is that the central banks can monitor the inflow and outflow of goods and foreign exchange through this IEC number.

It is just like an identification number of the exporter.

Or you can say the export license.

Export and import license.

In different countries, it has some different terms that are used for this kind of code number.

Then there is something called ICC clauses that are related to the insurance cargo insurance.

ICC means Institute Cargo Clause.

Then there is another ICC, which is called ICC Paris, France.

This ICC is the International Chamber of Commerce.

It is very, very important in international trade. It issues several kinds of documents and guidelines.

Commercial terms used for international contracts, like FOB, CIF, and the explanation of these commercial terms.

ICC plays a very, very important role in international trade. Why? Because every country has its own law of the land, and different laws of the land can create a lot of problems with international trade.

To align the international trade, to make it smoother, to move goods from one country to another, ICC plays a very, very important role.

Friends.

There is another term, EDI

Now, EDI is an electronic data interface.

What is this electronic data interface?

Internationally, all countries are not the same.

Some countries are very rich. Some countries are not that developed. Some countries are very poorly developed.

Not every country has the digital, uh, methods of filing documents or handling documents.

International trade has still not adopted the documentary system, which is digital in nature.

There is no electronic data interface kind of thing in the international trade documentation and procedures because of the differences in the development of the different countries.

But individual countries also require the local governments also require a lot of regulatory documents and auxiliary documents to be filed with the local government.

These documents do not move with the goods.

These documents are normally filed digitally in order to facilitate the trade, in order to make the trade smoother and faster.

Goods clearance, whether it is for export or for import, becomes smoother in those countries, uh, because of the efforts by the local governments.

And these efforts include the biggest effort of digitalization of the local documents.

Electronic data interface.

For example.

In other countries, the name may be different.

In the US, it is called the Automated Export System AES.

Then there is something called Pre-shipment credit.

What is Pre-shipment?

Pre-shipment means anything that is done before the goods are loaded on the ship, and the goods have been shipped from the port.

The point of loading the goods is called shipment.

Anything that is done before that is called pre-shipment.

And when we say pre-shipment credit, it means anything.

Any financing required for the export transaction by the exporter from the commercial bank.

It is called pre-shipment credit.

And similarly anything any financial help or support that is required after the goods have been shipped, that is the post shipment that is called the post shipment credit.

Then something called MR

That is the Mate's Receipt.

A mate's receipt is nothing but a document that is issued by the captain of the ship when goods are loaded on the ship.

It is proof that goods have been loaded on the ship.

And there are remarks by the captain about the status of the goods, whether they are damaged, whether they are absolutely fine, whether there is some problem with the goods that are loaded, or there is some theft of the goods, so there is short delivery or whatever, whatever the problem may be, it is remarked by the captain of the ship.

Now this Mate's Receipt is actually used for obtaining the transport document by the exporters.

This is called MR. Mate's Receipt.

Another concept is of Incoterms, that is the international commercial terms.

Now I was talking about this ICC in Paris, France.

ICC Paris, France, issues this uh, guideline, this charter, uh, wherein they explain the latest international commercial terms, which are uniformly used by the exporters and importers in different countries.

They understand the common meaning of the different terms like FOB, CIF, DAP, and DDP.

Whatever the terms are, uh, presently these terms are 11 terms.

The latest version of Incoterms, that is, the international commercial terms, is 2020.

For the next ten years, the same version will be used. Uh, so the latest versions are normally used for the international contract.

International commercial terms make things aligned and uniform for understanding the terms of the contract.

That is, the commercial terms.

You probably already know what the WTO is. That is the World Trade Organization.

WTO monitors international trade to ensure that it is free and fair.

By different means, the World Trade Organization keeps a check on the foreign trade policies of the member states.

Then there is something called UCP: Uniform Customs and Practices. Uh, the 500 and 600 are basically the versions.

400, 500, 600 different versions are there. The latest version is 600.

UCP is nothing but uniform customs and practices for documentary credit.

International trade financing, which is done by the banks to receive the international payment by the exporter from the importer, is governed by the so-called Uniform Customs and Practices.

In short, it is called UCP.

And these UCP documents and rules and regulations, and clauses are announced by ICC Paris, France.

Here also you will find the role of ICC France.

Then there is something called the Usance Period.

Now, this Usance period for international payments, uh, again is the part of the international trade financing by the banks, and the USANCE word also comes from the UCP: uniform customs and practices. Usance means that the the gap between the acceptance of the document by the bank or by the buyer and the actual payment, there may be a gap.

During that gap, the money that is due to the exporter is being used either by the bank or the buyer.

That's why it is called the usance period.

Somebody is using it for that period.

There is a cost involved, obviously.

If it is through a letter of credit and the letter of credit is not payable at sight, which means it is a Usance SLC, it means there is a gap between the acceptance of the document as the compliant document and the actual payment. That is the Usance period.

My idea is that you learn these terms, and all these terms will be coming in the course, and we will be discussing all these concepts in this course.

If you learn all these concepts, then only you can become confident in international trade.

All these terms will be coming here and there in this course.

That's why we are focusing on these terms, so that you at least retain some part of them in your mind, and you become familiar with them.

Then there is something called BL, which is the bill of lading.

Now bill of lading is nothing but the transport document which is issued by the shipping company.

When goods have been loaded on the ship and the ship has sailed.

EGM has been issued.

That is, the export general manifest has already been issued by the shipping company, and the Mate's Receipt has been given by the captain of the ship. Using the MR and some other documents, which I will be sharing with you later in this course.

The bill of lading is obtained using these documents by the exporter from the shipping company, because it is required by the buyer, and it will be one of the major documentary conditions in the letter of credit.

LC is called the letter of credit

This is one of the most common international trade financing instruments used by international banks.

Then there is another term, which is called LCL.

LCL means less than container load.

It means that the goods that are being exported are very small in nature.

The quantity is small and it is less than one container load.

This container can be a 20ft container or it can be 40ft container.

Presently, the most common containers are 40ft containers, 40ft in length, eight feet wide, and eight feet high.

These containers can contain something like uh, around uh, 26, 27 tons of the material, depending on the volume and density of the goods.

If the goods are not good enough to completely, uh, occupy the full container, it is called the less than container load, the LCL.

And if it does occupy the container and if it does, the container can be examined by the customs.

And the customs seal can be put on that for export purposes.

It is called FCL.

In the next lecture, Dr. Jain shares short details of some of the logistics-related terms

Then another term which you should remember is FOB free on board.

Very common.

The most common term part of the international commercial terms, the 11 terms of Incoterms. if you talk of 2020, which is the latest version, FOB is free on board.

Very common term.

CIF is another term in the Incoterms. Out of the 11 terms, cost insurance and freight means the FOB plus insurance plus freight.

Cost here means whatever the cost is till goods are loaded on the ship.

That is the free on board that is FOB.

And another term which is used is ex works, EXW, the meaning of which is that the moment goods are out of the factory, the goods are delivered to the buyer.

The responsibility of shipping the goods, the cost of shipping the goods, everything is of the buyer.

It is called Ex Works.

Then there is another term, which is called BE, which is a bill of exchange.

Now bill of exchange is a bank document.

It is also called the bank draft.

Then uh, one more term which is commonly used is called pallets.

Now pallets are the unitization of the goods before they are stuffed into the container.

The boxes are not just put in the container in a very loose form; generally, they have to be palletized, which means standard sizes are there for the pallets, wooden pallets are there, the base, which is called the pallet, and the goods are put there and shrink wrapped to make the goods seaworthy.

Seaworthy export packing is done in the form of pallets, which involves unitization, palletization, and standardization of the logistics management of the goods through containers.

Something like, for example, depending on what is the size of the pallets, common sizes are there for the pallets. The number of pallets in, for example, a 40-foot container can be something like 20 or 21 pallets.

Basically, the pallet means that the pallet is a unitization of the goods, which can be put easily and stuffed into the container using forklifts, not manually.

These pallets, wooden pallets, the base is there.

It can be easily lifted by the forklift, and the lift can go inside the container and put it at the right place.

It makes the stuffing of the container easy, and the overall movement of the goods logistics management becomes much smoother.

The word that I have already used, I discussed the breakbulk, which is the moving of the goods in loose form.

Many of the goods cannot be put in cartons, they cannot be put in pallets, they cannot be put in containers, for example, commodities, for iron, iron or coal, or wooden logs.

These are the items actually cannot be containerized.

They cannot be palletized, and they cannot be standardized.

These goods are exported in breakbulk.

That is what is called the breakbulk.

I have tried in this lecture to give you a gist of some of the terms that will be very commonly used in this course, to make it easier for you to understand the concepts of this course.

Keep watching.

In the next lecture, Dr. Jain shares concluding remarks on this section.

We understood key financial concepts like Pre-shipment and Post-shipment credits. We also introduced operational documents like Mates Receipt, and we spent time on crucial global frameworks like the Incoterms.

That is the international commercial terms.

We briefly also discussed what the WTO is and its role in facilitating international trade. We also talked about what UCP 500 and 600 are, which govern the documentary credit system in the world. We clarified terms like what the usance period is, what is bill of lading is, and what a letter of credit is. We also broke down common shipping terms like FCL, which is the full container load, and LCL, which is less than container load, as well as Incoterms like FOB, CIF, and EXW.

These terms will be taken up in more detail in later modules.

And finally, we looked at financial instruments such as bills of exchange and logistics-related concepts like what a pallet is, and what the concept of break-bulk.

These things we discussed briefly, quite an exhaustive list, isn't it?

But as detailed as it may seem, remember, this is just a starting point.

These are some of the most commonly used terms, but there are many, many more you will encounter as you go deeper into export operations.

In fact, some of these terms will come up again and in much greater detail in the modules that will follow in this course, especially when we begin discussing the core documents and procedures involved in a typical export transaction.

I encourage you to review this module whenever needed.

Treat this module as your reference library for terminologies in export operations.

In the next module, we will continue our core journey, this time diving deep into the world of export documentation.

You will learn how documents are prepared, presented, processed, and verified across different stages of the export cycle.

Until then, keep learning and stay curious.

See you in the next module.

In this introductory lecture to the module on Pre-Shipment Export Documents, the instructor outlines the critical importance of understanding and mastering the documentation required before goods are shipped in international trade. The module will cover the core category of commercial documents—divided into Principal, Auxiliary, and LC-related documents—such as proforma invoices, export contracts, commercial invoices, packing lists, certificates of origin, and quality certificates. It will also explore essential transport documents like Bills of Lading and Air Waybills (AWBs), highlighting their role in ensuring the seamless cross-border movement of goods. This section is designed as a comprehensive guide for both new and experienced exporters, equipping them with the knowledge and tools needed for effective and compliant export operations. Let us start with an introduction and overview of the Pre-Shipment Documents

Hello friends. Welcome back to the course, and I am very, very happy to start the new section, the most exciting section of this course, which deals with the documentation part. So in sections one, two, three, and four, my main objective was to prepare you to be able to understand the concepts of documentation, the significance of each document, what these documents look like, and why they are there. What is the purpose? So, in order to understand what you've already prepared in the earlier sections, I congratulate you that you have reached this stage now. I will be able to discuss with you the individual documents. But before I discuss with you each and every document typically used in export transactions, I would first like to give you a very brief introduction to the different groups of these documents.

A certain category of documents is there. What is their purpose? How do we group all these documents? So that I will discuss it before I start with individual documents. Let us look at this cluster of documents and what they are called. We generally categorize all the activities, documentary activities, which are done for exporting, into two different categories: very broad categories, and which are documents that are to be worked upon before the shipment happens. Because in an export transaction, the main point is that goods are loaded on the ship. Most of the goods, as I had mentioned to you, go by ship. The volume is very, very big. So normally we say whether it is air or sea when shipment has happened, which means the goods have been loaded on the main carrier, which goes from one country to another country, whether it can be a ship or it can be an aircraft. So goods are loaded there and have already left the country.

That part, that shipment point, is very, very important in the export business. Any activity, or documentary activity before that, is categorized as pre-shipment export documents. So that is to be understood. And anything to be done, any document to be arranged, any activity to be carried out, whether it is documentary or procedural, post shipment activity, is are post shipment document. So there are two categories in the Pre-shipment documents. One category you already know is LC documents, the letter of credit documents. Commercial invoice, the packing list, certificate of origin, certificate of inspection, which is also called the quality Certificate, or the transport documents like Bill of lading, airway Bill, combined transport document. So these are all transport documents.

Then, the bill of exchange, which is a bank document, and the shipment advice, which is not an LC document, but after the goods have been shipped, it is mandatory to send it to the buyer. These documents, along with the certificate of insurance, including the policy, insurance policy, or even the freight certificate, depending on what is the commercial terms that have been agreed with the buyer. These are the LC documents. These LC documents are basically part of the so-called commercial documents. Commercial means those documents of the interest of the buyer or the seller and have nothing to do with the authorities, local authorities, or any, you know, direct need of any government body or any particular agency.

Those are commercial documents that are related to commerce. That is the business that you are doing with the buyer. So among those commercial documents, the LC documents are typically referred to as the principal documents. So, what is the meaning of the principal documents that are in the commercial documents? There are two categories. One category is the Principal documents, which are directly demanded by the buyer through a letter of credit. That is why they are called principal documents, and those documents, which actually help in obtaining these principal documents, which are also commercial documents, obviously, because they do not have any need to be provided to the agencies or the authorities, are called auxiliary documents, like a proforma invoice, which I had discussed with you. A proforma invoice helps you get the business and create the first commercial invoice. Then, shipping instructions which is given to the shipping company to get the shipping order, which I will talk to you about later.

And intimation for inspection. That means to the inspection agency. It may be the third-party inspection, which is demanded by the buyer, or the mandatory inspection, which I told you about earlier. You must be realizing that in section four, whatever we discussed is having an echo here. So, because of that understanding, you are able to understand the concepts now. Then, the letter to the bank for the collection of payment from the buyer. So covering letter basically, when you give the documents, you have to use this covering letter. The insurance declaration, which helps you get the insurance policy or insurance certificate. But then this insurance declaration is required, depending on who buys the insurance, depending on the international commercial terms. Then the shipping order, which is issued by the shipping company, helps you in, uh, getting your goods carried to the container yard. so shipping order.

Then the Mate's Receipt, which is issued by the captain of the ship, helps you in getting the transport documents. An application for the certificate of origin, based on which you get the certificate of origin from the local industry bodies, like the Chamber of Commerce or any approved body, in the case of Generalized System of Preferences, that is, the GSP certificate of origin. So we'll talk about it. We'll discuss the different types of certificates of origin. So now my idea was to make you understand that these are the pre-shipment documents, and that these are the commercial documents. And those documents, documents which are needed to comply with the local regulations in the home country or the host country. These are called regulatory documents. So, as an exporter, you will need the regulatory documents mostly in your home country only. And most importantly, uh document is the exchange control document.

That is the uh document which is required by the central banks. In the procedural cycle, I did not discuss the exchange control mechanism because that happens at the back of the cycle. So what actually happens is that you are not dealing directly with the central banks. For example, in India, it is the RBI. Rather, you are just doing the export declaration with the local customs authorities in the form of a shipping bill, which again is purely your declaration of the goods you are exporting, and the system generates this shipping bill. So when it does generate the shipping bill, it also generates the exchange control copy, which is sent to the central bank. If it is EDI like in India, automatically it is generated along with the shipping bill, which is also called the exchange control copy of the shipping bill, and which is automatically sent via electronic means to the central bank. In the case of India, it is the RBI. So these are the documents that actually help you in satisfying the central banks that you have exported something, and money will come. Now, when money comes, banks have to notify the central banks that yes, money has come in the form of so-called BRC, which is also electronic in India.

The Icegate platform of the customs in India does all these things, and banking mechanisms wherein they receive the foreign exchange, they inform the central bank in case of India, which is the RBI, about remittance being realized. And those two things have to be matched by the central bank. So that thing happens in the background. Your purpose, your concern, is to deal with the customs and with the banks. So that exchange control mechanism happens automatically. Then you will need the certified copies of the shipping bill. Also, once the goods have been exported, proving that indeed the export has happened, only then can you do the post shipment activities. And the drawback copy is the duty drawback in the case of India. So in different countries, they have different schemes. So this kind of export promotion copy may be needed for some other type of measures in other countries.

Maybe some other form is not a drawback. So in India, it is called drawback. And then also to claim the export incentives, for example, in India, you need a document proving your membership with the local export promotion body, which is in India called EPC. That is the Export Promotion Council. So every product group has a different export promotion council, and you become a member of that, and you get the membership certificate, which is also called the RCMC. That is the registration and membership certificate in India. And this is mandatory to obtain any government benefits and which is the case in many of the other countries. This way, we have understood the two different categories of the Pre-shipment export documents.

One is the commercial document, and the second is the regulatory. We will be discussing these documents threadbare in later lectures in those sections one by one, and you will get an even better idea of these documents. My idea was just to give you a broader perspective on these documents. So you have an idea of what these documents are categorized as and which family they belong to, that is very, very important.

In the next lecture, Dr. Jain introduces you to the Post-Shipment Documents.

Friends, as I had mentioned to you that there are two different categories of these documents broadly. One is the Pre-shipment document, and the second is the post-shipment document. So moment shipment happens, shipment advice is used to inform the buyer that the goods have been loaded and the ship has already sailed, and the container details and all other details which are normally given in the export general manifesto. that is, the EGM, which is also used by the local customs to finally get satisfied that yes, the goods have indeed been exported. So this EGM actually provides all this information to be incorporated in the shipping advice to be sent to the buyer. It should be enclosed with the non-negotiable copies of the bill of lading or the air waybill. any transport document can be a CTD, also a combined transport document and which I will be discussing in more detail later. Then the commercial invoice and packing list.

These are the minimum documents category of shipment advice documents categorized as the Post-shipment export documents. And then all those documents which you prepared before the shipment, we call the commercial principal documents or the LC documents, are now ready with you. All and signed whatever way they had to be prepared according to the LC. So now this complete set, along with the bill of exchange copy, which is the bank document, as an unconditional order to pay against the LC and all other LC documents, complete set, including the LC in original, receipt from the notifying bank or the advising bank, all these documents and the covering letter, are called negotiation documents. So these are as per the LC terms. So these are the main documents. Main commercial documents. Principal documents. Principal commercial documents. So this is the second category of the Post-shipment export documents. Then comes the third category, which is the incentive claim documents required by the exporters to claim any benefits being given to them by their respective local governments.

Mostly, these are the refunds of any direct or indirect duties and taxes which are paid either in the advance authorisation or in the remission mode, which means to be remitted after the export has happened. So whatever the method is, even if it is an advanced payment, this has to be resolved after the shipment. These documents have to be used in all the countries of the world, wherever such benefits are there from the local government. For example, if we take the example of India, these documents include documents for excise or GST if there are any GST matters or any VAT in India; we do not have VAT now. But few goods have excise duty, while most of the goods have GST. Such refunds would require, for example, the ARE1 and ARE2 forms in India for excise purposes.

As I told you, very few items are there, but mostly you will be needing the commercial invoice and the shipping bill, which is certified by the local customs. the export has happened, to get the GST refund. And non non-negotiable copy of the bill of lading will be required in all such claims. And especially for the duty drawback claim in India, you would be requiring a duty drawback claim proforma, which you have to create, a certified copy of the commercial invoice, certified by the local customs.

Non-negotiable copy of the bill of lading, Certified copy of the shipping bill. That is the drawback copy of the shipping bill. it is also called. And of course, you will need the RCMC and BRC. As I had mentioned to you that RCMC and BRC, BRC would be obtained from the bank, and RCMC would be obtained from the EPC where you have become a member. I hope you have got a very graphic idea of the different categories of these documents, different clusters of these documents. I'll be discussing these documents one by one. And, uh, we'll be discussing all these things, uh, to your entire satisfaction. So you will get an idea very clear idea of all these things.

Although not a document that is mandatory for exporting goods, a Proforma Invoice still serves as the most important first document that helps immensely in the later journey of export documentation and procedures.

Hello, friends. Welcome back to the course. So in the last lecture we discussed about broad categories of various export documents. Now, in this particular lecture, I will be starting the discussion on individual documents. Let us start with that. Let us first talk about the main principal commercial documents. That will be our focus in this particular module. But I will start with the Proforma invoice, which, as per my understanding, is the most important export document for any exporter. Although it is not part of the main principal commercial documents, but Proforma Invoice is actually the starting document. That's why it is important. The more professional it is, the chances of getting business are very, very high. Typically Proforma invoice is created even before getting the order. That is why I am saying it is so important.

It is always recommended that whenever you receive an enquiry, an overseas enquiry, or some kind of letter of intent from the overseas buyer, you may give the quote, actually, for that inquiry in a very professional type of Proforma Invoice. So I will show you what all is there in a typical proforma invoice, and why I say that it is always better to give the quotation, the price offer to the foreign buyer in the form of a Proforma invoice, rather than just giving the price and some kinds of conditions, a list of conditions in some kind of message. It is always better to be very clear about all the information that is connected with the price offer, all the conditions, and that is where the importance of a Proforma invoice comes. So let us see. Let us look at one of the sample proforma invoices which I have created based on one of Malhotra's exports from Mumbai, India, exporting fashion garments, ladies' fashion garments to France to a company. Let's look at this. Now, let me share with you one sample of the proforma invoice. This proforma invoice sample is based on, as I just mentioned, one Malhotra exports from Mumbai, exporting fashion garments to a party in France named Saint Laurent. Here, in this particular Proforma Invoice, as you can see, the seller's name is given there. The buyer's name is also given there, along with all details, address, and contact person.

All that information is given there at the top left. Here it is, page one of one. It can be multiple pages, also. So this is at the top row on the right side, as you can see here. And there is a kind of invoice number is there. So you can have some kind of Proforma invoice number, which can also be a temporary number. Because a Proforma invoice you are preparing for the purpose of quoting your prices, to start with. That is the purpose. Maybe you can later on, if you are getting the order and you want to formalize a Proforma invoice, you can give a proper proforma invoice number. You can do that later.

Basically, you are still not sure whether the order will be confirmed. Therefore, you are preparing this Proforma invoice based on the letter of intent (LOI) or some kind of inquiry, as I had just mentioned. And you are mentioning basically the issue date, you are giving some buyer's reference also. That may be the reference of a particular email or inquiry, or a letter of intent, or some kind of reference you can mention here. Whatever it is. Some reference you give here to the buyer. And you also mentioned the due date. So what is this due date? This is the date by which you expect the prices that you are quoting in this particular Proforma invoice; until that date, those prices can be kept the same. That is the validity of the prices.

You can't have a price validity for infinity. You can't do that. So you have to have some kind of due date, after which prices may change, as per your declaration, in this particular Proforma invoice, for the overseas buyer basically. And here you also mention the expected delivery date, indicating that you are expecting that you can supply the goods. But it is better if you mention here also in this particular delivery date that subject to confirmation of the order within a certain time frame until a certain date. So you can mention it here. That thing. Maybe the confirmation of the order. Maybe you can keep it within one week or 15 days, or maybe one month, whatever you can mention.

Now, this delivery date can also be a date that is requested or expected by the buyer. The buyer is expecting a certain date for the goods to reach him. So, whether you can meet that date, at least for dispatch, you know you can't ensure when the goods will reach the buyer. But at least you can control or you can judge when you can dispatch the goods. So, whether you can meet the dispatch date at least, or some date near that particular expected date that you have to mention here. So, whether you can meet that particular dispatch date, at least, if not the arrival date to the buyer.

Somewhere near that date, if you can meet, you can mention it here. Then you also have one column for things like a method of dispatching the goods. So the prices that you have calculated are based on the enquiry of the buyer, overseas buyer, where you have taken the mode of transportation either by sea, then the price will be different, or by air, in which case the price may be different. So you have to mention whether the method of dispatch is by sea or by air. Then the type of shipment, whether it is FCL, that is, the full container load, or whether it is LCL, that is, the less than container load. So you have to mention these things here. Then you also mention the port of loading. What is the port of loading? Since this company, in this particular case, for example, is based in Mumbai. So Malhotra Exports will write here that the port of loading is Mumbai, because that is the nearest point for dispatch, a wet port.

Depending on where the manufacturing of the goods is being done by the exporter. If it is near, for example, in this case near Mumbai or in Mumbai, it is better to dispatch goods from the port of Mumbai, obviously. And the port of discharge will be based on the requirement of the buyer, as mentioned in the inquiry, if it is mentioned. Or a letter of intent, whatever it is. If the buyer has indicated some port of discharge, or you can say port of destination, then the same has to be mentioned here. If the buyer wants goods to be delivered at a certain port, you have to mention that port.

Here, in this case, in our example, the port of discharge is Paris, which is in France. So then the exporter also mentions the method of payment. What are the terms of payment that you expect? Which means the exporter expects based on this, only the price given by the exporter would be valid. And the exporter's calculation is based on that only. So exporter, for example, in this case, is asking for a confirmed irrevocable letter of credit. What is this confirmed irrevocable letter of credit we will be talking about later in a particular module that focuses on the payment methods?

An exporter may also mention that LC will be payable at sight, depending on the exporter's policy for payment and receiving payment. I would recommend that it should not be the usance letter of credit. That means there should not be any Usance Period involved. If there is any Usance period, which may be us by the buyer, the prices have to be increased to provide for the risk premium involved in such kinds of payment terms. So the exporter may have to give higher prices in such cases.

The exporter should also mention here the product code. Whatever is there, the product code or the exporter's number? Some exporters' file is maintained with the exporter. Some kind of product category code as per the product management. It is not really very, very important, actually, at this stage, because it is a Proforma invoice stage. Some tweaking can be done on the numbers in the commercial invoice after clarification with the buyer. But you can mention some product code, which should be nearly what you plan to do in your commercial invoice, if the order is confirmed. It should be mentioned that way. Because what happens in this invoice, you are not giving the breakup of all the products, which means the color, which means the different sizes, small, medium, large, those kinds of things. Those things you are not giving, you are giving very broad categories. So it is not expected that you will be able to give a very specific product code. It is not possible in a proforma invoice. For example, in this particular case, the description of the goods is ladies' skirts and blouse sets, which are 100% cotton.

What it writes. Assorted adult sizes. So it is not giving the breakup of the sizes. It is simply writing so many assorted adult sizes, assorted color themes. Each two-piece set. Here, it is possible that in the commercial invoice, you give the breakup also of the different sizes and colors, and the product number may be different, obviously. So the unit type here in this particular example is set, and the unit quantity, that is, the number of sets. There are 3500 in total. And the price for each set, a 2-piece set, is Euro 15, as you can see here. Based on this Euro 15 price for the two-piece set, the total amount for the whole quantity, if it is shipped in one go, happens to be Euro 52,500, for these many sets, all complete shipment. This is how you arrive at the total amount, the proposed amount in the Proforma invoice.

Because the order is still not final, you are just proposing this price. So this is the code that the exporter is giving through this proforma invoice, along with all other conditions and assumptions, and requirements of the buyer, if it is there. So everything is very clear to the buyer. Now, if you go further in the Proforma invoice, you will see here that the total of these goods being negotiated has to be mentioned here, both the quantities, that is, the sets, the number of sets, total, and the total price that we had just talked about. And also, you can write here the Consignment total. Now, what is this consignment total?

I will explain to you. Here you can see that the consignment total is the same as the actual total because you are sending all the goods in one go. But imagine if there are two or more consignments or three consignments for this total quantity of 3500 sets at different dates, to be sent at different dates with different invoices, maybe with different prices. Then this may be the quotation for the first consignment. And the quantity of this first consignment may actually be less quantity.

It may be some thousand sets, or it may be 1500 sets for the first consignment out of the total deliverable quantity of 3500. So this is the meaning of this consignment total. It is also possible that the buyer wants you to quote the price for 3500 sets, but he wants the goods in three installments: 1000, 1000, and 1500. And he wants the price to remain the same in each of these three shipments.

You have to plan it out accordingly, how you want to average out the prices of the consignment. Here, in this particular case, we are assuming that the exporter is going to export and dispatch the entire 3500 sets in one full container load. And possibly, if it is being sent by full container load, the transportation cost may be less because full container load prices are cheaper.

Then you may have some special packing charges also, which may be added depending on the special packing requirements of the overseas buyer. So, for example, in this case, Euro 2500 may be the extra cost for such special packing, thereby making the total, entire total of this complete shipment Euro 55,000. So Incoterms are also mentioned here, which are based on the latest Incoterms 2020. And the decided Incoterm or proposed incoterm by the exporter through this Proforma invoice, in this case, is FOB, free on board, because the price that is Euro 15 that we had mentioned, per set, is based on this particular incoterm, which is free on board. So the cost will be calculated based on this Incoterm. If the incoterm changes, the price may change.

It may increase, for example, in the case of Incoterms, if it is CIF, for example, cost, insurance, and freight, the price may be more, in this case. And further, the exporter also mentions that the FOB prices, which are given, Euro 15, are based on the dispatch from the port of loading, that is, Mumbai in this case. If the port is different for some reason, the price may have to be changed. And the currency of the contract that the exporter has proposed in this quotation or Proforma invoice is euros. And all prices are in euros. Here you may add some additional information, some kind of instruction, or some kind of conditions of the prices. Something you can mention. Or you can even mention the markings, shipment markings, which in a Proforma invoice will not be there. But in the commercial invoice at this place, you can have the marking.

You can also mention the most recent expected date of dispatch of the shipment here. The latest date by which you can actually dispatch the goods, based on the availability of the ship, is also. So, as we have given in this example. So it may be different, actually, from the delivery date, this expected date, because you are expecting, as per the latest information that you have, the expected time of departure or date of departure of a particular ship. For example, it may be the direct shipment that which buyer wants if the buyer wants so. That can be given here. For example, in this case, to the Paris port, the current expected date of delivery given is 15th June 2022. So whatever it may be, this information will indicate the latest available date of the ship that you can mention here. And then you can also mention here the bank details, your requirement for the type of bank that should open the letter of credit. For example, here you are writing a payment through a letter of credit from a first-class overseas bank, international bank, advised through your own bank.

This basically you are putting as the nominated bank, which is your local bank with whom you can deal more comfortably. So, what is happening is that the exporter is actually nominating a bank. The bank in the exporter's country, which is, in this case, Malhotra Exports. It is based in Mumbai. And generally exporter is already dealing with this local bank. It has already got the business with this bank. So it is in this case, for example, is International Bank of India, Mumbai, main branch. So, what Malhotra Exports is doing they are nominating this bank for advisory purposes.

To act as the advising bank that is indicated here. It is important when you prepare the Proforma invoice to include all these details to make it very clear. And then in this place, the exporter writes the name of the company, the signatory company, the name of the authorised person, and the signature. So this is a very simple format, a very common format of a Proforma invoice that is typically very similar to the future commercial invoice, which will be prepared later once the order is confirmed. If it is confirmed.

While often there is no formal export sales contract in the real world, a well-laid-out export sales contract helps both an exporter and an importer to avoid misunderstanding and ensure transparency in a typical export transaction. It is important for an exporter to always insist on a formal export sales contract before moving further in the business transaction.

Friends, welcome back to the course. In the last lecture, I discussed with you about the Proforma invoice. Now, I wanted to discuss with you about the commercial invoice, but I thought that before I talk to you about the commercial invoice, it is very much required that I should talk to you about the export contract. So in this lecture, I will talk to you about the export contract. An export contract has to be signed at this point between the buyer and the seller, once the Proforma invoice proposal, which includes the price, which means the packing, which means the payment terms, method of payment, delivery terms, date of delivery, and the nature of incoterms. What will be the Incoterms conditions?

All these things are discussed and agreed upon between the buyer and the seller. So once that is done, it means you have got the order. Many times, when the business is not very big, the buyer simply signs the Proforma invoice if it contains all the conditions that have been agreed between the buyer and the seller. Or if it has not been agreed, a new performance invoice is created which contains the final details which has been agreed. And many times, the buyer simply signs and confirms the proforma invoice, and that acts as the export contract. So, in a case where the nature of the transaction is a little complex, the value is high. The exporter and the importer may agree to sign a comprehensive, detailed export contract. And bring out and prepare, sometimes professionally, sometimes by the international lawyers, even to come out with a very professional-looking, detailed, clause-by-clause export contract.

Many times it happens. So let me share with you one sample of the export contract, and let us see what the common clauses which are in an international export contract. Now, let us look into this sample for educational purposes only of one sales contract that is very, very similar to the real-life situation. And, uh, this sales contract copy as a sample is also available in the resource section for your download. So you can download this sales contract and look into the different clauses and the structure of the sales contract. Let me explain to you the basic structure of the sales contract and the main clauses that are in the sales contract, so that you have a good idea how what the sales contract looks like in a real-life situation. Herein, in this sales contract, as you can see, the contract number is given. This is an example sales contract.

It is not the real sales contract. But just for an idea of what it looks like. This sales contract is entered into, the effective date. And the place where this contract is signed is also given here. Then the name of the seller and the name of the buyer are given there, with the address and the contact details of both parties. And this has been mentioned here in the sales contract that the buyer and the seller will be referred to as the party or the parties at different places in this sales contract. So this is how it starts. If we look at the initial description that is given at the very start of the sales contract, some very important information is given here. Like this contract is subject to the bankability of the seller's product, and upon mutual written agreement, some required amendments by the buyer's bank are allowed. Jinko is committed to receiving a technical inspection from a third party, the bank's technical advisor. and has to bear the relevant costs. This inspection has to be carried out by the date that has been mentioned here.

Once the bank has accepted Jinko as the seller and the contract amendment is complete, the seller will issue the commercial invoice and bank guarantee in the amount of the percentage is given here. What kind of percentage will be given as the bank guarantee of the total contract? Approximate value. Why approximate? I will explain to you in this contract. This contract has multiple shipments. Those are to be carried out by the seller in different months. So, what exactly are the actual shipments that take place in different months that will decide the total value? exact value.

In this contract, the approximate values are given. And I will explain to you all these things again. Further in this contract, you will have a better idea. Further, it says that within 10 working days of the document's issuance, certain percentages will be given as an advance payment by the buyer. So that percentage is given here. The buyer and the seller agree to conduct the following transactions according to the terms and conditions that are given in this sales contract, and certain confidential information has been omitted from this sample. So this is how the sales contract starts. This particular example is a very detailed sales contract. I will not be able to explain each and every line of this, but I will take up some important parts of this sales contract that I will describe to you and explain to you.

Here, in the first part of this sales contract, the product description is given. Since this contract is a technical contract, therefore, you can see here that, uh, uh, different descriptions on a monthly basis are given there. In each month, what kinds of solar cells will be supplied by the seller to the buyer? What will be the different technical specs of that? What will be the wattage of each shipment, total wattage? Therefore, in this contract, the average price per watt is mentioned, not based on the quantity of the solar cells supplied, but rather on the total wattage that has been supplied here. So this is very technical in nature, and the requirements of this particular industry and the product.

As I was explaining to you, the prices may vary from month to month. So June prices, approximate, July prices, August prices, and September prices are mentioned. These are the approximate prices, the expected prices that are given there. The actual prices may vary according to the description that is explained and given in this sales contract, and accordingly, the prices may vary. Total quantities of the contract, which will be the approximate quantity, because the actual shipment will decide what is the total quantity. But some idea is given here in this sales contract, what will be the total quantity and approximate total price of the contract? So, what it mentions here, the price is in Euro, and on Incoterm that has been decided is CIF, in this case, Ravenna port in Europe. It can also be any European port because the contract is for multiple shipments, and the requirement of the ports may vary from month to month, and many other details are given here. For example, what the sales contract will look like for each shipment.

Because this particular sales contract is for the entire year. What will happen about the purchase order on to monthly basis? What will be the individual sales contract or export contract of each shipment every month? All those things have been explained here. For example, it mentions that according to the shipment schedule, the seller shall issue a written proforma invoice to the buyer by email or fax, or any other means, within 45 days before the scheduled shipment date of each month, during the contract period. And thereafter, the buyer shall sign and return the proforma invoice within five business days upon receipt. All proforma invoices shall be subject to the terms and conditions outlined in this contract.

This is the master contract, sales contract, and all the monthly proforma invoices that will be signed by the seller, as well as the buyer, will serve as the individual sales contract of each month. So this is how it will go further. This process will happen this way. In the second clause, it refers to the product's technical specifications. All the technical information about the products is mentioned here, like power tolerance, maximum system voltage, and any other details. It mentions the details, technical details that refer to the product's technical specifications in Appendix A of this contract, which specifically deals with the technical specifications. So in this third clause, the focus is on the terms of payment, and it talks about the Incoterms that are used and the latest effective Incoterms that have been used as a reference for any dispute that happens between the buyer and the seller. So the latest Incoterms will be used.

Further details about the terms of payment are given there. For example, what will be the percentage of the advance payment? How the advance payment will be made by the buyer to the seller? All those details are given there. The total purchase price for each shipment will be calculated based on the nominal power of the solar module, as recorded on the commercial invoice. So, as I had mentioned to you that the average wattage per watt price is given here in this contract, and based on that advice, based on that reference, the actual shipment price will be calculated for each shipment. Monthly shipment.

And accordingly, the commercial invoice will be prepared by the seller. Bank information is given here in the third clause. Subclause 3.4. What is the opening bank? What is the opening bank address? What is the Swift code? What is the name of the beneficiary? What is the address of the beneficiary, and what is the bank account number of the beneficiary?

Then, in clause number four, that refers to the title and risk of loss or the insurance. So it deals with the risk of loss or the insurance, and the title term. So, how does the title transfer according to the Incoterms that have been used? All those things have been described here. So it is not difficult to understand this because the CIF contract is there. We already know the terms of trade, Incoterms.

And accordingly, the title transfer and the responsibility of the loss and the claim of insurance can be easily understood. That has been described in clause number 4. Further, in clause number 5, the terms of shipment are given. So that is the focus. What will be the date of the shipment? And it has to be according to the schedule that has been given in the Annexure, which I will show you later in this particular contract. And what is the port of loading? What is the port of destination, and what happens before packing and shipment? Modules shall be arranged according to the output power with one watt peak increment. All these process details, step by step, are given here in this clause.

And things like a notice of shipment. In case of shipment by the seller shall inform the buyer of the contracts of the forwarding agent and the dispatch date of the relevant vessel by notice within two working days after the shipment. So in fact, it indicates the shipment advice that I had mentioned, and explained also that the seller is obliged to send a shipment advice. So this notice of shipment refers to that shipment advice, and that obligation is of the seller. Clause number 6 deals with packing.

Here, a detailed description is given. How will the goods be packed? The packing will be very technical in nature. Some explanation is given here. And that can be reviewed by you by having a review. And look at the sample contract that is available in the resource section. You can download it, and you can review the packing details. You will have a fairly good idea about it. Clause number 7 deals with warranty and claims. And this detailed information on warranty and claims is included in Appendix B of this contract.

I will show you that. Then, clause number 8 refers to the force majeure. Force majeure is a situation that is out of the control of any of the parties. And it describes what those situations will be wherein the contract may cease to be applicable due to the situations that are the act of God, or maybe war, or warlike conditions, or embargoes, or riots, or strike or lockout, and other events beyond the reasonable control of any of the parties. So all these details are given here in the force majeure clause.

That is a very, very important clause. So there are two subheadings in this clause: 1 and 2. And you can have a look at the details that are given in this particular sales contract. You can review it. Then clause number 9 refers to the breach liabilities, breach of the conditions of this contract by any of the parties. And those different situations are mentioned here in subclauses 1, 2, 3, 4, 5, and 6. What will be the consequences of such a breach? Those are mentioned here.

Then, clause number 10 deals with the contract disclosure. So things like the buyer agrees that the seller can disclose the main content of this contract to the state's Security Commission of the country, where the seller is preparing for its listing affairs, as required. So that is on a case-by-case basis. Generally, the approach is that neither of the parties would be disclosing the contents of this contract to any competitors or any third party, or to any media companies or any platform where the business may be affected. A detailed description of the contract disclosure is required in many cases; depending on the situation, those things can be there. In this particular case, the seller needed an escape from the contract disclosure in this situation, as you can see here, and that has been mentioned here.

Then clause number 11 refers to the non-transfer, which means non-transfer of the rights. So no right of transfer, any right or obligation of this contract by any party without the express written approval of the other party. The meaning of this is that neither party can transfer its obligation to any third party. For example, a seller cannot transfer its obligation to dispatch the goods to any third party or any third supplier, so that is not allowed without the consent of the buyer, for example. Then clause number 12 refers to the applicable law in this particular sales contract. I had already mentioned to you in my earlier lectures that the laws of third countries are generally preferred by the parties. Here in this contract, also, as we can see here, the choice of the law is the German law, which is the third country, because the seller happens to be from China, and the buyer happens to be from Italy. Applicable law is the German law. So, as I had mentioned to you, the choice is the third country law in this case, German law. Then clause number 13 refers to the arbitration, and how the arbitration will be carried out in case of any dispute. As has been mentioned that the German law will be applied.

Any dispute in this connection with or arising from the contract shall be settled through friendly negotiations first. If no settlement can be reached, the dispute shall be submitted for arbitration to the Chinese European Arbitration Centre in Germany. So these details are mentioned here on how it will be carried out, depending on the negotiations between the buyer and the seller. Then clause number 14 deals with the miscellaneous matters like for example, in this case it is mentioned that each party shall ensure that neither it nor it affiliates and each of their directors, senior officers and employees have made or will make any disclosure or announcements in respect of this contract, the transaction, the fact that the parties are in negotiation with each other or any other matters, any miscellaneous matters that cannot be included in other clauses of this sales contract. Those things will be included in this particular clause, Number 14.

That is the miscellaneous section of this contract. All these details will be here. You can review all these details in the sample that is available, and you can download it from the resource section. And then finally, at the end of the sales contract, the appendices are given there. Basically, in this contract, there are two appendices, Appendix A and Appendix B. Appendix A in this particular sales contract deals with the technical specifications, and Appendix B deals with the limited warranty for PV modules.

We can have a look at Appendix A, which deals with the technical specifications, and complete details are given here. Similarly, Appendix B is given here, which deals with the warranty terms. All those details are given in these appendices, as had been mentioned in the sales contract, and the details included in these appendices will depend on the case basis, depending on what is the subject matter. So subject matter is very, very important. That is where the contract started. In the very initial stages of this sales contract, the subject matter was described. So this is one example that I wanted to share with you about a typical kind of sales contract that is signed between the seller and the buyer.

A commercial invoice can have several forms and serves many purposes. The most important role of a commercial invoice is that it is a summary of the sales transaction, incorporating all the terms and conditions in a nutshell.

So, friends, in the last lecture, I'm sure that you understood the export contract and you are feeling confident. So in this lecture, I will be talking about the most important document of the typical export transaction, that is the commercial invoice. A commercial invoice is the first document that you create after you finalize the export order. And proforma invoice helps you a lot in creating the commercial invoice. An invoice can be of many types. A commercial invoice is the most common type because it is commercial in nature, which is required by the buyer which is required by the seller. It is required at many places for commercial purposes, not for regulatory purposes. For regulatory purposes, there are other documents. The other types of invoice that can be there can be a custom invoice or a consular invoice. So a consular invoice is the same as the commercial invoice. It is just that it has to be endorsed by the consular office, that is, the embassy or consulate of a particular country, which requires a consular invoice. So certain countries require a consular invoice, apart from the commercial invoice, which is the regulatory requirement of the host country.

That is what it is a consular invoice. Similarly, the custom invoice is also the same as the commercial invoice. It is just that it is certified by the customs at several places for regulatory purposes and for claiming certain benefits. The customs-verified and signed invoice is required, which is called a Customs Invoice. Many times, the host country also requires a certified customs invoice. So the names may be different, but it is all the same. A commercial invoice is the main template that is replicated. So I am very confident that in this particular lecture, you will know everything about the commercial invoice and what the different entries are. So I will show you one sample commercial invoice also in this video.

You can see here that this is the typical format of a commercial invoice as per the ADS system, the aligned document system. And you can see that this invoice contains almost very same information that was there in the proforma invoice. So you can see here that, like in a proforma invoice exporter's name is there, the consignee's name is there. The invoice number and the date are there, which can also be different. Now you can make it a new invoice number, also it is possible. Bill of lading number, in case it is already available, or when it becomes available, you can add it. Buyer's reference number.

The other reference number, if you want to give any new reference number, maybe the reference number of the file or the account that you have created for this particular buyer, if it is a new account, or if it is an already existing account of the buyer, you can give the reference number. So there is very, very similar information that was there in the proforma invoice. Country of final destination. Country of origin. Vessel name, vessel number. Voyage number. Port of loading. Date of departure. Port of discharge. Final destination. Marine cover policy number.

In case the contract requires the seller to buy the insurance policy, you can put the policy cover number here. The LC number will be available now. So you can see here that the description is also detailed with the different colors, sizes, HS code, the number of sets of different colors and sizes, price, and amount. So breakup has been given in this. And the other information, like bank details, special packing charges, and Incoterms. You will see that much information comes from a proforma invoice.

As you can see here from this invoice, this invoice contains almost all the highlights of the export contract. So this is the reason a Commercial invoice is so important because it tells the complete summary of the export shipment. So whether it is the consular office or the embassy of the buyer's country, in the exporter's country, or the customs or the shipping company, or anybody, any intermediary, banks, they can easily identify and understand the export shipment just by looking at the commercial invoice. That is the purpose.

Now. A commercial invoice can also be of more than one page, depending on the breakup of the goods. So in which case the other pages will have the same template, same format, except that the description of the goods, product code, HS code, unit, quantity, type, etc. if there are any changes, they will be reflected in the other pages, but the rest of the things, the header and the footer, will be the same. So you can see here that this is the header and this is the footer. So these things will be the same except the middle portion, which is this portion, will change in the next pages, in case there is more than one page in the commercial invoice. So I think by looking at this sample of the commercial invoice, I talked to you about Malhotra Exports exporting fashion garments to a buyer in Paris, Paris. I am sure that now you feel confident that you can create a commercial invoice for your own shipment. So that is the purpose of this particular lecture: to make you understand how a commercial invoice is created, what it contains.

A very important part of the commercial invoice is the details about the unit price and the amount. This is a very clear indication of the financials that are involved in the shipment. So this is very, very important. And the terms of payment. So many times, if some more details are available about the terms and method of payment, those should be mentioned. And of course, the Incoterms. In this case, it is FOB Mumbai, out of the 11 incoterms, which I had discussed with you earlier in this course. So this has to be clearly indicated in the commercial invoice. And generally, it is useful that in the commercial invoice you have the contact details and the name of the contact person. So the contact person's name and the mobile number. Similarly, the contact person who is the buyer from the buyer side, and the mobile number. And in case the consignee is different from the buyer, in that case, the buyer's name should be mentioned here.

Many times, what happens is that the company name is the same, but the address is different. The meaning of this is that the company's particular office is the buyer, and the consignee is some other office. Maybe in the same country or in a different country. So there also these two columns will also be very, very useful. One more important thing here is that this is the place where you write the currency of the contract. So if it is a U.S. dollar, you write US dollar. If it is euro or yen, whatever it is. And this space can be used for any additional information, which is very important for the shipment. Maybe the shipment contains some hazardous material. So, some instruction has to be given here to handle the shipment with care. So this information can be put here. Or if the shipment has some special features that everybody should know.

That information can be put here. So this is a multipurpose space that provides additional information. You can put it here. And here you can write about the bank details. If you want to put a nominated bank here, who would be advising the letter of credit? So, for example, in this case, it is written there that LC from First Class International Bank was advised through the International Bank of India, Mumbai main branch. So what the exporter has done is that it has nominated the advising bank in Mumbai. Such kind of information about the banks can be given here. So this is how the commercial invoice looks. And these different columns can be filled. Whatever information is available, it can be put here.

This is all I wanted to talk to you about the commercial invoice. So I am sure that you are getting the confidence of understanding these documents and, very importantly, the entries which have to be made. What is the significance of those entries? That's the most important thing that you need to understand. The template and the format of the documents will be created automatically by the computer software, which is easily available, both the paid version as well as the free version.

Online, you can download this software. The documents that I am going to discuss in the later lectures, again, the importance and purpose of those documents, and the entries that have to be made. That is what you have to understand. So I am sure that this method of sharing with you the documents is working for you, and you can understand these documents. So I will keep the same process for future lectures about these documents. Keep watching. Thank you very much.

Often ignored, a packing list is an important shipment document that may be needed not only by the transporter, but it may also be required by the intermediary banks and customs or border control, even if the buyer may not demand it. In the next 2 lectures, Dr. Jain discusses a typical format of the packing list.

Hello, friends. Welcome back to the course. So now, slowly, we are moving towards more documents. Our progress is good in this course. I congratulate you on this. We have already discussed a few documents, including a proforma invoice, export contract, and commercial invoice. Now, let us discuss one very, very important document that is called a packing list. A packing list is always attached to a commercial invoice. If it is there. Many times packing list is not there when the shipment is very, very simple. So basically, a complex shipment requires, definitely requires a packing list because it tells you exactly what the different types of packing. What are the different types of pallet boxes? What contains what? So it completely identifies the actual physical nature of the shipment. So generally it is a practice that even if the shipment is simple. It may be all the same types of boxes, packing list is still made. Let us look at the packing list.

This is the packing list. You can see here that the header is very, very similar to or almost the same as the commercial invoice. You can see here the name of the exporter, the consignee's name all the numbers. You will find it is almost the same except for some columns like packing information, where you can put the marks that are there on the cartons, and how many cartons are there in those pallets? That information will be coming in the description. So it's quite similar to what is there in the commercial invoice. So what happens? This packing list comes with the data that has been obtained from the commercial invoice. But you will see here that in the packing list, there is no mention of the financials, which were there in the invoice, if you remember. In the invoice, what we had given was the unit price and the total price.

The breakup was here, where we had mentioned the special parking charges. So those financials are missing. So instead of those financials, what has happened here we are having things like the kind and number of packages, net weight, gross weight, and measurement in cubic meters of the different categories of the products, which have been mentioned in the commercial invoice. So, for example, in this case, I will explain to you. There were one, two, three, four, five codes, and the different color sizes and categories were made in the commercial invoice, and there were 700 sets of each. So what has happened that what we have done is that we have taken one pallet, which is approximately five cubic meters, for each category to pack the material. So one pallet is generally of this size; the standard size is 48 inches by 40 inches.

This is a standard size. And accordingly, the cartons were made to fit into that pallet size. And what actually happened? What became practical was that seven sets in each carton had been packed in this way. So for 700 sets, we needed 100 cartons. So 100 cartons means each carton is available with seven sets of packing. So when we put these cartons on the pallet, 48 inches by 40 inches, which is the standard pallet, we found that the net weight came out to be approximately 980kg, and the gross weight came out to be 1260 kg. So this was the gross weight, which can easily be lifted by a forklift and can be stuffed into a container. So we have a total of five pallets. Are there one, two, three, four, and five pallets are there in this shipment, and have they been stuffed in the container? So this is a 20-foot container.

And it can carry a total capacity of a maximum of 15 tons. So this is this whole shipment is approximately 6.5 tons. So it can easily fit into this. So basically it's the garments. Garments take up more space, so they can fit into the container, but the maximum weight will not be exceeded. 15 tons means that if it is heavy machinery or some scrap material, then the question of the maximum capacity will arise. Here, the volume will take care of the whole space in the container, and the maximum weight of that whole shipment for a 20ft container is coming to be 6.5 tons, which is very well within the permissible range of the container. So this is the way you plan it out. And this packing list will have this kind of information, complete information that the sets, if it is pieces, then how many pieces are there in the carton? Here it is, sets. So how many sets are there in the carton? So seven sets in a carton. And how many cartons per pallet? We have written 100. So for each category, we made one pallet. And there are five categories. So we have five pallets. But it is not necessary, depending on what is the quantity, the pallet distribution has to be managed. It was easy to manage here.

That's why we have done it. I hope you have understood these details, which are given in the packing list. And they are quite simple. Many times, the information can be very, very complicated, and it has to be done very professionally. You may have to take the consultation of the professional packers, their know-how on how you have to use. Sometimes it is like this. So it all depends on how complicated the shipment is. And if you need any professional help, you may have to outsource the total shipment management. How many pallets? What will be the packing size, carton size? How will they be packed on the pallet, whether it is shrink-wrapped or it is wrapped?

Mostly for seaworthy packing, the shrink packing and stretch packing are used. And for the standard pallet sizes, the stretch wrap machines are normally available at the ports themselves, the container yard, or the CFS container freight stations, where you stuff your material in containers. Or you can call the professional packing people in your factory to pack the material, make the pallets, and stuff those goods in the factory itself. In which case, the container will be stuffed in the factory and will proceed to the container yard if it is a full container load.

If it is not a full container load, if it is less than a container load, it is generally sent to the nearest CFS. That is the container freight station for consolidation, so that the professional Consolidators will consolidate the material and create the full container load, and then it will go to the container yard for the Gating In process.

This is the process that we use. So don't worry, I'll be talking about this Gating In process in the later videos also. I'll make it clearer to you how it happens, but for the packing list purpose, I gave you this information so that you understand how the packing list shipment distribution is done of the goods in different cartons and pallets. So this is one example I have given to you.

So you are seeing that the header and the footer are almost the same as the commercial invoice, and it is the description and the packing details that are there. And again, depending on how many categories there are of the goods, the packing list itself can run into several pages. So it all depends on your total export shipment and the nature of the shipment. But otherwise, you can see here all the information exporter and consignee. Method of dispatch. Type of shipment. Vessel name. Voyage number. Port of loading. Port of discharge. Country of origin. Country of final destination. Buyer, if not consignee. So here in the commercial invoice, it was the letter of credit information and the insurance policy number, and the LC number.

Those have been omitted. And instead of that, a new column has been created which talks about the packing information. In this column, if the material is hazardous, then you have to declare that the material is hazardous. So this thing can be done here. Similarly, in this additional information, also, if the marks and packing details do not fit into that column, you can put them here also. So here it is just written that the packing instruction please pack appropriately, but it may be detailed information. Detailed instructions also. So generally this area is used for such instructions that are elaborate and the information that is elaborate. Generally, the declaration of the hazardous material should be here.

And you can also put here the details about the international labels that are used on the packs. For example, there are United Nations numbers are there of the different labels. So it comes under the labeling of the export shipment. All your pallets and boxes have to be labeled according to the United Nations Charter of Labeling, especially the hazardous materials. So, for different hazardous materials, there are labeling instructions, internationally recognized instructions that have to be used for labeling purposes. Many times, that has to be done by professional packers. And the details can be added here in this column. So this is how the packing list looks. So I hope you now have a better idea about this packing list. You can download a copy of this packing list from the resource section of this lecture.

This was all about the packing list I wanted to talk to you about. You should also note that many times in the letter of credit case, the Bank also asks for the packing list. Why? Because banks do not deal with the shipment. It deals only with the documents. So, in order to keep a record of the shipment, they will ask for the packing list. Even if it is not mentioned in the letter of credit, the bank may need it for its own records. So a packing list can have many ramifications. So it is always advisable to have the packing list, even if it is not required.

In the next 2 lectures, Dr. Jain talks about the significance and structure of two very important commercial principal documents, a buyer may demand for sure before he pays for the shipment.

Now, let us look at the certificate of origin. This sample again is based on the opening case study of this course of Malhotra Exports, exporting fashion garments to Saint Laurent of Paris, France. So, in this certificate of origin, you can see that the details are quite similar to the commercial invoice, which contains the name of the exporter and the consignee, and the buyer, if not the consignee. Method of dispatch: Sea. Type of shipment: FCL. Vessel name is there. Then the Voyage Number is there. The port of loading is there. The departure date is there. The port of discharge is there. The final destination is there. And if you remember, this particular column was different in the commercial invoice and the packing list.

Here also, it has been kept open. So here are some of the things that are related to the manufactured goods or features of the goods that have to be mentioned here. For example, the garments that are being exported by Malhotra are being exports to Saint Laurent. They have to declare that the garments are azo dye-free. So when you do that, this becomes a very important point for the issuing authority that is issuing the certificate of origin, because the certificate of origin deals with the manufacturing. So any manufacturing feature, like the requirement of the importing country that the garments should be AZO DYES-free, should be mentioned here. Or, for example, there may be, you know, some requirements like pharmaceutical products, wherein the importing country may have a requirement for the technical certificate of the pharmaceutical product approved by an agency in the foreign country.

That means the importing country. So that number, approval number, that certificate number, if it is mentioned here, it will be very, very helpful for the issuing authority, which is issuing the certificate of origin. Such kind of information has to be mentioned here. It can also be the information related to some kind of certifications that the goods conform to the EC certification or the UL certification. So this kind of information can be put here in this open column, which is actually blank, and which is kept blank. And that information can be put here. Otherwise, if you look at the header, it is almost the same as the commercial invoice.

And if we look at the description where the importance is given to the marks and numbers, the kind and number of packages, description of the goods, tariff code, gross weight. So, here you do not need to give a detailed description of the goods. Rather, you have to give the summary. So, marks and numbers, for example, in this case, Jai Hind marks were there. And ah, the kind and number of packages as were mentioned in the packing list, 500 cartons were there. So the cartons were of cardboard, and the general description of the goods is ladies' garments. 2-piece set. Tariff code is mentioned here, and the gross weight is around 6.3 tons. So no details. The summary information has to be put here in this certificate of origin. And once you do that, the same information has to be in the form of a declaration by the exporter.

The same document can be used for the declaration which is here, which says that I, the exporter, understand being duly authorised by the consignor and having made the necessary enquiries, hereby certify that based on the rules of the origin of the country of destination, all the goods listed originate in the country and place of the designated country, which has been mentioned here. So it will be mentioned here that the designated country. So I further declare that I will furnish to the customs authorities of the importing country or their nominee for inspection at any time. Such evidence as may be required for the purpose of verifying the certificate. So this authority has to be declared for the customs people of the importing country if they wish to inspect. Because this particular certificate of origin is targeted to the customs authorities of the importing country, border control. So they have to be given this, ah, right to inspect the goods if they wish.

Here, the designated country has to be mentioned where the goods were produced, manufactured, in this case, in India. So this declaration is the most critical point of the certificate of origin. This declaration can be in a separate form, whereby the declaration form will be referred to as the auxiliary document, and the same format can be used. Now, in the original certificate of origin, which is to be issued by the local authority, which is mostly the local industry body, like the Chamber of Commerce or any nominated body. In case of the certificate of origin, which is not ordinary, which is bilateral or multilateral, as I had mentioned to you, so designated authority will be issuing the certificate of origin, and it will be in the form of a declaration by the authority or the Chamber of Commerce or the industry body, or any other body.

It can also be some association also of the industries, local industries. It declares that the undersigned certifies, based on the information provided by the exporter, that to the best of its knowledge and belief, the goods are of designated origin. That means in this case designated origin is India declared by the exporter, production, or manufacturing point of view. This is the declaration which is given by the issuing authority, the place and date of the issue, in this case, Mumbai. The signatory company, which is issuing in this case, is the International Chamber of Commerce. The name of the authorized signatory is given here, and the signature is there. Maybe a stamp is also here.

And many times, these documents, like a certificate of origin, are on the letterhead of the issuing authority. Or they have a standard format like this, along with the logo of the Chamber of Commerce here many times. Or it may be just the simple certified origin of this type, this format simply stamped and signed. So this is the most typical certificate of origin as per the ADS. That is the aligned document system, which is commonly used in several countries that follow the ADS. That is the aligned document system. I hope this, uh, sample of this certificate of origin gives you a fairly good idea about the different entries that are to be made in the certificate of origin. And what is the significance of these entries, and how certificate of origin issued?

In the next lecture, Dr. Jain discusses this complex document, which is called a quality certificate.

Welcome back to the new lecture in this course. So in this lecture, I'll be talking about the quality certificate. So quality certificate is invariably required by the overseas buyer. And it is mostly it is there in the LC documentary conditions, because the buyer wants to be sure that the goods which are being exported are of the desired quality or the quality that has been agreed. So this certification is given by a third party, and there is no standard structure or standard format of quality certificate. So there are different types of quality certificates depending on the item. It can be in the form of a test report. It can be in the form of a certification given by a representative of the buyer.

It can be done by an international testing agency. So there are different ways of getting this quality certificate. And generally, in a slightly more complex and larger export order, a very detailed clause is given for this kind of quality certificate. How the inspection will be done. What will be the form of the quality certificate? What will be the process of doing this kind of inspection? So sometimes it is explained even in the form of an attached annexure in the export contract.

For mainly technical goods, it is very very elaborate type of testing procedure. So I will give you one sample of the quality certificate. And I will try to explain to you what it means and what the significance of this quality certificate is. So I will show you two certificates that are related to our example. That is the exports of readymade garments by Malhotra exports to the party in Paris. So, although this test report is for another party. But these are the common quality certificates that are generally required by international buyers. So apart from the inspection certificate, which basically looks at the shipment to test whether the goods are in Conformity with the sample, which was agreed between the buyer and the seller. The other quality certificates relate to the human safety angle of the garments, that whether the garments are safe for humans. So this kind of test report, done by SGS, is given here.

This particular quality test relates to the safety of the textile garment for humans. So it describes the name of the exporter who has given the sample to SGS for color fiber contents. The name of the applicant, the sample receiving date, and the date of the performance of the test. And what are the tests that are performed? 1, 2, 3, 4, 5, and 6 tests were performed. Whatever the results are have been attached along with this certificate. So this is the sample and the example of the quality test done for the safety angle of the textile. Another relevant certificate in this case refers to the certificate that certifies that the garments are azo dye-free. So let's see that. So these are the test results. One example of the azo dyes free quality testing and certification, where the different test methods have been used, and the results are given. ND that is not detected.

You can see that all these methods have been used and which says that the azo dyes are not detected. So this is the type of certificate that is normally employed to find out whether the garments contain azo dyes or not. So this is another example of the quality certificate. And there can be an inspection certificate also wherein the SGS or any other third party will be testing the random samples from the shipment to find the conformity with the sample submitted, which means the sample that was agreed upon between the buyer and the seller, or the description. Based on the commercial invoice, whatever has been mentioned in the inspection, the third party can test whether the shipment conforms to the description or the sample that is submitted. So these three types of quality certificates may be required. There may be many other types because quality certification is a very complex procedure.

Depending on the country of destination, there can be many, many different types of requirements of the buyer as well as the importing country's Government. For example, for textiles exports to Saudi Arabia, there are certain mandatory tests that are prescribed by the Saudi government. This whole quality certification can be a very tedious and complicated process, depending on the country of destination. So this whole description of the quality certificate should be detailed in the export contract threadbare. So if it is not there in the export contract, then through written emails, the exporter should clarify with the buyer before accepting the letter of credit what the test requirements are. Quality test requirements?

What is the procedure expected by the buyer, and if there are any mandatory requirements of the importing country, all those things have to be clarified. So this was all I wanted to talk about the quality certificate, although a lot can be discussed about the quality certification because there are so many complicated requirements depending on the product, depending on the industry, depending on the practices, which differ from one country to another. So this quality certificate matter has to be very clearly understood, depending on what item you are exporting. You have to understand exactly the requirements of the buyer, what kind of quality certificate is required by the buyer, as well as the regulatory requirements of the importing country.

This information has to be gathered very meticulously. I am very sure that these lectures are giving you a fairly good idea about the type of documents, the type of input data that is to be put in these documents, and what is the significance of these documents. In all these lectures that I have taken in this section, you will find one sample copy of the respective document in the resource section of that lecture. So, in every lecture, you should look into the resource section also. That will be very, very useful.

In export documentation and procedures, transport documents play the most important role. These documents are generally negotiable at intermediary banks in the case of a letter of credit. Without the original copies of these documents, generally, banks do not release payments against a letter of credit. These documents also help in deciding ownership transfer and responsibilities in the case of an incident involving transport risks and perils. Moreover, carriers mostly deliver goods to the buyer based on a valid transport document. Let us start with an overview of these transport documents.

Friends, welcome back to the course. So your progress is very impressive. You have now learned many, many commercial documents, the so-called principal commercial documents, or the letter of credit documents, or the main documents, main shipping documents, which are also called. So one by one in these lectures, we'll be taking up various documents, even those documents which are not very, very typically used. We'll try to take up some of those documents also, because you will at least have an idea that if you require such documents, what to do. So that will be done in this course. In this particular lecture, I'll be talking about the transport documents. The documents that are actually negotiable or transferable, or which are generally required by the buyer to take possession of the goods. So these transport documents are not created by an exporter, unlike many other documents.

Like for example, a certificate of origin is issued by a third party, that is, the authority of some agency. Similarly, transport documents are issued by the shipping company or the airline. So if the goods are being transported by sea, it will be issued by the shipping company. If goods are being shipped by air, it will be issued by the airline. So the complex nature of these transport documents, I will try to make it very simple for you. I will try to explain to you the difference between the transport document by sea and the transport document by air. So, what these documents can do, what these documents cannot do, and what precautions you should take while making sure that you get the right transport documents? Because this is the most important document for the buyer to get possession of the goods.

Before I share with you some of these documents, let me explain to you that the transport document, which is issued by the shipping company for the mode of transport by sea, is called a bill of lading, a very commonly used transport document, because 90% of the world's cargo, it is said, is shipped by sea. And the next most popular way of exporting goods is by air. And the transport document, which is issued by airlines, is called an air waybill. So there are certain technical differences, apart from the fact that they signify a different mode of transportation. There are some technical differences also between the bill of lading and the air waybill, which I will explain to you.

And in present times, what is happening is that there are freight forwarders who are providing the complete services, door-to-door services, or warehouse-to-warehouse services, or place-to-place services like courier companies. So these freight forwarders or the operators are generally referred to as the multimodal transport operators, because they take the goods from one point and deliver to the desired point, and in between, there can be different types of modes of transportation. It is possible that the transportation type, like truck, railways, by sea, or even by air, may be using multiple modes they are using, and in such cases, these operators can also issue one transport document, which is called the Combined Transport Document (CTD).

A combined transport document means it is combined for any type of mode of transportation. So increasingly the buyers are agreeing to accept the combined transport document, or so-called CTD, in the letter of credit documentary conditions also. So you can check with your buyer if he is agreeable to accept the CTD instead of the bill of lading. It can speed up your work, and it can make your life much simpler, especially when you are transporting goods through such multimodal transport operators. One example I will give you of the multimodal transport operator in India. One of the examples is CONCOR Container Corporation of India.

And this Container Corporation of India is a state-owned company that is the Government of India owned company. But there are private players also from India, as well as from abroad. From India, we have, for example, companies like the MTO being run by Reliance Group or the MTO being run by Adani Group. And we have several Chinese multi-modal transport operators in India who are operating from different dry ports as well as the wet ports. So let us look at one of the examples of the bill of lading. We will start with the bill of lading. Then we will talk about the Airway Bill. And we will also talk a little bit about the combined transport documents. And we will also discuss some of the technical differences between these documents. Let us see that.

Then, friends, if we talk about the transport documents which I had mentioned to you, which are the principal commercial documents and part of the Pre-shipment documents and the negotiation documents, the most important one is the bill of lading. It is also called an ocean or marine bill of lading because it refers to the shipment made by sea. So it is important because 99% of the world's cargo by quantity and 95% of the world's cargo by value is transported by sea. So that is why you will find that the reference to the bill of lading is more than the reference to the air waybill.

Although the use of air shipment is increasing year by year, the volume and the value of the shipments being made by air are increasing as the advancement of technology is making air transportation cheaper and cheaper. So, air waybills are becoming important in the present times. And then now, as per the Incoterms 2020, which talks about the transportation terms. Delivery terms from place to place. Which means from the warehouse of the exporter to the warehouse of the importer. You need the services of an organization, which is a type of courier type of company. It is called MTO, Multimodal Transport Operator, which picks up the goods from the warehouse of the exporter and uses different modes of transportation in the process of shipping the goods from the exporter to the importer.

And in this journey may go through a land route or rail route, or a sea route, and even in between, some part may be by air also. So the MTO takes care of the multiple types of transportation, and that is why it is called a multimodal transport operator (MTO). And he generally does not issue the bill of lading. Rather, it issues the combined transport document, and the use of the combined transport document as per the modern types of letter of credit is becoming more and more popular and acceptable. So, in which case, the moment combined transport document has been issued by a reputed multi-modal transport operator, generally, depending on the export contract, the buyer is ready to accept the combined transport document also, in which case the negotiation documents will contain combined transport document CTD instead of bill of lading, and the buyer itself can use the original combined transport document to claim the goods from the multimodal transport operator.

And in the case of road shipment, where the main carrier is using road transportation, the main transport document, which is used in that case, is called the consignment note. And in the case of rail transport, railways transport, as a main carrier, it is the railway receipt, RR, also called the railway receipt. So these are some of the very, very important transport documents. And it should be understood, as I had already mentioned to you, that a bill of lading is a negotiable instrument, while an air waybill is not a negotiable document.

What is the meaning of this? As I have already mentioned to you that since the A transport is very fast, and the possibility of the negotiation documents along with the transport documentation in the original form, reaching through the negotiating bank and the issuing bank, and then to the buyer. That is a very circuitous route. The possibility of reaching the air waybill in original form, via banks to the importer or the consignee is very rare, and to avoid the over congestion of the pending goods on the different airports of the world, it has been made possible and necessary, actually, that the importer or the consignee can claim the goods using the non negotiable copy, the fax copy or the email copy, or even a photocopy of the air waybill.

Until he has got the airwaybill number and he can produce the identity, the bona fide identity of the company, or the person who is mentioned in the commercial invoice as the consignee, and on the airwaybill as the consignee. After due diligence, the carrier is authorized to hand over the goods even without the original airwaybill. So that is the reason an air waybill is not a negotiable document.

A Bill of Lading is the main transport document in sea shipment. It is a negotiable document. What is that? Let us learn that in the next lecture.

Okay, friends, now let us talk about the most important transport document, that is the bill of lading. A bill of lading is the king of transport documents in the international transportation of goods. So it has a very unique character. It is a negotiable instrument, unlike any other kind of document for any other type of mode of transport. So this is the document of title, which means whoever has the bill of lading is the owner of the goods. For example, until the bill of lading transport document is with the bank, then the bank is the owner, legal owner of the goods. The moment it moves from the bank to the importer or the consignee, then the importer and the consignee become the owners of the goods.

The possession of this document defines the ownership of the goods. So that way it has got three functions. First of all, it is the receipt of the shipment by the carrier. So the carrier is issuing the bill of lading as a receipt. Yes, the shipment has been received by the carrier. And the carrier is taking all the required actions to carry the shipment from the port of loading to the port of discharge.

It serves as the receipt of that journey from the port of loading to the port of discharge. And then secondly, a bill of lading is a contract between the carrier, the main carrier, and the exporter. So this contract defines all the onward journey of the shipment. So, depending on the clauses and the conditions and the status of the bill of lading, this serves as a contract between the exporter and the shipping company. In case the freight is to be paid by the importer, then it is a contract between the importer and the carrier. So it depends on the export contract. What are the modes of commercial terms, International Commercial Terms, which are used?

Accordingly, the parties to the contract will be there for the bill of lading. And then finally, its third function is that it is the document of title, which I have already mentioned to you, that the possession of the bill of lading defines the ownership of the shipment. So when it is in the possession of the exporter, it is the property of the exporter; when it is in the possession of the bank or any other party, the ownership changes. And for this reason, it is negotiable. That is why it is called a 'to order' bill of lading.

And there can be other types of bills of lading also possible. And of course, the non-negotiable copies are there. but depending on the contract, in certain cases it can be a conignee named also, in which case it is non-negotiable. It means the consignee's name is there. It is named to the consignee, so ultimately the goods will be owned by the consignee. And if it is a consignee name-based, even the non-negotiable bill of lading can be used by the consignee, who is named in that kind of bill of lading, to claim the goods, like in an air waybill. Because the air waybill is also the consignee's name.

After due diligence and the check of the identity of the consignee, the carrier is authorized to hand over the goods either in an air shipment or in a sea shipment. If the consignee's named bill of lading is there, then it is possible that the goods can be claimed by the consignee, even without the involvement of the bank or any other third party. But that depends on the arrangement between the buyer and the seller.

That is the shipping line.

The name, details, address, contact details, and contact person.

All this information is given here.

Then, free carriage by truck, as was mentioned in the commercial invoice, is also.

Place of receipt of the goods: JNPT, Jawaharlal Nehru Port Trust in Mumbai.

The vessel name is given there.

Voyage number is given there, as was given in the commercial invoice, port of loading: Mumbai.

The additional information contains some details about the shipment, which can be obtained from the packing list.

In this case, it is five pallets, each containing 100 cartons, cardboard cartons, and the volume of each pallet is five cubic meters.

Then the details of the port of discharge are given here.

Place of delivery at the destination port, that is, Paris. The final destination is Paris, France.

This information is provided here. And marks and numbers in this case are given there. Kind and number of packages.

Cartons, 100 cartons.

A description of the goods for each pallet is given here.

Measurement.

Gross weight.

All these details are given here.

The total weight is given there.

That is approximately 6.3 metric tons and 25 cubic meters.

There seems to be a printing error.

But don't worry, I will explain to you what is written here.

Here, it says the total number of containers or other packages, or units in words.

It writes here one container FCL, which is container full container load.

Then, in the next row, it asks for the container number.

What is the number of the container?

In this case, it is csqhI and whatever the number is there.

Then it asks for the seal number, which is the customs seal number.

After customs has verified the goods, and the goods have been appraised, customs has already issued the LET Export.

You will have the seal number.

That is mentioned here.

Then the next column says the size and type of the shipment.

Here it writes 20ft container, steel container, dry cargo FCL.

This is how it is to be written here.

This information is given here.

The number of original bills of lading.

In this case, it is three.

Which means the shipping company will be issuing three original copies of the bill of lading.

Then the Incoterms 2020 is given here, which is as per the commercial invoice, that is FOB.

And the freight is to be payable at Paris.

It is written here, and the terms of payment are freight charges on a Collect basis, which means freight collect, or it is also called the To Pay basis.

This bill of lading is on a To Pay basis.

If the payment had already been made by the seller, this bill of lading would have been categorized as Freight Paid.

But in this case, it is Freight Collect.

Then shipped on board is given there, which means this bill of lading specifies that the date of the loading of the goods on the ship is given here, and this is actually the bill of lading date.

This has to be before or on the latest date mentioned in the letter of credit.

If this date is beyond the latest date given in the letter of credit, then this bill of lading will be regarded as a stale bill of lading.

Stale means the date of the shipment is beyond what was allowed by the buyer.

This has to be understood.

Then, this column is given here for any terms and conditions that may be imposed by the shipping line.

The place and date of issue are given here.

Usually, it will be 1 or 2 days later than the Shipped On Board date.

Signatory company, name of authorized person, and signature.

These things are already given. Many times, when the goods loaded on the ship are damaged, or there is a problem, that will be reflected by the captain of the ship on the MR — that is, the Mate's Receipt.

That will be mentioned here.

In such a case, if there is any damage, then this bill of lading will not be clean.

You remember, I had told you that the bill of lading should be a Clean On Board Bill of Lading.

Clean means that while loading, when the goods are already loaded, the captain of the ship should confirm that there is no damage to the goods.

Then it will be regarded as a clean bill of lading.

Whether it is clean or dirty can be marked here in these terms and conditions.

The concept of this MR is like that when goods are received by the captain of the ship on board, he or she does not issue the bill of lading.

Rather, they issue an MR, that is, the Mate's Receipt.

A Mate's Receipt is proof that the goods have been loaded, and also proof of whether the goods loaded are damaged or not.

Once you receive the MR, you need to enclose with this MR the NOC from the customs and the port authorities to ensure that you have already paid any dues that are there to the Customs and Excise department or border control, and the port authorities or the container yard.

With these three documents, you have to approach the shipping company. On the basis of these documents only, the shipping company will issue you the bill of lading.

This is the procedure that is followed in order to ensure that the bill of lading is not issued before all the dues are cleared.

That is the purpose.

In the next lecture, I will talk to you about the other variants of the bill of lading, as well as the air waybill, which is the transport document for shipment by air.

Yes, there are different types of B/L. Let us learn about some of the more popular ones.

There are different variants of the bill of lading. The most common being the on board or shipped bill of lading, which signifies that the goods have been loaded on the ship, and this is the most common type of bill of lading, transport document. There can be another bill of lading, which is called received for shipment, which means it is free alongside, FAS, which means the goods have not yet been loaded, and the bill of lading has been issued. In certain cases where the arrangement between the exporter and the importer is like that the exporter is not obliged to load the goods on the ship, and that loading is to be arranged by the consignee or the importer. In that case, the LC terms will define it, and the importer will accept it, and the bank issuing bank will accept it, that the bill of lading is received for shipment, and that is the free alongside.

Then another very important part of the bill of lading is that it also defines the status of the shipment which is received on the ship, whether it is in good order and condition, in which case it is a perfect shipment, in which case the bill of lading will have this marking on it, and the status of bill of lading would be clean bill of lading. Clean means that the shipping company certifies that the goods which are received for shipment are in good order and condition. And if they are not in good order and condition, the status of the bill of lading will not be clean; it will be dirty, or it is also called a claused bill of lading, which means that the shipment that has been received is not in perfect condition.

There are certain kinds of discrepancies, or certain kinds of damage or shortage, or leakage. So, some kind of problem is there with the shipment, and in which case the bill of lading will still be issued, but it will not be a clean bill of lading. So, for example, if the letter of credit says that the bill of lading should be a clean bill of lading on board bill of lading, then it is necessary that the goods are received by the shipping company in good order and condition and on board. Now there is another variant of the bill of lading, which is called a stale bill of lading, which means that the goods have been received after the due date, which is mentioned in the commercial invoice. So commercial invoice has a due date.

The last date by which the shipment has to be affected, and if this date has been crossed when the goods have been received by the carrier, as certified by the captain of the ship, in which case the bill of lading, which will be issued, will be called a stale bill of lading. So the status of the bill of lading will be stale. bill of lading. Then there is another variant of the bill of lading, which is called a through bill of lading. So this kind of bill of lading is issued when the shipment is made by the carrier in a multi-modal transport mode. So there are different types of stages of the goods in the main journey of the transportation of goods, where different types of modes are used, in which case the bill of lading, which is issued by the shipping company, the main carrier is through bill of lading.

And then there is another very common variant of the bill of lading, which is called the transshipment bill of lading, which means the bill of lading has been issued by the shipping company with the status that the entire journey of the goods may not be on the same ship, so the loading and unloading of the goods may happen during the journey from one ship to another on this transshipment point, which may be a third country, which may not be the country of discharge of the goods. It may be a third country, where the transshipment will take place of goods from one ship to another will take place.

This identifies that situation, and the type of bill of lading which will be issued in this situation is called trans transshipment bill of lading. Then we have some other types of variants of a bill of lading, which are called house or freight forwarders' bill of lading. It is mostly for the purpose of the internal use of the freight forwarders, and generally, it is used in multimodal transport operations where the requirement of a bill of lading is not there, and the combined transport document serves the purpose. And it can also be the charter party bill of lading. This is mostly the case when the ship is completely chartered, or a part of the ship has been chartered for the shipment.

This is called a Charterparty bill of lading. And then there are two variants of the bill of lading. Most of the bill of lading. Freight paid or freight to pay, which is also called freight collect. So, freight paid means it signifies that the freight of the shipment has already been paid to the carrier, either by the Exporter or by the importer. So if freight has been paid, the bill of lading will be freight paid. And if the freight has to be collected at the port of discharge, then the status of the bill of lading will be freight to pay.

A bill of lading is issued by the shipping company only when the captain of the ship has received the goods, and the status has been identified and fixed by the captain of the ship, because he is the authority on the ship, and a receipt has been issued by the captain of the ship, which is called the Mates' Receipt. So, MR MR it is called in short form. So mate's receipt, along with the no objection certificate from the port authorities and the no objection from the customs authorities obtained by the exporter, along with the mate's receipt. These three documents help the exporter to obtain the bill of lading from the shipping company, the carrier, main carrier.

In the next lecture, Dr. Jain talks about the main transport documents in an air shipment.

And friends. The air waybill, as I have already explained to you, is a non-negotiable document. It is not possible to have it as a negotiable document because of the nature of the transport, which is so fast that the goods reach much faster than sea transportation, and therefore air waybill can only be consignee-named, so it is always non-negotiable.

Normally, it is in three copies. The green copy is for the carrier, the pink copy is for the consignee, and the blue copy is for the shipper. Air waybill is also a very important transport document, and it has its own peculiarities, as I have already mentioned, and it differs from the bill of lading in many ways, which I have just explained to you. So this is the sample of the air waybill issued by this, my Freight Forwarding Company Limited, based in Malaysia. The exporter, the shipper's name is given there from Malaysia, the consignee's name is given there, and all the names and addresses, and telephone numbers. All these things are given here. And the air waybill says that it has got three copies, and all three are originals and have the same validity. So all this information is given here. The issuing carrier's name is given there. The city is given there.

My Freight Forwarding company in Malaysia. And if the agent has an IATA code, it could have been given their account number, could have been given there, the account information could have been given there. The airport of departure is given there Kuala Lumpur International Airport. And it is being shipped to Frankfurt, and the airport information is given there. Frankfurt International Airport. The amount of insurance is nil here. Here, the declared value of the carriage has to be given. Declared value of the custom is to be given there, here. Here, the Number of pieces. Gross weight in kilograms is given there.

Then rate as agreed. Total, as agreed, has to be mentioned here. Nature and quantity of goods. Shipper's loads to count, foodstuff, and the cubic volume have to be given there. So, the volume dimensions could have also been mentioned. So here you can find the total quantity, total gross weight, and the date is given there. The place of issue and the forwarder's name are given there. So this is a very simple format for the air waybill.

In a constantly changing world, where advancements in the movement of goods are helping reduce costs and increase the safety of shipments, multimodal transport is becoming more and more important. For a truly warehouse-to-warehouse shipment of export goods, a combined transport document is becoming more and more important and is also being accepted by banks in many cases.

Then I talked about the Combined Transport Document, which is normally issued by the multimodal transport operator (MTO). We have several examples of multimodal transport operators around the world. Every country, big country, trading country has its own MTOS, which are international. There are a lot of MTOs that operate internationally. In India, also, there are also certain very well-established multimodal transport operators like Container Corporation of India or Adani and Reliance, which have their own multimodal transport operations. So these multimodal transport operators normally use containers and different types of units for carrying the goods. And they take the goods. And the entire journey is generally optimized for time and cost. And they really add a lot of value in the overall export operations.

They provide a lot of convenience, similar to the type of courier companies, courier companies, which take different types of goods, like DHL and many other similar types of transport logistics companies. There are companies that only deal with big cargoes, bulk cargoes, or consumer goods being exported from one country to another. So these logistics companies provide multi-modal transport operations and warehouse-to-warehouse logistics. So there the combined transport document (CTD) has become very, very common and popular and an acceptable instrument in international trade. And this combined transport document complies with the FEDAI rules.

Normally, the combined transport document operations are accompanied by the undertaking by the MTOs or also it is CTOs, Combined Transport Operator, that the marine bill of lading, if there is any in the whole process, or air waybill if it is necessary, will be produced to the shipper or the consignor. So if the consignor does require, in the letter of credit, a bill of lading, and it is a mandatory condition for the original bill of lading or the air waybill, combined transport document issuer which is the CTO or the MTO, as per the FEDAI rules, they are obliged to provide and take the undertaking for the bill of lading as and when it is received to them, they are obliged to deliver the same to the shipper.

Let us wind up this section in the next lecture.

This was all about the different transport documents we discussed, about the bill of lading, and we talked about the airway bill, and the difference between the airway bill and the bill of lading should be very well understood. The airway bill is not a negotiable instrument. If it is a negotiable instrument, the time taken to reach the original air waybill to the buyer through the banks will be so much that it may impact the congestion of the goods at the airports, because air shipment is very, very fast. So, in a negotiable document like a bill of lading for a sea shipment, it is possible to move the original documents to the buyer through banks, and the buyer only gets possession of the original documents, which is not possible in the case of an air waybill. So for this reason, an air waybill is just the document of receipt of the goods.

Even an email copy of the air waybill is enough with uh the buyer to take possession of the goods by showing the identity. So basically, an Air Waybill is more like a consignee-named transport document so that the consignee can take possession of the goods just by giving their identity proof. So this difference should be well understood. For the transportation of goods by road through trucks from one country to another country, for example, the goods are transported from India to Bangladesh by road, by trucks, through the Benapole border, or by train.

Many countries in the European Union, for example, supply goods from one country to another by train. Even in South Asia, the goods are supplied from one country to another by train, for example, between India and Nepal, between India and Bangladesh, India and Pakistan. So the transportation by train is also there. So the documents, for example, similar to the bill of lading and air waybill by train, are referred to by many names in different countries. For example, in India, it is called a RR railway receipt. So it also works like any other transport document. The same is the case of transportation by road, where it is called LR, for example, in India, which is the lorry receipt.

The names are different, but the purpose is the same, whether the transport is by sea, by air, by road, or by train. The understanding of transportation, the requirement of transportation, plays a very, very important role. Every other type of transport document requires a similar kind of treatment, as the nature of the transport requires it. So I hope this section was able to give you a conceptual knowledge of how the transport documents work, why they are so important. So in this section, I hope you have become more and more confident about the export documentation.

You got the logic behind it. You understood the whole game plan. Why documents are there, what they signify, and how they work. This thing is now becoming more and more clear to you. So keep watching these different sections. You will learn a lot about export documentation and procedures. You will become confident, and you will be able to impress your overseas buyers with this knowledge and save a lot of money for yourself, and increase your business.

Welcome to this new module on transport risk management and related documents in exports. So this module builds on your understanding of the transport documents, introducing the vital topic of managing risks associated with cargo movement, both domestic as well as international. That means inland transportation as well as main transportation, which is by sea or by air. Before we move forward, let us just recap what you have already done in this course. Until now, you have already covered these modules in this course, starting from the introductory module and then the opening case study. Then we discussed module two and module three.

And the last module was module four, where we discussed different transport documents, starting with the bill of lading, which is used for sea shipment, and its variants. So we discussed different variants of the bill of lading and their characteristics, features. An air waybill, which is used for air shipment, its features and then combine transport documents, which are used for multi-modal transportation. We also talked about similar documents for the transportation of export goods through road and railway transport. I hope that now you must be feeling more confident about all these documents that we have already covered in various modules, especially in module four. And these learnings were really useful to you.

If so, what about your comments on this course? Up till now, you may now rate and review the course if you have not yet done. It will help me to make this course even better. Thank you for that. Now, in this new module on transport risk management, our emphasis is on understanding marine insurance, the different types of coverage, and the documentation required to safeguard the interests of both exporters as well as importers. That's our idea. So by the end of this new module, which we have just started, you will be able to understand the concepts and necessity of marine insurance in exports. You will be able to identify key risk points during cargo transport and how they can be managed.

You will be able to distinguish between different types of insurance coverages: Minimum, optimum, and maximum coverages. You will be able to interpret Incoterms, international commercial terms, with respect to the insurance obligations and documentation. And finally, you will be able to prepare or verify key insurance documents required during the transport process.

That's the idea of this particular module. Now, let us look at what are the key topics that we wish to cover in this particular module. Starting with Introduction to transport risks in exports, then understanding marine insurance, what it is, and Incoterms and insurance obligations. Types of insurance coverage, marine insurance documentation. Best practices in transport risk management.

And we will also take up certain practical, real-world examples. And we will finally conclude, and we will find out what the takeaways are for this particular module. So that is our plan in this particular module. Let's go into this module.

To protect the cargo owner, an insurance cover is necessary while the cargo is in transit from the consignor’s warehouse to the consignee’s warehouse. The carrier and other intermediaries, such as the port authorities, warehousing operators, C&F agents, etc, have only limited liability during the movement of cargo, and therefore, they cannot be held responsible in the event of loss due to a situation that is not in their control, such as man-made accidents, natural calamities (Act of God), etc. A detailed discussion on the different types of cargo insurance coverages is given in the next few videos. Let us start with an introduction to the subject of transport-related risk management in the next lecture.

Now starting with the first topic of this module, which is Introduction to Transport Risks in Export. We can start by saying that exporting goods across international borders involves the movement of cargo through several modes, which may include road, rail, air, and sea. Each stage of this journey introduces potential risks that can compromise the integrity, value, or timely delivery of the shipment. Understanding these risks is the first step towards effective risk management and insurance planning in export operations. And in this module, we are focusing on the transport risks basically. So let us look at the different types of transport risks in exports. There can be various types of risks that can affect cargo during transit. These risks vary in nature and severity depending on the route, destination, handling, and mode of transport.

The very first type of very basic type of risk that can be seen in the transportation of goods is physical damage. Breakage, crushing, leakage, spoilage due to mishandling, improper packaging, or even accidents, physical damage can happen. If you take the example of a fragile item that may break during rough sea passages, perishable goods may spoil due to temperature variations. These are all examples of physical damage. In order to reduce physical damage, some of the very common strategies include proper packaging, using pallets and crates, and selecting reliable carriers. These can be some very basic strategies to mitigate the perils of physical damage. Another very common transport risk in export is theft and pilferage. So loss of goods due to theft during transit, especially at storage points, as well as en route.

These thefts and pilferage can happen. For example, high-value electronics stolen from a container in a port warehouse are very common. High-value items are very much prone to stealing by bad elements. In order to mitigate these kinds of risks, very common strategies that are generally employed include tamper-proof seals, secure containers, GPS tracking, and insurance coverage. Now, another very common type of transport risk in export refers to the delay in transit. so unexpected delays caused by customs clearance may be one example, or port congestion, or some kind of strikes, or some kind of main carrier issues, which can be in sea as well as in air. So things like road closures due to labor unrest or bad weather can also delay vessel departure. So this is one example. There can be many different situations for delays in transit.

In order to mitigate such kind of risks, common strategies that are generally used include buffer time in delivery schedules, using reliable shipping lines, and contingency planning. So this is another type of very common transport risk in exports. Another type of transport risk in export may be related to the weather. So, weather-related risks are also very common. Damage or delay due to natural elements such as storms, heavy rains, or snow. So, for example, containers shipping containers exposed to seawater during a storm, causing rust or damage to the packaging. This is an example of weather-related risks. Some of the common mitigation strategies for weather-related risks include using weatherproof packaging, proper containerization, insurance for acts of God, things so-called force majeure. So these are some of the mitigation strategies for weather-related risks. Another very common type of transport risk in export is with respect to war, political instability, or piracy. Now, disruptions due to, for example, armed conflicts or some kind of sudden sanctions, civil unrest, or piracy on key shipping routes. So these are the possibilities of war, political instability, or piracy risks.

For example, piracy in the Gulf of Aden or sudden political unrest in that area, blocking customs operations, is one example of such a kind of war, political instability, and piracy risk. Some of the common mitigation strategies used for war, political instability, and piracy risk include monitoring geopolitical updates, avoiding high-risk routes, and using war risk insurance. So these are some of the very common mitigation strategies that exporters use for war, political instability, and piracy risks.

Now, let us look at some of the risk exposure points in the export journey. Risks can arise at multiple stages of the cargo journey, from the origin of the goods to the destination of the goods. Being aware of these critical points helps in designing better insurance and operational strategies. So, one of the very important exposure points for the risk is from the warehouse to the port. That is the inland transportation. So if we talk of this particular exposure point from warehouse to port, we are talking of all types of modes, including road, rail, or inland waterways. And the types of risks which are possible in this particular stage of the journey include accidents, cargo shifting during stops, or delays due to roadblocks or inspections. Very common documents, which are very important to mitigate many of such kinds of risks in this particular exposure stage of the whole journey, include receipts, inland waybills, and local transport insurance. These documents can be very helpful in mitigating this particular stage of the journey. Then, another stage or exposure point in the export journey is loading and handling at the port or the airport.

In activities like containerization, crane lifting, or storage at the terminal, the risks are much higher in such kind of activities during this particular stage of the journey. So types of risks that can arise in this particular stage of the journey include mishandling by port workers, damage from mechanical equipment, or misplacement of containers, and many more. Some of the very common mitigation strategies that can be used to mitigate risk in this particular stage include proper supervision, hiring licensed logistics operators, and port insurance. So these are some very common types of strategies that are used. And if we talk of the stage of this journey that is very, very important, that is the international transport, either by sea or by air.

Generally in international transportation we are using, for example, container vessels or air cargo crafts, or Roro ships, and many different types of ships, are there, tankers are there, the kind of risks that are very common in this particular stage of the journey, including storms, accidents, piracy, container loss at sea, sometimes pressure changes in the air transport, especially if we talk of air transportation. Very important documentation, which can be very helpful for mitigation of risks during this particular stage, includes a bill of lading, in case of sea transportation, or air waybill, in case of air transportation, or marine, or air insurance policy. These are some of the very important documents that can be really helpful to mitigate risk in this particular stage. Now, another exposure point or stage of the journey where the perils can happen during transportation refers to unloading and destination port handling.

Activities like for example, discharge of cargo, customs checks, or temporary storage, and many more situations can occur in this particular stage. So risks of this type can happen, things like theft, misrouting, or delays due to documentation issues. Some of the very important mitigation strategies that are commonly used in this particular stage include accurate labeling, destination insurance, engaging a reliable freight forwarder, and similar types of strategies that can be used. Then, the final delivery to the buyer is the stage where risk can also happen during transportation. So here, basically, we are talking of local transport of the goods in the importing country, generally by road. But there can be other modes also.

There can also be inland waterways, for example. So, types of risks which are very common during this particular exposure point or stage of the journey, include things like theft, poor road conditions resulting in physical damage, or local unrest or protests in the country of destination. Whose responsibility is there during that stage will depend on incoterms like Incoterms, like DDP or EXW. So it all depends on what the Incoterm is, and accordingly, responsibility will be fixed for any risk during that time. But again, the local documentation there can also be very helpful in this particular exposure stage.

What we can conclude in this particular lecture is that transport risks are an inevitable part of international trade. With proper planning, insurance, and documentation, it is possible to minimise the impact of such risks. So exporters must evaluate both the type of goods and geographic route to assess the risk levels at each stage and prepare accordingly. That's why this particular lecture was meant to give you an idea that what are the different points that are possible stages which are possible in the journey where such kinds of and what types of risks can happen during that part.

If you have complete holistic knowledge about these stages, planning is very much possible. So this foundational knowledge of this particular lecture, which I took today, sets the stage for deeper discussion on insurance coverage and documentation in the next section. In further lectures in this module, I will be discussing these kinds of insurance coverages and documentation in more detail.

In the next lecture, Dr. Jain introduces the concept of so-called Marine Insurance.

Welcome back, friends. Now, in the second topic in this particular module, let us talk about understanding marine insurance. What is marine insurance? What is the concept behind marine insurance? So marine insurance plays a critical role in international trade by providing financial protection against the loss or damage of cargo during transit. Whether goods are shipped by sea by air, or by land, marine insurance is the mechanism exporters and importers rely on to manage and mitigate transport-related risks. So let us try to understand the definition, the meaning of this marine insurance. We can say that marine insurance is a type of coverage that protects goods, ships, and other cargo-related assets against loss or damage during transportation, whether by sea, by air, by road, by rail, or inland waterways, or any other mode, whichever may be there. Though historically rooted in ocean shipping, the term marine insurance today broadly includes all types of international transit insurance, whatever the mode may be.

If we talk of the scope of this marine insurance policy or this insurance in general, marine insurance policies typically cover things like physical damage, partial or total loss of cargo due to accidents, maybe mishandling or environmental factors, or theft, pilferage, and non-delivery of goods, or war and strike-related risks, with specific endorsements on the policy. General average contribution. What is this general average contribution? It is nothing but the shared loss among all cargo owners if the vessel sacrifices part of the cargo, or maybe sometimes the whole shipment, to save the vessel or the voyage. So if we talk of the modern coverage of any marine insurance policy, it includes sea freight, which is basically a traditional mode of transportation that we call traditional marine coverage, or including air freight also, if the goods are sent by air.

Or inland and multimodal transportation, in which case it is called the combined coverage from warehouse to warehouse, for example. So we can very confidently say that this term, marine insurance in export still applies even when the mode of transport is not exclusively maritime. Marine insurance is not just an optional safeguard; it is a critical risk management tool that protects all the parties involved in international trade and international trade transactions. So what type of protection does it provide? Let's try to discuss that. First of all, it protects against financial loss. Cargo can be damaged, lost, or stolen at any point in the journey. Without the insurance, this type of insurance, the exporter or importer will have to bear the complete cost of the loss. Secondly, it serves as compliance with trade terms.

That is the international commercial terms. Incoterms. Many of the incoterms, like CIF, CIP, make marine insurance a contractual obligation, requirement. Seller or buyer must provide insurance depending on the chosen and agreed Incoterm in the contract. Thirdly, it facilitates financing and credit. Banks and financial institutions often require insured shipments before issuing a letter of credit or financing the trade for a particular transaction. An insurance certificate may actually be a part of the complete letter of credit set, for example, or any other banking instrument for international trade financing.

Fourthly, it serves as peace of mind for all the stakeholders. It can be the freight forwarders or the main carrier, or customs agents who work with more confidence, knowing that the particular shipment is already insured. It is already covered by the insurance. So it avoids legal disputes when cargo is lost or damaged. Insurance claim processes are more straightforward if they are insured. And also, it is essential in high-risk routes. Some geographical routes have a history of piracy, bad weather, or political risks. Marine insurance adds a layer of safety when operating in uncertain waters, or we can say uncertain environment. Now there are two main documents when we talk about the marine insurance policy system how it works. So it has, first of all, the main document, which is a policy. And there is another thing, another term or another document which is used, it is called a Marine Insurance certificate. Let us see what is the concept of this marine insurance policy and certificate. Let us look at the difference. So if we talk about the marine insurance policy, it is a detailed contract of insurance often issued to the exporter or an importer who insures single or multiple shipments. Now, the concept of a marine insurance certificate arises in multiple shipments.

A document is a document that proves a specific shipment is covered under a particular existing larger marine insurance policy. We can also call it an open policy. So if we look at the use of these two documents, a marine insurance policy is used by companies with either a single shipment or frequent or bulk shipments, in which case it will be called, as I just mentioned, an open marine insurance or annual policy. While a marine insurance certificate is issued to the consignee or the bank for a particular consignment, a particular shipment, usually under an international trade finance instrument like a letter of credit. If we look at the content of a marine insurance policy, it is basically a detailed terms and conditions, risk clauses, coverage limits, geographical scope, and even premium rates. A marine insurance certificate contains things like basic shipment details. For example, insured value, voyage policy number, and type of coverage.

And if we look at the functionality of these two different documents, a marine insurance policy establishes an insurance relationship and coverage in general, while a marine insurance certificate functions as evidence of coverage for a specific shipment. And if we look at the negotiability of these two documents, a marine insurance policy is usually non-negotiable, but in the case of a single shipment, it can be negotiable. but a marine insurance certificate is mostly negotiable, especially when required by banks or through a letter of credit. So we can say that an exporter may take an annual or open marine insurance policy and itself issue a pre-signed individual marine insurance certificate for each specific shipment based on that larger policy. Marine insurance policy.

If we conclude on this particular concept of marine insurance, it is basically the backbone of transport risk management in international trade. It protects exporters as well as importers from unforeseen financial losses and ensures compliance with Incoterms and trade finance requirements. Understanding the difference between a marine insurance policy and a certificate is essential for accurate documentation and smooth coordination with banks and buyers. Thank you.

What is the link of Inctoterms agreed on the Insurance obligation for the exporter? Let us discuss the same in the next lecture.

Welcome back, friends. So in this particular lecture, we will be focusing on Incoterms and insurance obligations. So Incoterms that is, the international commercial terms are globally recognized rules published by International Chamber of Commerce, Paris, France, that is, ICC, which define the responsibilities of buyers as well as sellers in international trade. Among other things, they specify who is responsible for ensuring the cargo and to what extent. So this is the reason in this particular lecture, we are talking about Incoterms and insurance obligations. What is the connection between these two? That we are going to discuss in this particular lecture. So our main focus in this particular lecture is to understand the buyer versus the seller's responsibilities under different current Incoterms, not all selected. So why selected? Because few Incoterms have a direct connection with insurance, so that's why will be taking up those terms mainly.

Each Incoterm places different types of responsibilities on the seller and the buyer regarding transport, insurance, and risk. Some incoterms require the seller to provide insurance while others place the responsibility, responsibility on the buyer. Let us look at the key Incoterms with respect to insurance and see what is actually happening in these terms. You will have a better idea. If we start with and talk about CIF, cost insurance and freight, that is applicable for maritime only because it's a sea term basically. So, insurance responsibility under CIF, if you talk about it, the seller must arrange and pay for a minimum marine insurance cover. That is the idea to cover the buyer's risk from the port of shipment, because that is where the risk transfer happens, once the goods are loaded on the ship at the port of departure.

The documentation requirement, if we talk about it under CIF, an insurance certificate is required as part of the documents required by the buyer or their bank, depending on the situation. What are the payment terms? Now, if we talk of CIP, that is carriage and insurance paid to which applies to all modes of transport. So herein, if we talk of insurance responsibility, the seller must arrange all risk insurance as per Institute Cargo Clause A by default, although, depending on the contract depending on negotiation between the buyer and the seller, more can be added. So risk transfer in this particular case passes to the buyer, once goods are handed over to the carrier, that is, the first carrier, often even before the actual shipment at the port, if we talk of sea transportation. Documentation requirements, in this case, refer to the fact that the seller provides an insurance certificate covering the buyer's risk beyond the carrier handover point.

It should be understood that under Incoterms 2020, versions of Incoterms, CIP requires a higher level of insurance clause, A, all risk, while CIF still requires a minimum cover clause C, unless otherwise agreed, generally. If we talk of other earlier terms, F terms, E terms, like FOB free on board or FCA, free Carrier or EXW, Ex Works, etc., herein, in these kinds of terms, if we talk of the insurance responsibility, it is mainly of the buyer. So the buyer is responsible for arranging insurance once risk has been transferred, depending on what is the Incoterm. So if we talk of, for example, FOB, at the port of shipment itself, the risk transfers when goods are loaded onto the ship. In the case of FCA, which is free carrier, when goods are delivered to the first carrier, the risk transfers to the buyer, so the buyer has to start working on the insurance part immediately after the risk transfers.

And talking of the EXW term, that is the Ex Works, risks are transferred many times at the seller's premises itself at a very early stage. So, documents required for the seller, if we talk of the seller, that is the exporter, he does not require any insurance document; the buyer has to handle it. All the insurance part. So it is up to the buyer whether he wants the insurance; he will take it. If he doesn't want the insurance, he will not take it. And talking of terms like D terms, that is the DAP for example delivered at place or DDP that is delivered duty paid, insurance responsibility, technically it is not mandatory, but since the seller carries the risk up to the point of delivery, that is agreed point at the destination, it is very, very important and very much recommended, strongly recommended for the seller to insure the goods, although it is not mandatory, unless seller require it for the bank purpose. If bank, if there is a bank connection, some financing is required from the bank; the bank will ask for insurance cover, otherwise it is not mandatory.

Obviously, the risk transfers at the agreed place of destination. And obviously, the documentation: Insurance, since it is not legally required under Incoterms, in case of DAP and DDP, for the seller, he should be doing it. He should be arranging some kind of policy or certificate. Therefore, we can say that understanding who is responsible for providing insurance also dictates who prepares the documentation. That is what we understood. If we summarize these things, and if we look at this table highlighting key documents based on the responsibility. So we can say that in the case of CIF, or CIP, the key document is the insurance certificate, which is to be arranged by the seller, and the purpose is to prove cargo is insured for the buyer's risks. So it becomes mandatory from the biased point of view, from the bank's point of view, from the point of view. And in case of FOB, FCA, EXW, as we had discussed, it is mainly the responsibility of the buyer or buyer's agent, or buyer's insurer. Whoever is handling.

And marine insurance policy or certificate may be required, whatever the case may be, if the buyer goes for it. The idea is to protect cargo, post-risk is transferred, which can be a very early stage of the journey of the goods from the origin to the destination. And in case of DAP and DDP, from the seller's point of view, it is optional, and policy or certificate, whatever is arranged by the seller, it will only help to cover cargo risk until the destination. So that is what we learnt in this discussion up till now. And it is also very clear that the insurance certificate requirement actually can be legally very, very important because it may be part of the required documents under the letter of credit, especially for CIF or CIP shipments. Even in this case, while the transfer of risk happens as soon as the goods are loaded on the ship, it may be the requirement of the LC in CIF and CIP shipments. So if we talk of common contents of a typical insurance certificate, we can see that these are some of the important entries that are there.

Name of the insured, which is basically the buyer or the importer. Name of the insurer and the policy number. And very importantly description of the goods. Value insured. This value insured is usually 110% of the invoice value. Commercial invoice value. And the type of coverage, which can be ICC clause A, which is all risk, or ICC clause B or C, or additional clauses can be added. The voyage details also have to be there. Then applicable exclusions or any endorsements, any special instructions or endorsements. These are very common contents of a typical insurance certificate. Now, let us talk about some important tips and best practices when we are talking about the Incoterms and insurance connection.

Always check the incoterms used in the contract because they determine who should procure the insurance and what kind of insurance is required. So it is very, very important to check. If you are a seller in the CIF or CIP contracts, you must discuss the level of insurance coverage with the buyer because, as we have discussed, the minimum is not always sufficient. Buyers under FOB or EXW, according to Incoterms, must ensure they arrange coverage from the correct risk transfer point. So they should understand this point, and it has to be clarified by the buyers. In a letter of credit transaction, it is important to ensure the insurance certificate is compliant with the LC terms, so it has to be carefully arranged. Incorrect documents can lead to Non-payments.

If we conclude on this today's lecture on this intersection between the Incoterms and insurance, we can say that insurance obligations under Incoterms are not just a matter of cost; they affect risk exposure, documentation, and payment compliance. Therefore, exporters and importers must align their responsibilities, coverage needs, and document submissions to avoid costly misunderstandings and ensure smooth international transactions. Thank you. If you have any questions, please ask your question in the Q and section of this course.

Why do we need various types of insurance coverages in the transportation of goods? Let us learn that in the next lecture.

Welcome back, friends. Now, in this lecture, let us talk about the types of insurance cover in export transport. So, choosing the right insurance coverage is essential to minimize financial losses during cargo movement. It is very clear. Now exporters must understand the major categories of transport insurance coverage and how they apply to specific shipments, types of shipments. So that will dictate what kind of transport insurance coverage is required. So this transport coverage can range from basic protection to comprehensive all-risk policies, depending on the needs of the buyer, the value and nature of the goods, and the route of the transit.

These are the main factors that have to be taken care of. The most common and popular type of coverage is defined by the so-called Institute cargo clauses, which can be clause A, class B, or class C, which are more popular. So this concept of Institute cargo clauses has been internationally recognized, and they are treated as standard terms issued by an institution, which is called the Institute of London Underwriters, based in the UK. These clauses define what risks are covered under marine cargo insurance and are widely used in export contracts all over the world. Talking of the Institute Cargo Clause A, which is also called all risk coverage.

This Institute Cargo Clause A provides the widest coverage, including loss or damage from any external cause unless specifically excluded. What are the typical inclusions in the Institute Cargo Clause A? These are: theft, loss, or damage from rough handling or fire explosions, or natural calamities like earthquakes, floods, storms, or accidents during the loading or unloading of the cargo. These are the typical inclusions in this all-risks clause. Institute cargo clause A. And what are the exclusions? Things like willful misconduct or delay. This delay can even be caused by an insured risk. It will still be called a delay, and it is generally excluded. Then improper packaging. Inherent vice. What is this inherent vice?

Examples of inherent Vice include the fresh fruits and vegetables getting rotten naturally during transit. These kinds of inherent vices, which are product-specific, generally. So this kind of institute cargo clause A, which is also popularly known as I have just mentioned, all risk coverage is best for high-value, fragile, or sensitive cargoes. Cargoes like electronics cargo or pharmaceuticals, or expensive machinery. So it is recommended where full protection is desired. Or when Incoterm CIP 2020 is used, it is mandatory to use the Institute Cargo Clause A. As we had discussed earlier, in CIP 2020, it is mandatory. The second very popular cargo clause, the Institute Cargo Clause, is clause B, which is named perils.

It covers intermediate coverage. In fact, clause C is also part of the named perils only, but this is the main one in the named perils, which means I will explain to you the meaning of named perils. So the scope of this Institute cargo clause B is like that. it covers specific listed risks. That is why it is called named perils. It can cover things like fire, explosion, or vessel sinking or overturning, earthquake or volcanic eruptions, or maybe lightning, or discharge of cargo at a port of distress. Unscheduled port, which is a necessity due to several reasons. Now, what it excludes is this clause B, which is actually not an all-risk policy; it is a named peril. It is an intermediate coverage. It excludes things like theft, pilferage, contamination, or kind of ordinary leakages.

These are some examples of exclusions. You can see the complete list of what it covers and excludes in a note, which I have provided in this particular lecture. In the download section, you can get this note, which is a very detailed note about clause A, class B, and class C, what they include, and what they don't include. So it will give you a better idea. So this institute's cargo clause B is best for moderately valuable or less sensitive goods. So this particular coverage of insurance for export cargo transport is less expensive than the clause A, obviously, but offers limited protection, so it is suitable only for some cargo types or cargo or voyage routes, actually. Talking of the third clause, Institute cargo clause C, which is basic or the narrowest coverage, but it comes under named perils only. It is not obviously all risk coverage.

The scope of Cargo clause C covers only major disasters. So it can only cover generally things like fire, vessel grounding or capsizing, collisions, or overturning of the vessel. So major catastrophes. It excludes things like theft, storm damage, water ingress, or handling damage. Those things are excluded. So generally it is said to be the minimum cover, actually. It is the minimum possible, bare minimum cover. It is therefore best for bulk cargo, low-value items, and shipments with low risk exposure. Therefore, it is not suitable for fragile or high-value shipments. I think you have now understood the meaning of and the differences between Institute clauses A, B, and C. We will discuss these differences in more detail in my next slide.

If we differentiate between so-called all-risk coverage, coverage, which is clause A, and named perils policies, that is, clauses B and C, what we can see is that in the case of an all-risk policy, it covers all unforeseen physical losses, damages, unless specifically excluded. That's why it is called an all-risk policy. But it is different from maximum coverage, which I will explain to you later. It is an all-risk policy, but it is not maximum coverage. And as I had mentioned to you, it is ICC clause A, and it is best for export cargo that is fragile, perishable, or high-value cargo. Talking of the other two clauses, clauses B and C, which we are calling named perils policies, coverages, they cover only the risk explicitly listed in the policy. That's why they are called named perils policies, and clause C actually is the minimum, bare minimum.

These coverages are best for bulk cargo which are durable or that are low-value goods. When cost saving is the priority, named peril policies are to be used. And clause C, which is even the narrowest coverage, is generally the bare minimum, which is generally mandatory in Incoterms, the relevant Incoterms that we had discussed in our earlier lecture. So now it is very, very clear that the name All Risks does not mean every imaginable risk is covered. So, in the note that I have provided in the downloadable section, you can download it. You should read exclusions carefully. For example, exclusions like loss due to delay or poor packaging. They are not included.

Can we customize insurance cover for my special need of transportation of export goods? Let us learn that in the next lecture,

If we want to learn about how to customize coverage based on shipment details, what is the type of shipment? What are the other factors related to the shipment? That we should try to learn. So insurance is not a one-size-fits-all concept. It is not like that. The right coverage should be chosen after evaluating several factors that are related to the shipment. Things like the type of cargo, which means things like fragile goods in the cargo, for example, glassware. So obviously it is recommended to use Institute cargo clause A due to high breakage risks of such kind of cargoes or perishable cargo, for example, food items which may need add-ons like temperature fluctuations or maybe contamination coverages, or bulk materials. For example, coal grain, where the institute cargo clause C fits better, which is often used to reduce costs. So, where cost is a priority, it has to be used like that. So basically what I'm trying to say is that you can customize your coverage based on this detail, which is the type of cargo. This is one.

Then the second consideration is destination risks associated with the export shipment. Things like war risk zones or high theft regions, or ports, or landlocked or remote destinations in remote countries. So war-risk zones require special add-ons or endorsements, actually, which I will be discussing when we talk about the maximum insurance coverage in the later lecture. And high theft regions or ports may require you to consider policies which has the provision for pilferage and theft coverage, which are available only in clause A, Institute cargo clause A, or in case of landlocked or remote destinations, countries. Inland transit coverage is critical, especially in cases of shipments that are warehouse-to-warehouse.

Comprehensive shipments require comprehensive coverage. Then the third consideration, which is related to shipment, while customizing coverage based on shipment details, can be the transit route complexity. So things like multimodal shipments, transshipment points, or weather-sensitive routes can dictate the choice of coverage. So, for example, multimodal transport shipments, which may require a combination of road transport or sea transport, or air transport, may require comprehensive continuous coverage, which is actually very complex, actually. That's the complexity of the transit route and the method of shipment. So things like transshipment points, which may be there in between the particular route where direct ships are not available, each leg of the journey due to these transshipment points adds handling and storage risks, extra risks.

Then, weather-sensitive routes add to the complexity of the transit routes. Insurance should account for the delays, exposures to the weather conditions, and natural hazards, which are very common in such kind of weather-specific routes. So this transit route complexity can be a very major factor when customizing insurance coverage based on the shipment details. Lastly, very important is the buyer's requirements. Some buyers may specifically demand clause A coverages in the sales contract or LC, or even maximum coverage, which I will be explaining later.

And even a letter of credit may also dictate insurance value, for example, which can be whatever has been mentioned, but a minimum of 110% of the invoice value, and the currency of the insurance coverage is also dictated by the LC, which is basically framed by the buyers. So buyers' requirements become prime in this case. You don't have a choice as an exporter. So, concluding this particular topic of the insurance coverage for export cargo, understanding the different types of coverages, basic coverages we have discussed whether it is all risk, which is clause A, Institute cargo clause A, or named perils, which is class B and class C Class C is very narrow in nature and bare minimum.

This kind of understanding allows exporters to make informed decisions tailored to their cargo and route. Therefore, what we can conclude is that as a seller, you always need to assess the value, sensitivity, route complexity, and the importer's requirements before selecting an insurance policy and the type of coverage that is there inside. And finally, we can conclude that coverage of the insurance minimizes disputes and ensures successful claims if things go wrong. So, from this lecture, at least we have understood how you plan the insurance coverages for the export shipment.

If you have any questions till now regarding the insurance part, please jot down your question in the Q and A section of this course. I will try to answer your query within 1 or 2 working days. Definitely. In the next lecture, I will talk about the maximum and minimum coverage. What is it? What is the concept of maximum and minimum? We have discussed all this, but there is a concept of maximum and minimum insurance, also that you should be understanding in this particular section, which is a very, very important part of the module.

In a complex world of global trade, some shipments require utmost care and safety. For such shipments, insurance covering all possible perils may be required. Regular insurance policies may not serve the purpose in such cases. Dr. Jain discusses this peculiar case of securing cargo with so-called truly maximum coverage in the next lecture. 

Friends. Uh, in the last lecture, we discussed basic understanding of the insurance coverage planning, how it is to be planned, what the factors are, and what type of insurance coverages are available? One very important part, which I want to discuss in this lecture today, is the concept of maximum and minimum insurance coverage. So minimum is very, very clear. It is the mandatory part, actually, it's the bare minimum. But maximum is the thing that needs more clarification.

When negotiating insurance for international shipments, exporters and importers often refer to maximum or minimum insurance coverage. Let us try to understand what it is. These terms reflect how comprehensively the cargo is protected, not just which ICC clause is to be used. No, that's just a very basic and very simple way of classifying. But in the real world, it is also very important that what additional clauses are included in the coverage, which are beyond ICC clauses A, B, and C. If we talk about the minimum insurance, it is much clearer from our last lecture. The bare minimum required coverage usually only covers catastrophic risks with a limited scope. So the typical component of a minimum insurance coverage is just one component, and that is the Institute Cargo Clause C that we have discussed in the last lecture, which covers major events like fire or explosion, vessel grounding or sinking or overturning, or collision of vessels, or discharge at the port of distress.

These are very unexpected and catastrophic events that can happen, which are covered in this bare minimum insurance coverage, which is the Institute cargo clause C, which is the final thing about the minimum. So a minimum insurance coverage does not cover things like theft, pilferage, or water damage unless from some catastrophic incident like a major accident or poor handling or packing, or general leverage contributions. Those things are not covered. Low-value goods, bulk commodities, or when the buyer wants to reduce cost exposure, minimum insurance cover is to be used, which we had discussed when we were talking about the institute cargo clause C. Generally, minimum insurance cover is mandatory in incoterms like CIF, which we also had discussed in our earlier lecture.

But when we talk of maximum insurance cover, things get beyond ICC clauses A, B, and C. So the most comprehensive coverage available in standard marine insurance, combining multiple clauses to address almost every possible risk, is actually called the maximum insurance coverage. Therefore, the typical components of maximum insurance coverage include not only the Institute cargo clause A, but Institute war clauses or the Institute strike clauses. Institute A, we had already discussed, which is an all-risk of loss or damage from external causes, except for standard exclusions that we had discussed. But the institute's war laws also cover loss due to war, civil war, revolution, rebellion, or capture or seizure or detainment by hostile forces or risks of mines, torpedoes, and warlike weapons, which are generally not covered in the standard Institute cargo clauses A, B, and C. And the Institute strike clause covers things like risk associated with strikes, riots, civil commotion, labor disturbances causing cargo damage or delays.

Even beyond these clauses, which we discussed, to make it a truly maximum insurance coverage, there are optional add-ons also, which include theft and pilferage extensions or contamination and spoilage, especially for perishable goods, or delays, or consequential losses, which are actually very limited. It needs to be negotiated with the insurance company, actually. How do you define it, and how do you explain it? What kind of delays are covered, what is not covered, or the losses arising out of that? Or even optional add ons are available for terrorism coverages or warehouse to warehouse cover, which is basically used in case of combined shipments, combined transport operations, which include inland transport and ocean and even delivery leg or maybe air also, it may include, which requires comprehensive insurance coverage, a true maximum coverage which may need this kind of warehouse to warehouse cover, which is optional. In addition to what we already discussed about the maximum insurance coverage.

These things, all these things, make it a truly maximum insurance coverage. If we look at this summary table of what we have discussed in this particular lecture, if we talk of components like ICC class A, which we had discussed earlier, or institute war clauses or institute strike clauses, or add-ons which are included if needed. So, in case of ICC clause A, all risks are covered except specific exclusions. In case of the Institute war clauses, there is are inclusion of war-related events and hostile actions. In case of Institute strike clauses, strikes, riots, and political unrest are also included, and then in the add-ons, there can be inclusion for theft, spoilage, terrorism, delays, etc.. So high-value sensitive or politically risky shipments require these kinds of maximum coverages. When also buyer demands full protection in the contract or under the letter of credit, you have no other option as a seller but to take the maximum coverage. In case of CIP incoterms, it is recommended to use as comprehensive insurance as possible, because it is generally a kind of warehouse-to-warehouse, uh, cargo shipment, where the buyer, as well as the seller, wants complete protection because of the complexity of the route.

Any term where buyer or seller agrees to more than minimum coverage, this concept has to be very well understood, as discussed in this lecture. Now I want to give you some tips as exporters when dealing with the maximum and minimum coverages. When the Incoterms require insurance under terms like CIP or CIF, you should make sure to clarify with the buyer whether they expect minimum coverage that is ICC C, or maximum coverage, which may include ICC A+ plus war, plus strike clauses, or even add-ons. And you should also confirm the LC requirements, which actually may require coverages beyond what the buyer wants. Many banks also require clause A level coverages, plus named clauses for war and strike risks in certain situations. So it is very important to set the insurance amount at least 110% of the CIF value, which is a common practice to account for profit margins and emergency costs.

If you can make it even better, when the buyer comes, then you can negotiate with the insurance company, giving the right reasons for your actual insured amount. So if we talk about this particular lecture of today, which is discussing minimum and maximum insurance coverages, we can conclude that the minimum coverage is satisfied by ICC C only. It will work, which covers major disaster, but maximum coverage of insurance or maximum coverage, which may include components like ICC A, plus institute work laws, plus institute strike clauses, and optional add-ons. So by understanding this distinction, exporters can align their insurance coverages with contract terms, buyers' expectations, and cargo risk levels depending on the shipment type, reducing liability and ensuring smooth claim settlement.

Thank you very much. If you have any questions, please ask your question in the Q&A section. I will definitely answer it within 1 or 2 working days.

In the next lecture. Dr. Jain explains the kind of documentation required in transport risk management.

Welcome back, friends. So in the last two lectures, we talked about different types of insurance coverages. What are their components? We discussed ICC clauses, A, B, and C, and add-ons and ICC war value or strike laws. We also discussed what is a truly maximum cover. What is the minimum cover that is required? In different situations, we require these kinds of options that are available to the exporter. In today's lecture, let us now talk about marine insurance documentation. Proper documentation in marine insurance is essential not only for legal compliance and claim settlement, but also for fulfilling contractual and banking requirements in international trade. Each document in marine insurance documentation plays a specific role in establishing the existence and the extent of insurance coverage during cargo movement across borders. The first very important document to talk about is a marine insurance policy.

A marine insurance policy is a formal insurance contract between the insured, who is typically the exporter or the buyer, depending on the Incoterms, and the insurer, that is, the insurance company. It defines the full scope of the insurance agreement. That is, what is an insurance policy? If we talk of the key characteristics of a marine insurance policy, it is generally issued either for a single voyage or on an open basis, that is, for maybe an annual basis or a quarterly basis, whatever may be the case, but very common on is annual basis. It includes things like the name of the insured, description of the goods, value of the shipment, and types of coverage that are there. That is ICC clause A or B, or C, add-ons, or duration of the coverage. For example, the warehouse-to-warehouse or geographic scope of the insurance policy. That is things like the port of origin and the part of the destination. And what are the applicable clauses and endorsements? These are generally the contents of a marine insurance policy. So typically, marine insurance policies can be of these three types.

First is the voyage policy. A voyage policy insurance policy is for a specific shipment, a particular voyage. While the second type of policy, which is an open policy, is generally an annual coverage wherein declarations have to be made for every shipment during that particular period. Then there is the third type of insurance policy, which is called a time policy. The time policy covers goods or vessels for a specific time period, whichever has been agreed upon and which is defined in the contract. Now, another very important document that we had discussed earlier, also in earlier lectures, is the insurance certificate.

An insurance certificate is documentary proof that the goods are insured under some kind of open policy or master policy, whatever you say. This is typically issued for individual shipments under a master marine policy or an open marine policy, insurance policy. The key functions of a marine insurance certificate include that it is required in documentary credit, or so-called letter of credit transactions. most commonly. It is provided to the buyer as evidence of the insurance. In Incoterms like CIF or CIP, if those are the agreed contracts, this insurance certificate is useful mainly for customs clearance and claim processing.

The typical contents of a marine insurance certificate include things like the name and address of the insured, which is generally the buyer or importer, and the insurance company and policy number, which means the name of the insurance company. Description and value of the goods, which is 110% of the invoice. And the shipment and transport details. Things like what is the origin of the goods? What is the destination of the goods? What is the vessel or the airline? And the type of coverage and clauses like ICC, A or B, C, war clause, or strike clause? And the date of issue and validity period of the Marine Insurance certificate. It should be noted that under Incoterm, CIF, and CIP, the seller is required to provide an insurance certificate to the buyer, which is mandatory, as we have talked about earlier.

Then, another very important document in marine insurance documentation is the declaration form, as well as the cover note. So declaration form is also called the DEC form. These are basically the preliminary or internal documents issued before the final policy or the certificate is actually issued. These are often used when an open policy exists. Talking of the DEC form, that is the declaration form. It is used by exporters under an open policy to declare individual shipments. It basically notifies the insurer of a specific shipment's value and route. It forms the basis for issuing the insurance certificate or endorsement. I will talk about what is the meaning of endorsement in subsequent lectures; in this lecture, you will have a better idea.

And what is the cover note? A cover note is a temporary document issued by the insurer. Or it can also be the broker, before the formal policy is prepared. It basically confirms that insurance coverage is in place from a specified date. It is used when immediate proof of insurance is needed, for example, to meet some kind of deadlines, maybe LC deadlines, or some deadlines that are specified by the buyer. So it should be noted that in time-sensitive export deals, a cover note can help meet documentation timelines, basically, while the full policy is still being finalized.

Now, let us talk about the different required endorsements and clauses that are in the typical insurance policy. So insurance documents, whatever we have discussed, must include or be endorsed with so-called specific clauses and endorsements that define the coverage terms. Basically, these endorsements and clauses define the coverage terms in clarity in clear, clear-cut terms. So if you look at these common clauses, what are these common clauses like, the Institute cargo clause A, B, C, which is used for basically main coverage, understanding main coverage, all risk, for example, or named perils.

What are those main coverages that this clause is used for? Then another clause that we have discussed earlier also Institute war clauses, which cover damages, loss due to war, rebellion, or terrorism, we discussed in the last lecture. and the Institute strike clauses, which cover losses from strikes, riots, labor unrest, or warehouse-to-warehouse clause, which are add-ons, which cover full transport from the origin warehouse to the buyer's destination warehouse, whatever has been agreed at the destination place. And general average clause, which covers contribution in case of part of the cargo, is sacrificed for the safety of the ship during the voyage. And the Sue and labor clause, which allows reimbursement for actions taken to minimize loss after an incident. Then debris removal clause, which covers the cost of removing damaged goods after an incident, and refrigeration breakdown, which is mostly for perishable goods. This covers temperature control failures. So these are not all the clauses, but they are very, very popular and very important clauses.

And what are the endorsements in a marine insurance policy? Endorsements are often added for special cargo. Things like livestock or temperature-controlled goods, or temperature-sensitive goods. It can include clauses for things like transshipment, multimodal transport, or customized exclusions or inclusions. Generally, these endorsements are required by letter of credit terms, and non-compliance can lead to document rejection by banks. That is where the importance and significance of endorsement come. So it should be noted that the exporters should always match the policy and certificate wordings with incoterms obligations, as well as the requirements of the buyer and the letter of credit requirements. All three things have to be carefully watched by the exporters before planning the insurance documentation. Let us take a simple scenario of marine insurance documentation under our CIF contract.

The documents required in this sample scenario are a Marine Insurance policy, which is issued by an insurance company and which is the main insurance contract, actually. And the insurance certificate, if there are multiple shipments and it is under a master policy or open policy, which is issued by an insurance company, or it can also be issued by a broker, which is actually a documentary proof for the buyer or the bank. Then the DEC form, that is the declaration form, which is issued by the exporter. It actually notifies specific shipments under a master policy or an open policy insurance policy. And the cover note, which is issued by the insurance company or the broker, is actually a temporary confirmation of the coverage.

Endorsements and clauses that are included in the certificate define the scope, obligations, and rights of the insured. So, the documentation I have just given, there can be more actually, but for a specific sample scenario of a CIF contract, I have given this particular sample scenario in different scenarios, in different Incoterms. This documentation may be less or more. If we look at some of the best practices for exporters, when dealing with the insurance documentation, it is important to verify the exact insurance document requirements under the LC terms or the buyer's agreement. It is also critical to ensure the correct value of the insurance, which is generally 110% of the CIF value, and it is to be stated accordingly.

The exact value has to be carefully stated. And also exporters should align the named assured in this documentation with the party entitled to claim. Often it is the buyer. Even if it is to be arranged by the exporter, the named assured is generally the buyer. An exporter should check that all mandatory clauses are explicitly referenced in the insurance certificate or the policy. They must retain copies of all the marine insurance documents, especially DEC forms and endorsements. So, if we conclude from this lecture, which was focused on marine insurance documentation, we can conclude that marine insurance documentation is not just paperwork. It is critical for risk protection, compliance, and payment assurance.

Therefore, exporters must be familiar with the insurance policy, Insurance certificate, DEC form, and endorsements, and ensure that these are accurate, complete, and aligned with trade terms. Any missing or incorrect detail can lead to claim rejection or LC discrepancies, potentially resulting in non-payment or heavy losses in any adverse event. So this was all I wanted to talk about: the marine insurance documentation. If you have any questions, please use the Q and section of this course to ask your queries. I will try to answer as soon as possible, within 1 or 2 working days. Stay tuned with me. We'll be just starting the next lecture in this module on marine insurance.

So, friends, this is one typical sample of the cargo insurance policy. As you can see here, this, uh, policy has been issued in Vietnam by BAOVIET insurance company. So the policy number is written here. So if this cargo insurance policy name of the assured is given, which is Importado Valencia, which is based in Spain. That means the assured person is the importer.

Why? Because this policy is issued for the CIF contract, in which case when the goods are loaded on the ship, the goods are loaded on the ship, the risk transfers from the exporter to the importer, and in this case, the importer is based in Spain. So, since the risk is of the importer, while the policy has been bought by the exporter, and that is why it is issued in Vietnam, because the exporter belongs to Vietnam, the risk is now of the importer, who is based in Spain. That's why the name of the assured here is the importer, not the exporter. This has to be very clearly understood.

And this policy has been issued for exports of 424 bundles, uh, almost 84,000 pieces of bamboo baskets, the total weight of which is about 6.5 metric tons, 40ft container, one 40ft container is there for which this cargo policy has been issued. Vessel details are also given for which this policy has been issued, and the LC numbers are also given there. The Bill of Lading number is also there, the contact number is also there, and the port of loading and the port of discharge are also given. So this is very essential information.

The sum assured is uh 10% extra of the CIF value. This is the CIF contract. That's why this insurance has to be taken by the exporter. So in this CIF contract, the CIF price 110% value has been insured. And uh, the premium amount is not mentioned here. The premium rate could also have been mentioned, which is not given here. But uh, this might be between the exporter and the insurance company. It is not essential to have this information on the policy. If the importer wants this information to be there, then only it is to be put. Otherwise, it is not required because it is private information between the insurer and the exporter. Now very important thing is what is the coverage type? In this case, because these are bamboo baskets and it is a containerized cargo. So what it covers is ICC clause A plus SRCC. That is the strikes, riots, and communal commotion. This is very strong coverage

Now, the policy further states that in the event of loss or damage, apply for a survey to the company claim payable in Spain. So, as you know that in the Incoterms CIF, the responsibility of claiming is of the buyer, not of the exporter. So that's why this information is given there, because it is a CIF contract. The claims and all details have to be worked out in Spain. So this is a very, very typical type of insurance policy. It provides you with a good knowledge of the cargo insurance processes. It all depends on the Incoterms, who is to buy it, and who is responsible. So this is how it works out.

The companies know it, and once they know what the Incoterm accordingly, they issue the insurance policy. So, friends, this was all I wanted to talk about: the insurance policy. So I showed you one sample marine cargo insurance policy, also. Air shipment policies are also very, very similar in nature. The process is the same. In the case of an open insurance policy for several shipments, generally, the insurance certificate is issued. And accordingly, the letter of credit demands the certificate, rather than the policy. So keep watching. In the next section, we will be going to discuss some more documents.

Download the sample copy of the Insurance Policy from the resources section of this lecture.

In the next lecture, based on the learning of this module, Dr. Jain summarizes the best practices to be adopted for effective risk management strategies.

Welcome back, friends. In the last lecture, I shared with you a sample of a typical insurance policy for a typical export transaction. Now, in this new lecture, continuing in the same module, I wish to share with you another very important topic for managing risks in the transportation of goods internationally. The topic is best practices in Transport risk Management. Effective risk management in international cargo transport is not just about purchasing insurance. It is about embedding best practices into your operational workflow. These practices ensure you minimize the chances of cargo loss or damage, secure your payments, and reduce the risk of claims being rejected. I will cover the following subtopics in this lecture. Working with the right freight forwarders and insurance brokers. One of the best practices. Timely documentation and communication, another best practice. And the importance of a structured claims process and how to avoid disputes. These are the subtopics that I am going to cover in this particular lecture.

Let us go into this lecture. Talking about working with the right freight forwarders and insurance brokers, the right partners. Choosing the right partners and maintaining clear communication with them is the key to ensuring your cargo is handled and insured professionally. So if you talk about freight forwarders, let's start with that. What is the role of freight forwarders? They organize the movement of cargo and coordinate between carriers, customs, and other parties. So, what are the best practices to deal with freight forwarders? Work with experienced licensed forwarders, FIATA members, or country-accredited agents. Provide clear shipping instructions. Things like the dimensions of the shipment of the different boxes and weights, the cargo nature, and what are the Incoterms that are agreed upon between you and the buyer. Confirm responsibility for booking insurance, transport mode, and documentation.

Ask for the written standard trading conditions, so-called STC, to understand their liability limits. What happens? Forwarders, freight forwarders usually have limited liability. So, do not rely solely on them for risk protection. That should be avoided. Talking about the insurance brokers. What is the role of insurance brokers? They act as intermediaries to negotiate tailor-made insurance policies. And what are the best practices to deal with insurance brokers? Engage a specialist broker with marine cargo insurance expertise. Disclose all material facts: Cargo type, route, Value, and special handling. Do all these things accurately. Ask for options. Things like ICC clause A versus ICC clause C, or the inclusion of war or strike add-ons, or clauses like warehouse-to-warehouse add-ons. Always review policy documents carefully. Ensure the right party is named as the insured.

What happens an insurance broker can help structure complex multimodal coverage and assist with claims settlements effectively. Now, let us talk about the importance of timely documentation and communication, right communication. Delays, errors, or miscommunication in documentation are among the top reasons for insurance claim rejections and commercial disputes. So, what is the importance of a timely insurance declaration? Let's first talk about that. Always declare cargo to your insurer before the shipment leaves the origin. Provide accurate shipment value, vessel name, voice number, and transit details. Let us now talk about the document checklist in order to ensure timely documentation and right communication.

If we talk about the documents and their purpose, starting with commercial invoices. A commercial invoice establishes value for insurance. And the packing list. Packing list assists with cargo handling and verification. Transport documents like a bill of lading or an air waybill. These transport documents confirm the mode and route of transport. And what about the insurance certificate? An insurance certificate confirms risk coverage. And what about the export declaration? Importance. The export declaration is required for customs and may affect the coverage scope. This is the document checklist in order to ensure timely documentation with proper communication. Now, let us talk about the best communication practices.

Notify all stakeholders. Forwarder, Insurer, Buyer, about the shipment details and timing. In case of any delay, immediately inform the insurer. What happens? Some coverages lapse after a fixed period. Keep proof of delivery, photos of the cargo before dispatch, and packaging documents. If a shipment is delayed, rerouted, or damaged, the insurer must be informed immediately. Now, let us talk about the importance of the effective claims process and how to avoid disputes. Even with the best precautions, losses may occur. Structured claims process and proactive actions can help avoid disputes and ensure proper and timely compensation. So, what are the immediate steps in case of loss or damage? Notify the insurer or the broker within 24 to 48 hours. Arrange for a joint survey by the insurers' appointed surveyor. Preserve all evidence.

Damaged goods, Packaging, Photos, Logbooks, whatever is related. The receiver of the goods should never issue a clean receipt if the cargo is visibly damaged. So, for an effective claim process, what are the required documents for the claims process, structured claim process? What are these documents, and why do they matter? So if you talk of the original insurance certificate, it confirms coverage details. Similarly, the commercial invoice and packing list confirm the cargo value that we discussed earlier. And transport documents like a bill of lading or air waybill confirm the route and terms.

Similarly, the survey report confirms the nature and cause of the loss. And the claim form is the official notification of any loss. The protest letter, if applicable, is the letter to the carrier holding them liable. Then the photos and inspection reports, and the records, these strengthen claim validity. These are the required documents for a structured claim process. Now I want to share with you some tips to avoid disputes in this structured claim process. Understand exclusions in your policy. For example, things like delays or packaging. What is the meaning of the policy for these things? And package cargo professionally. Claims are often denied for inherent vice or insufficient packaging, which we discussed in this module, in earlier lectures. Ensure contract terms match your sales contract, letter of credit, and insurance wordings. They all must align. Use clean and legible documents. Inconsistent or poorly worded entries in the documents raise red flags. Let me share with you a common reason for claims denial is that the insurance was taken out after the cargo had left the warehouse or the port. So let us now enumerate the summary of all the best practices that we discussed in this lecture. What are the areas, and what is the action required? So, talking of the partner selection, always choose licensed freight forwarders and experienced insurance brokers. Talking of the documentation part, complete and submit the insurance declaration before shipment. Importance of communication.

If you talk about the communication area, always inform all parties involved of any changes or delays proactively. Talking of the claims process, act fast, keep evidence, and submit all required documents correctly. And for dispute prevention, align contracts, package goods properly, and understand policy exclusions. So, concluding in this lecture, we can say that risk in international trade is inevitable. But losses and disputes are not. By working with the right partners, managing documentation precisely, and handling claims professionally, exporters can build a reputation for reliability and resilience.

Embedding these best practices reduces financial exposure, ensures cargo is protected throughout its journey, and enhances the buyer's confidence in your export process. Overall export process. So by the end of this lecture now we have almost completed this important module of this course, focusing on the risk management and mitigation during the transportation of goods internationally. In the next lecture, I will take up some practical examples to illustrate the learning from this module.

I am very happy that you have completed this important module of this important course in Export Documentation Management. If you have any questions regarding any of the topics covered in this module or any subtopic that is covered in this module, do write your query in the Q&A section of this course. You can also use the AI assistant that has been provided in this course to understand more about any terms or concepts that have been discussed in this module. You can also do that. Thank you.

In the next lecture, let us look at some practical examples of transport risk management.

Welcome back, friends. So in the last lecture, I discussed with you the best practices for transport risk management. In this particular lecture, I will take a few examples, real-life examples, to make you understand that the risk management in exports becomes even clearer when seen in action. So when I take this example, you will see the significance of these examples, these actions that make things even clearer to you. So the following real-world examples will illustrate how marine insurance policy terms and risk coverage types can directly impact a business's ability to recover from unforeseen disruptions.

Let us take the first example that discusses cargo damage during ocean transport. So in this particular example, a South Korean electronics manufacturer shipped a container of LED display panels to a distributor in Brazil under CIF Santos Incoterms. The cargo was loaded at the Port of Busan and travelled via transshipment through Singapore. During the ocean leg, the container was subjected to severe sea turbulence, and poor lashing led to cargo shifting and panels being damaged. Upon arrival, more than 30% of the LED panels were cracked and they were unsellable. So this is the scenario, in this particular example, I wanted to talk about. So let's see what the insurance documents are that are available in this particular example. And we will see the consequences of that.

These are the documents that were prepared in this particular transaction. Insurance Certificate issued under ICC clause A (all risks). Secondly, a marine survey was conducted at the destination. So that survey report was available. And very importantly timely notice of damage was filed within 48 hours of the incident. So these are the facts of the case as far as the documentation part is concerned, and the procedural part is concerned. So let's look into what the outcome was because of these documents and procedures. The claim got approved by the insurer after the surveyor validated improper lashing as the cause of the damage. And 90% of the invoice value is reimbursed. That was 90% of the 110% of the CIF value that was insured, with some depreciation that was deducted.

The buyer was compensated, and the shipment was rebooked. Now, what are the lessons that we learn from this particular example? We can easily see that in ICC clause A, it provides broad coverage, and in this particular example, it helped recover significant value, 90% of the invoice value of the damage. So, timely claim, notice, and complete documentation were the keys in this particular example that ensured a smooth process of the claim. Without clause A, under normal clauses like ICC C, this claim would likely have been denied as improper lashing is not covered under ICC clause C. Now, if we see another example where a French exporter of luxury perfumes shipped goods to their retail partners in Ethiopia under CIP Addis Ababa terms, the shipment was routed through Djibouti and overland by truck to Ethiopia.

Now, during the transport, sudden political unrest in northern Ethiopia led to roadblocks and suspension of transport in the region. Significant delay. So what happened was that the cargo was stuck for almost three weeks in Djibouti. So, because of all these incidents, the buyer demanded compensation for missed launch dates and storage losses in this case. And if we talk of the insurance detail in this particular example, the policy covered was only the ICC clause A. No institute strike or war clause or included. The policy included delay as an excluded risk. The name peril was not there. Therefore, the outcome was that the insurance was rejected as the delay was due to civil unrest, which is not covered under the ICC A clause. Even if it is all risk. It is only covered with an institute strike clause (cargo) or war clauses.

The exporter had to negotiate with the buyer and offer a partial credit note. So the exporter adopted some solutions based on the lessons learned from this particular incident. It added strikes and war clauses to their maritime policy for high-risk destinations in the future. It also changed Incoterms for volatile markets to DAP (delivered at the place) to shift the risk, post-border leg of the transit. Now it has also partnered with a broker to create a route-specific insurance endorsement. These were the solutions that were adopted as the lessons were learned from this second example.

Therefore, we can conclude from this second example that political risks require an explicit clause inclusion. ICC A does not mean all imaginable risks. Understanding exclusions is very, very crucial for this particular clause. So, for fragile political environments, adding war and strike coverage is essential, and in fact, depending on the situation, more clauses may be required. So summarily, if we take the summary of these two examples, learning from these examples, we can say that the scenario in the first case was that the cargo was damaged at sea. In which case, ICC clause A was there, and good documentation was there. Timely notice was given. So this particular ICC A covered that kind of situation. So the outcome was successful.

Then, in the second example delay was due to the political unrest. So ICC A, in this case, was without any war or strike cover. So obviously, the delay that was caused by the civil unrest was not covered, and therefore, the claim was denied. So these are some examples, practical examples that illustrate how it works. And depending on the situation, depending on the nature of the cargo, depending on the value of the cargo, the destinations, whether they are politically sensitive destinations, and the type of possible risks, which can be there, it is very, very important to choose the right insurance coverage. So we can recommend to the exporters, based on these examples, which always assess the risk of the destination country and route. Use ICC A plus strike plus for clauses for politically unstable or high-risk areas.

They should ensure proper cargo securing (lashing, packing). Many claims fail due to inherent vice or poor preparation. It means this was not related to the handling. It was related to the exporter's actions before the shipment was made. So it is very important for the exporter to read policy exclusions carefully. Assume nothing is covered unless explicitly stated in the policy. That should be the assumption. Work with brokers who understand trade lanes and incoterms implications.

Now you have learned about some real-life examples demonstrating the significance of insurance management and tools in the export documentation procedures, in a very professional manner. So in the next lecture, I will take up the conclusions from the several lectures that we have covered in this module. I am very happy that you have now completed this important module of this very, very important aspect in export documentation and procedures. If you have any questions regarding any of the topics that are covered in this module or any subtopics, write your query in the Q and A section of this course.

You can also use the AI assistant of this course, which has been provided in this course as a tool to understand more about the subtopics covered in this module. At the end of this module, I also have a role play where you can, uh, try your skills, your learnings in this particular module. I will talk about it more in my next lecture.

Let us wrap up this discussion in the next lecture.

Welcome back, friends. If we conclude in this module, finally, it is very clear that understanding and managing transport risks is not just optional; it is a critical element of any successful export operation. Whether you are an exporter managing deliveries from your own warehouse or you are an agent arranging shipments on behalf of the clients, you carry a level of responsibility that demands foresight, precision, and risk awareness. Let's revisit the key takeaways from this module. So let us enumerate the things that we learned in this particular module. Starting with the first thing that is that it is very important to understand your risk exposure and insurance obligations. Every export journey carries potential risks.

Whether it is natural damage or a theft, or handling issues or geopolitical disruptions, as we learned in this module, risk does not just begin at the port; it begins inland, most of the time, from the moment goods leave your premises and continue until the goods reach the buyer's location. The incoterms you choose define who bears the risk and who is obligated to arrange the insurance.

If you are the one responsible for the insurance as per the Incoterms, you must ensure that the coverage is not only active but also adequate for the route, mode of transport, and nature of the goods. Remember, neglecting your insurance obligations under CIF or CIP incoterms can lead to legal liabilities and financial losses, even if the damage was not your fault. Secondly, we learned that it is important to match insurance coverage to shipment characteristics. Marine insurance is not a one-size-fits-all kind of thing. The type of goods, the destination country, and the transport route all influence what kind of policy and clauses you need. Use ICC clause A for all kinds of protection, all risks, and add war and strike clauses when shipping to sensitive regions.

For perishable or temperature-sensitive goods, ensure coverage includes refrigeration breakdown or special handling clauses. Always ensure the goods are at 110% of the CIF or CIP value, which helps cover additional unforeseen costs in the event of loss. Remember, selecting the right coverage isn't just a formality; it is your financial safety net. The third thing that we learned from this particular module is that proper documentation is the backbone of risk mitigation. Even the best insurance coverage is ineffective if you cannot prove your claim. Documentation is both your legal proof as well as your operational tool.

Always issue a proper insurance certificate or policy in line with your buyer's agreement or sales contract, or LC terms, or whatever has been agreed between you and the buyer. Declare shipments on time under open policies and retain all original transport and cargo documents. In case of loss or damage, act quickly, gather evidence, notify the insurer, and cooperate with the surveyors. Remember, well-prepared documents not only ensure smooth claim settlements, but they also show professionalism to the buyers, banks, as well as the regulators. So my final thought on this module is that risk management is a strategic advantage. In international trade, the exporters who manage risk proactively don't just avoid losses; they build a reputation for reliability, responsibility, and resilience.

Mastering transport risk management and documentation is not just a compliance issue; it is a competitive advantage in today's volatile global business environment. As you move forward in your export journey, treat insurance as part of your strategic planning, not as an afterthought. So now you have learned all about basic risk management in export documentation and procedures, as far as the transportation risk is concerned. To learn more details about this topic, look out for a new course that will be online very soon on Udemy, delivered by me, focusing in detail on this particular topic. In the next module, I will discuss some more miscellaneous primary export documents that we have still not discussed. But before that, do not miss out on a self-learning AI-based role play that is coming up next in this module, which will help you sharpen your skills in the area of transport risk management.

I am very happy that you have now completed this important module of this important course in Export Documentation Management. If you have any questions regarding any of the topics that are covered in this module, do write your query in the Q&A section of this course. You can also use the AI assistant, which is provided in this course, to understand more about any of the topics or topics covered in this module. Now, if you look at the Progress tracker, your progress tracker in this course, you started with the introduction of the course.

Then you came to module one, which was the opening case study of this course. Then you progressed from module two to module five, which is this module. Your progress is remarkable in this somewhat long course. I want to really congratulate you for having reached this far in this course. You still have to go a long way, I know that, but I'm still very, very sure that you will be able to complete all the modules in this course. At this point, how about reviewing and rating this important course? If you have already rated or reviewed this course, you can do it again to further strengthen the confidence of future students about this course. Thank you very much.

That is not all. There are still more miscellaneous documents that are equally important. Let us see them in the next lecture.

Hello friends. Welcome back to this new module. So in the earlier modules, we talked about some very important main documents, so-called the LC documents or the principal commercial documents or transport documents, the cargo insurance documents. A few more documents and procedures are still to be discussed, as per my understanding. When we talk about the Pre-shipment documents or so-called primary documents, primary commercial documents, these also include documents and procedures related to international and national export control regulations and compliance. So before we move forward, let us quickly revisit what we covered in the last module.

In the last module, we explored the critical importance of managing transport risks in international trade and how marine insurance plays a central role in safeguarding the cargo during inland and ocean transit. You learned about three major types of institute cargo clauses: ICC clause A, ICC clause B, and ICC clause C, including their inclusions, exclusions, and appropriate use cases. We also discussed how to choose the right insurance clause based on things like cargo type, route risks, buyer's expectations, and incoterms like CIF and CIP. We also examined optional coverage extensions, such as institute war clauses or strike clauses, and understood the significance of insurance documentation like the Marine Insurance certificate, especially when required under a letter of credit.

Finally, you participated in a practical role play in that module last module that sharpened your ability to interact with an insurance broker and negotiate the most suitable coverage for your export shipment. So in this module, we will try to discuss a few more documents and some procedures that may be required by the buyer in certain situations and certain product categories. Or that may also be required within the country for some commercial purposes. Therefore, in this module, whatever the pre-shipment commercial documents that are still remaining, I will discuss.

My focus in this module is related to mainly following documents and procedures. The first is the certificate of free sale, something called certificate of free sale. Second is the inland bill of lading. What is the concept? I will explain to you. And a third one, which is a dangerous goods form. What is this dangerous goods form? We will discuss it. And one more document, which is called the Shipper's letter of instructions. And also, finally, we will be talking about the documents and procedures related to export control regulations, both domestic as well as international. So these are the things that we will be covering in this particular module. Let us go into the next lecture, starting with something called a certificate of free sale.

What is a certificate of free sale? Let us discuss it in the next lecture.

So, friends, one of the commonly used documents that may sometimes be required by the buyer is called the Certificate of Free Sale. In international trade, a certificate of Free sale is a common trade document that certifies that the goods in question, typically consumer products like food, cosmetics, dietary supplements, and pharmaceuticals, are freely sold and approved for sale in the exporting country's domestic market. Very interesting document, it is. And it has a lot of significance. I will explain it. What exactly is this certificate of free sale?

A certificate of free sale confirms that the product is legally sold without any restrictions in the country of origin, and it complies with the relevant safety and regulatory standards in that particular country. And who issues this certificate of free sale? A certificate of free sale is typically issued by some government authority. It may be, for example, uh, the FDA Food and Drug Administration, in the case of the US as an exporting country for items like food and drugs. Or it may be DGFT, that is Directorate General of Foreign Trade, or the Export Inspection Agency in the case of goods being exported from India.

Or it may also be some kind of chambers of commerce, that is, the semi-government bodies or authorized industry associations, or export councils. In some cases, in the case of certain countries, private agencies may also issue it. But importing country authorities generally prefer official or semi-official bodies issuing such a certificate. And who requires it? A certificate of free sale is usually required by importing country authorities, especially for health and safety-regulated products or consumer goods that come in contact with the body or are ingested. Authorities in importing countries want assurance that the product is safe and already in circulation in the country of origin. That's the purpose. So is it always required? No. A certificate of free sale is not universally required, but it is mandatory in specific markets and sectors.

Its requirement depends on the type of product, the importing countries' regulations, and the risk level associated with that particular product, which is being exported. Now, let us look at some examples of the situations where a certificate of free sale may be required. If you take the first example of exporting nutritional supplements from the USA to Brazil. Now Brazil's health authority, like ANVISA, may require a certificate of free sale to show the product is sold and regulated under US law. Now, in another example, the second example of exporting Ayurvedic cosmetics from India to the European Union, an importer in the EU might request a certificate of free sale to prove that the product is lawfully sold in India and meets safety standards. In another example, the third example of exporting packaged food from the UK to Saudi Arabia.

In this particular example, the Saudi Food and Drug Authority, which is SFDA, may require a certificate of free sale to ensure the products comply with the UK's domestic food safety regulations, and that may be sufficient for the Saudi market. It's a protection, a first layer of protection. Finally, we can say why this certificate of free sale is important. A certificate of free sale helps build trust with foreign regulatory authorities. It is often a precondition for market access in the importing country.

And it can also expedite product registration and clearance if it is a new product in that particular market. So if you're exporting regulated goods, especially those goods related to health or personal care, or which are ingestible products, always check if a certificate of free sale is part of the import documentation required by the destination country.

You should also know that there is no standard format for the certificate, and it depends on the product for which it is being issued, the country of issue, and the authority that is issuing the certificate. All of them may have their own different formats. But basically, they will contain certain very basic information with respect to confirmation that those goods are legally sold with all safety precautions in the country of origin. In the next lecture, I will take up some more documents and their procedures that are still remaining and which come under the category of miscellaneous documents, as far as this course is concerned. So let us go to that lecture.

The International Air Transport Association which makes up the majority of the world`s airlines, uses the ICAO Technical Instructions for the Safe Transport of Dangerous Goods by Air as the basis for their dangerous goods regulations (IATA-DGR).

Some airlines have specific operational variations. These variations identify unique requirements specific to that particular airline and are always more restrictive than the DGR. FedEx, for example, has very specific documentation requirements and shippers should be aware of these variations.

Air Waybill(s) accompanying dangerous goods consignment(s) for which a dangerous goods declaration is required must include the following statements, as applicable, in the Handling Information box: “Dangerous goods as per attached Shipper's Declaration” and possibly “Cargo Aircraft Only” if applicable.

Download a sample of a typical IATA shipper's declaration for dangerous goods from the resource section of this lecture.

Now, friends, let me tell you about some more documents that are generally not required by the foreign buyers. One of these documents is used for the movement of goods in the domestic tariff area, so-called DTA, domestic tariff area. Or it also means we are talking about the inland transportation and the main document, main transport document for that within the country, the movement of the goods. And what is the transport document for moving the goods within the country for export purposes? So for this purpose, the main transport document is called an inland bill of lading, which may have different names in different countries, for example, in India it is called. Sometimes it is called A Builty. So what is the inland bill of lading? It is a contract of carriage between the exporter or the shipper. I will explain to you who the shipper and the transporter are.

It is either between the exporter and the transporter or the shipper, whichever is the shipper and the transporter. So, to move goods from the warehouse of the exporter or the shipper to a dry port or a wet port, or to some airport. And sometimes it is also used by manufacturers. That's why I use the words shippers. So it can also be used by the manufacturers who have manufactured that goods.

They are moving their goods from their factory to either the exporter's warehouse or to a port of loading or airport, wet port or dry port on behalf of the exporter. So what is happening that somebody else may be exporting those goods, but this manufacturer is moving goods within the country? This document, although it is generally not concerned with the documents in the letter of credit or the main documents that are required by the buyer, as I had just mentioned. Still, it is a commercial document, and that is the reason I want you to know about it. And it can be quite important, actually.

I have given a sample inland bill of lading in the resource section of this lecture, which you can download from here. There is no standard format for it, but a couple of samples. You can check this inland bill of lading sample. Another document I want to talk about is called the Dangerous Goods document or form. So what is the dangerous goods form? Suppose you are exporting some items that may be hazardous. That may be dangerous for the other goods or for anybody, even for the people who are handling the goods. And those shipments that are also going with the same vessel or the aircraft, if those can pose some danger to the other shipments also. So a document is required to transparently declare the nature of the goods and the nature of the hazard or danger associated with that particular shipment, and also confirming and declaring that you have professionally done the safe packing for the goods so as not to put other shipments and the ground crew or the handlers at any risk.

This is the requirement, actually the regulatory requirement of IATA in case of air shipment and of IMO in case of sea shipment. So IMO means International Maritime Organization. This requirement says that the declaration of the goods being hazardous has to be affixed to the shipping documents that are being collected by the shipping company or the airline, as the case may be. This dangerous goods certificate or form, or document, whatever you call it, is the declaration and is required for shipping purposes. It is very, very clear. It is also the shipper's or the exporter's declaration about all aspects of danger or hazards associated with the goods. He has to declare what kind of danger and the level of danger these goods can pose. So the level of danger is to be declared as per the categories of the dangers specified by codes and the labels defined by the United Nations.

According to these codes or labels, the goods have to be duly affixed with these labels on each box or pallet. These numbers in the codes or the colors of the label will tell everybody during the transit of the goods what the hazard is and what level of hazard or danger it is. This is how it works. So basically, this is the shipper's declaration that has to be there in the form of this kind of document, a dangerous goods document or form. And it should also declare that the shipper has made all efforts, best efforts to do a very scientific and professional packing to mitigate the risk of any danger or any hazard that is implicit or inherent in that particular shipment that may be posed to the handlers or to the other shipments in the vessel or the aircraft. So this special packing declaration has to be given by the exporter or on behalf of the exporter, by the freight forwarder. This is the dangerous goods document or the form. And then finally, let me discuss in this particular lecture another document, which is called the Shipper's Letter of Instruction.

Again, this SLI is actually not required by the buyer. It is required by the freight forwarder because these are the middlemen. These freight forwarders are the middlemen who provide you with certain kinds of special services. One of these services is to clear your goods at the border control of the origin country. Or it can also be to deal with the shipping company or to deal with the port authorities. These are the services that are being provided by the freight forwarders.

And sometimes they also deal with the destination country's customs. So, depending on the incoterms, for example, in the incoterms DDP, which is delivered duty paid, the freight forwarder may have to deal with the destination country customs and the regulatory authorities in that particular importing country. Therefore, this document relates to the freight forwarders who are providing these special services. It contains information to successfully allow the freight forwarder to carry out these special services and to move goods across borders.

This SLI, the shipper's letter of instruction, works like a cover memo for the export documents submitted to different regulatory authorities in the home country, as well as sometimes in the host country. So generally, it may also include a limited power of attorney for the freight forwarder by the exporter to allow the freight forwarder to sign certain regulatory documents on behalf of the exporter. At many times, what happens in the regulatory authorities' filings and declarations, these signatures are required. And it is very impractical for the freight forwarders to every time, come to the exporter to get these documents signed, because these documents emerge every now and then.

This limited power of attorney is required for freight forwarders to act on behalf of the exporter. It may be very, very important at that particular time, at the moment of the time when they are dealing with these authorities, to have this kind of limited power of attorney to sign the declarations of the documents by the freight forwarder on behalf of the exporter. This is the use and purpose, and significance of the Shipper's letter of instruction (SLI). So this particular document provides those possibilities for freight forwarders to be able to carry out all these activities, those special services.

One copy of a sample of the Shipper's letter of instruction is given in the resource section of this lecture. If you want, you can download it just to have a look at what it looks like. There is no international standard format for this document. It is one example that I have given of this SLI that you can download. In the next lecture, we will discuss documents and procedures to deal with export control regulations that remain in this particular module. Let's go there. Thank you.

In the next few lectures, Dr Jain shares the background and summary of the documents and procedures involved in the export of certain sensitive goods that may be subject to domestic or international export control regulations and laws.

Welcome back. In the last lecture, I discussed a very important document, which was the Shipper's Letter of Instruction SLI that is required by freight forwarders. In this lecture, I will discuss the documents and procedures required in certain cases of the export product that are subject to domestic or international export control, regulation, and compliance requirements. Let us go into this lecture. Understanding and complying with export control regulations and international trade compliance requirements is critical for any global business engaged in international trade, especially for sensitive, dual-use, strategic, or regulated goods and technologies.

Here in this particular module, I am going to share with you a detailed guide on the Documents and procedures needed to comply with export control regulations and related international laws, covering both the origin countries, that is, exporting countries, as well as the destination country, that is, the importing country. So if we focus on export control compliance and the documentation procedures required from the perspective of the origin country, export control laws in origin countries aim to prevent the export of certain goods, technologies, and services that could threaten their national or possibly global security, as well. That's the idea. That's the concept behind this. So, in this context, what is the key procedure from the point of view of the origin country, that is, the country that is exporting the goods?

The first step in the procedure is the product classification. So what do you do in the first step of this classification? Classify your product under the appropriate HS code and determine if it is a controlled item. It could be a military item, military-related item, or dual-use item, nuclear-related items, software with encryption, etc. In the US, for example, this involves ECCN classification, export control, and classification number. Finding that number from the Commerce control list, which is the control list of the US, CCL. Similarly, in the EU, it refers to the EU dual-use list. In the second step, one needs to check the prohibited and restricted list. So what do you do? Do you verify if the product, destination country, or even the buyer is on a denied party list or restricted country list? That has to be checked. And if we take the example of such a list, for example US BIS Entity List or OFAC sanctions list, or the EU sanctions list, these are common lists that can help you check the prohibited or restricted categories of the products, the destination country, as well as the buyer.

The third step is to obtain an export license if required. So you need to apply to the National Export Control Authority for licenses. For example, in the USA, you have to apply to BIS, which is the Bureau of Industry and Security. In India, you have to apply to the DGFT- Directorate General of Foreign Trade. In the EU, for example, you have to apply to the national export control authorities of individual member countries. Then, in the fourth step, it is always recommended to have an internal compliance program, which is ICP. So you set up internal checks, documentation review training, and escalation procedures to avoid violations. So if you take stock of all the documents that are required from the origin country side, starting with the export license, if applicable, the purpose of this document is the legal authorization to export controlled goods, if it is there. On a case-by-case basis, it is not for all the items. It is only for such items that are controlled or restricted.

And the end-use certificate or statement, which declares how and where the product will be used. Sometimes it is required by the exporter's government, that is, the origin country. Then the shipper's export declaration (SED) is required in some countries. For example, it is required in the USA for shipments above a certain value or under a certain kind of license. Then the commercial invoice for restricted items must state the product classification, value, and any related licensing information.

It should be jotted down in the commercial invoice as well as in the packing list, which will contain the detailed contents for inspection and clearance for such restricted items. Then the transport documents, like the bill of lading and air waybill, which confirm the export, also have to contain such information on the licensing for the restricted items. Very, very important. Then very important statement, or you can say document, is the DCS. That is the destination control statement.

I will tell a little more detail about this particular document at the end of this lecture. It is mandatory, for example, in the US exports of controlled items to prevent exports. So similar DCS statements are required in other countries also. Then the letter of assurance Loa, which is from the buyer, guarantees that no unauthorized use or diversion will happen. So these are the required documents. Complete, exhaustive list of documents that are required to comply with the Export Control Regulations in the origin country, from the point of view of the goals and objectives of the origin country for such a mechanism.

If we talk about the import export control compliance requirement, documentary and procedural for the destination country, the importing country also imposes its own set of regulations, especially for strategic goods, high-tech or dual-use items, or items like chemicals, arms, software, etc.. So the importing country also does that. Let's look at the key procedures that are involved, typically involved from the importing countries' point of view. So the first step is to secure the import license or permit, which is required for certain controlled or sensitive goods. The second step is the customs declaration and tariff classifications for such sensitive and controlled goods, which require accurate declaration using HS codes and documentation of origin. Which must also comply with product standards, labelling laws, and safety regulations.

Then, in the third step, in the importing countries, the procedure requires product registration and conformity certificates. So some countries, like for example China, Saudi Arabia, and European Union countries, may require conformity marks. For example, CE marks, SFDA approvals, etc. SFDA in the case of Saudi Arabia. And also in the fourth step, what is required is the end-user verification. The importing country may demand a certified end-use certificate for such controlled and sensitive goods. So, if we take stock of the complete set of documents required at the destination country, that is the importing country, starting with an import license or permit, the purpose of this document is to authorize the entry of sensitive or controlled goods or strategic goods.

The End Use certificate in the destination country is to be submitted to local authorities to declare the intended use. Conformity certificates and approvals may be required, which would demonstrate compliance with local safety or quality standards. Certificate of origin becomes very important in such cases because it proves the origin of the goods of controlled goods, restricted goods for customs and duty benefits, which may be under some agreement, but they are being monitored.

The origin is being monitored because of the sensitivity of the goods. Those items are controlled. So certificate of origin becomes very important. Then, the customs import declaration, which is submitted by the importer or the broker to clear goods, should very clearly mention the import licensing information and the status of the goods, which may be sensitive or controlled. Then commercial invoice and packing list have to be prepared accordingly and must match the export side documentation. And finally, transport documents like the bill of lading and the airway bill should verify actual shipment and route for such controlled and sensitive goods, and relevant information should be contained in transport documents.

This is the complete set required to comply with the export control regulations in the destination country. Now, if we talk of the common export control product categories, because it is not to be done for all the items, generally the categories like military and defense equipment, encryption software and electronics, nuclear-related goods, aerospace components, certain chemicals, and pharmaceuticals. Dual-use goods that can be used for both civilian as well as military purposes. These are the very typical and common export control categories for the products that are traded internationally.

In the next lecture, Dr. Jain discussed the significance of a Destination Control Statement in Export Documents.

Now, as I had mentioned about the DCS is the destination control statement. from the origin country's point of view, it becomes very important. The destination control statement DCS is a critical legal declaration used primarily in export control compliance in the origin country. It is designed to inform all the parties involved in export, as well as the transportation of a shipment of the controlled goods or restricted goods, that the goods are subject to certain kinds of export control laws or restrictions, either in the origin country or in the destination country. And they may not be diverted, re-exported, or transferred to any unauthorized entity or country.

That has to be declared very clearly. So, what is the significance of this DCS? And we can understand from the purpose of this statement, which is to alert foreign buyers, freight forwarders, and customs authorities that the goods are subject to certain kinds of export restrictions under the laws of the exporting country at least. Origin country. And prevent any unauthorized re-exports, diversion, or use of sensitive, dual-use, or controlled goods. It serves as a compliance safeguard and evidence that the exporter took due care under national and international laws to comply with the Export Control Regulations.

If you look at the DCS or something similar type of documents, which are the countries that require such DCS or similar items or similar statements or documents? If you look at the United States, where the regulatory body is BIS, that is the Bureau of Industry and Security under EAR, Export Administration Regulations. So in the United States, it is mandatory for controlled items under EAR, including dual-use goods, to have a DCS destination control statement. Similarly, in the United Kingdom, where the regulatory body is the Export Control Joint Unit ECJU, DCS may be required in the UK for strategic export control licenses. Then, in European Union countries, if we talk about it, where the regulatory bodies are national authorities under EU dual-use regulations, not always a DCS may be required explicitly, or a so-called DCS, but similar types of statements are used in different countries.

Then, in Canada, if you talk about where the regulatory body is, Global Affairs Canada, DCS is recommended for military or dual-use goods. And in the case of Australia, where the regulatory body is the Department of Defence, defence export controls, it may require a version of DCS in the Defence and Strategic Goods List (DSGL export. In India, the regulatory body is DGFT and which controls the SCOMET list of controlled goods and restricted items. A DCS-like declaration is required in some cases. For example, in SCOMET exports under licenses, it will definitely be required. So that is the significance of a destination control statement. Now, if we talk about how and where DCS is made, how is it created?

If you look at the, for example, wording, if you take the example of the US. For US exports under EAR, that is export admin regulations, the DCS must be included on documents like the commercial invoice, transport documents like air waybill, and bill of lading. All shipping documents related to the transactions for controlled and restricted items only, not for all items. Then the standard US text reads like this that "these commodities, technology, or software were exported from the United States in accordance with the EAR, that is, the Export Administration Regulations. Diversion is contrary to US laws, and it is prohibited. This is the wording that is used. And how is it placed in the documents?

It must be very clearly visible and legible, which is typically placed, for example, at the bottom or near the signature. for example, in the case of a commercial invoice. Similarly, on the bill of lading and air waybill. On any other relevant documents accompanying the shipment, especially if a license is involved, a suitable place near the signature or anything that is very similar, it has to be placed. This statement has to be there. So these were the main miscellaneous documents that we had not covered in this course. And in this module, I will not take up any further documents. In the future. if any similar documents come to my notice, I will also include those documents in this particular module. So in the next lecture, let us conclude this module.

Let us wrap up this discussion in the next lecture.

Congratulations on reaching the end of this important and insightful module on miscellaneous trade documents and export control compliance procedures in international trade. This module covered a wide range of critical, yet often overlooked, documents and procedural frameworks that play a vital role in ensuring smooth, lawful, and compliant movement of goods across borders. Let us take a quick recap of the key elements we have covered in this module. In this module, we started with a very important document called the Certificate of Free Sale. We learned that this certificate of free sale demonstrates that the product is freely sold in the domestic market of the exporting country.

We also learned that this certificate of free sale is often required for health-sensitive products like food, cosmetics, and pharmaceuticals. It is not required for all the items, actually. And we also learned that it is issued by government and semi-government bodies or an authorized chamber of commerce, and sometimes by private agencies also. Then, subsequently, in this module, we took up another important document that is called the Inland Bill of Lading. We learned that this inland bill of lading is often used for domestic transportation from the exporter's or manufacturer's facility to the port or the airport. It is crucial for establishing a chain of custody and for coordinating multi-modal shipments, generally, often. We also talked about another very important document, which is called the dangerous goods declaration or certificate or document, or form, whatever you call it. We learned that it is mandatory to ship hazardous materials as per IATA or IMO regulations.

It ensures packaging, labeling, and handling of the goods comply with the safety norms: international as well as national safety norms. And it is usually issued by trained and certified professionals. Then we took up another document, which is called the Shipper's Letter of Instructions. Basically, this particular document provides clear shipping and compliance instructions from the exporter to the freight forwarder. It includes lesson details, delivery terms, and sometimes, if required, destination control statement DCS. It protects the exporter by clearly outlining the responsibilities of both the exporter as well as the freight forwarders in a smooth transaction and shipment of the goods for export, and ensuring the correct routing of the goods. It may also serve as a limited power of attorney for the freight forwarder or clearing and forwarding agent, C and F agent.

Then we also discussed about destination control statement (DCS). Very important export control compliance document. This is a compliance declaration included in documents like the commercial invoice or transport documents like the bill of lading or air waybill. And it is mandated generally by some countries, like the United States, for controlled or dual-use, or licensed exports. The purpose of this statement is to prevent unauthorized re-exports or diversion of sensitive or dual-use goods. Then we moved into the complex and highly regulated world of export control compliance, both from the origin countries' point of view as well as the destination country's point of view.

Herein, we discussed steps like product classification, checking the restricted parties and sanctioned countries, and obtaining export licenses wherever required, using documents like export licences, end-use certificates. Letter of assurance (LoA), customs declaration, and destination control statement (DCS). We also briefly mentioned the significance of having in place the so-called ICP: internal compliance programs for exporters of sensitive and dual-use goods. These procedures protect your organization from regulatory penalties, supply chain disruptions, and reputational risks, while also helping ensure national and global peace and security through responsible trade. Now, let us look at what is coming next. In the next module, we will dive into the world of auxiliary pre-shipment export documents.

These auxiliary pre-shipment export documents are the documents that are required to be prepared and submitted to relevant authorities, wherever applicable, to obtain the main principal commercial documents. And I also want to share with you an exciting update about this particular module, which still has a concluding lecture, which is basically an AI-based role-play exercise. The purpose of this exercise is to strengthen your understanding practically and engagingly.

The next lecture of this module will therefore feature this simulated AI-based role-play exercise, where you will take on the role of an exporter navigating the real-world challenges of export control compliance, interacting with an experienced clearing and forwarding agent. This immersive, interactive experience will help you test your knowledge, sharpen your decision-making skills, and it will help you learn how to respond to unexpected compliance situations with confidence.

Finally, I congratulate you on completing this important module of this course that focused on miscellaneous primary documents. If you have any queries about any of the documents that are discussed in this module, or the procedures that are taken up in this module, do write in the Q&A section of this course. I will respond to your query within one working day. You may also use the live AI assistant of individual lectures to ask your query, and it will try to answer your query in real time, clearing your doubts you may have about the respective lecture.

Now, how about rating and reviewing this course and sharing your thoughts about the content in this module, as well as in this course? If you have any suggestions, do write. These gestures will help the future students of this course immensely and help me improve this course further. If you have already rated or reviewed the course, you can do it again to strengthen your confidence in this course. Thank you very much.

In this section, Dr. Jain discusses the important support documents used to obtain the main principal commercial documents.

Friends, welcome to yet another new lecture. As you can see here that we'll be taking up today's topic. Our focus will be on the auxiliary export documents. So I will tell you what Auxiliary export documents are. And this very interesting topic which we had not covered actually. We had in the past sessions, we had discussed the main commercial principle documents. So when we talk of the commercial documents, there are two categories of documents. One category is the commercial principal documents, and another category is the commercial auxiliary documents.

Auxiliary documents are also commercial documents. Their purpose is to do the international commerce and to make the shipment smooth, export shipment smooth. The main purpose of the auxiliary documents is to make it possible to get the main documents, that is, the commercial invoice, the packing list, the certificate of origin, the quality certificate in order to obtain the main documents. So one by one, we'll be discussing the different auxiliary documents. These documents, once filed, lead to the main documents in the process of filing these documents, which is correct. So there are certain procedures, and there is the purpose of these procedures will be discussed that purpose also. So you will get an idea that the reason is for these auxiliary documents, or is it just for the ritual? No, it is not for the ritual.

There is are definite purpose of these auxiliary export documents to be filed to obtain the main commercial documents, or the so-called LC documents. So a letter of credit generally asks for such documents for getting the shipment from one country to another country across the borders, clearance, and for taking possession of the goods by the buyer. In order to obtain those documents, some formalities are there, and some procedures are there. So I will share with you one list of such documents, and I will try to explain to you how they work. Although these auxiliary documents are not required by the buyer, they are very important documents. With the help of these documents, only the exporter is able to get the main documents. So I will just share with you the list of these documents so you will have an idea. I had shared this list earlier also. We had not discussed that list, so we'll be discussing the same today.

Next, Dr. Jain has discussed the role of PI and SI as Auxiliary Documents.

So, friends, I had told you that commercial documents can be of two types: principal and auxiliary. And these documents we had already discussed, uh, individually. And if any of these documents we have not discussed in detail, maybe we can discuss any particular document, the main document for future sessions. But today we'll be discussing the auxiliary documents. So these are the documents to be focused on to obtain the principal commercial documents.

The proforma invoice we have already discussed, and you already know I had shown you one sample of the Proforma invoice in the earlier session. And I had explained to you that a proforma invoice is a precursor to the commercial invoice. It contains all the information, the description, and the type of description. So the idea is to give a screenshot of what is going on in the mind of the exporter, about the description, about the price, about the total price, and what quantity he's talking about. And when he wished to supply them. The delivery terms, the commercial terms, and the payment terms. All this information is there in the Proforma Invoice. It works like the highlight of the possible export contract, in the future.

This Proforma Invoice we have already discussed, and it leads to obtaining the final commercial invoice. Once the Proforma Invoice has been approved by the importer and possibly signed also, in which case, it also becomes the export contract also, in many cases. It leads to the creation of the commercial invoice that we have already discussed. Now, let us talk about another document, which is called the Shipping Instructions. You should not get confused with this document with another document, the Shipper's letter of instruction, which is actually meant for the freight forwarder. But this shipping instruction is to be given to the shipping line or the airline. Either it is given by the freight forwarder, or it is given by the exporter himself. Whoever gives the shipping instruction is a very, very important document because it contains some very important information. I'll just show you that. What is the significance of this Shipping instruction? So I'll just explain to you that this contains information like the shipment number.

The container number. May not be at the start. So some of this information is not available at the very start of giving the shipping instructions, which are to be given to the shipping company. If the information is not available, the shipping company will provide that information and will complete the shipping instructions. Total number of packages. A very important thing is to write the description of the shipment, the total number of packages, the size, the gross weight, the payer's parties, the type of packages being shipped, and whether they are in pallets. If they are in pallets, what are the dimensions of the pallets? Are these standard pallets? So, how many pallets are there? Whether it is likely to be FCL or LCL. Cargo Description. Shipper's name and address. Consignee name and address. Other mandatory details, under local customs and regulations. In different countries, there are certain local customs and regulations.

So whatever information is not available, obviously, that information will be given by the shipping company, but this shipping instruction becomes a document in order to ensure that you get the shipping space either on the ship or on the aircraft. So shipping instructions are like applying for the shipping space provided by the freight forwarder, or it can be applied by the exporter. But this kind of information should be ready with you. Whatever is available, you have to give. The best of your information has to be given in the shipping instructions. So every shipping company or airline will have its own format of shipping instructions. But the basic information will be on this checklist. So this should be very clear to you. Shipping instructions in such a case become a kind of request for booking this shipping space, based on which the shipping company or the airline will book the space for you, and will issue you the documents accordingly. I will tell you what documents are issued by the shipping company or the airline for this.

Do you know that a DEC page can be more important for a smooth export shipment than an actual insurance policy?

Then, friends, there is another document. Two types of information for inspection. One type is for the third-party inspection desired by the buyer, which is mandated by the buyer in the letter of credit. It wants the inspection certificate or the quality certificate from a third party, and the procedure for which has already been explained by the buyer. You have to notify at least seven days before the scheduled inspection. Correct time for inspection, according to the goods, according to the process, according to the packing, and the whole strategy of shipment. So, whatever is the suitable date, at least seven days before this intimation has to be given to the third party. The other type of intimation for the inspection relates to the intimation for inspection to, for example, local authorities. In many countries, the local governments want the goods to be inspected by the government agencies, in order to ensure that the goods are genuine and are they are bona fide and quality is of good quality, so as to improve the reputation of the country. These kinds of regulatory requirements are there in many countries. For example, in India, we have an agency called EIA: Export Inspection Agency.

The procedure has to be followed. Certain documents have to be filed with the export inspection agencies. These documents, along with the application for inspection, even if you are registered with the self-certification, you have to inform the EIA, and inspection may happen, or may not. The inspection is done randomly. So the inspection doesn't need to be made. If an inspection is made, they will issue the inspection certificate. If it is not made, then this intimation itself will serve as the inspection certificate. So this thing I had given a passing reference to in the earlier sessions. So the idea was just to give you more details about this inspection. In different countries, the agencies may be different. Then, another auxiliary document, which is very important in this regard, is the letter to the bank for the collection of the payment from the buyer.

Do not get confused with another document bill of exchange, or a bank draft. You are giving a letter to the bank with complete information about the documents and how these documents have to be sold to the buyer, whether on a DP basis or on a DA basis. So this has to be very clearly mentioned. So those instructions have to be very clearly given in this letter to the bank for the collection of the payment from the buyer in the non-LC cases. In the LC cases, also, you have to give the bill of exchange and the bank draft to tell the bank to pay against these documents, against the letter of credit. So even there a covering letter has to be given to the bank, absolutely clear instructions have to be given to the bank. This letter is the most important document in the case of bank collection, where the LC is not involved, and the bank's involvement is just to take the documents and negotiate with the buyer.

You have to be very, very clear and specific about this letter. And sometimes this letter has to be drafted very professionally. Then there is another document insurance declaration. It is also called the insurance declaration page or DEC page. Very popular document it is. I will tell you the significance of this document, but in a very broad sense, the insurance declaration is a kind of application for the issuance of the export cargo insurance policy. So this document is very, very significant. It has a lot of implications for the exports because, uh, I will just explain to you the reasons for this, this insurance declaration page. Basically, it sums up what is in the insurance policy. So whatever you think the insurance policy should cover, like for example, it should very clearly indicate what the incoterms. And if it's, for example, if it is CIF, then why is the exporter buying? Because it is a CIF contract. And who is the person to be insured and assured is the importer. So all these things have to be given very clearly, including the value of the shipment. What is the shipment? What is the subject matter of the shipment? And uh, any detail, uh, by the exporter.

An insurance policy is sometimes very difficult to read. So once you give this insurance declaration page, which sums up all the information, once the insurance policy is issued, this declaration page has to be updated further so that this serves as a template for you to understand what is there in the insurance policy in case of any peril, in case of any disaster or any damage to the goods, if the claim, insurance claim has to be filed, this page is going to help you because it contains not only what you had written, but it also contains the information by the insurance company. This DEC page becomes a page to be given to different authorities because the policy is very difficult to read the policy. This is very technical in nature, but this DEC page contains all this information. It comes at the start of the policy paperwork and contains information such as your deductibles, coverage, discounts, and more. And as an exporter, you should check your DEC page for errors as soon as you get the final DEC page. Once the policy is issued, the DEC page will contain the highlights of the policy, and the best way to check whether the marine insurance or the air insurance policy is correct, you check the DEC page, which is updated and given by the insurance company, along with the insurance policy. And if there is any error, it may create a problem for you while filing the claims. If it is required in the future.

No error should be there. This can only be checked with this insurance declaration page. You may need to show this page to your lender in case you have availed any banking credit, or Pre-shipment or post-shipment credit from the bank. This declaration page may be required to be shown to the lender, so that the lender knows that the insurance has been duly bought for this shipment. So this is very, very important. So this DEC page is very, very significant. Policy is very difficult. Even the lender may find it difficult to understand the policy document. So this is actually an official document. Your insurance declaration becomes an official document vetted by the insurance company and updated by the insurance company. And it reflects the information in the cargo insurance policy. So that's why it is very important. So that's the thing. The exporter should know the significance of this document's insurance declaration page or page.

Then friends. Based on the shipping instruction, the company issues you this shipping order, which is a confirmation that space has been booked. So this shipping order is a kind of a license for you to take your goods in the container yard and, uh, avail the slot which is given in the shipping order. Then you can take your goods, uh, your container in the container yard, and your, uh, transporter can take it inside and do the Gating In process. This Gating In process for getting the goods loaded on the ship or the train, in the case of a dry port, this container yard Gating In process is done. I will give you some more information.

A shipping order is a document that is issued by the carrier that confirms a shipment's booking on a vessel will contain the location of the empty container, from where to pick up the empty containers for stuffing purposes, and may also contain booking details like vessel number and sailing time, and will also contain the time slot for the Gating In process. So it's a very detailed shipping order and a very important document for further steps involved in making the shipment, entering into the Container Yard, and carrying out the customs clearance and the loading of the goods on the ship. Then we had, I think, already discussed in the earlier session what the Mate's Receipt is. This again is a document required for obtaining the transport documents. The mate's receipt is issued by the captain of the ship. It is a confirmation that the goods have been loaded on the ship. And what is the condition of the goods? Whether they are in good order and condition. They are not damaged, in which case the information will be mentioned in the receipt. If the mate receipt does not specify that the goods are in good order and condition, or it mentions that the goods are damaged, or there are some comments about the goods.

If that information is there, then you can't get the clean on-board transport documents. This receipt, along with the No Objection certificate from the port authorities and the customs, will help you obtain the transport documents. So, there is no MR in the case of AirwayBill, the shipment by air, you do not have any such MR, so this is only valid for the Sea Shipment. Then, finally, the very important document to obtain the certificate of origin is the application for the certificate of origin. Your declaration about the goods where they originate from.

Without this declaration, the issuing authority cannot really issue the certificate of origin because the certificate of origin is issued purely on the documentation along with this application. And the main element of this application is the declaration. You yourself are declaring that yes, these goods have the requisite value addition, or they originate from the country to be mentioned in the certificate of origin. Based on your declaration and the documentation, only the certificate of origin is issued. So in this session, my main idea was to discuss these auxiliary documents. I wanted to give you some more details. You understand the significance of these documents, and therefore, you will be able to carry out the complete export documentation very smoothly. That was the purpose.

In the next lecture, Dr. Jain will conclude this section.

So I hope you found this session interesting as well as informative from the point of view of understanding what the supporting documents are in order to obtain the main commercial principal documents. So these documents, called the Auxiliary Commercial Export documents, require this expertise to be with the exporter only because the main role is that of the exporter. So even the shipping instructions, even if it is being given by the freight forwarder, freight forwarder, would like you to make sure that you understand what is given in the shipping instructions, and only then will the freight forwarder transfer that document to the shipping company or the airline. So whatever topics we take up in these sessions, the idea is to equip you with the proper and accurate knowledge of the documents.

At least you understand the concepts, and you can be confident about the entries and your ability to check the documents, whether they are correct or not correct before they are filed. That is important. What is the difference between the shipping instructions and the shipper's letter of instruction to the freight forwarder? The main difference between SI and SLI is that SI is to be given to the shipping company or the airline.

SLI is the document given to the freight forwarder to provide a limited power of attorney to the freight forwarder, and to make him aware of the requirements of the export contract. Who is the shipper? Similar information to what you give in the shipping instructions, but there is a possibility that in SLI, some of the information may not be there, which may be necessary in the shipping instructions, because shipping instruction is a format specified by the shipping company, while SLI is a very general document that contains very basic information. For the freight forwarder to understand the job, to understand the shipment, to understand who the exporter is and who the importer is, what are the payment terms?

All that information. It is important for the freight forwarder to understand, to work on behalf of the exporter, and to get the limited power of attorney to sign on behalf of the exporter, including the signing for the filing of the export declaration to the customs. SI is meant for the shipping company. SLI is a very general document for the freight forwarder to deal with not only the shipping company, but also with the customs or any other regulatory authorities. The idea of SLI is very broad, and the shipping instructions are very, very specific to the requirements and the information. Both are different documents, but very similar.

Many similarities exist. So I hope you understand the difference between SI and SLI. One of the reasons for today's session was also to make you understand that the Shipper's letter of instruction is not shipping instructions. It is different. So many times, the exporters get confused between shipping instructions and SLI. Thank you very much.

In this section. Dr. Jain discusses the regulatory pre-shipment documents and the touchpoints with various local regulatory authorities and banks to be dealt with for export shipment clearance.

Hello, friends.

Welcome back to the course.

In this course, we have tried to discuss the different procedures and documentation of different types. Talking about the pre-shipment documents, we have discussed the principal commercial documents and the auxiliary documents.

Before we discuss the regulatory documents, let us talk about the different types of dealings with the regulatory authorities, the local regulatory authorities. In every country, the local regulatory authorities are also the stakeholders in any export shipment.

In this section, we will try to understand what the local authorities look for and expect from the exporters in every transaction. They want to know about the implications of those transactions that relate to the movement of the goods outward, as well as the money coming into the country.

That is true for every country. In this section, we'll be talking about the regulatory documents, and we'll be talking about the different touchpoints where the local authorities have to be involved.

All these things will be discussed in this section. I'm sure that this section will make things even better for you.

Before I start this section, I want to tell you that the local authorities throughout the world are trying their best to minimize the formalities, to make the procedures simple, and especially to make them online. Most countries are trying to make all the applications and deliverables communicated online so that the complications are less for the exporters, and there is an incentive for the exporters to deal with the local authorities and comply with all requirements.

That has to be kept in mind. The local authorities in every export transaction in most countries are normally the authorities regulating the movement of the goods and the money coming into the country, that is, the foreign exchange.

Generally, it is the role of the central banks.

For example, the central bank in India is called the Reserve Bank of India (RBI).

Now, the Reserve Bank of India directly or indirectly intervenes in every export transaction without really creating any complication for the exporters by having the so-called importer-exporter code to be given to each exporter who is doing any kind of exports from India through the Ministry of Commerce. DGFT is the Directorate General of Foreign Trade.

Similar things are done by the central banks all over the world.

They provide some kind of code number, some kind of import license, some kind of import-export license — some kind of formality is involved so that the central banks know what kind of activities are being done by exporters, without creating any hassles for them, mostly by online means.

They get the data from customs (that is, border control) and from the authorized dealers, that is, the commercial banks dealing with transactions and receiving money from outside the country. They collect data from different authorities that already have touchpoints with the exporters.

That is the most important authority in any country: the central bank.

The second most important local authority to be dealt with is customs or border control.

Every country has customs and border control that regulate exports as well as import transactions. In most countries, if you want to export anything to the international market, you have to give a kind of export declaration well in advance, stating that you expect some goods to be exported from your country.

You have to file some kind of export declaration with the local customs or border control.

For example, in India, it is called the shipping bill.

The shipping bill has to be filed well in advance with the customs department in India.

And it is done through electronic means, online — the Electronic Data Interface (EDI).

This facility is available in India, and the customs have their own portal in India, which is called IceGate.

Using IceGate, exporters have to visit the customs service centers, and then they have to provide the export details: the details of the goods to be exported, the nature of the goods, the value of the goods, and the harmonized system classification (HS classification) of the goods.

Minimum data has to be provided to the customs service operators, and they will generate the shipping bill for the exporters.

I will explain in more detail in subsequent lectures.

Very similar processes are used in most countries.

I will give you an example of how it is done in India. A similar thing has to be understood to be done in other countries.

That is the second very important local authority for the rationalization of taxes and the internal charges generally in the domestic market in DTA, that is, the domestic tariff area.

Most governments want to refund any direct or indirect taxes on any inputs or intermediate goods used for the manufacture of exports.

Every government has a policy of giving back such direct or indirect taxes.

Sometimes it is called the incentives or the benefits to the exporters.

To provide that, requisite registrations are required to establish the bona fide nature of the exporters, to look at their past performance, and to categorize them.

For that, most governments have export promotion bodies where certain things are mandatory or statutory.

For example, most exporters in most countries must have some kind of membership with such organizations directly related to the core business of the exporters.

For example, in India, these are called EPCs with specific products that are exported.

We have the Engineering Goods Export Promotion Council.

We have the Apparel Export Promotion Council in India.

We have PLEXCouncil, which deals with plastics and linoleum products.

Depending on what is the core area of exports, the exporters are supposed to get the membership.

In India, they issue a document called the RCMC, which is the Registration and Membership Certificate.

Using this certificate, exporters can avail themselves of any refunds, incentives, or benefits, logically and justifiably, from the local governments.

To rationalize this system of benefits, justifiability, and the return of undue taxes or charges in the form of internal or domestic levies, governments require certain local registrations in each country.

That is the other part of the local regulatory bodies.

Then, registrations with the local sales tax authorities or the excise departments are also required to ensure that the exporters are under the monitoring of these organizations and that they are exporting goods without paying any local taxes on the finished product.

Those kinds of registrations are required.

These are some of the touchpoints.

Complying with the requirements of these local authorities becomes important for the exporters.

And not to forget about the mandatory local inspections by the government authorities.

These mandatory inspections are required in many countries. This can be in the form of self-certification for certain categories of exporters, but most exporters have to invite the local authorities for inspection, or fulfill the buyer’s quality control requirements, or provide a buyer’s quality certificate or inspection.

Also, the declaration of any dangerous or hazardous goods to the local authorities, wherever required, especially to IATA or the International Maritime Organization (IMO).

These are some of the regulatory requirements.

The same goes for dealings with banks, for which I will have a separate section. I will explain what dealings, touchpoints, and formalities exporters must comply with when dealing with banks.

I will share with you some of the common documents that fulfill this role of dealing with the local authorities.

In the next lecture, Dr. Jain lists out the most common regulatory documents.

Now, friends, let us discuss the regulatory documents.

We have already discussed the principal documents and the auxiliary documents.

Now, talking of the regulatory documents, the most important document is the one that relates to the central bank, as I had mentioned to you. In its physical form, this particular document is called the Exchange Control Declaration. Like the export declaration to the customs, you have the Exchange Control Declaration to the central banks.

For example, in India, you make this Exchange Control Declaration to the central bank, that is, the RBI.

In India, in physical form, it is called the GR form — that is, the Guarantee Remittance form.

In the case of exports of software, it is called the SOFTEX form.

If you are exporting goods by post, speed post, or by courier, it is called the PP — that is, the Parcel.

And if you are sending the goods that are already paid for, it is called VP.

And if it is to be paid, it is called COD — that is, Cash on Delivery.

These are the Exchange Control Declaration forms in the physical format, but most of the filing of the Exchange Control Declaration is combined with the shipping bill, that is, the export declaration to the customs, for example, in India.

When we talk of the export declaration to the customs, one copy of the shipping bill is a document in India. For example, it is called the shipping bill.

One copy of the same shipping bill is called the Exchange Control Copy.

And you do not make the Exchange Control Declaration separately. In the EDI, a copy of the shipping bill will automatically be sent to the RBI.

This is a kind of simplification of the documents.

The requirement for the document is less in India. When the shipping bill is created by the Customs Service Center, the service center operator automatically creates the form for the central bank, which works as the GR form.

This is how it is done. And this shipping bill copy is also there for the Port Trust's purpose.

That means one copy for the Port Trust is also there, one for the central bank, which is the Exchange Control.

Then you are making the export declaration to the customs, which is called the shipping bill.

That is the customs declaration.

And the third copy of the shipping bill is for the port.

You are making a declaration to the port that you are exporting. So well in advance, all three authorities, local authorities, are being informed that the export shipment is expected from you for a particular order: the details of the goods, the value of the goods, and the requisite details.

This is how it is done.

And the same shipping bill certified by customs has a different significance and importance for different authorities — for example, for the bank, for the authorities providing the export incentives to the exporters. The certified copy of the shipping bill is required post-shipment when the export has already been done.

Or the shipping bill copy for the export promotion to get the drawback. So there is a separate copy of the shipping bill for drawback, for example, in India. In most countries, there will be some kind of export promotion copy that will be common for any kind of export incentives being given by the government.

As I have already mentioned to you, the Port Trust copy of the shipping bill is also there, or it can be the export application, also in some cases, the dock challan.

Apart from the Port Trust copy of the shipping bill for dealing with the port, you require one export application and an In-dock challan, for which I will explain to you in subsequent lectures how to deal with the Port Trust authorities.

In a separate lecture, I will explain this process.

These are very important regulatory documents which include the Exchange Control Declaration, the Export Declaration to the customs, and the declaration to the port authorities.

These are very, very important things where you are dealing with the central banks, with the customs, and with the Port Trust in the EDI system, which is the Electronic Data Interface.

The importance of the post charges, which you have given to the shipment that you are sending by post, becomes very strong evidence, which is equivalent to a certified copy of the shipping bill.

In the case of a post parcel, when you are shipping the goods by post, you do not have a shipping bill.

Here you have the post charges receipt, which works the same way in India, at least. In different countries, there may be some differences in how to deal with the goods that you are sending by post.

And then in many countries, the Insurance Premium Payment Certificate may be required by some governments who insist that the main insurance, which is the main carriage insurance, is done in that country. But it is also required for the banks because banks that give you the packing credit or the post-shipment credit require this Insurance Premium Payment Certificate to ensure that due diligence has been done.

Whether the payment of the insurance is done by you or by the buyer doesn’t matter. What is important for these banks is that you have to have this Insurance Premium Payment Certificate, whoever has paid it, to be produced, if the bank asks for it, to ensure that due diligence has been done for the shipment for which the bank has provided you with the packing credit, the pre-shipment credit, or the post-shipment credit.

Then you have some regulatory forms in different countries for dealing with the excise department, which is a local authority, with nothing to do with the buyers.

You are removing the goods from your factory without paying the excise duty wherever it is applicable.

In India, still, for very few items, excise is payable.

You remove the goods from the factory without paying the excise duty.

You use some regulatory documents.

In India, these documents are generally called ARE1 or ARE2.

For very few items, these documents may be required. For sales tax purposes, also, some regulatory documents will also be required.

I will explain to you how it is done for the Goods and Services Tax (GST), for example, in India, in a subsequent lecture.

Then you need a vehicle ticket.

What is a vehicle ticket?

It is the document generated by the exporter to move the goods inside the Port Trust or the container yard.

It works like a gate pass.

A vehicle ticket is a very important regulatory document from the point of view of the Port Trust because it contains the details of the goods that are entering the port, against which commercial invoice, against what vessel details, what dates, and what slots are available to you for the Gating IN process.

All this information is there in the vehicle ticket.

It works as a regulatory document from the point of view of the entry of the goods in the Port Trust area or the container yard.

A Freight Payment Certificate may also be required, like an Insurance Premium Certificate, by banks that are giving you some kind of packing credit or when some financing is involved.

There, you need the Freight Payment Certificate again for due diligence purposes.

These are some very common regulatory documents to be produced and generated by the exporter or obtained by the exporter in the respective countries.

Some of them are self-certified, some of them are certified by the requisite authorities, especially the customs and border control, which serve as evidence that the export has happened.

For example, a certified copy of the shipping bill by customs is very good proof that the export has happened, and many times, non-negotiable copies of the transport documents are also required.

For example, in India, when you are filing for the drawback claim, you need not only the drawback copy of the shipping bill, but also the commercial invoice and the transport documents, non-negotiable copies.

There are a plethora of regulatory documents to deal with the local authorities.

These are the documents that I have just discussed, which are very common documents.

What is an End User Certificate? Let us learn in the next lecture.

Okay.

Now there is one more very important regulatory document that I want to talk about.

This is called an End User Certificate.

Or in short, we call it EUC.

This particular end-user certificate is sometimes demanded by the client.

Or that is sometimes required by both the exporting country's government, as well as the importing country's government.

Many other intermediaries.

It is a regulatory document.

And I will tell you what the significance is and what other things are related to this particular document.

An End-user certificate is an official document issued by the importer, which means the buyer or the importing country's government confirms the final recipient and the intended use of the exported goods.

This document is primarily required for strategic, sensitive, dual-use, or controlled items to prevent their misuse, unauthorized resale, or diversion to unauthorized entities.

Now, let us talk about why an end-user certificate is required.

Governments and regulatory bodies mandate an EUC to ensure national security.

That means preventing the sensitive goods from falling into the hands of unauthorized users, hostile entities for control of the dual-use goods.

That means to verify that items with both civilian and military applications, for example, items like advanced electronics or chemicals, or aerospace components.

These are used for peaceful purposes only. To prevent unauthorized re-exports.

That means ensuring that the buyer does not re-export or transfer goods to restricted destinations, and to comply with international export controls.

Many governments, including those of the US, the EU, Japan, and India, have strict regulations regarding certain exports.

Or to meet licensing requirements.

Some controlled items require an export license, and an EUC is part of the approval process.

Now, let us look at when an EUC is required.

An end-user certificate is typically required for exporting defense and military equipment, like weapons, ammunition, armored vehicles, or dual-use goods like high-tech machinery, aircraft components, encryption technology, or nuclear, chemical, and biological materials like radioactive substances, toxic chemicals, sensitive electronics, and telecommunication equipment, and certain pharmaceuticals and chemical products.

Now, who issues the end-user certificate? The buyer, that is, the importer, usually provides the EUC, often certified by the importing country's government or defense ministry.

It can be from chambers of commerce or industry regulators, or it can be from our relevant licensing authority.

For example, in cases of military or strategic items.

Now, let us look at what the key details are included in an EUC.

In an EUC, the details included are like details of the exporter and importer, which means company name, address, contact details, or the description of the goods.

Which means type, quantity, and technical specifications. And also, it includes the final user's name and address, like a company, or it can be a government agency receiving the goods.

Also included are the intended uses of goods.

It can be for civilian purposes, military purposes, research purposes, or for industrial use.

Also, it includes Non non-re-export clause, which means a commitment that the buyer will not re-export without approval.

Then it also includes government certification and stamps, which means official approval from the importing country.

Now, what is the process of obtaining an EUC?

There are certain steps.

The first step is that the exporter requests the EUC from the buyer.

The second step is buyer to complete the certificate and get it certified by the relevant government authority.

The third step is that the exporter submits the EUC to their country's export control agency if required.

And the last step is the approval and licensing.

If necessary, the exporter secures an export license before shipping.

Now, let us look at what happens if there is no EUC.

If there is no EUC, things can happen, like it could be the export license rejection.

Many governments require an EUC before issuing an export license, or even if it is issued.

Even then, if there is no EUC. it is possible that the license can be rejected. Or it can lead to customs clearance issues.

Shipments may be delayed or blocked.

If the EUC is missing, it could also result in a risk of legal violations.

Exporting controlled items without an EUC can lead to penalties, fines, or blacklisting.

In conclusion, we can say that this particular document End User Certificate, or EUC, is a crucial document in international trade.

It is used for controlled, sensitive, or dual-use goods normally, but it may be used in some other situations, depending on to case and depending on the product and the particular sector.

The main purpose of this particular document is to ensure compliance.

That's the main thing that you should know about.

And it directly or indirectly safeguards national security and prevents unauthorized use of the goods that are being exported. Or unauthorized re-export to countries where it should not be re-exported.

That's the purpose of this particular document, and it is a very important regulatory document.

In the next few lectures, Dr. Jain discusses the methods of dealing with Customs or Border control and the Documents involved in such touchpoints.

Okay, friends, now let us talk about the customs process.

The process of customs starts with the export declaration.

The name of this declaration, this document, is different in different countries.

In India, it is called a shipping bill.

Normally, in most countries, including India, the export declaration is filed online.

In India, it is called EDI, Electronic Data Interface, and in the US, for example, it is called the Automated Export System, which is the AES.

Normally, the export declaration is filed by the CNF agent or the freight forwarder, but it can also be filed in self-mode.

The exporter can also file it because it's an online process.

For this, the exporter or the freight forwarder's representative has to visit the customs service center, at least in India.

In different countries, the system may be different, but in India, to start with, to generate the export declaration document, that is the shipping bill, the exporter or the freight forwarder, or their representative, has to visit the customs service center. There, the customs service operators are there who will collect the basic data.

I will just show you what data is required.

This is the data export declaration details, like what is the destination country, what is the exporting country, several packages, ITC HS code, or HS code (whatever is there in that country which is prevalent).

Generally, it is an HS code only — Harmonized System — because all the customs in the world use a Harmonized System.

There may be little differences in the 10-digit or the 12-digit number, but eight digits are the same.

The terms of trade, the currency of the export, and the exchange rate are all factors.

What is the currency of the contract?

The quantity, price, and the total value of the contract, and very minimum details, as you can see here, refer to the nature of the goods.

The goods description also has to be mentioned here.

And the shipping marks.

This is the minimum information.

It will create a document like this, which I am just showing you.

And this document is not the shipping bill, actually. This is not the document.

This document serves as the checklist.

This sheet will be created by the service center operator and the representative or the exporter. Whoever is authorized to sign it will sign it.

Once it is signed, the same data will again be fed or checked by the customs service center operator, and the shipping bill will be generated.

Now, the name of this document can be different in different countries.

This is how it is done.

As I have just mentioned to you, in the Non-EDI filing, that is in the physical format, this document is called the Guarantee Remittance form.

The GR form, the main document, is the GR form.

Now, in EDI, it is a shipping bill.

What happens is that the same copy in two more sets is referred to as the EC copy.

That is, the Exchange Control copy.

What is the meaning of this?

This is for the exchange control by the central banks.

In the case of India, it is the RBI, the Reserve Bank of India.

One copy goes to RBI, and another copy is meant for the bank because the bank will receive the remittance of the foreign exchange when it comes.

This copy, after endorsement by the bank, will be sent to RBI for matching purposes so that RBI knows that this shipping bill was generated at customs, and the same copy has been endorsed by the bank, confirming that the payment has come.

It will be matched by the RBI.

That's why two sets are required.

And one set of this same shipping bill is for the Port Trust Authority's purpose.

It’s kind of an exchange control declaration as well as the Port Trust declaration, along with the export declaration.

This is how the whole system has been made simple for the exporters.

They just have to generate one shipping bill.

And that too, in this method of visiting the customs service center, and the operator will do the whole job.

You only have to give the data, that’s all.

It’s quite simple, actually. This shipping bill is the main document that has to be categorized, as well as when it is to be filed — whether it is under dutiable exports (which means the export shipment has some export duty involved), or is it duty-free, or is it duty-free because of the bond filed by the exporter.

It may be some kind of bank guarantee that the exporter has given that it will be exported.

That is why it is duty-free.

And it can be against such shipments where the drawback claim is there, a duty drawback claim in the case of India. In different countries, they have different export incentives.

In India, I am just talking about these four categories: dutiable, duty-free, duty-free ex-bond, or goods under a claim of drawback.

This has to be specified at the time of generation of the shipping bill.

This is very important so that customs understand that this export declaration is under what head, and accordingly, they have to do their internal formalities.

Other documents that are not generally required at the time of EDI at the start, but later on in the customs process, may be required.

Other documents that are required are:

• Commercial invoice.

• Packing list.

• Indian government’s inspection certificate (the EIA certificate). In case the inspection has not been conducted by the Export Inspection Agency, in India, for example, the intimation for inspection itself serves as the inspection certificate, which I had mentioned earlier.

• The export license, if it is applicable, or the certificate.

• LC copy if it is against the LC.

• Proforma invoice or the export order. A Proforma invoice means a signed copy of the buyer. That serves as the export order. Or otherwise, the export order or any export contract it may have.

• A technical brochure, in case of exports of goods where there are accompanying technical brochures, is useful to the customers for clearance purposes.

These documents may be required in case customs wants to do a physical examination.

I will just share with you what exactly the process and the role of customs are in this whole process.

I’ll just show you how it works.

In customs, there are four categories of roles:

1. Paper verifications.
   That means the export declaration. This data has to be verified. Customs officers check the description of the goods. Whether any duty is to be paid or any charges are to be paid may arise. The customs officer will check that.

2. Payment of charges.
   The payment of any charges, duties, or penalties by the exporter or the freight forwarder.

3. Release of the shipment.
   Finally, the release of the shipment.

This whole basic customs clearance process is conducted.

I will just show you the flow of this.

What happens is the exporter, the broker, or the freight forwarder forwards the export declaration to you by going to the customs service center and giving the data based on which the customs does the paper verification. The data verification is mostly automated.

Subsequently, the shipping bill number is generated by the system.

It may also be called the payment number, but in different countries, they have different names.

In case any payment has to be made, the freight forwarder or the exporter pays the customs.

Once it is done at the port of exit, in the customs bonded area managed by the custodian (some private custodian, which means the warehouse or the container yard), wherever it is, the goods have reached there.

At that time, they either give the green signal to go ahead without any inspection or give the red signal, in which case the physical examination will take place.

These two possibilities are there.

The red line is given to a very small percentage, and it is system-generated.

The system will use the shipping bill number to determine whether a physical inspection is to be done or not.

It is not the discretion of the customs people. It is generated by the system.

Once it is given the green signal, the cargo is loaded.

It is removed from the customs bonded area to be loaded on the carrier.

This is how it is done.

In the meantime, the verification of data and the customs report are generated.

It will help in getting the certified copies of the shipping bill or the EC copy, or the export promotion copy, that is, the duty drawback claim copy.

All these will be given in the verification and reporting by the customs.

After this, the freight forwarder takes over the removal of the goods from the customs bonded area and the loading of the goods on the carrier.

This is a very typical kind of method in this.

Do you know that an export declaration is the most important local customs document for any export shipment? Learn as much as you can about this document for smooth clearance of export goods at the border control.

As I have just mentioned to you, in the non-EDI filing, that is in the physical format, this document is called the Guarantee Remittance form.

The GR form, the main document, is the GR form.

Now, in EDI, it is called a shipping bill.

What happens is that the same copy in two more sets is referred to as the EC copy.

That is the Exchange Control copy.

What is the meaning of this?

This is for the exchange control by the central banks.

In the case of India, it is the Reserve Bank of India.

One copy goes to RBI, and another copy is meant for the bank because the bank will receive the remittance of the foreign exchange when it comes.

This copy, after endorsement by the bank, will be sent to the RBI for matching purposes, so that the RBI knows that this shipping bill was generated at customs, and the same copy has been endorsed by the bank, confirming that the payment has come. It will be matched by the RBI.

That’s why two sets are required.

And one set of this same shipping bill is for the Port Trust Authority’s purpose.

It’s kind of an exchange control declaration as well as a Port Trust declaration, along with the export declaration.

This is how the whole system has been made simple for the exporters.

They just have to generate one shipping bill.

And that too, by visiting the customs service centre.

The operator will do the whole job.

You only have to give the data. That’s all.

It’s quite simple, actually.

This shipping bill, which is the main document, has to be categorized also when it is to be filed — whether it is under dutiable exports (which means the export shipment has some export duty involved), or is it duty-free, or is it duty-free because of the bond filed by the exporter.

It may be some kind of bank guarantee that the exporter has given that it will be exported.

That’s why it is duty-free.

And it can be against such a shipment where the drawback claim is there — a duty drawback claim in the case of India. In different countries, they have different export incentives.

In India, I am just talking about these four categories: Dutiable, Duty-free, Duty-free ex-bond, or goods under claim of drawback.

This has to be specified at the time of generation of the shipping bill, so that customs understands that this export declaration is under what head, and accordingly, they have to do their internal formalities.

In the next lecture, Dr. Jain shares a typical export clearance process.

Other documents that are not generally required at the time of EDI at the start, but later on in the customs process it may be required. So other documents are-

Commercial invoice, packing list.

These are very usual documents. The Indian government's inspection certificate, which is the EIA certificate. In case the inspection has not been conducted by the Export Inspection Agency in India, for example, the intimation for inspection itself serves as the inspection certificate, which I had mentioned to you earlier, and the export license, if it is applicable, or a certificate, LC copy if it is against the LC Proforma invoice or the export order. A proforma invoice means a signed copy of the buyer, which serves as the export approval. Or otherwise, the export order or any export contract it may have, and the technical brochure in case of exports of such goods, where there is are accompanying technical brochure, and it is useful to the customs for clearance purposes.

These documents may be required in case the customs want to do a physical exam.

I will just share with you what exactly the process is and the role of customs in this whole process.

I will just show you how it works.

In customs, there are four things.

The role of customs is in four categories. That is.

The first is the paper verifications.

That means the export declaration.

This data has to be verified.

Customs officers check the description of the goods, whether any duty is to be paid or any charges are to be paid, and any kind of dues that may be there.

The customs officer will check that. And the payment of any charges, duties, or penalties by the exporter or the freight forwarder. And finally, the release of the shipment.

This whole basic customs clearance process is conducted.

I will just show you the flow of this.

What happens the exporter or the broker, or the freight forwarder forwards the export declaration by going to the Customs Service Centre and giving the data, and based on which the customs do the paper verification.

The data verification.

Mostly, it is automated.

The shipping bill number is generated by the system.

It may be called the payment number, but whatever.

In different countries, they have different names.

In case any payment has to be made, the freight forwarder or the exporter pays the customs.

And once it is done at the port of exit in the customs bonded area warehouse or the container yard, wherever it is, the goods have reached there.

And at that time, either they give the green signal to go ahead without any inspection or give the red signal, in which case the physical examination will take place.

These two possibilities are there.

The red line is given to a very small percentage, and it is system-generated.

The system will use the shipping bill number to determine whether the inspection is to be done.

Physical inspection has to be done or not done.

It is not the discretion of the customs people.

It is generated by the system.

Once it is given the green signal, the cargo is loaded.

It is removed from the customs bonded area to be loaded on the carrier.

This is how it is done.

And in the meantime, the verification of data and the customs report are generated.

It will help in getting the certified copies of the shipping bill or the EC copy, or the export promotion copy, that is, the duty drawback claim copy.

All these will be given in this verification and the reporting by the customs.

After this, the freight forwarder takes over, the removal of the goods from the customs bonded area and loading them onto the carrier.

This is a very typical kind of method in this.

In the next lecture, Dr. Jain discusses the methods of dealing with Shipping Co. and the Transport Documents involved in such touchpoints.

And friends, after the customs process is done, the way I had mentioned in the last lecture, the shipping company comes into the picture.

The shipping company had already received the shipping instructions, based on which the shipping company had issued the shipping order.

Now shipping order contains the slot when the goods have to reach the container yard, which is the custom bonded area first, uh, uh, after customs clearance, it is removed from the custom bonded area in the container yard to be loaded on the ship.

The Shipping company has already given, uh, this, uh, slot timings are there. Once the goods are loaded, then the freight forwarder or the exporter contacts the shipping company and, uh, obtains the Mate's Receipt first from the captain of the ship. The captain of the ship, uh, confirms whether the goods are loaded, damaged, or undamaged, so whether it is clean or not, and accordingly, the bill of lading will be issued later. after obtaining the No Objection certificate from the customs and the port authorities.

This is generally done by the freight forwarder.

Therefore, this is nothing but a no-due certificate.

These three documents, the MR, which is the Mate's Receipt issued by the captain of the ship, the NOC from the customs NOC from the port authorities, will help you in obtaining the bill of lading in the case of sea shipment.

In this process, once done, the goods are loaded onto the ship's sails, and then the export general manifest (EGM) is issued by the shipping company.

That is the confirmation that the goods are on the ship, and they have already sailed out of the port.

Only then, based on the export general manifest, that is the EGM, only the customs issues the certified shipping bill copies. Once it is confirmed that the boats have indeed been exported.

It has not only been removed from the customs area, but actually loaded, and the ship has already sailed.

EGM has been announced. The customs will check the shipment in the EGM, and then they will issue the certified copies of the shipping bill, both for the RBI as well as for the bank.

That is the EC copy and the export promotion copy. That is the duty drawback and the Port Trust copy also. This is how the touch points are there with the customs.

In the last lecture, I discussed with you and with the shipping. These are the formalities.

Now, let us talk about the different types of touch points with commercial banks.

You already have the idea that banks have different roles.

Different banks have to be dealt with.

And uh, the major, very important area to start with the bank is getting the AD number, which is the authorized dealer's number, at least in India.

The situation may be different in different countries.

In most countries, they need an AD number to link the foreign exchange receipt for the goods that are being exported.

Every port, whether it is a dry port or whether it is a wet port, requires an AD number, which has to be registered with the respective port that you want to use for export purposes.

This is the starting point when we talk about dealing with the banks.

The second touch point with the bank would be arranging the finance that I had discussed with you; also, commercial banks are mandated in many countries to provide the finance at concessional interest rates.

This can be in the form of the Pre-shipment credit, which is also called the packing credit.

It can also be in the form of a Post-shipment credit.

Post-shipment credit is required in cases where the payment terms are with Usance.

It means that, whether it is through LC or any other means, there is a gap between the receipt of the documents by the buyers and the actual payment by the buyer.

There may be a gap.

It may be 30 days, 40 days, 60 days, whatever the gap is.

To that extent, you need money and finances.

That is called the post-shipment credit.

Banks provide that facility. And whatever the loss is there of the commercial bank on the interest rates, generally, it is compensated by the local governments. The same facilities are available in India in the interest subvention scheme, which is WTO-compliant.

And there is no problem with that. And because the interest rates in India are much higher than the international rate, a gap between the international interest rates and the financing costs.

That gap is fulfilled by this interest subvention scheme.

Otherwise, the Indian exporters will not be able to compete with the other players in other countries because they are enjoying better interest rates and lower cost of financing for the export. To bring a level playing field for the Indian exporters, this scheme is there.

Many countries provide this kind of scheme where such a situation exists. The documents, as per the letter of credit or if it is being sent by bank collections, have to be provided and submitted to the negotiating bank, which will further negotiate those documents with the issuing bank.

What happens along with these documents that are given in the letter of credit, that list of the documents, generally it is a commercial invoice or packing list, a certificate of origin, quality certificates, freight certificate, insurance certificate, and transport documents.

These are the most common documents.

Apart from that, you also have to give a bank document that is called a Bill of Exchange or Bank draft.

I will tell you a little bit about this document, which is called a Bill of Exchange or Bank draft.

Let's see that. This bank draft is also called the documentary collection. in the case of the payment by bank collection. In the case of LC, it is just the bank draft or the bill of exchange.

It is attached with all commercial documents and a cover letter, along with the documents that are mentioned in the letter of credit.

A cover letter has to be given.

This cover letter has to be prepared very professionally and contain what you are attaching and any instructions that you want to give to the negotiating bank, directed toward the issuing bank.

You can give that instruction in the cover letter.

If you remember, in our opening case study, we discussed this cover letter and the importance of this cover letter.

This draft helps in the transfer of title and the responsibilities of the different parties.

This establishes the international commercial terms that have been decided.

It mentions the terms of the trade. And it helps in an important, the most important thing is that it helps in the release of the funds to the exporter.

In the case of LC, it is an unconditional order to the bank to pay against the LC, or in the case of documentary collection, it is an unconditional order to the negotiating bank and the collecting bank to collect the payment from the overseas buyer and pay to the exporter. It may contain some kind of payment instructions or a transmittal letter.

How the money will be transmitted, that information may be there, but as far as the collecting bank, in case of bank collection, or the negotiating banks are concerned, they will be more focused on the covering letter.

This is the role of the bank draft.

I will also show you one sample of the bank draft.

Let's look at this sample of the bank draft.

This is a sample of the bill of exchange or bank draft.

It contains the reference number. It contains the amount in a figure, which is given in our example, our opening case study.

The amount was Euro 55,000. That information has been given.

The bill of lading date is given, their place of issue, the date of issue, and the payment is it with some users, period, or it is payable at sight.

That is the most important thing.

If it is in sight, it will be according to the letter of credit. If the LC is payable at sight, the bank bill of exchange will also be at sight. If the LC is with the usage period involved, it will be payable with the grace period. And pay to the order of ourselves, because it is being created by the exporter.

Since it is being prepared by the exporter and generated by the exporter, it is written here to pay to the order of ourselves. Then some of the amount has to be mentioned here in words, like Euro 55,000, only drawn under the LC number.

The LC number has to be given with the date of the LC to be given. Issued by which bank?

Which is the bank? It is AXA bank.

This bank is the drawee in the case of an LC.

It is signed for and on behalf of the Droawee.

This particular bill of exchange has to mention the bank that has opened the letter of credit.

In the case of the collecting bank, the collecting bank will come here, where it will be written on behalf of the collecting bank.

And the bank name will be here. And signed on behalf of the drawer. The drawer is the exporter who is the beneficiary of the money.

The name of the exporter will come here.

The name of the authorized signatory and the name of the authorized signatory of the exporter will come here.

Signatures will be here.

This is a very simple document, but it is a very powerful document.

It is just like a bank cheque.

When you give a cheque, it is nothing but a bill of exchange or a bank draft.

Same thing.

This is prepared in two copies. as you can see here. The same copies are there. Those have to be sent separately to the bank.

Your negotiating bank will send it to the issuing bank in two separate air mail or courier.

This is a very traditional, very old method of sending the bill of exchange. The idea is that the bill of exchange reaches the issuing bank or the collecting bank.

It cannot be said that it has not received the bill of exchange. Separately, it has to be sent two times.

This is a very, very old practice in the banking system.

As per the UCP, different versions. This is the process for the bill of exchange. In the case of the documents that are submitted to the bank, negotiating bank for forwarding to the issuing bank or the collecting bank, these are the common documents: commercial invoice, packing list, certificate of origin, bill of lading or airwaybill, transport documents, inspection quality certificate, and shipping bill

EC copy, and exchange control copy also have to be provided to the bank.

You remember we discussed the Export Declaration shipping bill, which may have a different name in different countries. four copies are generated by the system, and the certified copies are four copies; two sets are for banking purposes, one for the RBI, and another for the commercial bank.

That copy has to be given to the bank also. And a bill of exchange or bank draft, insurance payment certificate, as the case may be.

A consular invoice is required by the buyer. And the phytosanitary certificate.

In this case, it is an applicable phytosanitary procedure is required depending on the pest involved, the nature of the packing, or the goods involved.

The phytosanitary certificate may be required.

These are the other bank formalities.

Apart from that, the other touch point with the bank is that the negotiating bank may write back if there are some discrepancies in the documents before it is sent to the issuing bank. With the help of the bank, you remove these discrepancies. If it is possible to remove it at that stage. And also obtaining the bank remittance certificate.

Generally, it is an eBRC- electronic Bank remittance certificate, which is issued by the bank confirming that the foreign exchange, the money against the export order, has been received.

Based on this, BRC only the bank endorses the EC copy of the shipping bill and sends it to the central bank.

In the case of India, it is the RBI. And thereby ensuring the exchange control compliance as guided by the central banks.xz

These were the bank formalities that had to be done by the exporters.

These are the touch points with the bank that every exporter has to be aware of.

In the next few lectures, Dr. Jain discusses the methods of dealing with different intermediary banks and the Procedures and Documents involved in such touchpoints.

Hello, friends.

Welcome back to the course.

Now, let us talk about the different types of touchpoints with the commercial bank.

You already have the idea that there are banks that have different roles.

And the major, very important area to start with the bank is getting the AD number, which is the authorized dealer's number, at least in India.

The situation may be different in different countries.

In most countries, in order to link the foreign exchange receipt is linked to the goods.

Every port, whether it is a dry port or whether it is wet port, would require an AD number, which has to be registered with the respective port for export purposes.

This is the starting point when we talk of dealing with the banks.

The second touch point with the bank would be arranging the finance that the commercial banks are mandated in many countries to provide the finance at concessional interest rates.

This can be in the form of the Pre-shipment credit, which is also called the packing credit, or it can also be in the form of the post-shipment credit.

Post-shipment credit is required in cases where the payment terms are with usance.

It means that, whether it is through LCE or any other means, there is a gap between the receipt of the documents by the buyers and the actual payment by the buyer.

There may be a gap.

It may be 30 days, 40 days, 60 days, whatever.

The gap is there.

To that extent, you need money, finances.

That is called the post-shipment credit.

Banks provide that facility.

And whatever the loss is there of the commercial bank on the interest rates, generally it is compensated by the local governments.

The same facilities are available in India in the interest subvention scheme, which is WTO-compliant.

And there is no problem with that.

And because the interest rates in India are much higher than the international rate, a gap between the international interest rates and the financing Cost.

That gap is fulfilled by this scheme.

Interest subvention scheme.

Otherwise, the Indian exporters will not be able to compete with the other players in other countries because they are enjoying better interest rates and, lower cost of financing for the export. To bring a level playing field for Indian exporters, this scheme is there.

Many countries provide this kind of scheme. Documents as per the letter of credit, or if it is being sent by bank collections, those have to be provided and submitted to the negotiating bank, which will further negotiate those documents with the issuing bank.

What happens along with these documents given in the letter of credit, that list of the documents, generally it is a commercial invoice or the packing list, the certificate of origin, quality certificates, freight certificate, insurance certificate, and transport documents.

These are the most common documents.

Apart from that, you also have to give a bank document that is called a Bill of Exchange or Bank draft.

I will tell you a little bit about this document.

Bill of exchange or bank draft.

Let's see that.

This bank draft is also called the Documentary Collection in the case of payment by Bank collection.

In the case of LC, it is just the bank draft or the bill of exchange.

It is attached with all commercial documents and a cover letter, along with the documents mentioned in the letter of credit. A covering letter has to be given.

This covering letter has to be prepared very professionally that containing what you are attaching and any instructions to the negotiating bank directed towards the issuing bank.

You can give that instruction in the cover letter.

This bank draft helps in the transfer of title and the responsibilities of the different parties.

Because this establishes the international commercial terms, it mentions the terms of the trade, and it helps importantly; the most important thing is that it helps in the release of the funds to the exporter.

In the case of LC, it is an unconditional order to the bank to pay against the LC, or in the case of documentary collection, it is an unconditional order to the negotiating bank and the collecting bank to collect the payment from the overseas buyer and pay to the exporter.

And it may contain some kind of payment instructions or the transmittal letter.

So, how the money will be transmitted, that information may be there.

But as far as the collecting bank is concerned, in case of bank collection, or the negotiating banks are concerned, they will be more focused on the covering letter.

This is basically the role of the bank draft.

I will also show you one sample of the bank draft.

So let's look at this sample of the bank draft.

This is a sample of the bill of exchange or bank draft.

It contains the reference number.

It contains the amount in figures, which is given in our example.

The amount was Euro 55,000.

That information has been given.

The bill of lading date is given there.

Place of issue.

Date of issue.

And the payment is it with some usance period, or is it payable at sight?

That is the most important thing.

If it is at sight, it will be according to the letter of credit.

If the LC is payable at sight.

The bank bill of exchange will also be at sight.

If the LC is with a usance period involved, it will be payable with a usance period. And pay to the order of ourselves because it is being created by the exporter.

So since it is being prepared by the exporter generated by the exporter, it is written here, pay to the order of ourselves. Then the sum of the amount has to be mentioned here in words, like Euro 55,000, only drawn under the LC number.

So the LC number has to be given.

The date of the LC has to be given.

Issued by which bank?

Which is the bank? Here it is, AXA Bank.

So this bank is basically the drawee in the case of an LC.

So it is signed for and on behalf of the Drawee.

So this particular bill of exchange has to mention the bank.

And in case of the collecting bank, the collecting bank detail will come here, where it will be written on behalf of the collecting bank.

And the bank name will be here. And signed for on behalf of the drawer.

The drawer is the exporter who is the beneficiary of the money.

The name of the exporter will come here.

The name of the authorised signatory and the name of the authorised signatory of the exporter will come here.

Signatures will be here.

This is a very simple document, but it is a very powerful document.

It is just like a bank cheque.

When you give a cheque, it is nothing but a bill of exchange or a bank draft. Same thing.

This is prepared in two copies, as you can see here.

The same copies are there, too.

Those have to be sent separately to the bank.

Your negotiating bank will send it to the issuing bank in two separate airmail or courier.

This is a very traditional, very old method of sending the bill of exchange.

The idea is that, uh, that the bill of exchange definitely reaches the issuing bank or the collecting bank.

It cannot be said that it has not received the bill of exchange.

Separately, it has to be sent two times.

This is a very, very old practice in the banking system.

And as per the UCP guidelines, Different versions.

This is the process for the bill of exchange.

In the case of the documents that are submitted to the bank, the negotiating bank forwards them to the issuing Bank or the collecting Bank.

These are the common documents.

Commercial invoice.

Packing list.

Certificate of origin.

Bill of lading or air waybill.

Transport documents.

Inspection and quality certificate, and shipping bill EC copy.

An exchange control copy also has to be provided to the bank.

You remember we discussed the export Declaration, shipping bill, which may have a different name in different countries.

Four copies are generated by the system, and the certified copies, four copies, two sets are for the banking purpose, one for the RBI, and another for the commercial bank.

That copy has to be given to the bank also.

And the bill of exchange, bank draft, insurance, freight payment certificate, as the case may be.

Consular invoice, if it is required by the buyer, and the phytosanitary certificate.

In the case it is applicable, a phytosanitary procedure is required depending on the pests involved, the nature of the packing, or the goods involved.

A phytosanitary certificate may be required.

These are the other bank formalities.

Apart from that, the other touch point with the bank is that, negotiating bank may write back if there are some discrepancies in the documents before it is sent to the issuing bank.

With the help of the bank, you remove these discrepancies if it is possible to remove, at that stage.

And also obtaining the bank remittance certificate.

Generally, it is an eBRC, an electronic bank remittance certificate that is issued by the bank confirming that the foreign exchange, the money against the export order, has been received.

Based on this BRC, only the bank endorses the EC copy of the shipping bill and sends it to the central bank.

In the case of India, it is the RBI. And thereby ensuring the exchange control compliance as guided by the central banks.

These were the bank formalities that had to be done by the exporters.

These are the touchpoints with the bank that every exporter has to be aware of.