How To Export Products To Other Countries
24 January, 2024
Export and import in India are defined under the Foreign Trade Policy, which is notified under the Foreign Trade (Development and Regulation) Act 1992. A little homework is recommended before you start to export goods and services to the overseas market.
Here is how to export products from India while complying with the requirements laid down in the Foreign Trade Policy:
Getting the export procedure documents ready
Get these documents ready before learning how to export:
- You must have a business entity in place, be it proprietorship, partnership, company, LLP, etc., and get it registered.
You must also obtain your Import-Export Code (IEC). It is a PAN-based number allotted by the Directorate General of Foreign Trade (DGFT).
The business entity must also have a PAN and a Current Account with a bank eligible to deal in foreign exchange. The bank will also issue a 14-digit Authorised Dealer Code, which will be registered with customs.
The business must also apply for a Registration cum Membership Certificate for export authorisation and to be eligible for export concessions and benefits.
The business has to obtain the Goods and Service Tax Identification Number (GSTIN).
The PAN-based Business Identification Number must be obtained from Customs, which is required for clearance of export goods.
You must register your IEC on the Indian Customs Electronic Gateway (ICEGATE) portal for e-filing (e-Sanchit) services.
Meeting pre-shipment compliances- You must select product(s) that is not prohibited or restricted. Once the market and buyer are finalised and the export order is received, you may have to arrange a quality control inspection through the concerned agency. You may also need to obtain a Certificate of Origin. The cargo to be shipped must be insured before dispatch from the factory/business place.
Shipping - The cargo is then shipped to the port or airport and marine/air insurance cover is obtained on it based on its FOB/CIF/CFR/other price. You may hire the services of a Clearing House Agent who ensures activities like the issuance of the shipping bill and bill of lading, payment of port charges, inspection, etc.
Meeting post-shipping formalities - The exporter must submit export documents to the bank within 21 days. The bank forwards these documents to the importer’s bank to clear the payment. These documents are,
Bill of exchange
Letter of credit
Invoice and packing list
Bill of lading or airway bill
Foreign exchange-related declaration
Certificate of origin
Inspection certificate
Any other document specifically required
Export Currency Realization- Export proceeds must be realised in freely convertible currencies and within nine months. Payment default risk may be addressed by obtaining appropriate cover from Export Credit and Guarantee Corporation.
Ensuring Finances for Export - Handling an export order may require significant funds. Exporters often resort to finance from banks and financial institutions for such requirements. You should choose a bank that is ready to address all your financial and documentation-related needs. Your bank should be able to finance a certain percentage of your export order, which will help you procure raw materials and processing, manufacturing and packaging costs. Post-shipment credit is also offered by many institutions against the raised invoice.
Shipping your way to success
HDFC Bank offers all export-related services including the issuance of Letter of Credit and bill collection. It also addresses your financial needs with easy and prompt export advances. Start your export journey with HDFC Bank to avail the best currency exchange rates and guidance from export procedure specialists.
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