Export and Import Procedures Essay

PGDIEM- SEM I Exim Policy & Export Procedure & Documentation (102) (I) Preliminaries For Exports Registration IEC, RCMC, EPC, C.

Excise Registration of Exporters/Importers • All intending importers/ exporters are required to register themselves with the following authorities before commencing business; – DGFT( regional authority) for obtaining Importer-Exporter Code Number (IEC Number) – Concerned Export Promotion Councils / Federation of Indian Export Organization) for obtaining Registration- cum Membership Certificates (RCMC) – Registration with Value added Tax Authorities – Registration with Central Excise AuthoritiesRegistration of Exporters /Importers • Importer Exporter Code Number (IEC) – No person is allowed to export or import goods without obtaining an Importer-Exporter Code Number, from the regional authority, unless specifically exempted, under any other provision of FTP. – Exporter of goods to Nepal or Myanmar through Indo-Myanmar border areas, are exempted, provided that the CIF value per consignment, is below Rs. 25,000. 00. Registration of Exporters /Importers (cont) • Application For Grant Of IEC Number – An application for grant of IEC number shall be made by the Registered Office/ H.O. , of the applicant, to the Regional Authority, (DGFT-Regional Office), under whose jurisdiction, the Registered Office in case of the company, or H.

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O. in case of others, falls in the Ayyat-Niryat Form, and shall be accompanied by: • DD or Bank Receipt for Rs. 1000. 00 • ST registration certificate or passport copy (for an individual), or copy of the legal authority letter when the application is signed by an authorized signatory.

• Certificate from banker of the firm as required • A copy of PAN card duly attested, copies of passport size photographs etcRegistration of Exporters Contd.. 1 • The regional Office concerned, will grant an IEC number to the applicant, in the prescribed format. A copy of such certificate, shall also be endorsed to the banker. • An IEC number allotted, shall be valid, for all its branches/ divisions / units/ factories, as indicated on the IEC number. • To facilitate collection of license / other documents, identity cards are issued by Regional Authority, to the authorized representative of the applicant. Registration With EPCs Registration with Export promotion Councils/ Commodity Boards/ Authorities – To enable exporters avail of benefits/ concessions given under the FTP, they are required to register with concerned EPC/ C. B /or authority and obtain an registration –cummembership certificate (RCMC) – The Exporter is required to apply in the prescribed format to EPC relating to their main line of business – Status Holder can also obtain RCMC from FIEO.

– Application for obtaining RCMC, to be made in prescribed manner & accompanied by IEC code number.If application is granted, EPC or FIEO will grant status of the exporter as merchant exporter or manufacturer exporter Registration With VAT Authorities • Registration with Value added Tax Authorities (VAT) – Goods which are to be shipped out of the country for exports are eligible for are eligible for exemption from both VAT & CST. – For this , the exporters are required to register themselves, with the VAT authorities of the state, in which they are located.

– The registration has to be done in the manner prescribed by the state VAT authorities.Registration With Central Excise & PAN • Registration with Central Excise Authorities – Goods meant for export are exempt from CED. – For this the manufacturer has two options : • either they can deposit CED at the time of clearance from factory • or take refund or avail procedure for export of goods without payment at the time of clearance. • Obtaining PAN – Exporters & importers who obtain the IEC number are also required to obtain PAN. An application in form number 49A has to be submitted Other Registrations Any exporter who wants to export his goods needs to obtain PAN based Business Identification Number (BIN) from DGFT prior to filing of Shipping Bill for clearance of export goods. • The exporter must also register themselves to the authorized foreign exchange dealer code & open a current account in the designated bank for credit of any drawback incentive. • All exporters intending to export under export promotion schemes need to get their licenses, DEEC Books etc.

(II) Categories Of Exports Physical Direct & Indirect Deemed Exports Merchant & Manufacturer ExportsCategories of Exporters • Exporter – Means a person, who exports or intends to export and holds an importer-exporter code number, unless otherwise specifically exempted • Manufacturer Exporter – Manufacturer exporter means a person, who exports goods manufactured by him, or intends to export such goods • Merchant Exporter – Merchant exporter means a person, engaged in trading activity and exporting or intending to export goods. – A status holder means an exporter recognized as Export House, Trading House, PTH etc by DGTD/ Development Commissioner. Categories of Exporters (Cont) Supporting Manufacturer , means any persons who manufactures any product or part/ accessories/ components of that product. Name of supporting manufacturer as well as exporter must be endorsed on export documents. • Third Party exports means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, export documents such as shipping bills shall include name of both manufacturer exporter/manufacturer & third party exporters. BRCs, GR declaration, export order & invoice should be in the name of third oarty exporter.Categories of Exporters (Cont) • Service Exporter means a person providing: – Supply of service from India to any other country – Supply of service to a service consumer of any other country in India – Supply of service from India through commercial or physical presence in the territory of another country.

– Supply of service in India relating to exports paid in FFE • Services normally means services recognized by GATT / WTO’S Agreement & includes 161 tradable services covered under GATS & where payment for services is received under FFE. Deemed Exports Deemed Exports refers to those transactions in which goods supplied do not leave the country & payment for such supplies is received either in Indian Rupees or in FFE. • Following categories of supplies by main/sub contractors shall be regarded as “deemed exports” under FTP, provided goods are manufactured in India: – Supply of goods under advance authorization/ DFIA – Supply of goods to EOUs/ STPs/ EHTPs or BTPs Deemed Exports (cont) – Supply of capital goods to holders of authorization under EPCG scheme.

– Supply of goods to projects funded by multilateral or bilateral agencies or funds as notified by DEA. Supply of capital goods to fertilizer plants. – Supply of goods to power projects & refineries. – Supply to projects funded by UN agencies & nuclear power plants etc. Benefits For Deemed Exports • Deemed exports, shall be eligible for any/ all of the following benefits, in respect of manufacture & supply of goods, qualifying as deemed exports – Advance authorization/ DFIA – Deemed export drawback. – Exemption from terminal export duty where supplies are made against ICB.

In other cases refund of terminal excise duty will be given.Benefits For Deemed Exports (cont) – In respect of supplies made against the Supplier Authorization / DFIA in terms of paragraph 8. 2(a) of FTP, supplier shall be entitled to Advance Authorization / DFIA, for intermediate supplies. – If supplies are made against Advance Release Order (ARO) or Back to Back Letter of Credit issued against Advance Authorization / DFIA, in terms of paragraphs 4. 1. 11 and 4.

1. 12 of FTP, suppliers shall be entitled to benefits listed in paragraphs 8. 3(b) and (c) of FTP, wherever is applicable. Export & Trading Houses Export & Trading Houses: Merchant as well as Manufacturer Exporters, Service Providers, EOUs & units located in SEZs , AEZs, Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs) shall be eligible for status. • Status is calculated on total FOB export performance during current plus previous three years (taken together) upon exceeding limit given below: – – – – – EXPORT HOUSE (EH): Rs. 20 Crores STAR EXPORT HOUSE (SEH): Rs.

100 Crores TRADING HOUSE (TH): Rs. 500 Crores STAR TRADING HOUSE (STH): Rs. 2500 Crores PREMIUR TRADING HOUSE (PTH): Rs. 10,000 Crores.

Export & Trading Houses Contd. • Status holder will be eligible for a number of facilities including : – Authorization & customs clearance for both imports & exports, on self-declaration basis. – Fixation of input-output norms on priority within 60 days – Exemption from compulsory negotiation of documents through banks – 100% retention of foreign exchange on EEFC account – Enhancement of normal repatriation period from 180 days to 360 days. – Exemption of providing Bank guarantee in schemes under FTP. – SEH & above to be permitted to establish export warehouses as per DoR guidelines – Conferring ACP status within 30 days of application. III) Shipping Documents & Terms Used In Shipping III(a) Shipping Documents Documents For Declaration Of Goods Under Foreign Exchange Rules • Section 7 of FEMA 1999, lays down the statutory control concerning exports.

• Under FEMA regulations ( number 3), every exporter of goods or software in physical form or through any other form, either directly or indirectly, to anyplace outside India ( other than Nepal & Bhutan) shall furnish to the specified authority a declaration in prescribed form & supported by such evidence as may be specified. Certain goods & services like trade samples, personal effects, personal gifts, goods being sent for testing, defective goods being sent outside for repair etc are exempted from the above. Documents For Declaration Of Goods Under Foreign Exchange Rules • The appropriate declaration forms are : – GR Forms : To be completed in duplicate for all exports (other than by post) including export of software in physical form. – SDF Form : In duplicate and appended to the shipping Bill for exports declared to customs offices notified by Central Government which have introduced EDI system for processing Shipping Bill. PP Form : for exports by post – SOFTEX : To be completed in triplicate for export of software otherwise than in physical form ie. Magnetic tapes, disks & paper media. GR Form • GR Form is an exchange control document required by RBI. The exporter through the GR Form has to assure to the RBI that the export proceeds will be realized within 180 days.

• It is submitted in duplicate, to the customs, at the port of shipment along with the Shipping Bill & the customs certify the value declared by the exporter & also record the assessable value. Customs returns one copy to exporter & retains the original for transmission to RBI • The exporter is required to negotiate the shipping documents, through his bankers (authorized dealers), along with the GR Form, within 21 days of the shipment. • The authorized dealer reports to the RBI after negotiation of documents & has to retain the documents till the full exports proceeds have been realized, & thereafter send the documents to RBI. Electronic Data Interchange (EDI) Electronic data Interchange can be used to electronically transmit documents such as purchase orders, invoices, shipping bills, receiving advices and other standard business correspondence. • Coping with the increasing imports/exports the Excise & Customs has computerized the manual process of assessment of Bills of entry, clearing of shipping bills for export & all documents relating to imports & exports are being processed on-line • At present all types of bills of entry for import of goods under export related schemes, e. g. 100% EOUs, EPCG scheme, EPZ, STP, EHTP, DEPB, DEEC, & imports for research purposes are being processed on EDI system.

• A new centralized electronic data system will be in place at major ports, airports by the end of the year (2008), for speedy and hasslefree clearance of exports and imports as well as to reduce delays in settling duty drawback claims. SDF Forms • On account of introduction of EDI system at certain customs offices, where shipping bills are processed electronically, the existing declaration in Form GR, is replaced by declaration in Form SDF ( statutory declaration form) . SDF form is to be submitted in duplicate, annexed to the relative shipping bill to the concerned commissioner of customs.

• After verifying & authenticating the declaration, the commissioner hands over to the exporter, exchange control copy of the shipping bill & the SDF form annexed thereto. • This must be submitted to the authorized dealer, within 21 days from the date of export, along with other shipping documents for negotiation. • The manner of disposal of the shipping bill & the SDF form annexed thereto is the same as that of the GR form.SOFTEX Forms • The exporter should submit declaration in Form SOFTEX in triplicate in respect of export of computer software & audio/ video/ television software to the concerned designated official of GOI at STPI/ EPZ/FTZ/SEZ for valuation/ certification not later than 30 days from the date of invoice.

• The designated official may also certify the SOFTEX forms of EOUs which are registered with them. • In respect of long duration contracts, where the exporter bills the client periodically, the exporter can submit a ombined SOFTEX form of all invoices including advance remittance. • Disposal of SOFTEX forms is done as per prescribed procedure in Export Of Goods & Services Regulations, 2000. Duplicate copy of SOFTEX along with a copy of the invoice may be retained by authorized dealers.

Documents For Transportation Of goods • The documents required for transportation of goods are: – Airway Bill or Air consignment Note – Bill Of Lading – Mate Receipt – Combined transport document : ICDs have been set up at various centers within the country for convenience of exporters.The movement of goods from ICDs to the destination is covered by the Combined transport document. Airway Bill or Air Consignment Note • The receipt issued by an airline company or its agent for carriage of goods, is called airway bill (AWB) or airconsignment note.

• It is not a document of title and it is not issued in a negotiable form. • The goods are delivered to the consignee mentioned in the AWB, after identifying himself as the party named in the AWB as the consignee / receiver, against payment of charges if any. It is therefore desirable to cosign the goods in the name of the foreign corresponding bank, as it will enable us to retain the control of the goods, till payment is made/ documents are accepted for payment.

Mate’s Receipt • Mate’s receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on the ship. This receipt is a prima facie evidence that goods are loaded in the vessel. • Mate’s receipt is first handed over to the Port Trust authorities & on receipt of port dues, the Port Trust authorities, hand the mate’s receipt to the exporter or his agent.Mate’s Receipt (cont) • The mate’s receipt has to be handed over shipping company for obtaining the Bill of Lading. • The mate’s receipt is a transferable document & can be of two types – Clean mate’s Receipt : This signifies that the goods have been received well in order, properly packed & without any defect or damages – Qualified Mate’s receipt: This signifies goods have not been packed properly or received damaged.

In this case the shipping company does not take any responsibility for damage in transit. Bill of Lading Bill of Lading (B/L) is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order , provided the freight & other charges as mentioned have been duly paid. It is also a document of title to the goods & as such is freely transferable by endorsement & delivery.

• B/L serves three main purposes : – As a document of title to the goods – As a receipt from the shipping company – As a contract for the transportation of the goods. Types Of Bill of LadingClean B/L B/L acknowledging receipt of goods apparently in good order & condition & without any qualification is a clean B/L. Such B/L does not contain any negative remark about condition of goods. B/L with a remark such as “goods insufficiently packed” is known as claused B/L. For multimode transportation, or when another shipping company’s vessel is used, this B/L is issued. A B/L held too long (normally more than 21 days)), before negotiations, is termed stale B/L.

B/L issued when freight is paid at the time of shipment is a freight paid B/L Claused B/L Transshipment or through B/L Stale B/L Freight paid B/LFreight collect B/L B/L issued when freight is not paid at the time of shipment& is to be collected from consignee is a freight collect B/L Contents Of The Bill Of Lading • • • • • • • • • • • Name & logo of the Shipping Line Name & address of the shipper Name & number of vessel Name of the port of lading, port of discharge & place of delivery Marks & container number, container seal number Packing & container description Total number of packages & containers Description of goods, gross weight, volume Amount of freight paid or payable Shipping Bill number & date Signature & initials of the Chief OfficerDocuments For Customs Clearance Of Goods • The Shipping Bill is the main document required by customs for clearance of goods for shipment. • Where the goods are to be cleared by Land Customs, Bill Of Export is prepared instead of the Shipping Bill. • Bill Of Exports are also of four types – White for export of duty free goods – Green for export of goods under claim for duty drawback – Yellow for export of dutiable goods – Pink for export of duty free goods ex-bond. Shipping Bill • Shipping Bill is an important document required by the customs authorities for allowing shipment. It is prepared by the exporter & it contains the name of the vessel, name of port of discharge, country of final destination, , exporter’s name & address, details about packages, number & description of goods, marks & numbers, quantity & details about each case, FOB price, total number of packages with the weight & value and the name & address of the importer. Shipping Bill (cont) • The shipping Bills are of following types: – Duty Free Shipping Bill : No duty or cess applicable – Dutiable Shipping Bill : Goods subject to export duty / cess – Drawback Shipping Bill : – Shipping Bill for shipment Ex-bond. For goods imported for re-export. Documents Required For Processing Of Shipping Bill: • The following documents are required for the processing of the Shipping Bill: – GR forms (in duplicate) for shipment to all the countries.

– 4 copies of the packing list mentioning the contents, quantity, gross and net weight of each package. – 4 copies of invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f. o. b.

/ c. i. f. value, correct & full description of goods etc.

– Contract, L/C, Purchase Order of the overseas buyer. – AR4 (both original and duplicate) nd invoice. – Inspection/ Examination Certificate. Other Documents • Other documents as shown in the following pages are also necessary and required to carry out various formalities for shipment & negotiation of documents and for meeting the regulations in the importing country. Aligned Documentation System • Aligned Documentation System is based on the UN layout key. • Under this system, different forms used in the international trade transactions are printed on paper of the same size & in such a way that the common items of information are given in the same relative slots in the same piece of paper.

Aligned Documentation System (cont) • Commercial Documents – These are required for effecting physical transfer of goods & their title from the exporter to the importer & the realization of export proceeds. Out of the 16 commercial documents in the export documentation, as many as 14, have been standardized and aligned to one another. These are proforma invoice, commercial invoice, packing list, shipping instructions, intimation for inspection, certificate of inspection, insurance declaration, certificate of insurance, mate’s receipt, B/L, application & certificate of origin, shipment advice & negotiation of documents. Shipping order & bill of exchange could not be brought under this system. Aligned Documentation System (Cont) • Regulatory documents – Regulatory pre-shipment export documents are prescribed by different government department & bodies in order to comply with various rules & regulations under the relevant laws governing export trade such as export inspection, etc.

– Out of the nine regulatory documents, four have been standardized and aligned. These are Shipping Bill, Exchange Control Declaration (GR Form), port trust copy of the Shipping Bill for payment of Port Charges. Packing List The exporter prepares the packing list to facilitate the buyer to check the shipment. It contains the detailed description of the goods, packed in each case, their gross & net weights etc. • The packing list also contains all basic information about the export order like name & address of the buyer & the exporter, purchase order number & date etc. • The packing order is the basic document used in the preparation of further documents like proforma invoice & so on. Proforma Invoice • The starting point of the export contract is in the form of offer made by the exporter to the foreign customer.

The offer made by the customer is in the form of the Proforma Invoice. • It is a quotation given as a reply to an enquiry. • It normally forms the basis of all trade transactions & enables importer to obtain import license, if required. Proforma Invoice (cont) • Contents of Proforma Invoice are generally the following: – – – – Name & addresses of exporter & importer Mode of transportation, port of discharge, final destination Buyer’s & seller’s reference numbers / dates Description of the goods, mode of packing, total number of packages, expected total weight etc. Origin of goods – Price offer on FOB & CIF Basis – Basic terms & conditions of sale. Commercial Invoice • Commercial invoice is the basic export document & contains all information required for making other documents. • It is prepared by the exporter after the execution of the export order giving details about the goods shipped • It should be addressed to the consignee as per the letter of credit. • It is the basic evidence of the ‘contract of sale’ or purchase & therefore must be prepared strictly in accordance to the terms 7 conditions mutually agreed between the buyer & seller.

It should contain basic details as in the proforma invoice, the detailed description of goods, as well as the final packing lists and the markings on packages plus details of shipment of goods, name & number of vessel/ voyage. • This document is used for various export formalities, incentive claims, negotiation of documents , accounting etc. Certificate Of Origin • The importers in several countries require a Certificate Of Origin without which clearances to import is refused. The certificate of origin states that the goods exported are originally manufactured in the country whose name is mentioned in the certificate. • Certificates of origin are required when: – Goods produced in a particular country are subject to preferential tariff rates in the foreign market at the time of importation – The goods produced in a particular country are banned for import in the foreign market. Types Of Certificate Of Origin 1 (1) Certificate Of Origin for Availing Concessions under GSP : – Required by countries like France,Germany, Italy, Benelux countries,UK, Australia, Japan, USA etc.

, which extend GSP benefits & are issued by specialized agencies like: • Export inspection agencies • Joint DGFT, Commodity Boards & their regional offices • Development Commissioner, Handicrafts • Textile Committee for textiles • Marine product export development authority for marine products • Development Commissioner for EPZsTypes Of Certificate Of Origin (cont) • (2) Non-preferential Certificate Of Origin: – These are normally required for clearance of goods by all importers & are issued by the Chamber of Commerce of the exporting countries or by Trade Association of the importing country. • (3) Certificate For availing concessions Under Commonwealth Preferences: – This is also known as “Combined Certificate Of origin & value” & is required by two commonwealth countries, Canada & New Zealand for concessions under Commonwealth preferences. These have to be obtained from the High commission of the country concerned. Types Of Certificate Of Origin (cont) • (4) Certificate For Availing Concessions Under Other System Of Preferences – Certificates of Origin are also required for tariff concessions under the Global system Of Trade Preferences (GSTP), Bangkok agreement (BA), SAPTA, – Export Inspection Councils have the authority to print blank Certificates of Origin & these are issued by EPCs, DCs of EPZs, EIC, FIEO etc. Consular Invoice Consular Invoice is a document required mainly by the African & certain other countries like Kenya, Uganda, Tanzania, Mauritius, Australia, New Zealand Nigeria, Ghana etc.

• The exporter is required to submit 3 copies of the Commercial invoice & related documents for certification to the respective Embassy & one copy is returned to him after certification. • Balance copies are sent by the Embassy to the customs department of the importing country for verification upon arrival of goods & calculation of the import duty payable. The consular certified copy is negotiated by the exporter along with other documents. Customs Invoice • Countries like USA, Canada etc need customs invoice • It is generally made out on a special form presented by the customs authorities of the importing country & helps for allowing entry of goods in the importing country at preferential tariff rates. • The invoice forms are generally available at the consular office of the importing country and are required to be signed and witnessed after duly filling the same. Bill Of Exchange / Draft A Bill Of Exchange also known as Draft contains an order from the creditor to the debtor to pay a specified amount to a person mentioned therein. • The maker of the Bill is known as “Drawer” & the person who is directed to pay is called the “Drawee” • The person who is entitled to receive the amount is called “Payee” • A Bill Of Exchange is of two types: (i) Sight draft (immediate payment) & (ii) Usance Draft ( Credit – Usance 30 days or usance 60 days) • Unless & until the draft is retired, the negotiating collecting bank does not hand over the shipping documents & the buyer can not take delivery of goods.Legalization & Attestation Of Documents • Documents issued in one country (‘Source Country’) which need to be used in another country (‘Destination Country’) must be ‘authenticated’ or ‘legalized’ before they can be recognized as valid in the foreign country.

This is a process in which various seals are placed on the document. • The number and type of authentication certificates depends on the nature of the document and whether or not the foreign country is a party to the multilateral treaty on “legalization” of documents. “Embassy (Consular) Legalization” of official documents is a procedure of confirmation of the validity of originals of official documents or certification of authenticity of signatures of the officials, authorized signatures on documents, and also the validity of prints of stamps, seals by which the document is fastened. III(b) Terms Used In Shipping (INCO Terms) INCO Terms • Incoterms are internationally accepted commercial terms, developed in 1936 by the International Chamber of Commerce (ICC), in Paris.

Incoterms 2000 define the respective roles of the buyer and seller, in the agreement of transportation and other responsibilities and clarifies, when the ownership of the merchandise takes place. • Incoterms are used in union with a sales agreement or other methods of sales transactions and define the responsibilities and obligations of both, the exporter and importer, in Foreign Trade Transactions. INCO Terms – Incoterms 2000, is mainly concerned with the loading, transport, insurance and delivery transactions.

– Its main function is the distribution of goods and regulation of transport charges. Another significant role played by Incoterms is to identify and define the place of transfer and the transport risks involved. – Incoterms make international trade easier and help traders in different countries to understand one another & are most widely used international contracts INCO Terms- Objectives • Incoterms safeguard the following issues in the Foreign Trade contract or International Trade Contract: – To determine the critical point of the transfer of the risks of the seller to the buyer, in the process of forwarding of the goods (risks of loss, deterioration, robbery of the goods). To enable the person who supports these risks to make arrangements in term of insurance & other arrangements. – To specify who is going to subscribe the contract of carriage; seller (exporter) or the buyer (importer). INCO Terms- Objectives • • To distribute between the seller and the buyer, the logistic and administrative expenses, at the various stages of the process It is important to define, who is responsible for packaging, marking, operations of handling, loading and unloading, inspection of the goods.

Need To confirm and fix respective obligations, for the achievement of the formalities of exportation and importation, the payment of the rights and taxes of importation, as well as the sending of the documents. There are 13 Incoterms, globally adopted by the International Chamber of Commerce. • • INCO Terms- Groups • Incoterms 1990 / 2000 – which defines all trade terms are divided into four basic groups.

• Group E comprise of Departure term. Where the seller makes the goods available to the buyer at the seller’s own premises, (EXW) – Ex Works • Group F: Comprise of Shipment terms – Main carriage unpaid.Where the seller is called on to deliver the goods to a carrier named by the buyer, (FCA, FAS and FOB). These are shipment contracts with the shipment point named, and carriage unpaid by the seller. – FCA – Free Carrier – FAS – Free Alongside Ship – FOB – Free On Board INCO Terms- Groups • Group C: Comprise of Shipment terms – Main carriage paid. Where the seller has to contract for carriage, but without assuming the risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch, (CFR, CIF, CPT and CIP). These are shipment contracts, with the destination point named, and carriage paid by the seller.

• There are two critical division points, one for costs, the other for risk. • Costs being assumed by the seller until the destination point; risk being transferred to the buyer at the point of shipment. INCO Terms- Groups • In CIF & CIP terms, the seller arranges the contract of carriage and payment of freight. – CFR – Cost and Freight – CIF – Cost, Insurance and Freight – CPT – Carriage Paid To – CIP – Carriage and Insurance Paid ToINCO Terms- Groups • Group D: Comprise Of Arrival Terms.

Where the seller has to bear all costs and risk needed to bring the goods to the country of destination, (DAF, DES, DEQ, DDU and DDP). These are arrival contracts. – DAF – Delivered At Frontier – DES – Delivered Ex Ship – DEQ – Delivered Ex Quay – DDU – Delivered Duty Unpaid – DDP – Delivered Duty Paid Ex-Works Contract (EXW) • Title and risk pass to buyer, (including liability for payment for all transportation and insurance costs) from the seller’s door. Used for any mode of transportation. • Seller : In EXW shipment terms the Seller (Exporter) provides the goods for collection by the Buyer (Importer) on the seller’s or exporter’s premise. • Responsibility for the seller is to put the goods, in a good package which is adaptable and disposable by the transport.

Ex-Works Contract (EXW) • Buyer : The buyer or Importer, arranges insurance for damage in transit goods & have to bear all costs and risks involved in shipment transactions. (However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. FCA -Free Carrier (…. Named place) • “Free Carrier” means that the seller fulfils his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge. • When, according to commercial practice, the seller’s assistance is required in making the contract with the carrier (such as in rail or air transport), the seller may act at the buyer’s risk and expense.

• This term may be used for, any mode of transport, including multimodal transport. FCA -Free Carrier (…. Named place) “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes. • If the buyer instructs the seller to deliver the cargo to a person, e. g.

a freight forwarder who is not a “carrier”, the seller is deemed to have fulfilled his obligation to deliver the goods when they are in the custody of that person. • “Transport terminal”, means a railway terminal, a freight station, a container terminal or yard, a multi-purpose cargo terminal or any similar receiving point. “Container” includes any equipment used to unitize cargo, e. g. all types of containers and/or flats, trailers etc and applies to all modes of transport. FAS – ( Free Alongside Ship) Contract • FAS- Free Alongside ship: Title and risk pass to buyer, including payment of all transportation and insurance cost, once delivered alongside ship by the seller.

• Used for sea or inland waterway transportation. The export clearance obligation rests with the seller. • In FAS price includes all costs incurred in delivering the goods alongside the vessel, at the port or ominated place of the buyer, but seller does not pay charges for loading on board of vessel, as well as ocean freight charges and marine insurance. • Seller: The responsibility of the seller are fulfilled, when goods are placed cleared along the ship.

• Buyer: Buyer or Importer bears all expenses and risks of loss or damage of transit goods, delivered along the ship. Free On Board (FOB) Contract • FOB is one of the most frequently used price quotation, in the international market. • Under this quotation, the exporter undertakes to pay all expenditure till the loading of goods, on board the ship, including documentation charges. All expenditure thereafter, such as ocean freight, marine insurance, unloading charges etc are borne by the importer.

Free On Board (FOB) Contract (cont) • The sellers obligations are : – To provide goods & the commercial invoice , or its equivalent electronic message, in conformity with the contract of sale. – To obtain any export license or other official authorization, and carry out all customs formalities, necessary for exportation of goods. – To deliver the goods on board of vessel, at the port of shipment, on the date, or within the period, stipulated. To give the buyer sufficient notice, that, the goods have been delivered on board the vessel – To pay the costs of checking quality, measuring, weighing, counting , packing and marking of the goods. Free On Board (FOB) Contract ( Cont) • The buyer’s obligations in a FOB contract are: – To pay the price as provided, in the contract of sale – To obtain import license or other official authorization & carry out all customs formalities, for the importation of goods – To take delivery of goods, when the goods have been delivered, in accordance with the terms of the contract. To reserve the necessary shipping space and give due notice of the same, to the exporter ; & – To bear all costs and risks of the goods, from the time, when they shall have effectively passed the ship’s rail, Cost & Freight (CFR) Contract • In this term the exporter bears the cost of carriage or transport to the selected destination port, & the risk transferable, to the buyers at the port of shipment. Seller: chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding.

On the other hand, the transfer of risks is the same one as in FOB. Buyer: The buyers supports all the risk of transport. When the goods are delivered aboard by ship at the unloading port, buyer receives it from the carrier and takes delivery of the goods from nominated destination port. CIF Contract • Cost, insurance & freight means, that, the seller has the same obligations as under the FOB contract, but with the addition, that, he has to organize the marine freight & procure marine insurance, against the buyer’s risk of loss or damage, to the goods during carriage. The seller contracts the insurance and pays the premium and also pays the ocean freight. CIF Contract(cont) • The seller has the following additional obligations as compared to FOB Contract : – To arrange for the carriage of the goods to the named port of destination by the usual route in a sea-going vessel & to pay its costs & freights. – To obtain cargo insurance as agreed in the contract & to provide the buyer with the insurance policy or other evidence of insurance cover. • The above obligations are excluded from the buyer’s obligations.

Buyer still has the obligations, as indicated in the “ buyers’ obligations, in FOB contracts.CPT- Carriage Paid To…. • “Carriage paid to… ” means that the seller pays the freight for the carriage of the goods to the named destination.

The risk of loss of or damage to the goods, as well as any additional costs, due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer, when the goods have been delivered into the custody of the carrier. • “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of’ carriage, by rail, road, sea, air, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. • The CPT term requires the seller to clear the goods for export. DAF- Delivered At Frontier(Named Place) • “Delivered at Frontier” means that the seller fulfils his obligation to deliver when the goods have been made available, cleared for export, at the named point and place at the frontier, but before the customs border of the adjoining country.

• The term “frontier” may be used for any frontier including that of the country of export.Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term. • The term is primarily intended to be used when goods are to be carried by rail or road, but it may be used for any mode of transport. DES – DELIVERED EX SHIP (..

. named port of destination) • “Ex Ship” means that the seller fulfils his obligation to deliver, when the goods have been made available to the buyer on board the ship, uncleared for import at the named port of destination. The seller has to bear all the costs and risks involved in bringing the goods to the named port of destination. This term can only be used for sea or inland waterway transport. DEQ -“Delivered Ex Quay (duty paid)” • “Delivered Ex Quay (duty paid)” means that the seller fulfils his obligation to deliver when he has made the goods available to the buyer on the quay (wharf) at the named port of destination. The seller has to bear all risks and costs including duties, taxes and other charges of delivering the goods thereto. This term should not be used if the seller is unable directly or indirectly to obtain the import license.

• Buyer has to clear the goods for importation and pay the duty. • If the parties wish to exclude from the seller’s obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: “Delivered ex quay, VAT unpaid (… named port of destination)”,.

• This term can only be used for sea or inland waterway transport. DDU- “Delivered duty unpaid” Delivered duty unpaid” means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. • The seller has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. • The buyer has to pay any additional costs and to bear any risks caused by his failure to clear the goods for import in time. DDU- “Delivered duty unpaid“(cont) If the parties wish the seller to carry out customs formalities and bear the costs and risks resulting there from, this has to be made clear by adding words to this effect. • If the parties wish to include in the seller’s obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: Delivered duty unpaid, VAT paid, (…

named place of destination), • This term may be used irrespective of the mode of transport. DDP- Delivered Duty Paid “Delivered duty paid” means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. • The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for importation whilst the DDU should be used. • If the parties wish to exclude from the seller’s obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: “Delivered duty aid, VAT unpaid (… named place of destination)”. • This term may be used irrespective of the mode of transport.

(IV) Export Procedures IV(a) Excise Clearance For Exports Excise Clearance Benefit/ Rebate • Excise Duty – Excise duty is a tax imposed by the Central government on goods manufactured in India. – It is collected at source I. e. before removal of goods from the factory premises – Exporters are totally exempted from payment of CED – However, necessary clearances must be obtained by the exporter in one of the following ways Excise Clearance Benefit/ Rebate (cont) (i) Export Under Rebate – Under this system, an exporter is required to pay CED initially & then claim it from central excise department after shipment of goods.

• (ii) Export under Bond – Under this system, an exporter is required to execute a bond, in favor of excise authorities, for a sum equivalent to the amount of excise chargeable on such goods. Such bond should be supported by an appropriate bank guarantee. Excise Clearance Under Rule 18 & Rule 19 of Central Excise Rules • Export Procedures for Excise – There are basically two procedures for dispatching the goods out of India. (a) (Rule 18 of Central Excise Rules).

• In the first procedure, duties are paid and subsequently rebate (refund) is claimed after exportation of such goods. Alternatively, rebate is granted of duty paid on inputs used in the exported final product. • Rebate claim had to be made to A. C. of Central excise along with original of ARE-1 & other prescribed documents. Excise Clearance Under Rule 18 & Rule 19 of Central Excise Rules (cont) – (b) (Rule 19 of Central Excise Rules).

• The other procedure is to export goods under bond without payment of excise duty. On actual exportation of goods and on presentation of necessary proofs regarding exports, the bond is released. Regular Exporters can have a running bond for this purpose. • A merchant exporter has to furnish bond in form B-1 & certificate in CT-1. Conditions For Central Excise Clearance • As a part of further simplifications and rationalization of excise rules announced by the Finance Minister a new set of Central Excise Rules, 2001, has come into effect from 1st March 2002. The procedure for export of excisable goods (except to Nepal & Bhutan) is subject to certain conditions & limitations. Conditions & Limitations ( Under payment of CED) • The excisable goods can be exported directly from a factory or a warehouse after the payment of excise duty • The excisable goods must be exported within 6 months from the date within which they were cleared for export from the factory of manufacture or his warehouse.

• The market price of the excisable goods at the time of exportation is not less than the amount of rebate duty claimed. The amount of rebate of duty admissible is not less than Rs. 500. 00 Conditions & Limitations ( Without payment of CED) • The exporter is required to submit a General Bond ( Surety or security) to the Assistant Commissioner of Central Excise or the Maritime Commissioner for a sum equivalent to the duty chargeable on the goods. • The excisable goods must be exported within 6 months from the the date on which they were cleared for exports from the factory of manufacturer or his warehouse. Procedure For Central Excise Clearance The following is the procedure for obtaining central excise clearance: – (i) Application to the Assistant Collector/ commissioner of Central Excise (ACCE) • The exporter is required to make an application to the Superintendent or the Inspector of Central Excise, having jurisdiction over the factory of production or warehouse of the exporter, by filling up 4 copies of ARE-I form, in five copies with distinctive colors.

– (ii) Information to the Range Superintendent • The ACCE informs the range superintendent, in whose area the exporter’s factory or warehouse is located.On receiving instructions from the ACCE, the range superintendent, deputes an inspector for clearance of goods for exports. Procedure For Central Excise Clearance (Cont) • (iii) Sealing of goods : – The inspector of Central Excise verifies the goods mentioned in the application and the particulars of the duty paid or payable. – If satisfied, he seals each package or the container in the manner as may be specified by the Commissioner of Central excise and endorses each copy of the application. (iv)Processing of ARE-I FormsARE-I(Original) The Superintendent or Inspector returns the original ARE-II(Duplicate) & the duplicate to the exporter ARE-I (Triplicate) The triplicate copy of ARE-I is sent to the Maritime Commissioner at the port of shipment or to the Excise Rebate Audit section in case the rebate is to be claimed by EDI (Electronic Data Interchange) system of customs. ARE-I (Quadruplicate) ARE-I (Quintuplicate) This copy of ARE-I is retained by the Superintendent or Inspector of Central Excise. This copy is returned to the exporter for claiming any other incentive.

Procedure For Central Excise Clearance (Cont) • (v) Examination of the goods at the place of exports – At the port of shipment, the exporter presents goods together with original, duplicate & quintuplicate copies of the ARE-I to the Commissioner of Customs. – The Commissioner of Customs examines the consignments and if satisfied, certifies the goods for exports, by an endorsement on all the copies of ARE-I. – The original & quintuplicate copies are returned to the exporter and the duplicate copy is sent to the Maritime Commissioner.Procedure For Central Excise Clearance (Cont) • (vi) Submission of the claim: For claiming rebate, the exporter is required to submit the following documents along with the prescribed application in form “C”(in triplicate) to Assistant Commissioner of central excise / maritime collector – Original copy of ARE-I duly endorsed by customs officer – Duplicate copy of ARE-I received from customs officer in a sealed cover.

– Duly attested copy of shipping bill – Duly attested copy of Bill of Lading or airway bill – Duplicate copy of Central Excise invoice under which CED was paidProcedure For Central Excise Clearance (Cont) • (vii) Verification of the application – Assistant or Deputy Commissioner of Central Excise compares the details listed in the different copies of ARE-I & if he is satisfied that the exports are not under claims for duty drawback, he sanctions the rebate. • (viii) Refund of duty – If any refundable amount is not paid to the applicant within 3 months from the date of filing the claim, interest at the rate of 20% is paid for the period between the expiry of 3 moths & the date of refund. (ix) Cancellation of documents – If the excisable goods are not exported, the Assistant Commissioner of Central Excise cancels the export documents on request of the exporter. IV(b) Shipment Of Goods (Sea Shipment) Shipping & Customs Formalities • According to Section 40 of Customs Act, the person in charge of conveyance vessel, vehicle, aircraft etc.

, can not permit loading of export cargo, at the customs station, until & unless a formal approval to the export given by the authorized customs officer is presented. Before granting permission, the customs officer ensures that the goods being exported are in accordance with different regulations, particularly in terms of the following: – Goods must be as declared by the exporter – The duty or cess leviable thereon has been properly declared & paid. – Provision of Export Control order, Export (Quality Control & Inspection Act) & FEMA are complied with. Procedure For Shipping & Customs Clearance • (a) Preparation & Submission of Export Documentation:For clearance of cargo from customs, the exporter or his agent is required to submit the following documents along with 5 copies of Shipping Bill to the customs appraiser at the Customs House. – Letter of Credit along with Export Contract or Export Order – Commercial Invoice (2 copies) – Packing List or Packing Note – Certificate of Origin – GR Form ( original & duplicate) – ARE-I Form – Original copy of Certificate Of Inspection, wherever necessary.

– Marine Insurance Policy. Procedure For Shipping & Customs Clearance ( cont 1) • (b) Verification Of Documents The Customs appraiser verifies the details listed in each document & ensures that all formalities relating to exchange control etc. , have been properly complied with by the exporter. If satisfied, he issues a Shipping Bill Number. • (c) Valuation Of Goods – The customs appraiser assesses the Shipping Bill and values the goods. The value as determined by the customs officer, holds good in future transactions, especially for the claim of incentives.

All documents are then returned to the exporter, except the following: • Original copy of GR, to be forwarded to the RBI • Original Copy of Shipping Bill • One copy of Commercial Invoice.Procedure For Shipping & Customs Clearance ( cont 2) – The validity of the assessed Shipping Bill, is for one month only. If the exporter fails to deliver the goods in that period, he will have to undergo the above procedure again. • (d) Obtaining Carting Order – The C&F Agent, then, approaches the Superintendent of the concerned Port Trust, for obtaining the “Carting Order” for moving the cargo inside the docks. After obtaining the carting order, the cargo is physically moved into the port area & stored in the appropriate shed.Procedure For Shipping & Customs Clearance ( cont 3) • (e) Customs Examination & Issue of “Let Export Order”: – The customs examiner at the port of shipment physically examines the goods and seals the package in his presence.

The same can be arranged for at the factory or the warehouse by making an application to the Assistant Collector of customs. The customs examiner, if satisfied, issues a formal permission for loading of the cargo on the ship in the form of a “ let export order”. The above procedure is now processed through EDI system. (f) Obtaining “Let ship Order” from customs preventive officer: – “Let export order” must be supplemented by a “Let Ship Order” issued by the Customs Preventive Officer. The C&F agent submits the duplicate copy of the Shipping Bill, duly endorsed by the customs examiner, to the preventive officer, who endorses it with the “Let Ship Order” Procedure For Shipping & Customs Clearance ( cont 4) • (g) Obtaining Mate’s receipt & the Bill of Lading: – The goods are then loaded on board of ship for which the Mate or the captain of the ship, issues Mate’s Receipt to the Port Superintendent.The Port Superintendent on receipt of the port’s dues, hands over the mate’s receipt to the C&F agent who surrenders the Mate’s receipt to the shipping company for obtaining the Bill of Lading. – The shipping company issues two or three negotiable and two or three copies of non-negotiable copies of the B/L. Exports By Air • The exporter must have an IEC (Import Export Code) number issued by DGFT (Director General of Foreign Trade).

• He has to file a Shipping Bill which has to be assessed by Customs and the goods are also subject to examination by Customs before LEO (Let Export Order) is given. This document can be filed with Customs up to 15 days before the goods are actually exported. • Like in case of imports, in exports too, the document for assessment and examination by Customs Shipping Bill, is processed through the EDI. Exports By Air (cont) • To encourage exports, the Government has introduced various export promotion schemes i. e. Drawback, DEEC, DFRC, DEPB, EPCG etc. and the exporter has a choice to avail any of them.

• However, certain schemes cast an export obligation on the exporter for which he is required to execute Bond and Bank Guarantee for certain period. Exports are also governed by the Customs Act, 1962, the EXIM Policy and are subject to prohibitions and restrictions imposed under various other Acts i. e. CITES, NDPS Act, Arms Act, Antiques Act, Drugs & Cosmetics Act, etc. . Procedure For Air- Cargo as given by AAI Shipment Procedure for Export General Cargo • 1. Registration, Processing of shipping bill by customs. • 2.

Obtain carting order and AWB from the carrier or through EDI • 3. Present papers (shipping bill / AWB / Carting order) to AAI counter and obtain terminal charges receipt. • 4. Pay AAI Charges. 5. Enter Export Cargo along with relevant documents • 6.

Present TSP receipts to AAI staff at designated TO gate and off-load cargo. Obtain AAI endorsement on TSP receipt. Procedure For Air- Cargo as given by AAI • 7.

Get the packages (as per the customs endorsement) examined by customs and complete the formalities • 8. Let Export Order / Customs Orders • 9. Present TSP receipt along with let Export Order to AAI staff at bonded area gate along with cargo for binning & for location slip for airlines handled by AAI. • 10. Hand over documents to airlines • 11.Unitization – Airline submits Customs approved checklist for unitization or bulk loading to AAI • 12. Release of Export Cargo for the flight against request from airlines duly approved by customs.

Basically the steps in clearance of air-cargo are the same as in seacargo. However, suitable modifications as required are done. IV(c) Marine Insurance For Export Cargo Introduction • Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination. Cargo insurance is a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability. • In the 19th. century, Lloyd’s and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for the use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication.

Marine Cargo Insurance • Transport Insurance • Export and import in international trade, requires transportation of goods over a long distance. • No matter whichever transport has been used in international trade, necessary insurance is must for every single good. • Cargo insurance also known as marine cargo insurance is a type of insurance against physical damage or loss of goods during transportation. • Cargo insurance is effective in all the three cases whether the goods have been transported via sea, land or air. Insurance policy is not applicable if the goods have been found to be packaged or transported by any wrong means or methods. So, it is advisable to use a broker for placing cargo risks.

Insurance- Scope Of Coverage • The following can be covered for the risk of loss or damage: • Cargo import/ export cross voyage dispatched by sea, river, road, rail post, personal courier, and including associated storage risks. • Good in transit (inland). • Freight service liability. • Associated stock.

However there are still a number of general exclusions such as loss by delay, war risk, improper packaging and insolvency of carrier. Covers for some of these may be negotiated. • Regular exporters may negotiate open cover. It is an umbrella marine insurance policy that is activated when eligible shipments are made.

Individual insurance certificates are issued after shipment Insurance- Specialized Covers • Whereas standard marine/transport cover is the answer for general cargo, some classes of business will have special requirements. General insurer may have developed specialty teams to cater for the needs of these business, and it is worth asking if this cover can be extended to export risks. • Cover may be automatically available for the needs of the trade. • Examples of this are: – Project Constructional works: cover the movement of goods for the project. – Fine art – Precious stones : Special Cover for of precious stones. – Stock through put cover: extended beyond the time goods are in transit until when they are used at the destination. Insurance- Specialized Covers Seller’s Buyer’s Contingent Interest Insurance – An exporter selling on, for example FOB (INCOTERMS 2000) delivery terms would according to the contract and to INCOTERMS, have no responsibility for insurance, once the goods have passed the ship’s rail. – However, for peace of mind, he may wish to purchase extra cover, which will cover him for loss or will make up cover where the other policy is too restrictive .

This is known as Seller’s Interest Insurance. – Similarly, cover is available to importers/buyers. Insurance- Specialized Covers (cont) Loss of Profits/ Consequential Loss Insurance – Importers buying goods for a particular event may be interested in consequential loss cover in case the goods are received late and expensive replacements have to be found to replace them.

– n such cases, the insurer will pay a claim and receive proceeds from the eventual sale of the delayed goods. Insuring Goods Against Marine Risks • A marine insurance policy has to be obtained to cover various risks while goods are in transit. • Marine insurance policy must normally be taken from an Indian insurance company & should be for CIF value plus 10% for incidentals. Upon receipt of the cover, the insurer must study the various clauses carefully. Insuring Goods Against Marine Risks (cont) • Policies can broadly be divided into 3 groups – Individual shipment policy – Open policy – (automatic protection for all shipments. Each shipment must be declared to the insuring company) – Floating Policy ( describes insurance in general terms & leaves other particular to be stated subsequently) • Risks covered by marine insurance policies are represented by special clauses like Institute Cargo clause (C), Institute Cargo clause(B) , Institute Cargo clause(A) etc. These policies are freely assignable IV(d) Quality & Preshipment Inspection Introduction • For sometime now, a number of importers have used the services of independent inspection companies, to certify the quality & quantity of products , they want to import.

• These inspections, mostly conducted prior to shipment & in the country of exports, assure the importer that the goods conform to the technical specification & quality standards laid down in the contract & that the quantities exported are accurate. Regulations in many countries, require that goods imported by government departments to be inspected & certified for quality & quantity by independent & competent inspection authorities. • Over 30 developing countries in the world use the services of preshipment inspection (PSI) agencies to control unfair or improper practices. Introduction • The basic objectives of PSI are: – To carry out physical inspection of the goods to ensure that they conform to the terms of the contract – To verify their prices & – To ensure that they are classified by the exporter under the correct tariff classification of the importing country. GATT Agreement recognizes PSI by several nations. • The purpose is to safeguard national financial interests (prevention of capital flight and commercial fraud as well as customs duty evasion, for instance) and to compensate for inadequacies in administrative infrastructures. Export Inspection Council of India (EIC) • The Export Inspection Council of India (EIC) was set up by the Government of India under the Export (Quality Control & Inspection) Act, 1963, as an apex body, to provide for sound development of export trade, through uality control and preshipment inspection. • The Act empowers the Central Government, to notify commodities and their minimum standards for exports and to set up suitable machinery for inspection and quality control.

• The EIC is assisted in its functions by the Export Inspection Agencies (EIAs) located at Chennai, Kochi, Kolkata, Delhi and Mumbai, having a network of 38 sub-offices and laboratories, to back up the pre-shipment inspection and certification activity Export Inspection Council Majority of export commodities have been brought within the purview of this Act and are subject to compulsory pre-shipment inspection. • All commodities will be covered by quality control and compulsory pre-shipment inspection ultimately. • The Export Inspection Council, established under the Act administers quality control and pre-shipment inspection. • The Council is responsible for establishing laboratories/ test houses providing inspection facilities for the commodities notified • Has established inspection agencies, under which quality inspection officials operate IV(e) ECGC Services ECGC Export contracts are open to risks which can generally be categorized into two broad types: • POLITICAL RISKS – Can be caused by outbreak of war or civil war, in the importer’s country or coup or an insurrection, which can result in delay or non-receipt of payments. Same problems may arise due to macro-economic or balance of payments problems, in the importer’s country.

• COMMERCIAL RISKS – These are insolvency or protracted default in payment by the buyers. ECGC • The Government set up the Export Risks Insurance Corporation (ERIC) in 1957 to provide export credit insurance support to Indian exporters. This was transformed to Export Credit & Guarantee Corporation Ltd. (ECGC) in 1964 & then to Export Credit Guarantee Corporation of India Ltd. In 1983.

• ECGC is wholly owned by GOI & functi