Export Documents, Procedures, Policies & Incentives In INDIA

In this section, Dr. Jain starts with the most important conceptual learning for anyone who wants to make a career in international trade. This learning starts with a complete understanding of a typical export transaction framework.

Friends, in section two, our focus is on understanding the typical export transaction framework. Why is it required? We are trying to know the flow of goods, the flow of documents, and the flow of payments. These are our three focus areas. We want to understand how the movement of goods, documents, and payments happens in a typical export transaction framework.

In a situation when the two parties—the selling party and the buying party—are at long distances, in different countries, different lands, with different regulations, different cultures, and absolutely different demography, the main objectives of this section are to understand the typical procedure for transacting goods internationally, the typical step-by-step procedures for doing that, and the role of the main intermediaries—the people and channel members who play a significant role in the transaction.

In a typical export transaction, who are these intermediaries, the organizations, the entities? What role do they play? And how does a documentary letter of credit work? What is the role of a documentary letter of credit in making sure that the seller gets the payment and the buyer gets the right goods at the right time?

Finally, this section aims to help you learn and understand the movement of goods, documents, and payments, as I just mentioned, in an international export transaction. These will be the main focus areas in this section, and there are a couple of videos coming up in which we will focus on these different points.

Hi, The idea of this section is to learn how the game of exports transactions plays out in the movement of goods from one country to country, with the least risk, right cost, and taking the right amount of time to change hands.

In a typical export transaction, an international transaction takes place between two parties in different countries.

The two main parties are the exporter—let us consider this as the first party, since this course is framed from the perspective of the exporter—and the importer or buyer, who is the second party.

Based on an enquiry from the importer, the exporter provides a quotation. If the importer accepts the quotation and the terms of business, they sign a document or agreement for the export of goods from the exporter to the importer. This document is typically called the sales contract or export contract, and sometimes it is referred to as the purchase order.

Based on this export contract, the exporter, in a typical transaction, proposes to the importer to instruct its overseas bank to open a letter of credit in favor of the exporter. This is done according to the conditions—documentary and otherwise—agreed upon in the export contract.

The document proposed by the exporter, called the LC opening instructions, is used by the importer to create a final LC opening instruction. The importer then requests its own bank—called the importer’s bank or the LC issuing bank—to issue a letter of credit in favor of the exporter.

Based on this request, the importer’s bank (the issuing bank) issues a letter of credit and sends it to the exporter’s bank, or the advising bank located in the exporter’s country, to advise the letter of credit to the exporter. This allows the exporter to understand the banking language used in the letter of credit and to carefully study the documentary and other conditions required to obtain international payment through the LC.

If the exporter is satisfied with the LC conditions, and they are in line with the exporter’s original LC opening instructions sent to the importer, the exporter accepts the letter of credit by issuing an acceptance letter. After this, the LC becomes active. Based on this letter of credit, the exporter prepares the goods and exports them through the port of loading in the exporter’s country, by ship, air, or another mode of transportation. The shipping company or carrier then moves these goods to the overseas location at the port of discharge in the importer’s country, where they are unloaded for further pickup by the importer.

In the meantime, once the goods are loaded on the ship, the exporter generates all the documents required by the letter of credit and submits them to the negotiating bank—the bank in the exporter’s country that negotiates these documents with the importer’s bank (the issuing bank). These documents are then sent to the issuing bank for scrutiny.

If the importer’s bank is satisfied with the documents and finds that all the documentary conditions are met, it releases payment to the negotiating bank in the exporter’s country. The negotiating bank receives the money, carries out due diligence, deducts any pending charges or payments from the exporter, and credits the balance amount to the exporter’s account.

Meanwhile, the goods are carried by the carrier to the overseas port of discharge and unloaded. At the same time, all the documents, including the transport document issued by the carrier, reach the importer’s bank.

The importer’s bank delivers these documents to the importer by debiting the importer’s account for the LC amount and any other charges. Based on this, the importer receives all the LC documents, commercial documents, and transport documents. Using these documents, the importer deals with local customs (border control) and the shipping company or carrier. With the help of the transport and customs documents, the importer clears the goods from customs and takes possession of the shipment at the port of discharge. The goods are then moved to the importer’s warehouse.

As you can see, the flow of payment moves from the importer via the issuing bank and the negotiating bank to the exporter. The flow of goods takes place via the port of loading, transported by the carrier to the port of discharge, and finally to the importer. The flow of documents—including LC documents, commercial documents, transport documents, and those required by banks, customs, and other authorities—moves from the exporter, through solid lines in this framework.

In this typical export transaction, we can clearly observe the different flows of payment, goods, and documents, all moved internationally by the carrier.

In this process, the role of intermediaries is significant. These include:

• the issuing bank, which issues the letter of credit based on the importer’s request,

• the advising bank, which receives the LC and advises it to the exporter, helping the exporter understand the banking terms and documentary requirements,

• the negotiating bank, which handles the final shipment documents and negotiates them with the issuing bank,

• the customs authorities of the exporter’s country (home country border control), which ensure local law compliance before shipment,

• the customs authorities of the importer’s country (host country border control), which clear the goods upon arrival, and

• the shipping company, which transports the goods from the port of loading to the port of discharge.

Other intermediaries, such as clearing and forwarding agents or freight forwarders, also play an important role. They liaise with local government authorities, port authorities, and customs in the exporter’s country, as well as perform similar functions in the importer’s country.

In this typical export transaction, the entire process of exports—the commercial movement of goods from one country to another—is understood, along with the crucial roles of different intermediaries.

Dr. Jain discusses the concept with an example. This example will form a strong basis of understanding in this course.

Ok friends,

Let us take one example. This example is about a company called Malhotra Exports, which is based in Mumbai, India. Malhotra Exports receives an order from a company in Paris, France, named St. Lauren. They require fashion garments worth 55,000 euros on a CIF basis. The goods have to be supplied within three months after the exporter accepts the LC. This means the company has received this order against a letter of credit, and this letter of credit, as per the agreement, will be opened in favor of Malhotra Exports for the amount of 55,000 euros.

Friends, as per the agreement, Malhotra Exports first sends the LC opening instructions to St. Lauren. The idea is that Malhotra Exports reminds the company that the conditions of the LC should match the sales contract. It is better if Malhotra Exports sends these opening instructions, because ultimately, Malhotra Exports has to accept the LC, and only then will it become active.

St. Lauren, based on these LC opening instructions from Malhotra Exports, approaches AXA Banque of France to open the LC for 55,000 euros in favor of Malhotra Exports with the final LC opening instructions. Basically, the importer creates a new LC opening instruction, which is quite similar to the one sent by Malhotra Exports, without making any major changes.

The same LC opening instructions are then used by the bank in Paris to issue a letter of credit. The bank issues the LC and sends it to the correspondent bank in India, based in Mumbai—Deutsche Bank—for advising the LC to Malhotra Exports. This bank in India, which has an arrangement with the Paris-based bank, advises the LC to Malhotra Exports. After reviewing all the conditions in the LC, Malhotra Exports accepts it and starts preparing the goods.

The first thing it does is appoint a C&F agent to get the shipment cleared and move the goods to France as per the agreed INCOTERM, which in this case is CIF Paris. After the goods are loaded on the ship, the C&F agent arranges all the transport and other documents required by the LC for submission to the negotiating bank. The exporter, Malhotra Exports, submits these documents. Essentially, the C&F agent hands over the documents to Malhotra Exports, and Malhotra Exports submits them to the negotiating bank in Mumbai.

This negotiating bank could also be Deutsche Bank, but Malhotra Exports chooses its regular bank, the Indian Bank, for negotiation. Malhotra Exports approaches its regular bank, where it holds an account, to negotiate the documents against the LC with the issuing bank, AXA Banque of Paris. It provides all LC documents along with the bank draft and a covering letter.

Indian Bank, the regular bank of Malhotra Exports, inspects the presentation and checks the documents. After verifying them, it forwards the documents to AXA Banque in Paris. AXA Banque, after being fully satisfied with the presentation (technically called a compliant presentation, meaning it complies with the LC conditions), releases 55,000 euros in favor of Malhotra Exports. The money is credited to the Indian Bank, not directly to Malhotra Exports. After deducting any dues, such as negotiating charges or retiring charges, Indian Bank credits the balance to Malhotra Exports’ account.

Meanwhile, the goods are on their journey by sea to Paris, France, which takes approximately 22 days. By the time the goods arrive, AXA Banque has already debited the LC amount from the account of the importer, St. Lauren, and handed over the complete set of commercial documents received under the LC conditions. These documents are given to the importer along with a No Objection Certificate, stating that the bank has no objection if the importer clears the goods and takes possession from the shipping company.

St. Lauren then instructs its C&F agent to collect the goods from the shipping company using the original transport documents and to get them cleared from French customs (border control). The documents, which were received by the bank, are effectively sold to the importer after ensuring all dues are cleared.

Friends, in this section, what have we learned? The highlights are that a typical export transaction requires various intermediaries, each playing an important role in the smooth flow of goods, payments, and documents. The documentation and procedures, which this course explains step by step, are designed to ensure that the interests of all parties are protected—the exporter, the importer, and the intermediaries such as the issuing bank, negotiating bank, and advising bank. The system is designed to be a win-win for everyone.

Friends, physical distance, and different local laws complicate the export process. While international transactions and overseas business bring many benefits, these challenges must be faced. This is why export documentation and procedures are designed to make the process smooth and comfortable.

Friends, banks operate internationally without any global common law or enforceable regulation of a common nature. This is not the case. Banks operate internationally using accepted guidelines, namely the banking rules published by the ICC in the form of UCP—Uniform Customs and Practice for Documentary Credits.

Friends, the final learning from this section is that export operations are carried out based on a very logical game plan. This plan is designed in such a way that the interests of all parties—exporter, importer, and intermediaries—are protected. That is the idea.

A typical export transaction is linked with a counter-import transaction by the buyer and follows a logical flow of goods, documents, and money. The letter of credit can help take care of the interests of both the exporter as well the importer while ensuring the international payment is made to the exporter more safely and promptly. To know more about Letter of Credit and UCP 500/600, you may like to enroll in the VJ Exports Mastery Series Course on UDEMY titled - All about letter of credit and UCP 500/600

In this section, what have been our learnings?

The highlights are that a typical export transaction requires various intermediaries. There are roles of various intermediaries who play a very important role in the smooth flow of goods, payments, and documents.

The documentation and procedures, which this course will explain step by step, are designed to ensure that the interests of all the parties are protected—whether the first party (the exporter), the second party (the importer), or the other parties, which are the intermediaries, including the issuing bank, negotiating bank, and advising bank.

Basically, these documentation procedures have been designed in such a way that it is a win-win for everybody.

Physical distance and different local laws complicate the export process. While there are benefits to international transactions and overseas business, physical distance and different local laws often play the spoilsport. These challenges have to be faced, and that is why the entire procedure and export documentation system has been designed to make the process comfortable and smooth.

Banks operate internationally without any global common law, enforceable law, or universal regulations. This is not the case. Banks basically operate internationally with the help of their own accepted guidelines—the banking guidelines published by the ICC in the form of UCP (Uniform Customs and Practice for Documentary Credit).

The final learning from this section is that export operations are carried out based on a very logical game plan. This logical game plan is designed in such a way that the interests of all the parties—whether exporter, importer, or intermediaries—are protected. That is the idea.

Hi there!

I hope you are doing well and making great progress in this course.

I wanted to take this small moment to congratulate you on your remarkable progress in this course. Your dedication and commitment to learning have truly impressed me.

I have been following you and your journey closely, and I must say, I'm delighted with the efforts you are putting in.

As a token of appreciation for your hard work, I would like to offer you a complimentary copy of my recent book on a similar topic that you are learning in this course, which I believe will further strengthen your learning and your grip on the course.

You can download this PDF copy of the book from the resource section of this lecture.

This course is part of the VJ Export Mastery Courses Series, a collection of 28 different courses targeting the area of export management, designed to equip you with the knowledge and skills needed to excel in the field of export and international trade.

On my part, I am committed to helping you expand your learning journey by providing access to more similar courses in the series, but at the same time, on your part, I have a small request as well.

Your feedback is incredibly valuable in refining this course and ensuring it remains world-class, refined to its best. I kindly ask you to leave a rating for the course along with your honest feedback.

If you have not yet done so, your input will help me continue to improve and tailor the course to meet your needs and those of future learners.

Thank you once again for your dedication and enthusiasm.

Keep up the fantastic work you are doing, and remember, I am here to support you every step of the way.

Together, let's continue on the journey of learning and growth.

Correct and timely procedures help carry out the checks and balances in the movement of goods across the border. The role of the buyer, the seller, the banks, the local government, and other intermediaries can only be fulfilled with the help of the right, accurate, and timely documents, and taking recourse to the correct procedure. Learn about the typical procedures involved in a typical export transaction.

Now, friends in section three, we will be discussing the basic export procedure. Step by step, we will learn what exactly the exact export procedure. You already have a fairly good idea about the way exporting is done, as we have learned in Section Two. The typical export transaction framework.

You will find that these export procedures come from there only. So now it will come easily for you to understand the basic steps that are involved in a typical export procedure and why these steps are required to be carried out. So slowly, when we go forward in this course, you will understand that all these steps, all the documentation, make things easier for the exporter, importer, and all the other stakeholders in the business.

Starting with initial business setup and formalities, the first objective of a new entrant in the business exports is to finalize their first export order and sign the export contract with the buyer.

Now, friends, the very initial step of the export procedure is legal compliance, both by the exporter as well as the importer. The exporter needs some kind of export license or permission in the home country. Similarly, the importer is also required to comply with the local authorities to legally carry out export-import transactions. For example, in India, legal compliance requires that any exporter engaged in commercial export business must obtain an IEC number, that is, the Importer-Exporter Code number.

This code number is monitored by the central bank, the Reserve Bank of India, but implemented by the DGFT (Directorate General of Foreign Trade). You can easily get this IEC number in India at a very nominal cost by applying online on the DGFT website, which comes under the Ministry of Commerce.

Secondly, the requirement is for the registration of the exporter with the respective Export Promotion Council. Each promotion council deals with specific product lines. Depending on the goods being exported, the exporter must register with the relevant EPC (Export Promotion Council) and obtain the RCMC (Registration-cum-Membership Certificate). This legal compliance is necessary to receive export incentives. Without it, exporters cannot avail themselves of any export benefits or incentives. Exporters in all countries are generally also required to register with their local tax authorities.

In India, the main tax applicable is IGST (Integrated Goods and Services Tax). For certain items, excise duty may also apply. Exporters in India must register either with the excise department (if their product attracts excise duty) or, otherwise, with the GST system.

After legal compliance has been completed, the first step for the exporter is to receive an inquiry in the form of a letter of inquiry. Generally, an importer who wants to import something and explore prices will send a letter of inquiry to potential exporters and request a formal quote, which is usually provided in the form of a document called the Proforma Invoice.

Before giving the quotation, it is prudent for the exporter to screen the potential buyer and the country. This is because the exporter needs to check whether business can be done with that particular buyer or entity. It requires checking against various government lists, such as denied or restricted party lists, maintained by local governments in most countries.

It is always better to check the buyer and the country to ensure business can proceed. Screening software is available for this purpose. If the exporter is satisfied that business can be conducted with the buyer and there are no major issues, the exporter prepares a Proforma Invoice, which is essentially a quotation.

The Proforma Invoice includes the price quotation, available quantity, and all other relevant details. It looks very similar to the Commercial Invoice. If the order is confirmed, the Commercial Invoice will be prepared based on the Proforma Invoice. A Proforma Invoice may also be required later by local customs or banks, which will be discussed further in this course.

Once the importer confirms the business and accepts the price, the next step is to finalize the sale. This is typically done after negotiating the terms of sale. Price may be acceptable, but many other details must be agreed upon. A signed Proforma Invoice, a formal contract document, or a purchase order is created after negotiations. This document includes details such as payment terms, mode of payment, Incoterms (International Commercial Terms 2020—the latest version), and the mode of shipment (by sea, air, or other means).

It also clarifies who will ship the goods. Will the importer procure the material from the exporter in the exporter’s country, or will the exporter ship the goods and deliver them to the importer’s country? These matters must be discussed, including who hires the freight forwarder or the main carrier (shipping line or airline).

It should also specify who files documents for export clearance from local customs at the Port of Loading and possibly customs clearance at the Port of Discharge. Which parts will be handled by the exporter and which by the importer must be clearly stated.

All these details should be included in the written form of the signed Proforma Invoice, formal export contract, or purchase order. It must also identify who provides which documents, since a complete set of documents is required for export shipments. These responsibilities must be clearly allocated in the contract.

Once the export contract is ready, against which a letter of credit has typically been opened by the importer, as well as received and accepted by the exporter, the next thing the exporter has to do is arrange or manufacture the goods, prepare the shipment, and dispatch the goods to the buyer overseas.

Now, once the export contract is ready, against which the letter of credit has been opened by the importer, received by the exporter, and accepted by the exporter, the first thing the exporter has to do is arrange for export finance to prepare the goods. The exporter has various options available for this purpose. It can either go for packing credit from the bank against the LC, almost 80 percent. For example, in India, almost 80 percent of the total LC amount can be obtained as packing credit, which is normally below the market rate of interest in India. Promotional interest rates are given for export purposes. Any losses to the bank on the interest are compensated by the local government, i.e., the Government of India.

The exporter can also go for private loans from India or abroad for exports. Alternatively, it can go for an international line of credit if offered by the importing country or arranged with the help of the importer. If any international line of credit is available, that can be used as export finance. Another option is partial advance from the buyer, meaning the importer provides some advance, maybe 20 percent or 30 percent, and the rest of the amount is covered through the LC. Depending on the type of LC, a partial advance may be available to the exporter to prepare the goods.

There are many options available. Once the exporter has arranged finance, it must prepare the goods and arrange for the shipping documents. Export-worthy packing has to be arranged—seaworthy packing if shipped by sea, and airworthy packing if shipped by air. The exporter also has to arrange inspections of the goods. One is the regulatory inspection, if required in the local country. For example, in India, the government requires inspection by a government agency for shipments above a certain amount. Additionally, the exporter must arrange for third-party inspections by an international quality inspection agency if a quality certificate is required under the letter of credit.

The exporter also has to arrange shipping documents such as the commercial invoice, packing list, certificate of origin, shipper’s letter of instructions, and transport documents. The original main transport documents could be a bill of lading, an airway bill, or an RR (railway receipt).

Once the exporter has done all the initial work, including arranging export finance, preparing the shipment, packing, and inspections, it is always good to do a second restricted party screening using screening software. If there has been an update in the list and the importer or country falls under the restricted category, the goods may not be cleared by customs. It is always better to do a last check before the final shipment of the goods.

To get the goods cleared from customs, the exporter has to appoint a C&F agent or a freight forwarder and issue an authorization letter or the shipper’s letter of instruction. This enables the C&F agent to file the documents on behalf of the exporter, clear the goods, and move them internationally.

At this stage, the exporter also has to define the scope of work for the C&F agent—what tasks are to be carried out, depending on the contract and LC conditions. The exporter must also provide a limited power of attorney, usually part of the shipper’s letter of instruction, to allow the freight forwarder to sign certain documents required in the process of moving goods internationally and clearing them from customs and the port.

The exporter must also ensure shipping space is booked in advance. Either the C&F agent or the exporter has to do this, but it must be arranged beforehand to make sure that the goods are exported before the latest shipment date specified in the letter of credit.

Depending on the buyer’s requirements and the agreed Incoterms, the exporter may also be required to arrange insurance and manage different types of risks associated with the shipment. The exporter must consider the entire journey of the goods—from the exporter’s factory to the importer’s premises—and ensure the goods are in transit. This includes inland transportation as well as international transportation. For international sea transport, marine insurance cover must be taken. For inland movement, inland transit insurance has to be arranged.

The exporter must also ensure against foreign exchange fluctuations. This can be done case by case, either through forward purchase contracts with the bank or through foreign exchange swap contracts. There are different methods to manage FX fluctuations.

Additionally, the exporter must ensure against commercial risks such as non-payment. In India, this can be done through ECGC (Export Credit Guarantee Corporation), which provides cover against such risks.

The exporter also has to arrange miscellaneous documents. These are documents specified in the sales contract and obligatory for the exporter to provide, as they may be required by the importer or the importer’s country. As per the LC or other agreed payment terms (such as bank collection), all necessary documents must be prepared. Documents required by the freight forwarder, C&F agent, or customs authorities must also be arranged.

The exporter must also prepare the bank draft (bill of exchange) and any documents required by the regulatory authorities of the local government or customs, such as the filing of the export declaration. These regulatory compliance documents must be prepared.

Next, the exporter has to complete customs and port formalities. The first step is filing the export declaration, which can be done up to 30 days before the expected dispatch date. The exporter can file the declaration any time within that window, though it is always better to file it in advance. All documents required by customs for clearance must be provided, and any customs or port fees or handling charges must be paid.

After that, the next step is to ship the goods and get them loaded on board. Once loaded, the exporter must obtain the transport documents, ensuring they are compliant with the letter of credit. These documents can be arranged either by the C&F agent, the freight forwarder, or directly from the shipping company or airline.

After the goods are loaded, the exporter must urgently prepare a shipment advice for the buyer, informing them that the goods have been shipped and the vessel has departed or is about to depart. This advice must be submitted to the buyer immediately.

In the next lecture, Dr. Jain delves into what happens after the shipment has been sent to the buyer across the border. What activities are carried out next by the exporter?

Then the exporter needs to present all the documents required by the LC as per the LC conditions. This complete set of LC documents has to be submitted to the issuing bank through a negotiating bank. It cannot be submitted directly by the exporter. It has to be sent through the negotiating bank along with the covering letter. The covering letter, bank draft, and the complete set of LC documents, as required by the LC, have to be submitted for presentment.

After that, the post-shipment formalities have to be carried out by the exporter, which include tasks such as claiming export incentives, getting tax refunds, or settling tax bonds with the local authorities—for example, excise duty if applicable, or input tax, GST, and IGST purposes. If any bond has to be settled, it must be settled, and compliance with the Excise Control Regulations must be ensured. For this, the exporter must confirm that the bank remittance certificate is available and that the bank has sent intimation to the central bank—in India, the Reserve Bank of India—that the foreign exchange has been received against the export shipment.

Finally, after the completion of the export shipment, record-keeping has to be done by the exporter. The exporter typically prepares a set of records of the documents and ensures that information such as the purchase order number, LC details, LC copy, copy of the commercial invoice, packing list, customs shipment number, and other important details are maintained. This also includes correspondence, email addresses, and contact details of key persons—whether from the bank, intermediaries, or the buyer’s side.

All this information has to be compiled, and a complete file has to be prepared for record-keeping.

Next, Dr. Jain is sharing an animated presentation about this typical export procedure in a nutshell, giving highlights of the process.

This is the animated video presentation of the step-by-step exports procedures. This video is to make understanding of the concept simple and serves as a starting point for learning the process. The details would be further discussed in this course in subsequent video lectures on exports procedures and documentation in India.

And now Dr. Jain discusses the steps in a summary form in the next lecture

Friends, in this step-by-step procedure, this is the summary of the different steps for a typical export transaction. Step one was legal compliance: IEC number, RCMC, or registration with the local tax authorities. Step two involved dealing with the letter of inquiry, securing the business, arranging export finance, readying the shipment, and appointing the C&F agent. Step three covered the shipping formalities, arranging insurance as per the LC if required, and booking shipping space in advance.

Step four involved carrying out all customs and port formalities, including customs clearance, filing the export declaration, and dealing with the port authorities for any handling of the shipment and loading of the goods on the ship, along with paying any charges for that. Step five was preparing the shipping advice, meaning informing the buyer about the shipment of goods. Step six included bank formalities to secure overseas payments as per the LC terms. Finally, step seven covered post-shipment formalities, including incentive claims, tax refunds, and record-keeping.

Friends, this is the summary of the step-by-step typical export procedure. This checklist is available for you to download from the resource section of this lecture. You can download this resource, and the chart provides a pictorial view of the different steps involved. These steps start with the export contract, request for LC issuance in the form of an LC opening instruction, LC receipt and notification, review of the conditions by the exporter, securing export goods, making arrangements for inspection by the requisite authorities or third parties for quality inspection, and filing the export declaration in the form of export reporting to local customs.

Next comes providing the shipping instructions to the carrier, main carrier, shipping company, or airline. Depending on the nature of the goods to be shipped, the shipping instructions have to be given by the exporter. A request for ocean cargo insurance may also be required as per the Incoterms and the LC conditions. The negotiating bank is then appointed to negotiate the documents after the goods have been shipped and to receive the payment from the issuing bank via the negotiating bank. Post-shipment management follows.

These were the pictorial steps. Friends, in this section, we have discussed the step-by-step typical export procedure.

Finally, in the next lecture, Dr. Jain shares a recap of what we learnt in this section.

And the main highlights of this section were that the learning that the typical export procedure for export involves many, many steps. So those steps we have already discussed. Knowledge of these steps is very, very important for the exporter of as well as for the importer.

The whole procedure is based on the logical needs of these several parties involved in this. apart from the exporter and importer, the various intermediaries, which play a very important role in this typical export transaction, and we learned that the export procedures are framed to comply with the several regulations governing international trade, which are implemented by the home country government or the host country government.

Friends, these were the main learning from this section.

Friends, welcome back to the course. So this is section four, and friends are in this section. We are going to discuss some very important aspects of export documentation and procedures. That is to understand exactly the nature and types of different documents that are used in export operations. So friends, what is the objective of this section is to understand step-by-step this export documentation. Which means the different documents are at different stages.

I will try to cover almost all the documents, but a complete exhaustive list of documents is not practically possible because many of the documents are required on a case-by-case basis in certain products. Certain documents are required for other products those documents may not be required for others. I may not be able to cover the complete list, but I will try to touch upon most export documents, which are used in the typical export transaction. And I will also tell you the step-by-step sequence of these export documents, which are used at different stages.

So all these things we will be discussing in this particular section.

Correct and timely export documents help carry out the checks and balances in the movement of goods across the border. The role of the buyer, the seller, the banks, the local government, and other intermediaries can only be fulfilled with the help of the right, accurate, and timely documents, and taking recourse to the correct sequence of these documents. Learn about the most commonly used export documents.

The commercial invoice is a legal document between the  exporter  and the  buyer (in this case, the foreign buyer)  that clearly  states the  goods  being sold and the amount  the customer is to pay. The commercial invoice is one of the main documents used by customs in determining customs duties.  A commercial invoice is a bill for the goods from the seller to the buyer. These  documents are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics.  

Considerably more detailed and informative than a standard domestic packing list, an export packing list lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as a conforming document. It is not a substitute for a commercial invoice. In addition, U.S. and foreign customs officials may use the packing list to check the cargo, so the commercial invoice should reflect the information shown on the packing list.

Friends, as I discussed in the last section, the very first document generated by the exporter on receiving the letter of inquiry is the Proforma Invoice, and we have already discussed this document. I will just give you a small glimpse of this particular document. You can also download a sample copy of it from the resource section of this lecture.

It looks very similar to the commercial invoice, but it is not the same. A commercial invoice is a little different, which I will explain in the next slide. The Proforma Invoice contains information like the details of the buyer and seller, their location, and their contact details—the minimum details to identify both parties. However, it includes a very detailed description of the goods, so there is no discrepancy or misunderstanding about the product.

This description has to be very carefully included in the document, and it is better to have the ITC HS code of the goods in the Proforma Invoice. As per the letter of inquiry, even if the ITC HS code is not provided by the potential buyer, you should include it. The ITC HS code (International Trade Classification Harmonized System) is universally used by customs authorities worldwide to understand the product and levy duties. It is a very important code.

The Proforma Invoice should also state the price with Incoterms. The Incoterms you propose may or may not be accepted by the buyer, and if changed, the price will also change. Still, you should state the Incoterms on which your price is based. Other important details include the proposed payment terms, delivery schedule (how much time you require to prepare and ship the goods), the currency of the contract (ideally the home country currency of the exporter), the date of issue of the Proforma Invoice, and the date of expiration.

The expiration date is very important because it indicates that the Proforma Invoice is valid only for a specific period. With time, prices and conditions change, so it is not advisable to keep a Proforma Invoice valid for too long. It is always better to specify the expiration date.

The second document generated by the exporter (the seller) after receipt and finalization of the order is the Commercial Invoice. This is an updated document based on the Proforma Invoice. Much of the information will be the same, which is why it looks very similar to the Proforma Invoice, but it is not the same. It contains updated details based on negotiated sales terms, which may include revised Incoterms, updated delivery times, updated payment terms, and even insurance details, which may not have been included at the quotation stage.

The Commercial Invoice is essentially a summary of the complete contract. Whether it is a signed contract, a purchase order, or a signed copy of the Proforma Invoice, the Commercial Invoice summarizes the finalized terms. It contains all the highlights of the contract and details of the transaction, covering the process from start to finish. It serves as a preview of the complete export shipment.

The next document, which is complementary to the Commercial Invoice and always accompanies it, is the Packing List. This document is very similar to the Commercial Invoice, but it does not include financial details such as unit price or total cost. Instead, it contains exhaustive information about the export shipment: the type of boxes, number of boxes, markings, net weight, gross weight, volume, container number, and dimensions.

The Packing List provides the physical description of the shipment and helps the freight forwarder create transport documents like the Bill of Lading or Air Waybill. At a later stage, even banks may require it when making payments against an LC, because banks deal only with documents and do not physically verify shipments.

The Packing List offers a preview of the physical shipment, which is why banks often ask for it even if it is not mentioned in the LC. Customs authorities also require it, especially if they conduct a physical examination to locate and inspect specific packages. Without a Packing List, it is difficult for customs to carry out examinations.

Another purpose of the Packing List is to help identify the shipment for the shipping company, the ship’s captain or crew, and the port authorities handling the cargo. It ensures accurate identification of the shipment by everyone involved in handling it. The Packing List contains critical information such as net weight, gross weight, dimensions of the boxes, and markings.

Friends, a sample copy of this document is also available in the resource section of this lecture, and you can download it from there.

A Certificate of Origin (CO) is an important international trade document that certifies that goods in a particular export shipment are wholly obtained, produced, manufactured, or processed in a particular country.

Now, friends, another very important document, which is part of the main commercial documents—also called the principal documents—is the Certificate of Origin. The Certificate of Origin is a certificate that certifies the origin of the goods, meaning the country where the major portion of the manufacture of the goods takes place.

In quantitative terms, if more than 40 percent of the value addition has taken place in a particular country, that country is certified as the origin. Most importing countries require it. It is normally signed by a semi-government or official agency; for example, it can be a chamber of commerce. The electronic form of the Certificate of Origin is very popular nowadays because it is difficult to wait for the certificate to arrive by courier, and even the issuing authorities find it cumbersome to handle physical certificates.

In present times, electronic COOs are very popular and generally easier to obtain. Another form of the Certificate of Origin can be country-specific, such as the GSP Certificate. These certificates of origin are special certificates of origin, in short, COO or special COO. Country-specific or GSP COOs are the result of bilateral or multilateral agreements. Bilateral agreements are those between one, two, or three countries.

Smaller groups of countries may have regional economic cooperation or a free trade area, such as the USA with Mexico and Canada under the free trade agreement, formerly known as NAFTA. In such cases, the Certificate of Origin certifies that the shipment originates from countries within which these agreements exist. This is a special COO, which helps make the shipment duty-free or subject to concessional duty rates.

Another possibility is multilateral agreements like the GSP (Generalized System of Preferences), under which rich countries are obliged to provide duty concessions to goods coming from poorer countries. These special COOs have a direct impact on the landed cost, reducing and saving costs for importers. They are very important documents. Special government or semi-government agencies generally issue such certificates, and sometimes consular offices also issue them.

A Free Sale Certificate is a certificate issued by a national regulatory authority of an exporting country based on national legislation confirming that the product is freely sold in the country, but without any indication that the product is evaluated for safety and efficacy and is registered for use in the country.

Another very important certificate is called the Certificate of Free Sale. It may not be required for every type of product to be exported, but it is generally required for certain specific items such as food items, medical devices, cosmetics, or biologics. These are some of the categories where the Certificate of Free Sale may be required. The purpose of this document is to allow the legal and free sale of goods in the open market.

Basically, it serves as authorization for the importer, especially if the product is new in that particular market, to allow them to sell the goods freely in the country. Generally, approved government agencies in the originating country certify and issue this document. The buyer may request it from the seller if it is required, particularly when the product is new in the buyer’s country and falls under the categories mentioned.

It is sometimes also called the Certificate of Exports or the Certificate to the Foreign Government. In such cases, it becomes a government-to-government certificate, which allows the importing government to legally approve the sale of goods coming from a particular country.

For example, in today’s world of the coronavirus pandemic, many countries are manufacturing vaccines. Once vaccines are exported by a particular company, the buyer will generally ask for a Certificate of Free Sale. It acts as permission from the originating country and its government that the product can be sold in the destination country.

Such a certificate is generally very important for the import of vaccines by importers from various countries. As mentioned earlier, it is typically required when registering a new product in the foreign (destination) country, where the goods will be sold by the importer. The importing country’s customs may also require it.

Air Waybill

Air freight shipments require airway bills. An air waybill accompanies goods shipped by an international air carrier. The document provides detailed information about the shipment and allows it to be tracked. Air waybills are shipper-specific and are not negotiable documents (as opposed to “order” bills of lading used for vessel shipments).

Bill of Lading

A bill of lading is a contract between the owner of the goods and the carrier (as with domestic shipments). For ocean shipments, there are two common types: a straight bill of lading, which is non-negotiable, and a negotiable, or shipper’s order bill of lading. The latter can be used to buy, sell, or trade the goods while in transit. The customer usually needs an original bill of lading as proof of ownership to take possession of the goods from the ocean carrier.

Friends, the goods sometimes have to be moved within the country as well. Generally, if the place of manufacture is away from the seaports or international airports, the goods have to be moved from the factory to the seaport or the airport. This movement of goods requires a transport document called the Inland Bill of Lading. The Inland Bill of Lading is for domestic purposes.

Generally, it is not required by the buyer. It is a contract between the exporter and the shipper, serving as a contract of carriage between these two parties. It is usually not sent to the buyer, which is why it is not often discussed, but it is still a very important document. In India, it is sometimes called a Builty. A copy of this document can also be downloaded from the resource section of this lecture.

The main transport document required by the buyer is called the Ocean Bill of Lading or the AWB. First, let us talk about the Ocean Bill of Lading. This is the main transport document, and in most cases, the buyer needs it. It is a document of title because it is a negotiable instrument. It can be made negotiable and is of two types: the Straight Bill of Lading and the Negotiable Bill of Lading. A Straight Bill of Lading is consignee-named and is not negotiable. Only the consignee can use this document. With the original copy, the consignee can approach the shipping company and take possession of the goods. Any third party cannot use it, as it is consignee-named and therefore non-negotiable.

However, most Ocean Bills of Lading, the most popular ones, are generally negotiable because of the bank documentary system. To safeguard their interests, banks generally require a negotiable Ocean Bill of Lading. This gives them leverage to collect any pending dues from the importer by selling the documents to them when necessary.

This makes the Ocean Bill of Lading a key LC document, enabling banks to deal safely with the importer. A copy of the Ocean Bill of Lading is also available in the resource section, and you can download it.

The other important transport document, if the shipment is by air, is the Air Waybill (AWB). This applies to goods shipped by air. It is simply a receipt of goods and is always consignee-named. It is not required in its original form; even a fax or email copy can suffice. It is non-negotiable.

The reason is simple: if it were made negotiable, the time taken for the document to reach the destination would be too long, causing losses for airlines due to congestion at destination airports. Goods would be left lying at the airport, waiting for the original document to arrive through banks via the LC route. This is impractical given the speed at which goods are transported internationally by air.

This makes the AWB very different from the Bill of Lading, as it is not a negotiable document. It is a completely different type of transport document.

Quality documents are essential pieces of documentation that create trust with the buyer about your adherence to the quality standards as agreed in the sales contract. Due to the large geographical distance between the seller and the buyer, it is usually not possible for a buyer to check the shipment on their own before goods are dispatched from the port of loading.

Another very important document is the Quality Certificate or Quality Inspection Certificate. Friends, the main interest of the buyer is to get the right quality of goods, and this can only be ensured through a quality inspection by an authorized entity. If the buyer says that their representative will check the goods, the exporter will generally not accept it, because if the goods are not required by the buyer, the buyer’s representative will invariably reject them.

What is generally agreed upon between the buyer and the seller is a third-party inspection. This is typically a third-party document. Third parties like the Swiss company SGS, which is very well-known for this purpose, conduct inspections worldwide, at any place, and issue quality certificates that are accepted by most international traders.

This quality inspection can be either an in-process quality inspection or a post-process quality inspection. Generally, it is conducted in the form of random inspection, which is more of a statistical method, where the entire shipment is not checked, but samples are taken for testing.

In most cases, this requirement comes from the buyer. The buyer requires it to protect their interest and ensure that the goods are of the right quality. Since the buyer is in a different country, this kind of document becomes very important.

An export insurance policy insures an exporter against the risk of not being paid under an export contract or of not being able to recover the costs of performing that contract because of certain events which prevent its performance or lead to its termination.

These risks can arise from

1. Transportation Risks

2. Foreign Exchange Fluctuation

3. Non-payment due to the insolvency of the buyer or due to the wrong intention of the buyer.

Different insurance tools are available for different types of risks. The most common form of transportation risk is to take a Marine Insurance Policy for the shipment of goods by sea.

Depending on the arrangement between the exporter and the importer, if the insurance has to be arranged by the exporter and has been factored into the price, then either the marine insurance policy or the policy certificate has to be arranged by the exporter. It depends on the Incoterms that have been agreed upon. The purpose of this kind of policy is to cover damages during transportation. It protects the financial interests of both the exporter and the importer during transportation.

It can also be comprehensive transport insurance, that is, place-to-place terms, which means that irrespective of the multimodal transportation of the goods—from the point of manufacture to the importer’s warehouse—insurance can be taken. Complete integrated insurance can be arranged for multimodal transportation.

In the case of sea terms, where the goods are shipped from the country of origin to the port of discharge in the country of destination, if the obligation of the exporter is to ensure coverage, then a separate marine insurance policy, aligned with the sea terms, has to be taken by the exporter.

The fact remains that whoever buys this insurance policy and enters into a contract with the carrier, in the case of any untoward incident, the other party can also claim the goods. This is the principle that is generally followed. Certificates are required in case a long-term bulk insurance policy has been taken for multiple consignments spread over a period of three months, six months, or even one year.

In such cases, for each shipment, a marine insurance certificate must be furnished along with the other LC documents by the exporter to the bank to claim payment for the shipment.

For dangerous goods, before packing, this cargo information is provided to the carrier in the form of the Dangerous Goods Request (DGR), and after packing, in the form of the Dangerous Goods Declaration (DGD – a.k.a MULTIMODAL DANGEROUS GOODS FORM) along with Dangerous Goods Labels..

The vessel only sees the Dangerous Goods Declaration on paper or on-screen, and the labels on the container, and has to use this information for purposes of stowage planning

For certain items that fall into the dangerous category, a Dangerous Goods Document or Form is required. It is mandated by the International Air Transport Association (IATA) or the International Maritime Organization (IMO). As per their guidelines, the exporter has to declare the status of the goods if they are dangerous in nature in this particular document.

It is required for shipping special category items that are dangerous and may affect other goods being transported on the ship or aircraft. The Shipper's Declaration of Dangerous Goods signifies the declaration of the exporter that the goods are dangerous, but also that the shipper has ensured special packing has been provided so that they do not damage or become hazardous to other goods in the ship or aircraft, or to the crew members or people handling the cargo.

This special packing ensures that even hazardous goods are handled properly by crew members. A sample copy of this document is also available in the resource section, and you can download it.

For local communication with customs in the home country of the exporter, an export declaration has to be filed by the exporter. This is normally filed by the freight forwarder or C&F agent on behalf of the exporter, usually online. In India, the system is called EDI (Electronic Data Interface), though in other countries it may be called by another name. In India, if filed in physical form, it is called the GR Form (Guarantee Remittance).

This form is not only a customs declaration but also a declaration to the exchange control agencies. For example, in India, it is submitted to the Reserve Bank of India (RBI). By filing this, the exporter guarantees that the goods are being shipped and that the foreign exchange proceeds will be received in the exporter’s account within the stipulated mandatory time period. In India, this period is 180 days.

The GR Form, also known as the Exchange Control Copy of the Shipping Bill, Export Declaration, or sometimes the Bill of Export, serves as a declaration to both customs and the exchange control authority (such as RBI) that goods are being exported and the exporter is responsible for ensuring payment realization.

The customs declaration copy is the main copy, whether filed online or offline. There are also two copies for the RBI’s Exchange Control Department: one for the RBI and one for the bank. The bank, upon receiving the remittance, matches the certified copy of the shipping bill with the one earlier sent to the RBI. Once the money is realized, the bank issues the BRC (Bank Remittance Certificate) and informs the RBI, closing the case. A fourth copy, the Port Trust copy, is required for port authorities.

The shipping bill copy filed online should specify the category of export. There are four categories:

1. Dutiable goods

2. Duty-free goods

3. Duty-free under bond (where a bond is furnished for GST or, in some cases, excise purposes, guaranteeing the goods are for export only; once the export is completed, the bond is settled)

4. Goods under the duty drawback claim

Customs uses these categories to apply the requisite treatment to the shipment and follows the appropriate protocol for each category.

There are still other documents that customs may ask for before clearance of the goods from the port of loading.

Friends, the other documents required for customs clearance—most of these I have already discussed with you in detail—are the Commercial Invoice, the Packing List, the Inspection Certificate issued by the Export Inspection Agency or the Export Inspection Council (as it is called in India), or any export licenses (if applicable). These have to be furnished to the Customs Department, serving as a kind of permission from the requisite authority allowing the export of that particular product. Such licenses may be required for certain items, though for most items in India, they are not.

Additionally, the LC copy (if applicable), the Proforma Invoice, the Export Order, or the Export Contract may also be required. Customs may even ask for the technical brochure of the goods being exported, wherever applicable.

These are some of the important documents required for customs clearance for exports.

And then there are post shipment formalities that require still more documents and procedures. In the next lecture, Dr. Jain delves into those documents also.

Friends, the documents involved in the post-shipment formalities start with the very first and most important document, the Shipping Advice. It has to be created and properly signed by the seller. As soon as the goods are loaded on the ship, along with the non-negotiable copies of all major items such as the Commercial Invoice, the Packing List, and the transport documents (B/L or AWB), these must be sent by fax or email to the buyer without delay.

The idea is that the buyer should know that the goods have been loaded on the ship and the expected date of departure, so they can track the shipment and make arrangements for receiving the goods.

The next set of documents is required at the stage of bank formalities, after shipment, for presentment against the Letter of Credit. These include the documents specified in the LC, such as the Commercial Invoice, Packing List, Certificate of Origin, transport documents (Bill of Lading or AWB), and the Quality Inspection Certificate if required by the buyer. Additionally, the Shipping Bill copy, though not required by the LC or the buyer, is required by the bank.

The Exchange Control (EC) copy is also needed so that, after receipt of payment, the negotiating bank (the exporter’s bank) can send it to the Reserve Bank of India (RBI) to match it with the earlier copy of the Shipping Bill. This certifies that payment for the shipment has been received in foreign exchange. The Bill of Exchange, also called the Bank Draft, is another important document. It is an unconditional order from the exporter to the bank to pay the requisite amount against the LC. This is forwarded by the negotiating bank to the issuing bank.

Insurance or freight payment documents may also be required, depending on the agreed Incoterms and LC conditions. In some cases, a Consular Invoice may be required, which is essentially the Commercial Invoice signed and endorsed by the consular office of the importing country. A Phytosanitary Certificate may also be required, depending on the type of goods.

These documents are required to claim remittance against the LC from the bank. Additionally, when dealing with the bank, the exporter must check if any discrepancies have been raised by the issuing bank and make necessary corrections. Once the money is received from the issuing bank (generally in electronic form as eBRC), the exporter must obtain the Bank Remittance Certificate. This is also required to claim incentives.

The exporter must also ensure that the bank sends the EC copy of the Shipping Bill to the RBI to avoid being blacklisted for non-receipt of international payment. The Bank Draft, though not always explicitly required under the LC, is crucial for banks to make a payment. It is also part of the Documentary Collection process. It is attached with all commercial documents, including LC documents, and accompanied by a Cover Letter.

The Cover Letter contains instructions from the exporter, any special notes, and the list of documents being submitted. The Bank Draft helps in transferring title and responsibility between the buyer and seller and facilitates the release of funds to the seller (the exporter, also called the beneficiary). It may also contain payment instructions or the transmittal letter issued or requested by the exporter.

The documents required for claiming export incentives or tax refunds include the RCMC (Registration Cum Membership Certificate) issued by the respective Export Promotion Council, and the BRC or eBRC, which certifies that foreign exchange has been received by the country. This enables the concerned authority to process refunds or release incentives.

A Customs-certified copy of the Shipping Bill is also required to confirm that the goods have been shipped. This certification is provided by customs. Additionally, non-negotiable copies of the Bill of Lading or the AWB, whichever is applicable, are required as transport documents for reconfirmation of the fact that the goods have been exported and to indicate the mode of export.

Now, finally, here is the summary of all major documents about which an exporter from India must have a complete understanding.

Friends, now I will show you and quickly explain the summary of all the documents, categorized as pre-shipment documents and post-shipment documents. In the pre-shipment documents, there are two categories: commercial documents and regulatory documents.

Among the commercial documents, the main documents required by the LC are also called the principal documents. Then there are certain secondary documents required for obtaining the principal documents. These secondary documents are called auxiliary documents. However, we have mainly discussed the principal documents, not the secondary ones. The auxiliary documents are actually required to obtain the primary (principal) documents, such as the Commercial Invoice, Packing List, Certificate of Origin, Certificate of Inspection or Quality Certificate, Bill of Lading, AWB, or Combined Transport Document (for place-to-place, warehouse-to-warehouse consignments).

Integrated transport documents are also becoming popular nowadays; these are called Combined Transport Documents. Other important documents include the Bill of Exchange, Shipping Advice, and the Certificate of Insurance.

To obtain these main documents, auxiliary documents are required, along with those needed for local government regulatory compliance by the exporter (not the concern of the buyer). Examples include the Export Declaration, which is for customs and exchange control purposes. In physical form, it is called the GR (Guarantee Remittance) for exchange control purposes; for software exports, it is called Softex; for exports through post parcel, it is called PP. The Shipping Bill is the same thing in electronic filing, but it is required for customs purposes. Certified copies, such as the drawback copy (for drawback shipping bills), port trust copy, and the export application or dock challan (in case of road transport), are also relevant. For restricted goods, an Export Certificate is required for compliance with local government regulations.

These are the regulatory documents. Many of these have been discussed in detail, but this is just a summary.

The post-shipment documents include the Shipping Advice (already discussed), which must be sent to the buyer as soon as the goods are loaded on the ship. Non-negotiable copies of the Bill of Lading, the Commercial Invoice copy, and the Packing List must also be sent as important attachments with the Shipping Advice.

Negotiation documents, required to be filed with the bank, include those specified in the LC: the Commercial Invoice, Bill of Exchange (first and second original, also called Bill of Sight), GR form, Shipping Bill certified copies, EC copy for bank purposes, a full set of Clean on Board Bills of Lading (original negotiable and non-negotiable copies), the Export Order (if applicable), the Packing List, Insurance Policy (if applicable), Consular Invoice, Customs Invoice (if applicable), and the original LC copy.

For incentive claim purposes (e.g., GST/Excise), duplicate certified copies of ARE-1 and ARE-2 are required for excise claims, though in India, these are now generally not needed except for a few items where excise still applies. Under bond, ARE-1 and ARE-2 may be required for exemption from excise duty or for claiming excise refunds.

For GST purposes, the Commercial Invoice and Shipping Bill are required. A certified copy of the Shipping Bill from customs and a non-negotiable copy of the Bill of Lading (transport document) are needed for GST or excise refunds.

For duty drawback claims, the required documents include the Duty Drawback Claim Form, a certified copy of the Commercial Invoice, a non-negotiable copy of the Bill of Lading, a certified copy of the Shipping Bill, the RCMC (Registration Cum Membership Certificate) from the respective EPC, and the BRC or eBRC from the bank confirming receipt of foreign exchange.

These are the documents, many of which we have already discussed in detail. This was the summary of these documents.

Now, the next question comes: which documents are actually required by the buyer? And who requires all the other types? Dr. Jain discusses the same in the next lecture.

Friends, it is also important to know which parties require the different types of documents we have discussed. As a reflection of all these documents, many are required by the buyer. For example, the Commercial Invoice, the Packing List, the Quality Certificate, the Freight Certificate, the Insurance Certificate, and the Certificate of Origin. The Certificate of Origin is very important because it saves money for the buyer, as the landed cost becomes cheaper if a special type of Certificate of Origin is provided. An ordinary Certificate of Origin is not very significant for the buyer, but it is required by customs. Even if it is not for concessional duty or free imports, a COO is required by customs.

The buyer will ask for it, and the buyer’s bank (the issuing bank) will also require some documents. The buyer’s country’s local government, customs, or border control would also ask for certain documents, such as the Certificate of Free Sale or the Phytosanitary Certificate.

Similarly, the seller’s country customs (i.e., the exporter’s home country border control) would require certain documents, as would local government authorities. The shipping company requires certain documents, and even the freight forwarder or C&F agent requires documents such as the Shipper’s Letter of Instruction. Airlines or transport companies also require certain documents, as mentioned earlier.

Both the buyer’s country local government and the seller’s country local government will require specific documents.

Friends, what I am trying to explain is that many different entities require various types of documents. This is the reason there exists a very long list of export documents, and it is very difficult to cover all of them in a course of this type.

We have, therefore, discussed the most important and commonly required documents in this section.

Dr. Jain takes an earlier example to explain the sequence of the steps.

Friends, in this example of Messrs. Malhotra Exports, who signed the export agreement with St. Lauren of France, the document signed by Malhotra Exports is the Sales Contract. This is the first document where the process starts.

The pre-contract documents in this case, before the Sales Contract was signed, were the Letter of Inquiry sent by the buyer to the exporter (Malhotra Exports). On the basis of this, the exporter, i.e., Malhotra Exports, sent a Proforma Invoice, which is basically a quotation. This is the document sent by Malhotra Exports.

The post-contract document, i.e., after the Sales Contract had been signed, was the LC Opening Instruction created by the exporter (Malhotra Exports). Based on this, the final LC Opening Instructions were created by the importer, Saint Lauren, and sent to AXA Banque.

This refers to the example already shared in this course. In continuation of the same example, I am explaining here what documents were created or generated. Based on the final LC instructions given by the importer (Saint Lauren of France) to the French bank (AXA Banque), the issuing bank issued the Letter of Credit.

This new document, generated by the bank, was then advised by the advising bank in India to Malhotra Exports in Mumbai. Once Malhotra Exports completed due diligence of the LC issued by AXA Banque, the exporter (Malhotra Exports) generated an LC Acceptance Letter, which we have already discussed. After acceptance, the exporter shipped the goods and generated the LC documents.

What were these documents? The Commercial Invoice, Packing List, Certificate of Origin, Quality Certificate, Freight Certificate, Insurance Policy, Phytosanitary Certificate, and the Transport Document (in this case, the Bill of Lading, since the goods were shipped by sea). Additionally, an Azo Dyes Free Certificate was required because the European Union mandates that any fashion garments or clothing imported into Europe must be free of Azo Dyes, which are harmful to humans.

In the same process, another document called the Bank Draft (already discussed), which includes the payment instructions, was generated by the exporter to be given to the negotiating bank along with the Covering Letter. These two documents were also generated.

Next came the generation of documents for the freight forwarder appointed by the exporter (Malhotra Exports). These documents included the Shipper’s Letter of Instruction or Authorization Letter, a kind of Power of Attorney allowing the freight forwarder to move the goods.

Another document generated by the exporter for local purposes (dealing with Indian customs) was the Export Declaration for this particular example, along with the Shipping Bill (an electronic copy, which is essentially the same). Copies of the Shipping Bill were also prepared for the bank, the central bank, and for export promotion incentives/refund claim purposes.

Finally, the Shipping Advice was generated by the exporter for Saint Lauren, along with a set of non-negotiable LC and transport documents, to be sent after the shipment had been effected by the exporter.

In the next animated video presentation, the 5 most important LC documents are discussed.

So here is a take off animated video presentation to help you under stand some of the most important exports documents, so called LC documents.

In the next lecture, Dr. Jain concludes this section.

Friends, in this section, we discussed different documents—several documents generated by different parties and required by buyers and many other entities. The conclusion from this section is that international transactions require a very large number of documents. The documents we discussed are not the complete set.

As mentioned in the last example, an Azo Dyes Free Certificate had to be generated. In different types of transactions, orders, and export requirements, there may be additional documents needed, which we have not discussed in this section. However, we have covered the common ones.

We also learned that different intermediaries and entities are involved in export transactions, and they require different types of documents for different purposes to play their roles. They need these documents because, without them, it is very difficult to perform their functions. The authenticity of transactions is proven through documents, which is why every party requires some form of documentation.

We also learned that the local regulations of both the exporting country and the importing country play a very important role. The regulations in both the home country and the host country must be very well understood by exporters.

Friends, welcome back to the course. In this section, let us try to generate the typical export shipping documents using a software for our example of Malhotra Exports, exporting fashion garments to France. So, that example we will take up.

Our objective of this section is to understand the step-by-step generation of the export documents using any software. So any kind of software can be used. So we will take up one of the software to generate these documents. And I will also explain to you what information needs to be filled in. Where? in this set of documents.

These things we will be learning in this section. So let us start.

In the next lecture, let us generate PI for this example.

Friends, the first thing the exporter does upon receiving the Letter of Inquiry is to create a Proforma Invoice. The Proforma Invoice also serves as the quotation. It contains the basic details about what is expected from the order by the exporter.

In this Proforma Invoice, the seller’s name and contact details are included, as well as the buyer’s name, address, and contact details. The invoice number is written, and the issue date is 26th February 2022. The buyer’s reference number is LOI (Letter of Inquiry), which can be any number for linkage purposes—here, it is LOI 24 Feb. The due date of the Proforma Invoice, meaning the validity of the quotation, is 25th March 2022. The delivery date is mentioned as 28th May 2022, though later it emerges that the buyer is willing to accept 15th June. For safety, the exporter prefers the delivery date of 28th May, which is suggested by the exporter. The method of dispatch is by sea from Mumbai Port (Ex-Mumbai).

The quantity, as per the Letter of Inquiry, can be fitted into one full container load, and the Port of Discharge will be Paris, France. The method of payment demanded by the exporter is a confirmed irrevocable LC. The buyer writes the product code and description of the goods as per the Letter of Inquiry: ladies’ skirts and blouse sets, 100% cotton, assorted adult sizes, assorted color themes, each set consisting of 2 pieces. The total quantity is 3,500 sets. The unit price is €15, making the total €52,500.

Additionally, special packing charges of €2,500 are included, bringing the total to €55,000. Additional information states that the expected delivery date is 15th June 2022, though the buyer wants to insist on 28th May.

The bank details are also mentioned: the LC should be from a first-class international bank, advised through the nominated bank of the exporter, which is the International Bank of India, Mumbai, Main Branch.

This is the first document generated by the exporter, based on the Letter of Inquiry.

In the next lecture, let us generate a sample sales contract for this example.

Now, based on the Proforma Invoice by Malhotra Exports, the buyer negotiates on details to make the contract to be signed between the two parties firmer, with more details and fine points discussed between the exporter and the importer. Based on that, the exporter creates a Sales Contract, which describes all the discussions held between the exporter and the importer.

This Sales Contract is structured as follows: the seller’s name is given, the buyer’s name is included, very similar to what was in the Proforma Invoice. Instead of one contact person, there are two contact persons listed, and the product number is also provided. The invoice number, which will later be used in the main Commercial Invoice, is also included.

The date is mentioned, and the delivery date is kept as 28th May 2022. However, the buyer orally assured, as well as confirmed by email, that it can be extended until 15th June. The method of dispatch is sea, with a full container load shipment. The port of loading and the port of discharge are specified. The payment terms are also given: a confirmed LC. This is very similar to what was stated in the Proforma Invoice.

More details are provided here: product codes and categories of different sizes and colors are listed, with the same items mentioned. The prices are also included, along with a detailed breakdown of the different categories. The total amount, including special packing charges, comes to €55,000. Conditions discussed between the parties are also noted, such as: partial shipment not allowed, transshipment not allowed, documents required—Clean On Board Straight Ocean Bill of Lading in original (three copies), Phytosanitary Certificate, SGS Inspection Certificate, and GSP Certificate of Origin.

Other documents, as per LC, required by the bank, are also mentioned. The latest shipment date is specified as 28th May 2022. Bank details are provided: the LC should be from a first-class international bank, advised through the International Bank of India, the nominated bank of the exporter, Mumbai Main Branch. Exporter details and signature are also included.

This Sales Contract is generated by the exporter.

In the next lecture, let us generate PO for this example.

Now, this Sales Contract has been proposed, and it has to be ratified by St. Lauren, the importer. Based on this, St. Lauren will be issuing a Purchase Order. St. Lauren issues the Purchase Order, which looks like this.

As you can see, this is the Purchase Order issued by the importer. It contains the importer’s details first; whereas the Sales Contract came from the exporter, this Purchase Order comes from the importer to the exporter, Malhotra Exports. Other details are given there: the PO number is the Proforma Invoice reference number, the date, the delivery date, and all other details are copied from the Sales Contract. There are no changes. Even the product code, description, quantity, and price are replicated from the Sales Contract with no change. It has been accepted by the importer (the buyer), with special packing charges of €2,500, making the total €55,000, and all conditions are the same as those in the Sales Contract sent by the exporter.

The importer endorses and issues this Purchase Order and sends a copy to Malhotra Exports.

In the next lecture, let us generate a Packing List for this example.

Now, let us look at the Packing List—how it looks, and how it is also based on the master data. In this case, since the details are very simple to understand, we can go for a simple Packing List that is not too detailed, because the shipment box types are the same and there are only five pallets. Everything is very straightforward, so a simple Packing List is sufficient. In special cases, a more detailed Packing List may be required.

In this case, it is not needed. You can download the sample Packing List from the resource section of this lecture.

The Packing List contains initial details that are the same as in the invoice: the exporter’s name, consignee’s name, buyer’s name, Export Invoice Number, Bill of Lading Number (to be provided by the freight forwarder), the reference number, and the buyer’s reference number. It also includes the method of dispatch, type of shipment, vessel name, voyage number, port of loading, port of discharge, final destination port, place of final destination, Country of Origin (India), and Country of Final Destination (France).

Packing information is also included: every box and every carton has the marking “Jai Hind.” These are cardboard cartons in five pallets, with 100 cartons in each pallet. Each pallet volume is 5 cubic metres, as mentioned in the description of the Packing List.

The Packing List differs from the Commercial Invoice in that it does not include price details. However, product codes, goods descriptions, and quantities are the same. The type of packages is mentioned here as cardboard cartons (100 pcs). This can be corrected to read “100 cartons.” Net weight is 980 kg, gross weight is 1,260 kg, and the cubic volume is 5 cubic metres. Each pallet contains 100 cartons with a total of 5 cubic metres, and all 5 pallets will be put into the container.

All other details are included, along with the packing instruction: “Please pack appropriately.” Simple packing is noted here.

This, again, has been generated by the exporter. This is how the Packing List looks.

In the next lecture, let us generate SLI for this example.

Now, the exporter issues the Shipper’s Letter of Instruction to the freight forwarder. This Shipper’s Letter of Instruction looks like this: the shipper’s name is there, the consignee’s name is there, the forwarding agent’s name is there (XYZ 3PL Private Limited), along with the reference number, buyer’s number, and export declaration number. The export declaration number is the customs export declaration number, generated when the shipping bill is filed by the freight forwarder.

This document is required by the forwarding agent to work on behalf of the exporter. It is possible that the export declaration number may not be available at the time of issuing the Shipper’s Letter of Instruction, but it can be added later. The forwarding agent’s details are given, while the notified party is not mentioned because the consignee and buyer are the same. The method of dispatch is copied from the invoice: sea, FCL.

The vessel name is given. The place of receipt of the goods by the freight forwarder is JNPT (Jawaharlal Nehru Port Trust, Mumbai). The Port of Loading is Mumbai. The date of departure is 28th May 2022, though this date may vary depending on the vessel arrangement made by the freight forwarder. If the details are available, they are mentioned; if not, they can be added later. The Port of Discharge and the final destination are given. The Bill of Lading (transport document) has to be on a COLLECT basis, and this is mentioned. Document instruction is “Originals.” The country of final destination and the country of origin are listed. The INCOTERM used is FOB, Mumbai. The declared value is €55,000, and all other details are simply copied from the invoice.

Kind and number of packages are given, and the description of goods is the same. Gross weight (1,260 kg) is copied, along with volume details (each pallet 5 cubic metres, already included in the master document). The consignment is declared “Non-hazardous.” LC status is “Yes.” Special instructions read: “Please pack appropriately in export-worthy, seaworthy packing.” The issuing authority is the exporter, Malhotra Exports, who, by signing the Shipper’s Letter of Instruction, provides a limited Power of Attorney to the freight forwarder to enable them to move the goods on behalf of the exporter. This is how the Shipper’s Letter of Instruction looks.

Next, the shipping instructions will be created by either the freight forwarder or the exporter, as the case may be, and these are very similar. The Shipping Instruction has to be given to the shipping line. This document looks very similar to the Shipper’s Letter of Instruction. It can be created by the freight forwarder or signed by the exporter.

In the Shipping Instruction, details are included: exporter, consignee, reference number (copied from the invoice), and the carrier (e.g., Maersk Lines). The address and the contact person’s name are given. Other details are copied, including method of dispatch, type of shipment, vessel name, voyage number, place of receipt of the goods, port of loading, date of departure, port of discharge, and final destination.

The country of origin of the goods, the country of final destination, freight charges (on Collect Basis), and document instructions (Originals) are also listed. These are copied directly from the Shipper’s Letter of Instruction. The total weight, total cubic metre volume, hazardous status (NO), and LC status (YES) are also mentioned. Special instructions are the same as in the Shipper’s Letter of Instruction.

If all the details cannot fit on one page, they can be continued on the next page. Essentially, the Shipping Instruction mirrors the Shipper’s Letter of Instruction in almost every respect.

In the next lecture, let us generate B/L for this example.

This is the Shipping Instruction, which goes to the shipping company and is created automatically. Another document generated by the software is the Bill of Lading. Let’s look at the Bill of Lading. It has to be signed by the shipping line and may have a slightly different format, with the logo of the shipping line, but it will look very similar to this.

This copy can be used by the shipping line to fill in the details on the original Bill of Lading, which will be issued on the official document of the shipping line. It will look like this.

The shipper’s name and consignee’s name are included, along with the same details from the Commercial Invoice. The carrier name is mentioned, as well as the shipper’s reference number. The Bill of Lading number is also included, since this is the Bill of Lading. Other details are noted, such as “Pre-carriage by truck,” showing that the goods are transported to the port by truck. The place is JNPT (Jawaharlal Nehru Port Trust, Mumbai). Additional information is provided, such as “5 pallets, each containing 100 cartons. Each pallet is 5 cubic metres.” The vessel name and voyage number are mentioned, along with the Port of Loading, Port of Discharge, Place of Delivery (Paris), and Final Destination (Paris, France). Details are copied directly from the Commercial Invoice and the Packing List. Gross weight, net weight, and cubic metres are taken from the Packing List. All other details are included as they are.

In this software, there is a small glitch, which causes the information to appear slightly garbled. To view the actual document, you can press the edit button in the software to get the correct copy. Bill of Lading details appear as follows: the container number is given, along with the seal and the customs seal number (applied after customs sealing). The size and type of the container are also listed: 20 ft container, steel dry cargo, FCL. The total weight and cubic metre volume are visible in the Bill of Lading, as shown.

Other details include: number of original Bills of Lading – three; Incoterms 2020 – FOB; one container; freight payable at Paris (hence “Freight Collect”); shipped on board date – 28th May 2022; place and date of issue – Mumbai; the signatory company name – Maersk Line; and the contact person’s name and signature.

The format may vary slightly, but the actual original document will replicate all these details on the official Bill of Lading issued by the shipping line.

Using computer software to generate a complete set of export documents for an export shipment can benefit exporters. Here are some of the most significant advantages:

1. Accuracy and Efficiency: The use of software for generating export documents can significantly reduce the possibility of human error. The software can automatically check the accuracy of the information entered, calculate fees, and provide assistance in filling out complex forms. This saves time and ensures the documents' accuracy, which is crucial for smooth customs clearance.

2. Speed: Export documentation can be a time-consuming and tedious process. However, by using software, exporters can quickly generate a complete set of documents in a short amount of time. This can help in meeting the tight deadlines associated with international trade and can also help in ensuring the on-time delivery of goods.

3. Cost-Effective: By using software, exporters can save money on manual labor, printing, and courier expenses. Moreover, the software can provide real-time updates on any changes in regulations, tariffs, and customs requirements, which can help in avoiding costly mistakes.

4. Improved Communication: The software can help in improving communication between the exporter and other stakeholders involved in the supply chain, such as freight forwarders, customs brokers, and banks. The software can allow for the seamless sharing of documents (for some parts of the document set), reducing the need for physical copies and the potential for lost or delayed documents.

5. Compliance: Exporters must comply with various regulations and laws, which can vary from country to country. By using software, exporters can ensure compliance with the latest regulations and requirements, reducing the risk of penalties or delays at customs.

In conclusion, using computer software to generate a complete set of export documents for an export shipment can provide numerous benefits to exporters. It can improve accuracy, efficiency, speed, and communication while also reducing costs and ensuring compliance with regulations.

Documentation plays an important role in Exports and Imports, especially when consignments are under a Letter of Credit basis. Improper documentation in exports and imports causes loss in business in all means and inconvenience with waste of time on rectification. Learn about common errors and mistakes made by exporters in export documentation and procedures.

Hi there. Let us talk about the six common mistakes made by exporters while doing export documentation. In this particular video, my objective is to explain what the common mistakes in export documentation are. One by one, we will discuss these mistakes and the possible consequences.

Friends, the biggest mistake made by exporters while creating export documents is giving wrong information, knowingly or unknowingly. This includes information like the contact details of the buyer (especially), sometimes even of the exporter, and wrong details of the packing, markings on the packages, number of packets, net weight, gross weight, or identification details of the packages. Mistakes are also common in payment details, such as the payment terms or the dates when payment is due. Such mistakes are very frequent.

Another major mistake often made by exporters while preparing documents is wrongly identifying the classification of goods. For customs purposes, the main classification is the ITC HS Code. For example, for Indian exporters, it is the Indian Trade Classification Harmonised System Code, which must be put on documents, especially those for customs. It must also be mentioned on the invoice. In the case of online filing of the export declaration, any error in this code can be very serious. Even if it is a genuine mistake, customs may assume it was intentional, creating distrust between the exporter and customs. It may even be categorized as fraud. Consequences can include delays in clearance, fines, penalties, financial loss, or failure to comply with licensing requirements in case the goods fall under restricted categories.

Let us take one example. Messrs. Sparkle Exports received an order to supply cut diamonds to a buyer in Belgium. In the export declaration filed online, the exporter wrote the ITC HS Code as 71051000 (for natural diamonds), instead of the correct 71049010 (for lab-created diamonds). During physical inspection, customs found the goods were lab-created diamonds, not natural diamonds. The correct ITC HS Code was different from what was declared.

Customs did not reject the shipment, since the LC documents and contract did not specify whether the order was for natural or lab-created diamonds. Nevertheless, heavy fines were imposed on the exporter for misdeclaration. Had the buyer specifically required natural diamonds, this would have been treated as fraud, with far more serious consequences.

Another very common mistake made by exporters is writing the wrong value in documents. When the declared value is wrong, authorities generally assume either undervaluation or overvaluation. If values in export documents do not match with LC documents or the customs’ international pricing database, further investigation is triggered. Large mismatches may lead to accusations of fraud, resulting in penalties and reputational loss.

Another mistake is giving the wrong product description. The description in documents must match the LC, export contract, and purchase order. Any mismatch may cause shipment delays, customs clearance problems, or delays in LC payments.

Exporters also frequently make mistakes while filling out the Dangerous Goods Form. This form must be filled out by a trained professional who understands the product, its risks, packaging, markings, and handling requirements. Smaller exporters sometimes attempt to do this themselves, but mislabeling or incorrect packing of hazardous goods can cause shipment stoppage, delays, or major financial loss. It is always better to involve a professional agency.

Finally, another very common mistake occurs when presenting documents to the bank—providing wrong or unclear instructions in the covering letter. Instructions to the negotiating bank may lack clarity or contain errors. These instructions guide both the negotiating bank and the issuing bank, and if they are ambiguous, banks may interpret them incorrectly.

Sometimes exporters assume instructions are already covered in the Bank Draft or LC documents. That is a myth. Banks generally do not go into such detail and mostly rely on the covering letter.

For example, Messrs. Malhotra Exports received an order for €55,000 worth of fashion garments from a French buyer, on DA payment terms. Goods were dispatched, and original documents were sent through the negotiating bank in India to the French bank. Malhotra Exports wanted the French bank to give co-acceptance (agreeing to pay in case the buyer defaulted). However, this condition was written only in the Bank Draft, not in the covering letter.

The negotiating bank failed to highlight this condition, and the French bank did not notice it either. The documents were handed over to the buyer on DA terms. Later, the buyer became bankrupt and failed to pay. The French bank also refused payment, citing the absence of clear instructions about co-acceptance in the covering letter.

Under UCP 600, banks are not obliged to read beyond explicit instructions in the covering letter. Malhotra Exports wrongly assumed the Bank Draft condition was sufficient. This oversight resulted in the buyer receiving the goods without payment, and Malhotra Exports incurred a huge financial loss.

Now, let us also talk about the common mistakes made by exporters in export procedures.

Now, friends, in this video, I will talk about seven common mistakes made by exporters in the export process. The objective of this video is to understand what these common mistakes are and what the consequences of such mistakes can be.

One of the very important and most commonly made mistakes, especially by new entrants in the export business, is not doing the homework before soliciting any business. Lack of preparation before soliciting export orders can lead to major problems, which may result in early losses and even the failure of the new company to survive.

The consequences of such mistakes can be that the exporter may not be able to execute the export order within the stipulated time. There can be quality issues, poor delivery, and customer frustration. It can also lead to financial losses.

For example, Pashupati Exports, a new entrant in rice exports, received an export order for five containers of basmati rice from the UAE on LC terms. After the receipt of the order, the client sent the artwork to print on rice bags. The exporter realized that before doing this, he needed to arrange a food safety license, which he was not aware of, and only discovered after getting the order. He also came to know from the C and F agent appointed later that there were certain bank formalities that had to be completed before being able to book the shipping space, which was urgent due to insufficient time.

Additionally, for rice exports, the exporter had to arrange for an LUT (Letter of Undertaking) for GST waiver, which would take a week or more to obtain, while time was already short. The miller of the rice was located around 600 kilometers from the head office of the exporter, and a third-party inspection by SGS required the exporter’s coordination. Since he had very few employees, he had to handle much of this himself, which consumed additional time. The bag printing company also had to be arranged near the miller, but this was not done earlier, causing further delays.

As a result, the buyer began to panic due to the slow progress, since he had commitments with his forward clients in the UAE. Eventually, the exporter had to request an extension of the LC validity, which the buyer refused. By that time, the exporter had already spent a lot of money on various aspects of the order, resulting in a major financial loss.

Another very common mistake made by exporters is the failure to screen the buyer or the country properly. Such failures are very common, as exporters may lack reliable sources or methods to gather data about the buyer and destination country. This lack of due diligence can lead to problems, especially when exporters are unaware of local or overseas regulations governing product exports.

Another frequent mistake is failure to negotiate the right Incoterms (International Commercial Terms). The reason may be a lack of bargaining power or poor negotiation by the exporter. The most balanced Incoterm is generally FOB (Free on Board). However, sometimes exporters agree to D-terms to secure business without realizing the additional costs, such as unloading at the destination, customs clearance, transport to the buyer, and payment of import duties. These additional costs can be very high, and exporters may not be able to adjust prices accordingly. This problem can also arise from a lack of knowledge about the latest Incoterms and how they work.

Another common mistake is failure to secure the correct LC terms. LC is a complicated banking instrument, and failure can occur at multiple stages: not securing the right payment terms (LC, DA, DP, etc.), not negotiating properly, or not recognizing problems in LC conditions when the exporter has to accept or reject it. Lack of knowledge about LC conditions or failure to get proper advice from local banks can cause problems. Sometimes, exporters also fail to choose the right currency for the LC. To avoid foreign exchange fluctuation risks, it is advised to secure an LC in the exporter’s home currency. However, many times exporters and importers agree to use a third-country hard currency, exposing the exporter to risks.

Another common mistake is failure to book shipping space in time. The timing of booking must align with the LC’s latest date for the Bill of Lading. Delays in booking can lead to shipment delays, late payments, higher transport costs, or even loss of future business.

Additionally, inexperienced exporters often choose the wrong service providers. These can be banks, freight forwarders, shipping lines (if not nominated by the buyer), or intermodal transport providers. Selecting the wrong or inexperienced service provider can lead to serious problems, including fraud.

For example, Ricela Exports from Raipur, India, received an order to supply six containers of basmati rice to Singapore on LC terms. They appointed a new CNF agent to handle clearance and shipping. Though the exporter arranged good-quality rice and dispatched it in time, the goods reached Singapore damaged due to water seepage, as the containers provided by the CNF agent were faulty. The buyer demanded compensation and refused future dealings. The problem arose because the exporter chose an inexperienced CNF agent, possibly to save costs. This mistake caused financial loss, damage to reputation, and loss of future business.

Finally, a major mistake exporters often make is the failure to manage risks adequately. Risks include transport risks (not having sufficient insurance cover), commercial risks (not obtaining ECGC cover if required), and foreign exchange risks (not negotiating contracts in the exporter’s currency or failing to hedge). Inadequate protection against these risks can cause significant financial losses.

These are the seven major mistakes exporters often make in typical export transactions.

In this section, Dr. Jain talks about Indian FTP and incentives available to exporters in India. Let's start with the section overview.

Now, friends, in this new section, which focuses on the foreign trade policy and the export incentives in India, we are going to discuss the very important role of foreign trade policy in India, and how it helps exporters carry out their export operations smoothly and profitably.

And what are the different export incentive schemes available in India for exporters? The objectives of this section are: What is the role of foreign trade policy in export promotion and in the growth of exports from India? You will understand and be able to appreciate the role of foreign trade policy in this section.

Another objective of this section is to understand what types of incentives are currently available in India and what the benefits of these incentives are. What kind of benefits exist for exporters? Who implements these different incentives? How do they work and why are they important in the export business?

These are the things we will be discussing in this section.

In the next lecture, Dr. Jain talks about the key objectives of India's FTP.

In this animated video presentation highlights of India's foreign trade policy are explained in summary form. This is a good start to learn about the focus areas of FT policy of India.

In the next lecture, Dr. Jain talks about the key provisions of India's FTP.

Friends, what are the major export incentive schemes, including the drawbacks I just mentioned to you? In India at present, there are approximately 25 different incentive schemes, which include the duty drawback. These schemes are either financial in nature or non-financial in nature.

Non-financial incentives mean recognition is given to exporters. Status is conferred on them, their achievements are acknowledged, and they are provided with certain facilities and exemptions from compliance requirements. These are non-financial incentives. Financial incentives, on the other hand, are generally in the form of compensation for costs incurred directly or indirectly in the production of goods for export.

Compensation may be given in the form of exemptions or remissions. That is the financial part of incentives. These incentives, provided by the Government of India, are in the form of subsidies, the purpose of which is to lower export prices and make goods competitive in the international market in a logical manner.

They also include tax concessions such as duty exemption schemes, which enable duty-free import of inputs for export production, and duty remission schemes, which enable post-export replenishment of duty on inputs used in exported products. The Duty Drawback Scheme also falls under the duty remission scheme. Financial incentives may also take the form of credit facilities to exporters, such as low-cost loans, pre-shipment credit, and post-shipment credit.

Finally, financial guarantees are also provided, such as provisions for covering bad loans. These may include international credit lines, where certain bad loans exist, both domestic and international. Such financial guarantees are also part of the financial incentives. These are the major types of incentives available to exporters in India. Many of these incentives are similar to what is available in other countries for export purposes.

Let us discuss the major schemes. Apart from the Duty Drawback Scheme, the major schemes include MEIS, the Merchandise Exports from India Scheme, which provides for two to five percent duty credit scrips based on the Free on Board (FOB) value of exported goods. It is being replaced by another scheme called RoDTEP. I will talk about this scheme now.

MEIS claims are still pending with the Government of India, so this scheme has not been completely scrapped, even though it has already been replaced. Another scheme is SEIS, the Services Exports from India Scheme. In this scheme, incentives of three to seven percent of the net foreign exchange earnings are given to services export companies.

Companies with an active IEC (Importer Exporter Code) number and a minimum annual foreign exchange earning of USD 15,000 are eligible for this scheme and these incentives. RoDTEP, which I just mentioned, stands for Remission of Duties and Taxes on Exported Products. It covers central, state, and local taxes such as mandi tax, electricity duty, and fuel taxes on exported goods. This scheme was introduced in January 2021 and replaces the MEIS scheme.

As mentioned earlier, MEIS claims are still pending with the Government of India and are in the process of being disbursed.

In the next lecture, Dr. Jain lists the key incentives presently available to exporters in India.

Now, the other types of schemes, which are also duty exemption or remission schemes, financial in nature, are schemes like AAS, that is the Advance Authorization Scheme, which allows for duty-free, that means zero percent duty, import of raw material for export production. This is basically a duty exemption scheme because this concession is available even before the export is made.

It is an advance authorization to import goods without paying duty. Another very popular scheme is called DFIA, which means Duty Free Import Authorization. This scheme is very similar to the AAS scheme, that is, the Advance Authorization Scheme, but the difference is that AAS is an advance authorization, while DFIA is not. DFIA is applicable post-exports. After the export has been made, the duty can be replenished. Then, in the subsequent imports of similar goods, this import duty exemption will be available.

Friends, as far as the Duty Drawback scheme is concerned, I had already discussed it in earlier slides and mentioned to you that this is a very significant scheme for goods imported and used for export production, directly or indirectly. It provides for the drawbacks of the duties.

Another scheme is RoSCTL, which is very similar to RoDTEP, but this applies to the apparel and made-up sector, the items which are covered under Chapters 61 to 63 of the ITC, that is, the International Trade Classification, HS, that is, Harmonized System, Configuration, which is also Indian Trade Classification, the same as ITC. Whatever goods are covered in Chapters 61 to 63, this scheme applies. This also provides for the remission of duties and taxes, including central, state, and local taxes.

Another very significant and popular scheme is the EPCG scheme, that is, the Export Promotion Capital Goods Scheme. It allows for the import of capital goods to produce export goods, and these capital goods can be imported at zero percent duty. This scheme comes with an export obligation, which is equal to six times the duty saved on the capital goods, whether imported or procured from the domestic market. Whatever taxes and duties have been saved, six times that value has to be exported within six years of purchase.

Another duty exemption/remission scheme is called the EOU (Export Oriented Units) Scheme. It allows for certain waivers and concessions in compliance and taxation matters to units that are involved purely in export, that is, 100 percent exporting units. Such units are eligible for this scheme and can benefit from the waivers and concessions provided under it.

Finally, in the next lecture, Dr. Jain will conclude this section.

Friends, in this section, we went through several lectures. The animated highlights of the different schemes helped us understand the architecture of the foreign trade policy currently in force in India and how it has been able to generate different types of export incentives for exporters in India in compliance with the World Trade Organization.

What we learned in this section, the key takeaways, is that India's foreign trade policy is actually struggling to introduce new, effective export promotion measures that are WTO-compliant and capable of boosting exports from India, which is becoming very challenging in the competitive environment of the international market. But we also learned that the World Trade Organization, whose goal is to ensure that international trade is free and fair, plays a very important role in determining what incentives can be given by a particular country, including India. It is not possible to provide unlimited incentives in the form of subsidies or in illogical ways, as some countries did in the past. At present, the WTO is very strong.

The guidelines of the WTO are very clear, which makes it difficult for any country to favor its businesspeople, exporters, local business community, or manufacturing units by giving unjustified subsidies. Whatever incentives are given must be WTO-compliant.

We also learned in this section that the export incentive regime in India has been constantly changing with every Five-Year Foreign Trade Policy. This happens due to the changing business environment, the changing realities of the country, pressures from different quarters both inside and outside the country, and, very importantly, the pressure of WTO compliance. For these reasons, different schemes are introduced by the Government of India in each Five-Year Foreign Trade Policy, making it a very challenging task.

I want to extend my heartfelt congratulations to everyone of you on completing this course! It's an incredible achievement, and you should all be incredibly proud of yourselves.

To show my appreciation for your hard work and dedication, I would like to reward you all with a complimentary copy of my book on a similar subject. The book is a comprehensive guide to export documentation and procedures and is filled with valuable insights and information that will be useful in your future endeavors.

To claim your complimentary copy, simply go to the resource section of this lecture and download your copy.

Once again, congratulations on a job well done, and I wish you all the best in your future endeavors.

Best regards

Friends, as you have seen in this course, our objective was to understand the different types of documentation and procedures required to carry out international transactions against export orders, especially from India. Because India is a very large country, many manufacturing units are located far from seaports, and in many places, connectivity is poor, and international airports are not available.

There are a lot of challenges faced by the country—pitfalls in infrastructure, the high cost of logistics, and the slow process of export clearance. These are some of the challenges Indian exporters face. Constantly, India is evolving. Export competitiveness is increasing in competition with China. Indian exporters are being given many incentives by the government, and FT policies are being framed to help exporters overcome difficulties and to compensate them for illogical and extra costs that competitors from other countries do not incur.

These avoidable costs can be compensated as per WTO compliance. The Government of India continues to introduce new schemes to help exporters boost India's exports. In this course, these objectives have been kept in mind, and several lessons and videos were created for your knowledge with respect to export documentation and procedures in India, the foreign policy of the Government of India, and the different incentive schemes available for exporters.

I am sure you must have liked this course and, to a great extent, learned the concepts discussed here. Topics such as a typical export transaction framework, the requirements of different documents, and the role of different intermediaries in export operations have all been researched and presented for your knowledge. If you liked this course, please share it with your colleagues, contacts, business associates, and employees. If you are running an export company, you will find this course very useful for your employees. I would also invite you to explore several other courses in the VJ Exports Mastery Series, of which this course is a part.

There are already 19 other courses in this series, which you can explore. They cover export documentation, procedures, marketing, online export business, digital marketing for global business, the role of the metaverse in export operations, the letter of credit, as well as courses on various aspects of international business, including cross-cultural management and managing the people side of organizations.

There are many topics and courses available in the VJ Exports Mastery Series. You can visit my Udemy profile page, where you will find all the courses listed in one place. There, you can explore, enroll, and encourage your contacts, friends, and employees to join these different courses.

Thank you very much.

Hello to you!

Today I have some appreciative comments for you.

I want to take a moment to congratulate you on fully completing this course.

Your dedication and perseverance throughout this journey have been truly commendable.

Completing a course is no small feat, and I am incredibly proud of the progress you have made and the knowledge you have gained along the way.

I also want to remind you that this course is just one piece of the puzzle.

It is part of our larger VJ Export Mastery Courses series, consisting of 25 courses that I had told you about earlier as well.

These courses are designed to provide you with a comprehensive understanding of the export industry.

On my part, as I mentioned earlier, I am committed to helping you expand your learning even further by giving you access to more similar courses in the series. On your part, I again have a small request for you.

Your feedback and rating are incredibly valuable in refining this course and ensuring it remains world-class.

I kindly ask you to leave a rating for the course along with your honest feedback, in case you have not done so yet.

Once again, congratulations on completing the course.

Keep up the fantastic work that you have done in this course, and remember, I am here to support you every step of the way, personally.

Even after you have completed this course, you can reach out to me anytime for any mentoring or support that you may need.

Thank you very much.

Hello and welcome, and thank you so much for completing this amazing course.

I truly appreciate the time and effort you have invested in developing all types of skills, whether related to export documentation, compliance, international regulations, logistics, or global marketing strategies.

In this short bonus video lecture, I want to share with you a few optional ways you can continue your learning journey, access additional resources, and stay connected with me for future guidance, all while remaining fully compliant with Udemy policies.

If you want to continue receiving educational content on exports, global compliance updates, HS code classification tips, EU/US regulations, logistics strategies, and real-world case studies, you are welcome to connect with me on LinkedIn.

I regularly post export-related insights, free updates, and practical examples that many learners find very useful.

Again, this is completely optional, but if you would like to connect, this is my LinkedIn profile: LinkedIn.com/in/vijeshjain. Along with my activities on LinkedIn, YouTube, Instagram, and many other social media platforms, I frequently share publicly available articles, guidance notes, and updates related to topics such as documentation and compliance, Indian and international customs rules, labeling requirements, global market trends, and policy changes in the EU, USA, UK, and Middle Eastern regions, as well as best practices for exporters.

These free resources can help you stay informed and confident as your export business grows.

For learners who need personalized clarity on specific export matters, such as HS decisions, regulatory compliance, product classifications, labeling reviews, customs queries, international market strategies, or even Amazon US product launch advisory, I also provide such guidance outside Udemy.

If you ever require any of this tailor-made support, you may contact me directly. My email ID is vijesshjain@gmail.com.

Please note that this is only an optional way to reach me outside Udemy, and it is not required to complete this course. It is also not part of the Udemy purchase for this course, which keeps this message fully compliant with Udemy policies.

In addition, I want to cordially invite you to my Discord Knowledge Hub, which has several channels, including the Q&A section, discussion channel, discussion lounge, video lectures channel, and announcement channel. No registration is required to access this knowledge hub or any of these channels.

Simply click the invite link, which is also provided in the resource section of this lecture, and you can access my Discord Knowledge Hub.

Before I close, I want to sincerely thank you once again for joining this course.

I truly hope that this specialized training has added real value to your knowledge base and to your professional journey in international trade.

My mission is to help learners navigate exports more confidently, whether it is compliance, export documentation, import documentation, logistics, or expanding into global markets.

I wish you tremendous success in your future business endeavors, and I look forward to staying connected with you on your path ahead.

Thank you once again, and all the best in your international journey.

Take care of yourself, and see you in another course in this course series.

Dear Learner,

Thank you for completing this course. I appreciate your time, dedication, and interest in strengthening your knowledge of export documentation, compliance, HS classification, logistics, and global market strategy.

This Bonus Section offers optional ways to continue your learning journey, stay connected, and access additional guidance outside Udemy.
Everything here is completely optional, not required to complete the course, and not included in your Udemy purchase, in full compliance with Udemy policies.

1. Connect With Me on LinkedIn (Optional)

If you'd like to follow my educational posts, updates, and insights on global trade, compliance, and international markets, you can connect with me on LinkedIn:

LinkedIn (Optional):
https://www.linkedin.com/in/vijeshjain/

I regularly share free content, industry news, case studies, and compliance tips useful for exporters and global professionals.

2. Visit My Udemy Instructor Profile (Optional)

If you’d like to explore more of my courses on international trade and global business:

Udemy Instructor Profile (Optional):
https://www.udemy.com/user/vijesh-jain-4/

You can browse additional courses, all focused on simplifying global trade and helping professionals succeed in international markets.

3. Optional Personalized Guidance Outside Udemy

If you ever need individual clarity on export documentation, HS code decisions, customs queries, EU/US/UK/UAE compliance, labeling reviews, market-entry strategy, or Amazon USA marketplace compliance, you may reach out to me directly:

Email (Optional):
vijeshjain@gmail.com

Additional Educational Video Resources at YouTube: https://www.youtube.com/@VijeshJain0506

This is only an optional way to connect and is not required for completing the course.

4. Join the Free Discord Knowledge Hub (No Signup Required)

To support continuous learning, I’ve created an open-access Discord Knowledge Hub for all students.
You can join anytime to access discussions, free resources, shared insights, and regular updates.

Join Optional Discord Knowledge Hub (No Registration Required):
https://discord.gg/wHgqdYe6tz

This community is free, optional, and designed to help learners share knowledge and stay updated with global trade trends.

5. Free Public Resources for Ongoing Learning

I regularly share publicly accessible updates on topics such as:

• HS classification best practices

• Compliance rules for the USA, EU, UK, and UAE

• Labeling and documentation tips

• Customs procedures

• Market-entry insights

• Global trade risks and opportunities

These resources are available on my social channels and are fully free for learners.

Thank You & Best Wishes

Thank you once again for learning with me. I hope this course has added clarity and confidence to your global trade journey. I look forward to staying connected and supporting your continued growth.

Wishing you success in all your international business endeavors.

Warm regards,
Vijesh Jain
Export–Import Consultant & Trainer
VJ Global Academy