Pre-shipment Procedure

Pre-shipment Procedure

 

Pre-shipment stage consists of the following steps:

(a) 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.

(b) 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 proforma invoice.

(c) Confirmation of Order: Once the negotiations are completed and the terms and conditions are finalised, the exporter sends three copies of proforma pre invoice to the importer for the confirmation of order. The importer signs these copies and sends back two copies to the exporter.

(d) 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.

(e) 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

(f) 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.

(g) 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).

(h) 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.

(i) 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.

(j) 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.

(k) 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.

 

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