Course Name: International Business

Individual Assignment On: - Export Procedure

By: -
Name ID NO
1. Misganaw Engdasew BDU 1501565

1st year MSc in Fashion Technology

Ethiopian Institute of Textile and Fashion Technology

Bahir Dar University

Bahir Dar
Ethiopia

Submitted to: - Assist. Prof. Seid Mohmmed

Summation Date:- April 2023 G.C
 Table of Contents
Introduction ................................................................................................................................................. 1
1.1 What is export ...................................................................................................................................... 1
1.2 Objectives of Export Trade ................................................................................................................ 1
1.3 Why export procedure important in fashion industry .................................................................... 2
1.4 Advantages and Disadvantage of Export ......................................................................................... 3
1.5 Export procedures ............................................................................................................................ 3
Summary.................................................................................................................................................... 13
Reference ................................................................................................................................................... 14

i
 Introduction

1.1 What is export

Export is one of the main components of International business and involves the movement of
goods and services across the nations and the exchange of foreign currencies between the dealing
parties. This makes export a complex process and the exporter is bound to follow the legal, and
compulsory formalities imposed by the exporting country (Sociais, Qualitativa and Gitleman,
2014). No country in today’s world wants to deliver illegal or bad quality goods and services to
other nations, as now international trade is governed under the strict rules of the World Trade
Organization. Therefore, a series of strict procedures have to be followed by the exporter before
the goods leave the boundaries of the home country. Export is one of the major components of
international trade. Exports facilitate international trade and stimulate domestic economic activity
by creating employment, production, and revenues. Businesses export goods and services where
they have a competitive advantage. Export procedure consists of several commercial and
regulatory formalities, which an exporter is required to complete during the course of export trade
transactions. These formalities are complex and time-consuming and involve considerable
documentation. The involvement of two or more nations in the international trade transactions
makes things more complex. Exporter is not only required to possess adequate knowledge of the
procedures and formalities of his own country but also of the importing country. Last but not least,
he should also ensure that all required documents, whether commercial or regulatory, are prepared
and filed with the appropriate authorities in the prescribed format on time. Export trade has to
follow a specific set of procedures from receiving inquiries to completion of the transaction,
exporters need to get themselves registered with these authorities for ensuring all the legal
formalities as required by them are met and also for receiving incentives which are allowed under
the export promotion schemes(Bade, 2015).

1.2 Objectives of Export Trade

The important objectives of the export include the following.
 Facilitating selling of goods to countries which desperately need such goods
 Expanding the market for goods by producing them on a large scale.
 Earning foreign exchange through exports
 Helping a country increase the national income

1|Page
  Creating employment opportunity in a country by promoting of export - oriented and
export related enterprises.
 Generating revenue for the Government in the form of customs and excise duties.
 Promoting mutual understanding and co-operation among the nations.
 Achieving optimum utilization of resources by large scale production of goods
1.3 Why export procedure important in fashion industry
In the fashion exporting business, fashion items like apparel, shoes, home textiles, and fashion
accessories, are manufactured in one country and shipped to other countries. The imported fashion
items are later sold to the end consumers in the destination country.
Import and export are part of the global fashion supply chain. Export manufacturers get FOB
orders from the buying countries. Then they procure the raw material and manufacture the
ordered items in their factories and export to the destination countries(Jhanji, no date).
Some apparel manufacturing companies made garments for 100% export purposes. They are
known as garment exporters. It is considered that there are good profits in the apparel and
fashion export business. You may be aware of Bangladesh which is known in the world for
exporting millions of garments every year. In India, we also do a lot of exporting of garments
and other fashion items to the USA, UK, and other European countries(Manual et al., no date).
 Market access earning foreign currency is one motivating factor for setting up the
manufacturing sector and exporting fashion goods to importing countries.

 Profitability The fashion manufacturing industry is a labor-intensive industry. So, in some

countries their Govt. Consider the apparel manufacturing industry for generating
employment for its population. They even provide incentives in many ways to motivate
investors for setting garment export businesses.

 Fast grow for many aspirants who like to start their own business and have a passion for
doing business in fashion items, they can fulfill their dream and follow the opportunity.
They choose to manufacture fashion items. For selling their products they go for exporting
business.

 Reduce local market dependence

 Improve innovation , expand Sales and greater competitiveness

2|Page
 1.4 Advantages and Disadvantage of Export
1.4.1 Advantages of Exporting
Serving foreign customers through exporting has been a popular internationalization strategy
throughout history because it offers firms a way to accomplish the following:
 Increase overall sales volume, improve market share, and generate profit margins that are
often more favorable than in the domestic market.
 Increase economies of scale and therefore reduce per-unit cost of manufacturing.
 Diversify customer base, reducing dependence on home markets.
 Stabilize fluctuations in sales associated with economic cycles or seasonality of demand.
For example, a firm can offset declining demand at home due to an economic recession by
refocusing efforts toward those countries that are experiencing more robust economic
growth.
 Minimize risk and maximize flexibility, compared to other entry strategies. If
circumstances necessitate, the firm can quickly withdraw from an export market.
 Lower cost of foreign market entry since the firm does not have to invest in the target
market or maintain a physical presence there. Thus, the firm can use exporting to test new
markets before committing greater resources through foreign direct investment.
 Leverage the capabilities and skills of foreign distributors and other business partners
located abroad.
1.4.2 Disadvantages of Exporting
As an entry strategy, exporting also has some drawbacks. First, because exporting does not require
the firm to have a physical presence in the foreign market.
1.5 Export procedures
The export procedure is a customs procedure (Article 4 (16) (h) Customs Code - CC). This means
that, unless other specific regulations exist for exports, the general regulations on customs
procedures also apply to the export procedure. the export procedure regulates the movement of
Community goods out of the customs territory, with the exception of goods placed under the
outward processing procedure or a transit procedure (Article 161 (2) CC).
The export procedure is an international commercial operation that covers all the stages that a
company must complete to be able to sell its goods or products outside the borders of the country in
which it carries out its activity(Bade, 2015).

3|Page
It is a complex bureaucratic process that requires a thorough knowledge of the import regulations
of the receiving country, the efficient completion of all the necessary documentation, etc.
Export Procedure can be divided into following stages:-
Stage 1:- Registration Procedure.
Stage2:- Pre-Shipment Procedure.
Stage3:- Shipment Procedure.
Stage4:- Realizing Export Incentives.
Stage5:- Post-Shipment Procedure.
Registration procedures: - involves the process of receiving or receipt of agreement between
exporter and importer as:-before producing and procuring goods, for shipment agreement in the
form of the document is mandatory.
In this step, there would be overall checking or examining of the goods and services to be
exported may contain the items like Product description, terms of payment, terms of shipment,
inspection and insurance requirement, last date of return and other terms and conditions.
A. Registration of Company: Exporters require to register the categories of company chosen
under a suitable Act within the country for conducting export operations such as a
partnership company has to register.
B. Open Bank Account: Exporters need to open a company bank account in the commercial
bank authorized by (RBI) to deal in foreign currency transactions. Any kind of monetary
transaction company is directed through this account. Such a bank also assists as a source of
pre-shipment and post-shipment finance for the exporters.
C. Obtaining Importer-Exporter Code Number (IEC No.): Earlier obtaining an Exporter's
Code Number from RBI was mandatory which is now changed to Import export code which
is now issued by the Direct General for Foreign Trade.
D. Attaining Permanent Account Number (PAN): An exporter must register its company
with Income Tax Authorities and attain a Permanent Account number to avail of export
income benefits.
E. Registration with GST: GST registration is mandatory for each exporting goods from one
country to another. Goods purchased for exports are exempted from other taxes.

4|Page
 F. Registering with the Export Promotion Council (EPC): The exporter needs to register
themselves with the Export Promotion council and Export registration cum Membership
certificate to avail of benefits under Foreign Trade Law.
G. Registration with Export Credit and Guarantee Corporation of India (ECGC): To protect
exporters from commercial and political risks it is essential to register themselves with ECGC.
ECGS aids exporters to seek financial aid and guidance from financial institutions including
Banks.
H. Registration with other Authorities: Some other essential authorities under which exported
needs to register are listed below-
1. Federation of Indian Export Organization
2. Indian Trade Promotion Organization
3. Chambers of Commerce
4. Productivity Councils, and so on
This is all about the export import registration process, if you still have any doubts, you can
connect our professional at ASC Group.
Pre- shipment procedure:- It follows some crucial steps including Inquiry and Offer, Foreign
Buyers, Opening of the letter of credit and last but not the least is the arrangement of Pre- Shipment
Finance. Then comes the pre-shipment inspection whereby inspection certificate is issued in
triplicate. Original Copy is sent for the custom verification. The second copy is sent to the Importer
and third copy is kept with the exporter himself for his reference purpose.
i. Approaching Foreign Buyers: In order to secure an export order, a new exporter can make
use of one or more of the techniques, such as, advertising in international media, sales
promotion, public relation, personal selling, publicity and participation in trade fairs and
exhibitions.
ii. Inquiry and Offer: An inquiry is a request from a prospective importer about description of
goods, their standard or grade, size, weight or quantity, terms of payments, etc. On getting an
inquiry, the exporter must process it App immediately by making an offer in the form of a
preforms invoice.
iii. Confirmation of Order: Once the negotiations are completed and the terms and conditions
are finalized, the exporter sends three copies of preforms pre invoice to the importer for the

5|Page
 confirmation of order. The importer signs these copies and sends back two copies to the
exporter.
iv. Opening Letter of Credit: The documentary credit or letter of credit is the most appropriate
and secured method of payment adopted to settle international transactions. On finalization of
the export contract, the importer opens a letter of credit in favor of the exporter, if agreed upon
in the contract.
v. Arrangement of Pre-shipment Finance: On securing the letter of credit, the exporter'
Procures a pro-shipment finance from his bank for procuring raw materials and other
components, processing and packing of goods an transfer of goods to the port of shipment
vi. Production or Procurement of Goods: On securing the pre-shipment finance from the bank,
the exporter either arranges for the production of the required goods or procures thorn from
the domestic market as per the specifications of the importer.
vii. Packing and Marking: Then the goods should be properly packed and marked with
necessary details such as port of shipment and destination, country of origin, gross and net
weight, etc. If required, assistance can be taken from the Indian Institute of Packing (IIP).
viii. Pre-shipment Inspection: If the goods to be exported are subject to compulsory quality control
and pre-shipment inspection then the exporter should contact the concerned Export Inspection
Agency (EIA) for obtaining an inspection certificate.
ix. Central Excise Clearance: Exportable goods are completely exempted from the central excise
duty. Such exemption can be sought in one of the following ways:
 Export under Rebate.
 Export under Bond.
x. Obtaining Insurance Cover: The exporter must take appropriate policies in order to insure
risks: ECGE policy in order to cover credit risks. Marine policy, if the price quotation agreed
upon is CIF.
xi. Appointment of C&F Agent: Since exporting is a complex and time-Consuming process,
the exporter should appoint a Clearing and Forwarding (C&F) agent for the smooth clearance
of goods from the customs and preparation and submission of various export documents.
Shipment Procedure:-The exporter has to contact the shipping company well in advance for
booking the required space in the vessel for shipment. Arranging Internal Transport from
factory/warehouse to the port of shipment. Preparation and processing of shipping documents such

6|Page
as shipping bill, commercial invoice, letter of credit together with the export contract, the center
of origin, GR form, AREI form, packing list or packing note and last one are Excise Invoice.
The shipment stage includes the following steps:

A. Reservation of shipping Space: Once the export contract is finalized, the exporter reserves
the required space in the vessel for shipment. On accepting the exporter's request, the shipping
company issues a shipping Order. The original copy of the shipping order is given to the
exporter and the duplicate is sent to the commanding officer of the ship. The shipping order is
an instruction by the shipping company to the commanding officer of the ship that the goods
as per the details given should be received on board.
B. Arrangement of Internal Transportation up to the Port of Shipment: The exporter makes
necessary arrangements for transportation of goods to the port either by road or railways. On
loading goods into the railway wagon, the railway authorities issue a 'Railway Receipt', which
may be either 'freight paid' or freight to pay'. It serves as a title to the goods. The exporter
endorses the railway receipt in favor of his agent to enable him to take delivery of the goods at
the port of shipment.
C. Preparation and Processing of Shipping Documents: As the goods reach the port of
shipment, the exporter should issue detailed instructions to the C&F agent for the shipment of
cargo along with a complete set of the documents listed below:
 Letter of Credit along with the export contract or export order.
 Commercial Invoice (2 copies)
 Packing List or Packing Note.
 Certificate of Origin.
D. Customs Clearance: The cargo must be cleared from the Customs before it is loaded on the
ship. For this, the above mentioned documents, along with five copies of shipping bill, are to
be submitted to the Customs Appraiser at the Customs House. The Customs Appraiser ensures
that all the formalities relating to exchange control, quality control, pre-shipment inspection
and licensing have been complied with by the exporter. After verification, all documents,
except the original GR, original copy of Shipping Bill and one copy of Commercial Invoice,
are returned to the C&F agent.

7|Page
E. Obtaining 'Carting Order' from the Port Trust Authorities: The C&F agent, then,
approaches the Superintendent of the concerned Port Trust for obtaining the 'Carting Order' for
moving the cargo inside the dock. After obtaining the Carting Order, the cargo is physically
moved into the port area and stored in the appropriate shed.
F. Customs Examination and Issue of 'Let Export Order': The Customs Examiner at the port
of shipment physically examines the goods and seals the packages in his presence. The same
can be arranged for at the factory or warehouse of the exporter by making an application to the
Assistant Collector of Customs. The Customs Examiner, if satisfied, issues a formal permission
for the loading of cargo on the ship in the form of a Let. Export Order'.
G. Obtaining 'Let Ship Order' from the 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 Shipping Bill, duly endorsed by the Customs Examiner, to
the Customs Preventive Officer who endorses it with the 'Let Ship Order'.
H. Obtaining Mate's Receipt and Bill of Lading: The goods are then loaded on board the 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 port dues, hands over the Mate's Receipt to the C&F
Agent. The C&F Agent surrenders the Mate's Receipt to the Shipping Company for obtaining
the Bill of Lading. The Shipping Company issues two to three negotiable and two to three non-
negotiable copies of Bill of Lading.
Post-Shipment Procedure:- Here, submission of documents by the agents to the exporter is done.
Tasks like dispatching of documents and exchanging of documentary bills take place. At last, GR
form is processed.
1. Shipment Advice: On the dispatch of the goods, the exporter sends shipment advice to the
importer. Along with it, he also sends the packaging list, commercial invoice and non-
negotiable copy of loading.
2. Presentation of Documents: The necessary documents are presented to the bank for
negotiation and realization of export proceeds.
3. Realization of Export incentive: Various incentive like duty drawbacks, refunds of GST if
paid, etc. Is given to the exporter by the concerned authorities.
4. Follow up: Exporter has to follow up and find out the buyers reaction on the goods he receives.
This concludes the export procedure. The post-shipment stage consists of the following steps:

8|Page
I. Submission of Documents by the C&F Agent to the Exporter: On the completion of the
shipping procedure, the C&F agent submits the following documents to the exporter:
 A copy of invoice duly attested by the customs.
 Drawback copy of the shipping bill.
 Export promotion copy of the shipping bill.
 A full set of negotiable and non-negotiable copies of bill of lading.
 The original L/C, export order or contract.
 Duplicate copy of the ARE-I form.
II. Shipment Advice to Importer: After the shipment of goods, the exporter intimates the
importer about the shipment of goods giving him details about the date of shipment, the name
of the vessel, the destination. etc. He should send also send one Copy of non-negotiable bill of
lading to the importer.
III. Presentation of Documents to Bank for Negotiation: Submission of relevant documents to
the bank and the process of getting the payment from the bank is called "Negotiation of the
Documents.” and the documents are called 'Negotiable Set of Documents'. The set normally
contains:
 Bill of Exchange, Sight Draft or Usance Draft.
 Full set of Bill of Lading or Airway Bill.
 Original Letter of Credit.
 Customs Invoice. Commercial Invoice including one copy duly certified by the Customs.
 Packing List.
 Foreign exchange declaration forms, GR/SOFTEX/PP forms in duplicate.
 Exchange control copy of the Shipping Bill.
 Certificate of Origin, GSP or APR Certificate, etc.
 Marine Insurance Policy, in duplicate.
IV. Dispatch of Documents: The bank negotiates these documents to the importer's bank in the
manner as specified in the L/C. Before negotiating documents, the exporter's bank scrutinizes
them in order to ensure that formalities have been complied with and all documents are in
order. The bank then sends the Bank Certificate and attested copies of commercial invoice to
the exporter.

9|Page
V. Acceptance of Bill of Exchange: Bill of Exchange accompanied by the above documents is
known as the Documentary Bill of Exchange. It is of two types:
1st. Documents against Payment (Sight Drafts): In case of sight draft, the drawer instructs the
bank to hand over the relevant documents to the importer only against payment.
2nd. Documents against Acceptance (Usance Draft): In case of usanc draft, the drawer
instructs the bank to hand over the relevant documents to the importer against his 'acceptance'
of the bill of exchange.
VI. Letter of Indemnity: The exporter can get immediate payment from his ban on the submission
of documents by signing a letter of indemnity. By signing the letter of indemnity the exporter
undertakes to indemnify the bank in the event non-receipt of payment from the importer along
with accrued interests.
VII. Realization of Export proceeds: On receiving the documentary bill of exchange, the
importer releases payment in case of sight draft or accepts the usance draft undertaking to pay
on maturity of the bill of exchange. The exporter's bank receives the payment through
importer's bank and is credited to exporter's account.
VIII. Processing of GR Form: On receiving the export proceeds, the exporter's (iv bank
intimates the same to the RBI by recording the fact on the duplicate copy of GR. The RBI
verifies the details in duplicate copy of GR with the original copy of GR received from the
customs. If the details are found to be in order then the export transaction is treated to be
completed.
IX. Realization of Export Incentives: If the exporter is eligible for export incentives, then he
should submit claim for the same accompanied by the bank certificate to the appropriate
authority.

Quality control and pre-shipment inspection? Quality control strategy should include the
critical step of pre-shipment inspection. By including the quality control measure of pre-shipment
inspection, you ensure that your product quality is checked before it’s dispatched. Strategically,
this helps to ensure that the products meet your company’s quality standards while they are still in
production, in order to avoid paying for defective goods. Inspectors from an independent third-
party inspection agency perform pre-shipment inspections at the factory when production is at
least 80% complete, and ensure that your shipment complies with the appropriate regulations.

10 | P a g e
During pre-shipment inspection, inspectors should follow your company’s quality standards and
the standards of your destination market. Inspectors should be checking for:

 functionality
 performance
 durability
 overall appearance
 dimensions of the merchandise

By including these steps in a Pre-Shipment Inspection Procedure, inspectors can begin to check
both hard lines and soft lines to be sure they adhere to the appropriate standards. The inspection
agency will depute an Inspector to conduct the pre-shipment inspections at the exporter’s
factory or were house. After the inspection is complete, and the consignment is passed, a
certificate of inspection will be issued to the exporter. This certificate has to be presented by
the exporter to the Export Department of the Custom House at the time of seeking customs
clearance of export cargo(Order and Invoice, no date).The quality control inspector compiles
a comprehensive inspection report and issues pre-shipment inspection certificates based on the
findings of the assessment of each criterion. Inspection reports visualize and explain the quality
control process while inspection certificates verify whether the batches of products inspected
conform to the specifications in the sale contract with a pass or fail. In most countries, local
custom departments require pre-shipment inspection certificates to allow entry of imported
goods as a measure to protect the health and safety of consumers(Scherne et al., no date).
Provide tax exemption on raw materials and packaging materials used by local factory
manufacturers to make tax exempted goods for the export market. This facility is subject to the
followings: -
1. Raw materials and components are imported or purchased from a licensed factory owner.
2. Unless the goods are placed under a price control: -
I. Raw materials and components must be used and exported within 6 months from the date
of sales or import or extended period approved by the Director General.
II. Raw materials and components and goods produced from it can’t be sold or destroyed
within the Federal states unless permitted by the Director General and with the appropriate
tax applied.

11 | P a g e
3. Raw materials and goods used for manufacturing: -
A. Goods that are exempted from tax meant for export
B. Control goods under Goods Control Act 1961, which are bound to price control.
4. The approved owner of the license must keep records and accounts related to the raw goods and
components purchased or imported and the records and a sales tax officer could inspect accounts
at any time.
5. The approved owner must settle all tax on any of the raw goods or components that are not
accountable of its use.
Excise clearance:
Excise Duty is the tariff charged by the government on the material used for manufacturing the
goods to be exported under Central Excise Tariff Act. The exporter has to apply to the Excise
Commissioner to obtain the excise clearance certificate. However, some goods are exempted
from excise duty, and under such circumstances, an exporter either does not make any payment
or gets a refund under the duty drawback scheme
Custom formalities: - the Customs Officer ensures that the goods being exported are in
accordance with different regulations, particularly in terms of the following:

 The exporter goods are of the same type sort and value as have been declared by the exporter.
 The duty or cases livable thereon has been properly determined and paid.
 Provisions of Export (Control) Order, Export (Quality Control and Inspection) Act and Foreign
Exchange (Regulation) Act are complied with.
Sales tax exemption: - When making tax-exempt purchases, buyers must provide an appropriate
exemption certificate, properly completed, to the seller. The seller is required to keep the certificate
on file for a period of five years. Sales tax exemption certificates enable a purchaser to make tax-
free purchases that would normally be subject to sales tax. The purchaser fills out the certificate
and gives it to the seller. The seller keeps the certificate and may then sell property or services to
the purchaser without charging sales tax. Sales tax only if he also registered with sales tax
authorities, the sales tax authority revises the facilities to exporters time to time(Development and
Of, 2020).

12 | P a g e
 Summary
Exports have attained greater importance in the contemporary world. It has emerged as one of the
vital indicators of a nation’s social, economic and political growth. No country in the world can
produce all the goods and services it required. They have to inevitably buy and sell from one
another. Therefore countries have to engage in international trade. Export and import represent
two sides of the same coin of international trade. In other words the countries have to buy the
goods which are either not available or not adequately available in home country and sell the
surplus goods/ services produced by it to other countries which need them utmost. In short each
and every country has to export surplus goods and import the deficit goods. In this process, it earns
precious foreign exchange and use the foreign exchange thus earned for import goods which cannot
be produced or adequately produced in the home country. Export is the backbone of international
trade. Export procedure is a complex set of stages that must be overcome in order to complete a
commercial operation between companies from different countries. However, there are as many
export procedures as there are companies and markets. The export procedure regulates the
movement of Community goods out of the customs territory, with the exception of goods placed
under the outward processing procedure.

13 | P a g e
 Reference
Bade, D.L. (2015) Export / Import Procedures Fifth Edition.
Development, T. and Of, A. (2020) ‘STEP-BY-STEP GUIDE FOR NEW EXPORTERS Part A :
Export Procedures’, (November).
Jhanji, H. (no date) ‘Edited by: Hitesh Jhanji’.
Manual, C. et al. (no date) ‘Export procedure’.
Order, I.P. and Invoice, I.C. (no date) ‘E XPORT D OCUMENTATION ’:
Scherne, D.D. et al. (no date) ‘UNIT 16 PROCEDURES FOR CLAIMING’.
Sociais, C., Qualitativa, A.P. and Gitleman, L. (2014) ‘済無No Title No Title No Title’, Formação
(Online), 1(20), pp. 50–63.

14 | P a g e