PROJECT REPORT
EXPORT PROCEDURE & DOCUMENTATION AND ACCOUNTING TREAMENT RELATED TO EXPORT AND IMPORT
ON
S.A.M. APPARELS PVT. LTD
Women Wear Exporter & Manufacturer
UNDER EXPERT GUIDANCE OF:
KRIPAL SINGH BISHT MAURYA
EXPORT MANAGER TRADE S.A.M.APPARELS PVT LTD. A-1, SECTOR-64, NOIDA, INDIA.
BY: RAM BARAN
MASTER OF FOREIGN BANARAS HINDU UNIVERSITY VARANASI, INDIA.
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SUMMER TRAINING PROJECT REPORT ON
EXPORT PROCEDURE & DOCUMENTATION AND ITS ACCOUNTING TREATMENT RELATED TO EXPORT IN S.A.M.APPARELS PVT. LIMITED “ONE OF THE LARGEST WOMEN WEAR
MANUFACTURER & EXPORTER
MASTER OF FOREIGN TRADE
UNDER THE GUIDENCE 0F SUPERVISION OF
UNDER
Prof. …………………… SINGH BISHT COORDINATOR (MFT)
Mr. KRIPAL
SR MANAGER (EXPORT/IMPORT) BANARAS HINDU UNIVERSITY SAM APPARELS PVT. LTD. NOIDA
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TO WHOM IT MAY CONCERN
THIS IS TO CERTIFY THAT MR. RAM BARAN MAURYA, A STUDENT OF BANARAS HINDU UNIVERSITY FOR FULFILLMENT OF THE COURSE MASTER OF FOREIGN TRADE HAS SUCCESFULLY DONE HIS PROJECT ON EXPORT PROCEDURE & DOCUMENTATION AT SAM APPARELS PVT. LTD.UNDER MY GUIDANCE FROM 15ST MAY 2011 TO 30TH JUNE 2011. DURING THE PERIOD, I FOUND HIM SINCERE AND HARD WORKING. I DECLARE THAT THE WORK DONE BY HIM IS HIS OWN AND ORIGINAL TO THE BEST OF MY KNOWLEDGE & HAS NOT BEEN PIRATED FROM ANYWHERE. I APPRECIATE HIS SPLENDID AND ERNEST JOB. AND I WISH HIM ALL SUCCESS IN LIFE.
KRIP AL SINGH BISHT
SR MANAGER (EXPORT/IMPORT GROUP)
DECLARATION
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“I, RB MAURYA declare that the project that I have successfully completed on the topic Export Procedure & Documentation and its Accounting treatment related to Export in S.A.M. APPARELS P .Pvt. Ltd. for the partial fulfillment of the requirement for the award of Master of Foreign Trade is my original work to the best of my knowledge and the report has not been submitted for any other award by anyone before this. The fact & figures are mentioned on the basis of my own effort of collection, recording and analysis of primary and secondary data through exploratory, descriptive and casual research.”
RB Maurya Master of Foreign Trade
PREFACE
The textile industry is primarily concerned with the design, manufacture, trade and distribution of fabrics. Textile manufacturing has come a long way, from domestic production
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using wool, cotton and flax in historical times to organized industry using spinning wheels and handlooms in the 18th Century to current day, leveraging modern techniques, electronics and innovation in man-made fibres to produce almost any type of cloth or design a person could desire. By the late 20th Century, the industry in the developed world had gotten a bad reputation, due to widespread exploitation of immigrants in illegal "sweat shops" in countries across South East Asia, the Indian subcontinent and Central America, all of whom were being paid less than minimum wages. As a result of this influx of cheap labour options and globalization in general, manufacturing has been mostly outsourced to overseas labour markets. With its low cost labour base, China has come to dominate the global textile industry, followed by India and Mexico. Meanwhile, the textile industry in areas historically associated with the trade, such as London, New York and Milan, have shifted focus to more refined associated industries such as fashion design, fashion modelling and retail. Performance The textile sector is among India’s largest foreign exchange earners, with a market value of ~$50 billion. After the termination of the Multi-Fibre Arrangement (MFA) in January 2005, the industry saw strong growth and currently, it directly and indirectly employs over 35 million people. Indian textiles contribute a significant proportion of industrial production (15%) and exports (20%) with readymade garments and carpets comprising the bulk of exports. Cotton remains the most significant raw material and India is the second largest producer of the fibre in the world. Other fibres used are silk, jute, wool, and man-made fibres. Specialty fabrics include woolbased Angora and Pashmina and Tasser silk etc. Exports have always remained robust, but now, the domestic textile market is also witnessing a strong upward trajectory due to the improving economic position of the country. The burgeoning middle income segment, increasing disposable
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income of the young elite and rapid proliferation of organized retail are all contributing to this phenomenon. The Indian textile industry can be divided into the organized and unorganized sectors. The unorganized sector is the dominant part of this industry, mainly utilizing the traditional processes of weaving or spinning, which are labour intensive in nature. This sector is largely decentralized and employs the maximum people in the industry. There are close to 2,000 mills in this sector with an installed capacity of almost 40 million spindles as per Ministry of textile records. The organized sector mean while, is focused on capital intensive production processes, with sophisticated mills utilizing technologically advanced machineries. This sector has witnessed a lot of flux over the past decade due to changes in the structural set-up of the industry. Growth Potential In India, textile job openings primarily fall into the categories of textile design jobs, textile pattern makers, fabric and apparel jobs and knitting jobs. Other related jobs for professionals include those with a background in marketing, process development, finance and administration, packaging as well as technicians. There are some great opportunities to be found within the textile fabric manufacturing organizations and the gamut of private companies which are engaged in producing finished textile products both in apparel and home furnishing. Prominent employers include the BK Birla group, Bombay Dyeing, Grasim Industries, JCT Limited, Lakshmi Machine Works and the Mysore Silk Factory amongst others. Future Prospects Most professionals in the industry can expect to work a conventional standard 35 to 40 hour a week. However, the illicit, lower grade workers involved in laborious manual work and particularly shoe and leather workers, laundry, tailors, dressmakers and retail staff usually need to work evenings and weekends.
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For ambitious young graduates with strong skill base and genuine interest, this industry offers a great range of opportunities for development and progress. It is expected that India will maintain its position as one of the leaders in this field for the coming decade, and the industry is poised to move from strength to strength. Hence, candidates will do well do ride the wave now while the prospects look very promising.
Textile & clothing exports: Trends & prospects
The export of world textiles and clothing (T&C) has grown through quantitative restrictions of Multi Fibre Arrangement (MFA) from 1974 to 1994. These restrictions were phased out during 1994 - 2004 in four phases. Now, with the opening of market, since January 1, 2005, the T&C industry has been fully integrated into the World Trade Organisation (WTO).
In this scenario, the world T&C export has grown from US$ 272.43 billion (bn) in 1994 to US$ 530 bn in 2006, registering almost a two-fold rise. It is observed that the export of clothing has exceeded the textile export from 1994 onwards. China, a leading exporter of T&C, exported the textile and clothing in the proportion of 33:67 during 1994 - 2006. In 2006, its export of clothing was US$ 95.39 bn as against only US$ 48.68 bn export of textile. It may be mentioned that as compared to textile, export of clothing is more desirable for the point of view of value addition and employment generation. China has started the strategy to accelerate the growth of clothing production and export much earlier than India. During 1994 - 2006, against the two-third share of clothing in total T&C export of China, India’s share was only 50 per cent. It is significant to note that during the MFA phase-out period, India’s share in the world export of clothing declined from 2.63% in 1994 to 2.55% in 2004;Whereas its share in the world textile export rose from 2.91% in 1994 to 3.58% in 2004. During 1994 - 2006, China has emerged as one of the leading clothing exporters in the world, while India could not improve its share in the global market. Joshi et al (2005) finds that Indian clothing firms are less competitive due to low productivity, low R&D, poor technology and non availability of finishing facilities. Roy (2005) also reveals that India’s clothing products have less advantage than China due to poor quality of fabrics and low productivity. Hashim (2004) finds a negative growth in the total factor productivity of Indian garment industry which is mainly due to outdated technology and diseconomies of scale. Rangrajan (2005) observes that India’s power cost, steam cost, financial cost are higher and, productivity and technology are lower than those of China, thus hampering the export growth of Indian T&C. Even India’s T&C export failed to grow after the dismantling of quota system (Times of India, March 1, 2008). Keeping this in view, this paper examines the trend in the T&C exports, assesses the future prospects of India’s T&C exports, and also discusses competitiveness of India’s apparel industry in terms of productivity, technology, number of machine per firm and infrastructures along with the Government role in supporting the industry.
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Global exports in textiles and clothing
The world export of T&C, which was US$ 273 bn in 1994, increased to US$ 530 bn in 2006, registering nearly a two-fold rise. However, the export of clothing grew faster than that of textile (Figure 1). During this period, the former increased 2.2 times, while the later increased only 1.7 times. The share of clothing in the total T&C export significantly increased from 51.46% in 1994 to 58.68% in 2006. As is depicted by Figure 1, during 1994 - 2006, the gap between the amount of export of clothing and textiles has steadily widened, especially after 2001. It is also observed that the clothing export has started exceeding the textiles export from 1994 onwards. In 2006, the world clothing export was US$ 311 billion, and as against it the textile export was only US$ 219 billion. Fig 1 The regional flow of the T&C export shows that China is the leading world exporter whose clothing export share has immensely increased from 4.0% in 1980 to 30.6% in 2006. The other major exporters are EU (union of 25 countries), Hong Kong, Turkey, India, and Bangladesh. It is evident from the Table 1 that the share of EU in the world export of clothing has significantly declined from 42.0% in 1980 to 26.3% in 2006.While the shares of some developing countries such as China, Turkey, Bangladesh, India, Mexico, and Indonesia among others, have increased (Table 1). For instance, share of India’s clothing export has increased from 1.7% in 1980 to 3.3% in 2006.
Table 1: World’s Leading Textile and Clothing Exporters Leading Exporters of Clothing % Share in world export 1980 China EU (25) Hong Kong, China Turkey India Bangladesh Mexico Indonesia US Viet Nam Source : WTO Trade Statistics 4.0 42.0 12.3 0.3 1.7 0.0 0.0 0.2 3.1 ... 1990 8.9 37.7 14.2 3.1 2.3 0.6 0.5 1.5 2.4 ... 2000 18.2 26.9 12.2 3.3 3.1 2.1 4.4 2.4 4.4 0.9 2006 30.6 26.8 9.1 3.8 3.3 2.8 2.0 1.8 1.6 1.7 Leading Exporters Textile EU (25) China Hong China US Korea, Taipei, Chinese India Turkey Pakistan Japan Kong, of % Share in world export 1980 49.4 4.6 3.2 6.8 4.0 3.2 2.4 0.6 1.6 9.3 1990 48.7 6.9 7.9 4.8 5.8 5.9 2.1 1.4 2.6 5.6 2000 35.6 10.2 8.5 6.9 8.0 7.5 3.8 2.3 2.9 4.4 2006 32.6 22.3 6.4 5.8 4.6 4.5 4.3 3.5 3.4 3.2
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Table 1 also shows the world leading exporters of textile, in which EU is the largest exporter, followed by China, Hong Kong, USA, Korea and India. China is the second largest exporter after EU. Its share in the textile export has increased from 10.2% in 2000 to 22.3% in 2006 with an annual growth of 20%. However, India’s share in textile export marginally declined from 2.4% in 1980 to 2.1% in 1990; Thereafter it rose to 3.8% in 2000 and further to 4.3% in 2006. Comparing trends in India’s export of T&C to that of China, we observe that in China, the export of clothing grew faster than that of textile while in India, it is just the reverse. Currently, India’s share in the world export of textile is higher than that of clothing, as is evident from the information given in Table 1.
India’s T&C export: MFA phase-out and postMFA period
India’s T&C industry grew under MFA quantitative restrictions (QRs) during 1974 - 1994. The QRs were removed in four phases during 1994 - 2004. India’s T&C export rose from US$ 7.3 bn in 1994 to US$ 13.63 bn in 2004. During this period, India’s share in world textiles export increased from 2.63% in 1994 to 3.54% in 2004, whereas share of clothing export decelerated from 2.63% in 1994 to 2.55% in 2004. From Table 2, it is observed that India’s share in T&C export declined in the year 1995, 1998, 2001 and 2004 which were the MFA phase I, II, III and IV out years. This indicates that India’s T&C industry has not benefited from removal of quota restrictions. On the other hand, China’s exports of T&C increased from US$ 35.55 bn in 1994 to US$ 95.28 bn in 2004. Except for 1996 and 1998 when China’s share in T&C export declined, during the entire phase-out and post-phase-out period, its T&C export grew immensely. It indicates that China has used the opportunity of removal of quota restrictions due to which its textile and clothing export increased 282% and 260%, respectively.
Table-2: India’s share of Textile and Clothing Export in World T&C Export Textile Export Year World bn) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 133 152 153 156 150 146 159 149 156 175 196 205 219 (US$ India (% Share) 2.91 2.86 3.23 3.37 3.04 3.48 3.78 3.6 3.87 3.92 3.58 4.13 4.27 China (% Share) 8.98 9.14 7.93 8.88 8.55 8.92 10.17 11.27 13.19 15.41 17.1 20.01 22.27 Clothing Export World (US$ bn) 141 158 166 178 186 185 198 194 206 234 261 278 311 India (% Share) 2.63 2.6 2.54 2.45 2.57 2.79 3.12 2.83 2.93 2.83 2.55 3.31 3.27 China (% Share) 16.86 15.19 15.07 17.91 16.16 16.29 18.21 18.91 20.03 22.24 23.74 26.68 30.63 Total T&C Export India (US$ bn) 7.53 8.47 9.15 9.59 9.34 10.24 12.18 10.86 12.07 13.47 13.64 17.67 19.52 China (US$ bn) 35.55 37.97 37.15 45.63 42.87 43.12 52.21 53.48 61.86 78.96 95.28 115.21 144.07
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Source: Authors calculation, data from World Trade Organization, values at current price, bn = Billion, T&C= Textile & Clothing. http://stat.wto.org Table 2 In the post MFA period, the world T&C export increased from US$ 456.11 bn in 2004 to US$ 530 bn in 2006, in which the textile export grew 4.9% in 2005 and 6.5% in 2006 and clothing export grew 6.6% in 2005 and 12% in 2006. In 2006, China is the leading exporter in clothing and second largest exporter in textiles, its textile export has increased 22.79% in 2005 and 18.5% in 2006, and clothing export grew 19.8% in 2005 and 28.6% in 2006. The analysis indicates that China’s growth in the T&C export was higher than the world T&C export. It could be due to the artificial exchange rate and also proactive steps taken by the Chinese Government in last 20 years (Textile Magazine, June 2007). Roy (2005) also points out that the China’s trade practices are currency manipulation, export subsidies, free capital (US government reported that up to 50% of government loans to Chinese business were never repaid), and direct government subsides to the textile industry. In the post MFA period, India’s T&C export has increased from US$ 13.64 bn in 2004 to US$ 19.52 bn in 2006, in which textile export rose by 20.68% in 2005 and 10.28% in 2006, and clothing export grew by 38.9% in 2005 and 10.6% in 2006. In the post MFA period, India’s clothing export rose from US$ 6.63 bn in 2004 to US$ 10.19 bn in 2006; exceeding the US$ 9.33 bn textile export achieved in 2006 as shown in the Figure 2. India’s T&C export shows significant growth in 2005 but its growth declined in 2006. The Ministry of Textiles (2008) has reported the decline in India’s T&C export in the year 2006 - 2007 over the previous year which is due to appreciation of rupee against dollar and also recession in the US market. Recently an article in Times of India (March 1, 2008) shows that India’s T&C export failed to grow in the post MFA period while neighboring China marched ahead. In the post MFA period, China has also exported more clothing than textile. Figure 3 shows proportion of textile and clothing in the India’s and China’s T&C export. In 1994, the world has exported textile and clothing in the proportion 48:52 and the proportion changed to 41:59 in 2006. It indicates that share of clothing in the total T&C export has increased during 1994 - 2006. In this scenario, China exported 33:67 textile and clothing, whereas the corresponding ratio in India was 50:50. In the year 2006, China made US$ 48.68 bn export of textiles and US$ 95.39 bn export of clothing; as against India made US$9.39 bn export of textile and US$ 10.13 bn export of clothing. It suggests that China has always emphasised on clothing export than the textile export. Since the export in clothing reflects the value addition and integration of value chain in textile and clothing, increasing share of clothing in the total T&C export of China is quite beneficial to China, especially in generating productive employment for the workers. Till the end of MFA, India has exported textile and clothing equally and in 2006, it has exported 48% textile and 52% clothing. It indicates that India has also started exporting larger quantity of clothing than textile in the post-MFA period.
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The National Textile Policy 2000 has set a target of US$ 50 bn export of T&C by 2010, of which garment export will be of US$ 25 bn. Given the large size of the domestic markets, India should use this opportunity to increase the capacity and productivity of integrated textile and clothing industry.
With the advent of development in management and technology a lot of significant changes have been taking place in the industrial sector. On the canvas of Indian economy Garments industry occupies a prominent place Due to its deep forward and backward linkage with several key segment of the economy. Garments industry has a strong multiplier effect and is capable of being the driver of economic growth a second transportation system play a pivotal role in the country’s rapid economic and industrial development. The well developed Indian Garments industry ably fulfills this catalytic role by producing a wide variety of Fashions. The Garments industry is under pressure to perform extremely fast in a flexible way. Both factors are driven, On the one hand by an increasing demand of modern stylish garments for special purpose. On the other hand, by tightening competition on globalize market. Product life cycles have become shorter. Indian Garments industry are highly cost competitive even at lower volumes due to, 1- Better Quality 2- Low cost The Garments sector in India is following the footsteps of Japanese system of manufacturing. They have adopted following important means of productivity enhancement in Garments industries. ? TQM ?TPM ?Production system
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The industry like SUPERIOR INDIA EXPORTS, Aarvee Denims & Exports, Ginni Filaments Ltd BL International, Orient Craft etc are steadly adopting the of quality improvement and new Design to boost their productivity and to produce component of high quality of standard. In fact cost of productivity is our key differentiator wiz a wiz competition from other lower cost economy. To sustain the competitive environment the companies are adopting the way and techniques of JIT (just in time).
? Indian Garments companies have proven capability to
supply on JIT system out of warehouse situated near the customer. ? Most Indian companies have arrangement with major logistic providers for JIT supplies. ? Adequate warehousing support and onsite engineering support is the requirement for today
METHODOLOGY
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This can be termed as method used to undergo at a particular project. This was not as research project that can be completed by using the method of questionnaires. It is an experience based project and here methodology regarding this project can be termed as the training undergone in SAM APPARELS PVT. LTD. I tried to contact every employee from top to bottom level management, who helped me lot. And the knowledge given there, regarding export procedure and documentation which was only possible by undergoing training. Although true picture of the export procedure, documentation and marketing in foreign country can be only obtained by visiting a particular relevant country. But as this was not possible best effort have been made to collect all relevant information within constraints.
The methodology of data collection is based on primary as well as secondary data. ? Primary Data: it’s a kind of original data obtained by researcher directly from subject through observation, survey and interview. The following sources helped me lot to obtain primary data regarding organizational activity • Personal interaction with Internship Site Supervisor.
•
Discussion with other officials. information to which researcher needs to ensure the reliability. I have acquired secondary data from following sources.
? Secondary Data: such data are collected from published
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Company’s Website, Company’s Magazines, past year data and other available records & reports.
OBJECTIVE
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The objective of this project is to study the process of export procedures and documentation which plays vital role in international market & trade and incentives given by government to promote Indian Garments Export: • To know processes involved in export. • To study the activities undertaken by the company right from the time there is query from the overseas buyer.
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To have firsthand knowledge of the Documents required for SAPL ’s export. To analyze the current situation of SAPL ’s export.
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• To know the various types of documents required for export. • To determine logistics cost reduction techniques. The project studies the Export Procedure and Documentation at S.A.M Apparels Pvt. Limited. It is an attempt to study the activities undertaken by the company right from the time there is an order from overseas buyers followed by documentation process, product packing, labeling and dispatch of consignment. Project also deals with policies and relaxations given to Garments Industries in India. It also studies the current status of the Company’s Export. The Documentation takes place in two stages i.e. Pre shipment Documentation and Post shipment documentation. These documents are prepared and sent to SAPL after the order is shipped. Project also deals in brief with Supply Chain Management in S.A.M. Apparels Pvt. Limited where main focus will be on Logistics & its Cost Reduction techniques. This project also studies the potential for export and also discusses the export performance of S.A.P.L.
CONTENTS:
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1. INDUSTRIAL PROFILE 2. COMPANY PROFILE -FOUNDATION OF SAPL -CORPORATE PROFILE -CORPORATE PHILOSOPHY - S.A.P.L.PRODUCT - LANDMARKS OF S.A.P.L. 3. ABOUT S.A.M. APPARELS. PVT. LTD. - SAPL PROFILE
-BRIEF INFO ABOUT PACKING, LABELING, SHIPMENT & FRIEGHT FORWARDER -HOW TO INITIATE EXPORT IN COMMON -EXPORT PROCEDURE AT SAPL -SUMMARY OF EXPORT PROCESS -EXPORT ANALYSIS 4. INCOTERMS 5. DOCUMENTATION -IMPORTANT DOCUMENTS REQUIRED IN EX-PROCESS - FLOW OF DOCUMENTS AT SAPL -DOCUMENTS’ SAMPLE - DOX REQUIRED BY DIFFERENT AUTHOROTIES 6. SWOT ANALYSIS 7. ANNEXURE
PROJECT: EXPORT PROCEDURE
Introduction
The garment and apparel industry involves advertising, designing and selling of fashionable clothes. Each outfit fabricated has a specific theme, purpose and target market of its own. For classifying the upcoming trends, apparel world connects with the designers and marketers who keeps track of all the essential requirement of consumers. The art and work related with the designers is not only restricted with the designing of clothes but also broadens to fashion accessories
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like shoes, bags, jewelry and many more. The interest in fashion apparel is on endless rise, accordingly the concerned opportunities and competition are there. As the apparel industry is growing more and more, there is an increasing need for much specialized and educated staff in the apparel world. Major drives of Apparel world: The two main driving factors affecting garment apparel world are end user tastes and relative manufacturing costs. Apart from this, an apparel organization depends upon its operational efficiency and its ability to catch deals with more clothing marketers comprising clothing wholesale and retail sector. How does Apparel Industry works? For effective functioning, Apparel industry requires versatile skills as well as equipments. Usually most of garment manufacturers specialize in fabricating 1 or 2 forms of outfits. Also, the Integrated manufacturers scheme and make garments in their own manufacturing plants and market their own clothing brands. Apparel manufacturing is one of the most sought after businesses today. With new fabrics, designers, technology coming up in the market, there is tremendous scope of further growth and advancements in the Apparel Industry.
THE COMPANY PROFILE FOUNDATION OF S.A.M. APPARELS PVT. LTD. Mukesh Sharma " In the world of Garments, S.A.M Overseas has a reputation of being a leading manufacturer & exporter of Ladies garments like Tops, Dresses, Blouse, Skirts, Camisoles. since its inception in 1998. This has resulted in the start of the start of the home furnishing business covering kitchen linen, Table Linen, Bed Linen, Cushion Covers, Quilts, Curtains etc. Due to international quality and highly competitive rates we have a strong base in domestic as well as international market.
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CORPORATE PROFILE
SAPL PRODUCTS
THE GROWING WORLD OF S.A.P.L.PRODUCTS, FOR Womens Wear
Ladies Garments Ladies Garments
Ladies Garments
Ladies Ladies Garments Garments
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ABOUT S.A.M. APPARELS PVT. LTD.
S. A. M. APPARELS PVT. LTD.
Company Profile
Business Type Capital in Dollars Export Percentage Primary Competitive Advantages No of Staff Year of Establishment Export Markets Investment on Manufacturing Equipment OEM Service Provided No of Designers Credit Rated Product Range Exporter , Manufacturer US $ 50 Million 100%
Impeccable Quality, Prompt Delivery, Competitive Price
1800 1998
U.S.A, U.K., Spain, Netherland, France, West Asia Rs 30.75 Crores
No 2 Yes
Kitchen linen, Table linen, Bed covers, Cushion covers, Quilts, Curtains, Rugs, Ladies garments as Tops, Dresses, Blouse, Skirts, Camisoles.
SAPL IS COMMITTED TO:
Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of SAPL products, focusing on serving our customer where we can build long term relationships by raising their lifestyle through performance excellence, proactive design & innovative technology. Our innovative solutions will always exceed the changing needs of our customers and provide value added Product. Build the Winning Team with capabilities for success, thriving in a climate for action and delivering results. Our employees are the most valuable assets and we intend to develop them to achieve international level of professionalism with progressive
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career development. As a good corporate citizen, we will conduct our business ethically and socially in a responsible manner with concerns for the environment. Grow through continuously innovating our business processes for creating value and knowledge across our customers thereby earning the loyalty of our partners & increasing our stakeholder value. CORE COMPETENCIES Customer #1 S.A.P.L .put customers first in everything we do. We take decisions keeping the customer in mind. Challenging Spirit
SAPL strive for excellence in everything we do and in the quality of goods & services we provide. We work hard to achieve what we commit & achieve results faster than our competitors and we never give up.
Team-work We work cohesively with our colleagues as a multi-cultural team built on trust, respect, understanding & mutual cooperation. Everyone's contribution is equally important for our success. Frank & Fair Organization We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen to others and participate in healthy & frank discussions to achieve the organization's goals.
PROJECT
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EXPORT PROCEDURE
IMPORTANT CONTANTS INVOLVED IN EXPORT PROCEDURE When shipping a product overseas, the exporter must be aware of packing, labeling, documentation, and insurance requirements. It is important that exporters ensure that the merchandise is:
• • •
•
Packed correctly so that it arrives in good condition; Labeled correctly to ensure that the goods are handled properly and arrive on time at the right place; Documented correctly to meet U.S. and foreign government requirements, as well as proper collection standards; and Insured against damage, loss, pilferage and delay.
Most exporters rely on an international freight forwarder to perform these services because of the multitude of considerations involved in physically exporting goods.
FREIGHT FORWARDERS
An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade. Export freight forwarders are licensed by the International Air Transport Association (IATA) to handle air freight and the Federal Maritime Commission to handle ocean freight. Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their
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services is a legitimate export cost that should be included in the price charged to the customer. Once the order is ready for shipment, freight forwarders should be review all documents to ensure that everything is in order. This is of particular importance with letter of credit payment terms. They may also prepare the bill of lading and any special required documentation. After shipment, they can route the documents to the seller, the buyer, or to a paying bank. Freight forwarders can also make arrangements with customs brokers overseas to ensure that the goods comply with customs export documentation regulations. A customs broker is an individual or company that is licensed to transact customs business on behalf of others. Customs business is limited to those activities involving transactions related to the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.
SHIPPING
The handling of transportation is similar for domestic and export orders. Export marks are added to the standard information on a domestic bill of lading. These marks show the name of the exporting carrier and the latest allowed arrival date at the port of export. Instructions for the inland carrier to notify the international freight forwarder by telephone upon arrival should also be included. Exporters may find it useful to consult with a freight forwarder when determining the method of international shipping. Since carriers are often used for large and bulky shipments, the exporter should reserve space on the carrier well before actual shipment date. This reservation is called the booking contract. International shipments are increasingly made on a through bill of lading under a multimodal contract. The multimodal transit operator (frequently one of the transporters) takes charge of and responsibility for the entire movement from factory to final destination. The cost of the shipment, the delivery schedule, and the accessibility to the shipped product by the foreign buyer are all
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factors to consider when determining the method of international shipping. Although air carriers can be more expensive, their cost may be offset by lower domestic shipping costs (for example, using a local airport instead of a coastal seaport) and quicker delivery times. These factors may give the SAPL exporter an edge over other competitors. Before shipping, the Company should be sure to check with the foreign buyer about the destination of the goods. Buyers often want the goods to be shipped to a free-trade zone or a free port where they are exempt from import duties
INSURANCE
Damaging weather conditions, rough handling by carriers, and other common hazards to cargo make insurance an important protection for exporters. If the terms of sale make the exporter responsible for insurance, the exporter should either obtain its own policy or insure the cargo under a freight forwarders policy for a fee. If the terms of sale make the foreign buyer responsible, the exporter should not assume (or even take the buyer's word) that adequate insurance has been obtained. If the buyer neglects to obtain adequate coverage, damage to the cargo may cause a major financial loss to the exporter. Shipments by sea are covered by marine cargo insurance..Air shipments may also be covered by marine cargo insurance or insurance may be purchased from the air carrier. Export shipments are usually insured against loss, damage, and delay in transit by cargo insurance. Carrier liability is frequently limited by international agreements. Additionally, the coverage is substantially different from domestic coverage. Arrangements for insurance may be made by either the buyer or the seller, in accordance with the terms of sale. Exporters are advised to consult with international insurance carriers or freight forwarders for more information. Although sellers and buyers can agree to different components, coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.
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HOW EXPORT INITIATES?
Any organization does not promptly turns into exporting unit, but to be the same it needs to saturate first the domestic market and has to follow various steps which are briefly explained below under seven fields: A: Understanding and preparing for exports 1. Considering export - If you are considering exporting, you should get yourself up to speed by understanding why you want to export, what the difference is between domestic marketing and export marketing, what the various environments are that you will encounter in international trade and the trade barriers you may face in the international marketplace. 2. Current business viability Analysis - If you are not managing to survive in your current business, then don't consider exporting. 3. Export readiness - Besides for having an existing base (i.e. a viable business) to build on, there are several other factors that contribute to your readiness to export. 4. Set a broad export mission statement and initial research budget for firm - If you're ready to export, then you need to set a broad statement indicating that intention to export (which you may revise later), and you will also identify a small budget that will allow you to do the research and preparation necessary to plan and implement an export strategy. 5. Confirm management's commitment to exports probably one of the main reasons why firms fail with their export endeavors is because management only pay lip service to the firms' export efforts. This is not enough! Get
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management to commit on paper to the firm's exports efforts and have them approve the budget you submitted for your export research.
B: Researching and segmenting export markets 6.Undertaking an initial export SWOT analysis of the firm - as it is important to understand what the export capabilities of the firm are, as this knowledge is used as an input to the export marketing research process, it is necessary at this point in the export process to undertake an export SWOT analysis. But as you do not yet have the foreign market information at your disposal, this SWOT analysis will need to be reviewed again later in the export process as an introduction to the export plan. 7. Selecting and researching potential countries/markets abroad - It is a fact; we cannot export to all the countries in the world. Indeed, even established companies can only concentrate on two or three countries at most (and usually only those that are close to each other either geographically, culturally or in terms of language or some other factor). Smaller companies will barely be able to cope with one additional country (over and above the domestic market). The question is which country? At this point in the export process our firm must evaluate the many potential countries open to you and narrow the list down to no more than three to five countries with the greatest potential to look at more closely (a shortlist of countries). Once we established a shortlist of countries, the next step is to do some desk research and inmarket research to identify the most suitable country (or perhaps two countries) from our shortlist.The purpose of this research will be to understand the foreign environment you intend to enter and to identify potential foreign customers and their needs so that you can plan an export marketing strategy that will meet your potential customers' needs.
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C: Compiling an export plan 8. Preparing your export plan - This is one of the most important steps in the export process and will incorporate a situational analysis (export SWOT), your export objectives and an export marketing strategy.
D: Implementing the export plan 9.Obtain financing/resources for your exports - You will almost certainly need to finance your export efforts in some way and you will have to give thought to how much you need and where you will find the money. You may also need to find the staff and facilities necessary to support your export activities (which, in turn, will cost money). 10.Managing your export risk - When you negotiate and eventually sign an export contract, you need to be aware that you are committing your firm to certain responsibilities (such as delivering on time and according to a certain standard) and that you are making certain assumptions about your business partner (that they will pay, for example). These responsibilities and assumptions represent a serious risk for your firm and you need to be aware of what these risks are and you need to take steps to manage these risks as best possible. 11.Promoting the firm and its products abroad - This involves letting the world know about your firm and what it offers and there are many promotional channels that you could use (such as advertising in trade magazines, e-mail marketing or participating in a trade fair). The channel you use will depend on what your promotional strategy is that you outlined in your export plan. 12.Negotiating and quoting in export markets - You need to approach your customers, convince them to buy from you, negotiate a deal and price that that find acceptable, and
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present them with a quote (usually in the form of a proforma invoice).
13.Revising negotiations, lowering your to revisit your
export costing and price - Following your you will in all probability have to consider price or other sales terms. This may require you costing exercise and pricing strategy.
14.Obtaining the export order - This is all about closing that sale and signing the contract!
15.Producing the goods - With the export order in hand, you now have to get down to producing the goods that you have promised to deliver. This will mean securing raw materials and components from your suppliers, and producing, packaging and labeling the goods for export. E: Export transportation and logistics 16.Handling the export logistics - You have to get the product from your factory to your customer and you will need one or other form of transportation to do this. F: Export documentation and payments 17.Handling export documentation and export payments - A lot of paper work will accompany each consignment. You need to ensure that your export documentation is in order so that you can effect export payment for your goods. 18.Providing follow-up support - Customers will want to be ensured that you will help them if something goes wrong with your product. To this end, you will need to consider what warranties and guarantees you will offer your customer, as well as what support you will provide them. 19.Getting paid - An important part of the export process.
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G: Export management 20.Reviewing the export process - To ensure a successful export department, you will want to review and improve your export process. 21. Export management - The process does not end here. It needs to start all over again with your next customer. This is the focus of export management and involves the way you organize your export department.
EXPORT PROCEDURE IN S.A.P.L.
EXPORT OPERATION IN S.A.P.L. S.A.M. APPARELS PVT. LTD. Export department is a subsidiary to SAPL . As all prime decisions and activities are subject of SAPL beside several cases. SAPL carry out export activity in two forms: 1). Direct Export: In this case SAPL directly takes order from agent in respective countries i.e. USA UK France Netherland and other European Countries. This order is then placed and executed and then order is dispatched to the ordering country. In this case SAPL has no interference at any platform. 2). Indirect/Triangular Export: If SAPL received any order through Buying House SAPL practices triangular trade. In this case export order is rooted through Buying house. i.e. imported deals with SAPL for payments and other related documents. SAPL get fixed amount for each of its garment. In the case the exporter does not have to bother about import position or payment. In fact SAPL is unaware about the price deal between SAPL & the importer. In triangular trade SAPL fetches
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order from overseas market and transfers those order to SAPL by issuing Purchase Order(P/O) and Shipping Instruction(S/I) rather than opening Letter of Credit(L/C).
EXPLAINATION SAPL issues P/O and S/I to export marketing division of SAPL . Within turn export order is registered, scrutinized the purchase order, clarify and revise the order. Further in order to do production planning the plant processes the order and forms a packing detail, invoice etc. and forward it to SAPL. After the invoice preparation and setting up the concerned plan for processing the export order as per purchase order SAPL arrange for Excise Inspection and SGS inspection if required by the importer. Thus obtains AR-4 certificate attested by the excise department and Clean Report of Findings (CRF) from the SGS and arranges for other documents. It dispatches the goods directly to the importer and finally documents are sent to SAPL through fax or courier as per requirement. SAPL in turn delivers the payment to SAPL within thirty days of receiving the delivery. The main advantage of this triangular trade is that it does not have to bear any risk of non -payment by the importer and moreover all marketing expenses are afforded by the SAPL and thus SAPL is able to utilize S.A.P.L.’s international network. The major disadvantage is that SAPL is not able to fetch market price for the products
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THE BEGINNING OF EXPORT IN SEQUENCE AT SAPL
When a buyer country send us written order and we have accepted this order, a contact of sale can now be considered to be in place. At this point, a number of actions and activities need to take place in order for the order to be successfully
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completed. This series of activities is often referred to as the export sequence and can be considered an important component of the overall export process. It involves those activities necessary to ensure that an export order is properly fulfilled. We assume that export sequence begins after our confirmation of the written order/indent sent to us by our foreign buyer (which we will refer to as the importer from now onwards). Under Export Procedure in SAPL following steps as an effective strategy are adopted… STEP 1: The next step is the importer's responsibility. The importer must now approach his/her local bank (referred to as the issuing bank) and request them to issue a letter of credit (L/C) in favor of our firm in case of direct trade. The importer will normally provide the bank with a copy his/her written order or indent and a copy of our confirmation of this order. Our confirmation serves as proof that(a) We received the order and (b) We agree with all of the specifications outlined in the order. For this reason, it is important that we carefully read the order before confirming it! The specifications outlined in the order will become the basis upon which the L/C is drawn up. The issuing bank then forwards the L/C to its correspondent bank in India. The correspondent bank may not necessarily be our own bank. The correspondent bank will then notify us that the L/C has arrived and that we can go to collect them. STEP 2: Once we have received the L/C, our task is to check its contents thoroughly. This is an extremely important task. Documentary credits normally contain certain mandatory information. Banks will only approve payment on presentation of documents that show that we have complied exactly with the requirements of the L/C. If we deviate in any way - even a misspelling of a name or the removal of a comma - may result in rejection of the documentation and end in non-payment of the L/C. Therefore we need to ensure that we comply with the requirements of the L/C. STEP 3: If we couldn’t meet the terms and conditions laid out in the L/C, then we need to urgently request an amendment to the L/C by the importer. We do so by notifying the importer in
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writing of our requested amendment(s). If the importer agrees to these amendments, he/she will notify of the issuing and corresponding bank to incorporate the amendments as requested. Remember, only the importer can request the amendments. STEP 4: Assuming the importer agrees the amendments, the corresponding bank will inform us that the L/C and amendments have been issued and let we have a copy thereof. We need to just check that the amendments are as our request. Now we have an accepted L/C which ensures payment. The time has come to start producing the goods. We inform all of the managers and staff of the receipt of the order and request that the production division to begin producing the goods concerned. Clearly, this process of producing the goods may be quite long and complicated and may require changes to the design of the product and to the manufacturing line. We must have planned for these changes and adaptations (both in terms of time and cost) before quoting for the business. As an export manager I will have to keep an eye on the production department to ensure that we do not fall behind or encounter any problem - if we do, then we may opt to communicate with the importer to warn him/her of any delays or changes to the product (we may also need approval for these changes). We are required to get order for export at least two months before the date of final shipment. However the shipment date can’t be determined only through it but logistic part are also considered. For example- Castro sends us order for 2,00,000 Pcs. of ladies Garments, then time required for production and time required for supply of raw materials from vendor to store room needs to be taken into account. STEP 5: Once we are confirmed with the production schedule and expected completion date, we contact our freight forwarder and book space with our mode of transport of choice - usually sea or air freight for most overseas orders and rail and/or road freight for carrying goods to the airport and sea port. The freight forwarder then confirms that space has been booked with a particular carrier for a particular date. Where containers are involved, arrangements are made to have
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delivery to our premises for packing and collection a short while later. We supply the freight forwarder with precise shipping instructions and these are communicated to the importer either by us or by the freight forwarder. STEP 6: An important step in the production process is the proper packaging and labeling of the goods for export. We need to ensure that they have been properly labeled, packed and marked according to the specifications outlined in the L/C or according to international standards. Not only do the goods need to meet the importer's requirements, but they need to endure the hazards of intercontinental transportation. Although they may be further packed into a container, there are still many hazards that our goods faces. STEP 7: If the importer has requested a pre-shipment inspection, then we arrange for this to be done. Normally, the importer indicates its own nominated inspection agency for inspection. We cannot contact the inspection company at the last minute and expect them to come at our convenience. Instead, we make arrangements well in advance (perhaps a week or two in advance). A good relationship with the inspection company is good for our further relations with the importer. The inspection need to take place before we pack the goods in the container. The inspection company some time wants to see actual products and thus we need to be ready to open up already closed packages that they may select at random in order to inspect the goods inside. These are properly sealed again for shipment. Bear in mind that some importers may require other forms of inspection and/or certification. For example, some importers may require tolerance tests, on-site inspections, destruction tests. These are spelled out in the L/C and thus we need to make the necessary arrangements for these inspections to take place and for the certification to be issued. The cost of these tests may be carried either by our company or by our customers (importer), these are also indicated (hopefully) in the L/C. STEP 8: This is where the export documentation comes into play. The documentation relates to the documentation required by both the export authorities in India and by the importer and
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importing authorities. Once again, the L/C will spell out what documents are required. Some countries require certificates of origin to be issued by the local chamber of commerce and export permits may even be required for selected products. Our freight forwarder assists us in (a) obtaining these documents, and (b) also further helps to complete them. STEP 9: The terms of trade (and the Inco term) that we have negotiated with the importer indicates if the marine insurance is to be obtained by us or by the importer. If it is our responsibility to arrange for insurance cover - again this is spelt out in the L/C. Marine insurance is required for all international cargoes (not just sea freight). STEP 10: Then need to complete an F178 Exchange Control Declaration form which is required by the Reserve Bank. At the same time, we need to complete or obtain all the other documentation necessary to support the order such as:
? ? ? ? ? ? ?
Commercial invoice Packing list Certificate of origin (if required) Beneficiary certificates Specification sheets Fumigation certificate Shipping instructions
We should also provide our freight forwarder with the details outlined in the L/C, perhaps even supplying them with a copy thereof. Our freight forwarder needs this information to ensure that any and all documents they complete are done so in accordance with the requirements of documentary credit. STEP 11: At the time and date agreed (and presumably at end of the production schedule), the containers are delivered to our premises for packing. Obviously, if we do not expect to make this deadline, we inform the freight forwarder, who will arrange an alternate date for the container to be delivered, and we also inform the importer of the possible delay. If we do not intend to use a container, then we arrange delivery of the goods to particular delivery point (usually that of the freight forwarder) or the freight forwarder may agreed to collect the goods from our premises. For small, non-containerized cargoes, they will
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probably consolidate our goods with others into a single container (the freight forwarder will probably do this themselves). If are using palletized cargo, then might deliver to the freight forwarder or to the quay side or have them collect it from us. The freight forwarder also prepares the customs bill of entry, export documents and all appropriate transport documents. Goods moving by sea freight incur obligatory cargo dues payable to Portent and the freight forwarder probably arrange for these to be paid (and bill us accordingly). STEP 12: Once the goods have been loaded onto mode of transport, the transporter will issue one of the following: • The shipping line issues a full set of bills of lading, comprising three originals and six non-negotiable copies • An airline issues us with an air waybill • Transnet issues us with a freight transit order • A road carrier/hauler issues with a road consignment note • At this point, the transport (ship, aircraft, truck, railway truck) departs. STEP 13: Then we prepare the negotiable documents to present to the bank to facilitate payment and the nonnegotiable documents that are send to the importer to allow him/her to take receipt of the goods and to clear them through Customs. The documents will be similar in nature; negotiable documents are marked as such and can be used to receive payment, while non-negotiable documents (marked as such) cannot. Now we fax (or e-mail) a non-negotiable set of documents to the importer as soon as possible., This • (a) informs the importer that shipment has taken place, and • (b) enables him/her to make the necessary arrangements to take receipt of the goods and to clear them through customs. Some countries allow pre-clearing to take place and the sooner the importer has the documents in hand, the sooner he/she can get his/her affairs in order. We need to move quickly with air cargos (and even road cargoes going to nearby countries), as they could arrive
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the very next day (and occasionally even the same day). An importer becomes very frustrated if the cargoes have arrived and we have not yet supplied the documents required to clear the goods through customs. • The negotiable set of documents is taken to the corresponding bank in SAPL to obtain payment. The bank scrutinizes our documents very carefully for any discrepancies from what is stated in the L/C. If any discrepancies are found, the bank informs us of these discrepancies and then we are required to make the necessary changes to ensure that documents are correct. Remember that this all takes time and by ensuring that the documents are correct, we speed up matters considerably resulting in quicker payment for our firm! If payment is against presentation of documents, then the bank pays us immediately (transferring the payment to our local bank). If payment is at sight of documentation, then the SAPL corresponding bank forward the negotiable documents to the issuing bank, which will require the importer to sign a bill of exchange as acknowledgement of debt. STEP 14: The importer's corresponding bank in India (Japan) then forwards the negotiable documents to the issuing bank overseas. The issuing bank will require the importer to make payment and once this is done they release the documents to the importer. Recall that the issuing bank may not necessarily be the importer's own bank (referred to as the remitting bank). Thus the importer may need to arrange for the transfer of monies from his own bank (the remitting bank) to the bank he used to facility payment of this order (the issuing bank). The importer then uses the documents to clear the goods through Customs. Depending on the terms of sale, customs clearance, the payment of duties and the delivery of the goods to the importer's designated premises may be the responsibility of either the importer or the exporter (although it is more common for the importer to take responsibility of this task). The issuing bank, having received payment from the importer transfers this money to the corresponding banks via bill of exchange of bank cheque. The local corresponding bank will notify us that the funds have arrived and we then indicate into which account these funds need to be paid (normally our firm's
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business account which may be held at the same bank or maybe a different bank). STEP 15: It is now up to our firm to pay our agents any commissions that may be due to him/her. STEP 16: The importer normally provides us with proof of delivery after receipt after the goods have been received at the designated place of delivery.
?SUMMARY OF EXPORT PROCESS
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EXPORT-IMPORT PROCEDURE
Seller and Buyer conclude a sales contract, with method of 1 payment usually by letter of credit (documentary credit) or buyer issues an export order. 2 Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary). 3 Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advice, and usually to confirm, the credit. 4 Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit. 5 If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier. 6 Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit. 7 Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate. 8 Bank, if other than the issuing bank, sends the documents and draft to the issuing bank. 9 Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. 10 Documents release to Buyer after payment or on other terms agreed between the bank and Buyer. 11 Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.
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INCOTERMS
(INTERNATIONAL COMMERCIAL TERMS)
The international commercial term is usually recognized set of definitions of International terms, such a FOB, CFR and CIF developed by International Chamber of Commerce (ICC) in Paris and France. It defines the trade contract responsibilities and liabilities between importer & exporter. It is valuable and cost saving tool. The exporter and importer need to undergo who will be responsible for freight, cargo insurance and other cost & risks. Under the incoterm 2000 the international commercial terms are grouped into E, F, C and D designated by the first letter of the term: • EXW (Ex Works) Ex means from & Works means factory, mill or warehouse, which are the seller’s premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks. In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.
FCA (Free Carrier) The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
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FAS (Free Alongside Ship) Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.
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•
FOB (Freight on Board)
The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
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C&F (Cost and Freight)
The delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F. CIF (Cost, Insurance and Freight) The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks.
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CPT (Carriage Paid To)
The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. CIP (Carriage and Insurance Paid To) The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
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DAF (Delivered At Frontier) The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.
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DES (Delivered Ex Ship) The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.
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DEQ (Delivered Ex Quay) The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
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DDU (Delivered Duty Unpaid) The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
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DOCUMENTATION
Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that exporting requires as forwarders are specialists in this process. The following documents are commonly used in exporting; but which of them are necessary in a particular transaction depends on the requirements of the Indian government and the government of the importing country. PURCHASE ORDER: It specifies all details of goods. In it rate and relevant terms and condition of trade like the prices are to be quoted as FOB, CNF or payment to be made in advance or
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through L/C. The order contains description of the goods, date of shipment price quotes etc. PACKING LIST: it is the list showing detail of goods contained in each parcel shipment. Packing list has to be prepared in the aligned document form. The only difference in packing list and invoice is that the packing list does not have description of price and rate of goods but invoices do have. It itemizes the material in each individual package and indicates the type of package, such as a box, crate, drum, or carton. It also shows the individual net, legal, tare, and gross weights and measurements for each package. Package markings should be shown along with the shipper's and buyer's references. The list is used by the shipper or forwarding agent to determine the total shipment weight and volume and whether the correct cargo is being shipped. Packing list are prepared twice- once before AIR WAYBILL: The receipt is issued by shipping agent for goods and is also called consignment note. Air freight shipments are handled by air waybills, which can never be made in negotiable form. BILL OF LADING: The B/L is a document issued by shipping company. It is a contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading which is nonnegotiable and a negotiable or shipper's order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods. There are several types of B/L as mentioned below: Received of shipment B/L-certifies only receipt of goods. On deck B/L- certifies and remark that goods are shipped o n deck. Through B/L- it covers the whole voyage and is acceptable if transshipment is permitted.
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Clause B/L- It is B/L containing additional clause limiting responsibility of the shipping company and including defective condition of the goods. Clean B/L- A clean B/L is one which does not bear any superimposed or annotation, which declares the defectiveness of the goods or the packing. COMMERCIAL INVOICE: A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, and number of copies, language to be used, and other characteristics. The invoice act as basic document on the basis of which other dox are prepared. CONSULAR INVOICE: is a document that is required in some countries. It describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. Certified by the consular official of the foreign country stationed here, it is used by the country's customs officials to verify the value, quantity, and nature of the shipment. CERTIFICATE OF ORIGIN: is a document that is required in certain nations. It is a signed statement as to the origin of the export item. Certificate of origin are usually signed through a semiofficial organization, such as a local chamber of commerce. A certificate may still be required even if the commercial invoice contains the information. In some cases as per requirement of the clients, the embassy of buyer country certifies the Indian manufactured goods. GSP CERTIFICATE: It is very much similar to CoO and is also issued by chamber of commerce and industry. It is required by only Commonwealth Countries. It is issued for goods imported to custom port/airport intended for transshipment. SHIPPER’S ORDER: Issued by shipping line intimating the exporter about the reservation of shipment space of cargo through a particular vessel from a specified port on the specified date.
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FLASH REPORT: A shipment advice is issued to inform the overseas buyer about the shipment of goods. It is prepared in align documents. The exporter only advise his importer about the invoice number, Bill of Lading, Air waybill number, name of the vessel with date, port of export, description of goods, quantity and the date of selling of vessel. GR FORMS: It is an exchange control declaration form, a RBI document containing the name of bank through which payment has to be received and the custom assessable value in rupees. Declaration is made under Foreign Exchange Regulation Act. EXTERNAL INSPECTION AGENCY REPORT: The importer higher an inspection agency operating on international level. These inspection agencies are known as External Inspection Agency (EIA). They have a network of office worldwide. The inspection is carried out for quality, quantity, stuffing, packing, price comparison and marketing with the end product. On successful inspection an inspection and Clean Report of Finding CRF is issued. SAFTA: It is required for products traded among the SAFTA countries (India, Sri Lanka and other South Asian Nation). It is the certificate that approves free trade among the member countries. ISFTA: The document is required when trade takes place between India and Sri Lanka to approve the free trade. INSPECTION CERTIFICATION: is required by some purchasers and countries in order to attest to the specifications of the goods shipped. This is usually performed by a third party and often obtained from independent testing organizations. DOX RECEIPT AND A WAREHOUSE RECEIPT: are used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the ship line for export. LETTER OF CREDIT: Letter of credit is used in case of export to Bangladesh and Nepal. It refers to a promise made by importers bank to exporter that the payment should be made to him in strict compliance with the terms and conditions of the
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export contract. The bank does not deal in goods it deal in documents. DESTINATION CONTROL STATEMENT: It appears on the commercial invoice, and ocean or air waybill of lading to notify the carrier and all foreign parties that the item can be exported only to certain destinations. SHIPPING BILL: Shipping bill is the main document required by custom authority for allowing shipment. Shipping bill lies with the regard to the goods being subject to: Export duty, Entitlement of duty drawback, Entitlement of credit of duty under DEPB Scheme etc. There different formats of shipping bill as follows: White shipping bill: for export of duty free goods Green shipping bill: for export of goods under claim of duty drawback. Yellow shipping bill: for export of excisable goods. Blue shipping bill: for export under DEPB scheme. BILL OF EXCHANGE: A bill of exchange is defined as an unconditional written order prepared by an exporter asking the importer to pay specified sum of money to a specified person in time. The specified amount is represented by the amount of invoice, the specified person refers to the bank and the specified amount is matter of negotiation between the exporter and importer. It is of two types:
Sight B/L: The payment is to be made by importer immediately or on demand to get the documents. Usance B/L: The payment is to be made after expiry of certain period of time. COMBINED TRANSPORT REPORT: Inland container depot has been set up at the various centers in the country. These dry ports have made it possible to cover the entire movements
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of goods from ICD to destination under the transport document called Combined Transport Document. EXPORT LICENSE: is a government document that authorizes the export of specific goods in specific quantities to a particular destination. This document may be required for most or all exports to some countries or for other countries only under special circumstances. INSURANCE CERTIFICATE is used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. ARE-1 FORMS: It is an application for removal of excise from excisable goods for export by air, rail or sea.(This is applicable only Engineering, Motor Vehicle Electronic Product etc.) Documentation must be precise because slight discrepancies or omissions may prevent merchandise from being exported, result in nonpayment, or even result in the seizure of the exporter's goods by importer or foreign government customs. Collection documents are subject to precise time limits and may not be honored by a bank if the time has expired. Most documentation is routine for freight forwarders and customs brokers, but the exporter is ultimately responsible for the accuracy of its documents.
FLOW OF DOCUMENTS
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ORDER RECEIVED FROM IMPORTER Purchase order Letter of credit
ORDER ANALYSIS
ORDER REGISTRATION SEND TO VENDOR
STORE
FORWARD INFORMATION TO THE VENDOR WILL SEND REQUIREMENT TO PLANT
CHECK THE STOCK WITH THE HELP
OF STOREALLOCATIONPARTS REQUISITION WILL ISSUE LIST, IF SHORT FEED SLIP THE REQUIREMENT IN THE SYSTEM. EXPORT QUALITY A WILL VERIFY-ACCEPT SEND TO PURCHASE DEPARTMENT OR REJECT CHECK
INNER CASE & OUTER CASE FILLING IS DONE…
DETAIL SENT TO EXPORT MARKETING Packing list Proforma or order list Weight & dimension list
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PRESHIPMENT DOCUMENTS PREPARATION Invoice Packing list Packing annexure Purchase order
EXPORT (A-1) Invoice Packing list Packing annexure Purchase order
EXPORT (A-64& Phase-II) Invoice Packing list Packing annexure Purchase order
EXCISE (All Unit) NOT APPLICABLE
ADD ARE & SEND TO EXCISE
CHA (LOGISTICS) Invoice Packing list Packing annexure Purchase order Shipping instructions CHA GETS CUSTOM 47 CLEARANCE SHIPPING BILL.
EXCISE GIVES INFORMATION TO BSR TO BRING CONTAINER FOR DISPATCHING.
STUFFING DISPATCH FROM THE PORT
SEA WAYBILL/AIRWAY BILL ISSUE
DOCUMENTS SENT TO SAPL EXPORT MARKETING
PREPARATION OF POST SHIPMENT DOCUMENT DOCUMENTS FOR SAPL (Flash Report) Covering letter Invoice Packing List Packing List annexure 48 B/ L Or Airway Bill P/O or L/C Certificate of
IMPORTER’S BANK (ORIGINAL DOCUMENT)
Invoice Packing List B/L or airway Bill SDF copy Exchange control Copy Of S/B P/O or L/C CRF Invoice
DOCUMENT FOR IMPORTER Covering Letter Invoice Packing List Bill of lading SDF Copy Exchange control copy
DOCUMENT FOR FINANCE SAPL Invoice Packing List Packing List Annexure B/ L or Airway Bill SDF copy Exchange Control Copy Copy Of Shipping Bill Purchase Order or L/C DOCUMENT FROM BANK TO IMPORTER FOR PAYMENT REALIZATION
PAYMENT RECEIVED
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CONTRACT COMPLETED
(1).AIR WAY BILL
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• • • • • • •
BLUE - Original 1 - For Shipper GREEN - Original 1 - For Issuing Carrier WHITE - Invoice WHITE - Remittance Copy PINK - Original 2 - For Consignee GOLDENROD - Delivery Receipt WHITE - For Destination Agent's Copy
(2).COMMERCIAL INVOICE
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DISCRIPTION OF PROFORMA 1. EXPORTER - The name and address of the principal party responsible for effecting export from the United States. The exporter as named on the Export License. 2. CONSIGNEE - The name and address of the person/company to whom the goods are shipped for the designated end use, or the party so designated on the Export License.
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3. INTERMEDIATE CONSIGNEE - The name and address of the party who effects delivery of the merchandise to the ultimate consignee, or the party so named on the Export License. 4. FORWARDING AGENT - The name and address of the duly authorized forwarder acting as agent for the exporter. 5. COMMERCIAL INVOICE NO. - Commercial Invoice number assigned by the exporter. 6. CUSTOMER PURCHASE ORDER NO. - Overseas customer's reference of order number. 7. B/L, AWB NO. - Bill of Lading, or Air Waybill number, if known. 8. COUNTRY OF ORIGIN - Country of origin of shipment. 9. DATE OF EXPORT - Actual date of export of merchandise. 10. TERMS OF PAYMENT - Describe the terms, conditions, and currency of settlement as agreed upon by the vendor and purchaser per the Pro Forma Invoice, customer Purchase Order, and/or Letter of Credit. 11. EXPORT REFERENCES - May be used to record other useful information, e.g. - other reference numbers, special handling requirements, routing requirements, etc. 12. AIR/OCEAN PORT OF EMBARKATION - Ocean port/pier, or airport to be used for embarkation of merchandise. 13. EXPORTING CARRIER/ROUTE - Record airline carrier/flight number or vessel name/shipping line to be used for the shipment of merchandise. 14. PACKAGES - Record number of packages, cartons, or containers per description line. 15. QUANTITY - Record total number of units per description line. 16. NET WEIGHT/GROSS WEIGHT - Record total net weight and total gross weight (includes weight of container) in kilograms per description line. 17. DESCRIPTION OF MERCHANDISE - Provide a full description of items shipped, the type of container (carton, box, pack, etc.), the gross weight per container, and the quantity and unit of measure of the merchandise. 18. UNIT PRICE/TOTAL VALUE - Record the unit price of the merchandise per the unit of measure, compute the extended total value of the line. 19. PACKAGE MARKS - Record in this Field, as well as on each package, the package number (e.g. - 1 of 7, 3 of 7, etc.), shippers company name, country of origin (e.g. - made in USA), destination port of entry, package weight in kilograms, package size (length x width x height), and shipper's control number (e.g. - C/I number; optional). 20. MISC. CHARGES - Record any miscellaneous charges which are to be paid for by the customer export transportation, insurance, export packaging, inland freight to pier, etc. 21. CERTIFICATIONS - any certifications or declarations required of the shipper regarding any information recorded on the commercial invoice.
(3).B/L CERTIFICATE 53
DISCRIPTION OF PROFORMA
1. SHIPPER (From) - Enter the company name and address of the shipper (Consignor). 2. POINT OF ORIGIN (At) - Enter the city and state of the actual shipping point. 3. DATE OF SHIPMENT - Enter the date of the shipment; that is, the date the Carrier took control of the merchandise. 4. TRUCK/FREIGHT - Check the truck block if the shipment is to move by truck, or the Freight block if the shipment is to move by rail. 5. SHIPPER'S NUMBER - Enter a unique control number to reference the shipment with the Carrier. 6. CARRIER - Enter the name of the company which will take initial control of the shipment and cause its delivery to the consignee. 7. AGENT'S NUMBER - Enter Carrier's control number, if known or required.
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8. CONSIGNED TO - Enter the full of the final recipient of the shipment, the ultimate consignee, if different than destination, for Carrier notification purposes. 9. DESTINATION - Enter the street address, city, and zip code where the Carrier will make delivery to the Consignee in Field 8. 10. ROUTE - If applicable, enter the route the Carrier will take to the consignee. This Field may also be used to specify docks, warehouses, etc., and to specify any intermediate Carriers. 11. DELIVERING CARRIER - If applicable, specify the carrier which will deliver the shipment to the ultimate consignee at the Destination, but only if different than the Carrier entered in Field 6. 12. VEHICLE/CAR NO. - Enter any vehicle identifying numbers or initials, if applicable. 13. NO. PACKAGES - Enter the total number of packages per line item; if the packages are consolidated on a pallet or in an outer container, note this information on a second line. Ex: 112 PKGS 3 Pall. 14. DESCRIPTION OF SHIPMENT - Enter the description of each line item, noting the type of package (carton, barrel, etc.) and the quantity per package. Since the correct freight classification is essential in describing an item, there must be a separate line item for each different freight classification description. If more than one type of packaging iss used per freight classification, a separate entry must be used for each type of package. Enter any special package markings, special handling requirements, and delivery instructions. Note: For hazardous material items, special provisions must be met in completing this field. 15. WEIGHT - Enter the total gross weight, in pounds, for each line item. For Bulk shipments, the TARE and Net weights should also be referenced in the description field. For package shipments, include the weights of pallets and skids. The total weight of the merchandise should be shown after the last line item, with pallet and weights shown separately. 16. CLASS OR RATE - Enter the 5-digit class (per the Uniform Freight Classification or the National Freight Classification) or a two digit Class Rate (a percentage of the First class 100 rate) per line item. This information may be determined with the Carrier. 17. WITHOUT RECOURSE - Per standard Bill of Lading terms, the shipper is ultimately liable for freight charges, even when the shipment is sent on a collect basis to the consignee. By signing this statement, the shipper is released from the liability of freight charges for collect shipments delivered by the Carrier to the consignee without the Carrier's collecting the freight charges. For prepaid shipments, leave blank. 18. PREPAID SHIPMENTS - Enter "Prepaid" if shipment is to be paid by the Shipper. If this field is left blank, the Carrier will seek to collect the freight charges from the consignee (see field 17). 19. PREPAYMENTS RECEIVED - Carrier enters any payments received in advance from the Shipper for the shipment. 20. CHARGES ADVANCED - Carrier enters any advanced charges for the shipment, if applicable. 21. C.O.D. SHIPMENT - First, check whether the freight charges are prepaid (the Carrier bills the shipper) or collect (the Carrier deducts the freight charges from the amount collected from the Consignee). Second, enter the amount to be collected for the merchandise itself - be sure to include the freight charges. Third, enter any collection fees, if applicable. Enter total charges to be collected by the Carrier.
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22. SHIPMENT DECLARED VALUE - When the weight charged by the Carrier is dependent upon the value of the shipment, the dollar value per unit of measure (ex: $100/pound) must be stated by the Shipper - enter this information in field 14. 23. SHIPPER - Enter the company name of the shipper. 24. SHIPPER'S AGENT - Enter the signature of the individual preparing the shipment for the shipper. 25. CARRIER'S AGENT - The Carrier's agent will sign here prior to taking control of the shipment. 26. PERMANENT ADDRESS - Enter the permanent (business) address of the shipper. This may be the same as for field 1. 27. CERTIFICATION - A signature is required by the Department of Transportation after this statement for all shipments of hazardous material.
(4)ORIGIN CERTIFICATE
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DISCRIPTION OF THE PROFORMA
1. THE UNDERSIGNED - Name of the individual completing and signing the certificate (see Block 13); may be the Exporter or Agent of the Exporter. 2. FOR - The Company name and address of the Exporter (Distributor or Manufacturer) effecting the shipment of merchandise. 3. SHIPPED ON - Name of the vessel, aircraft, rail, or trucking company. May also include vessel number and flag, flight number and flag, rail car number, and truck Pro number. 4. DATE - The date the carrier left the port/terminal for the destination. 5. CONSIGNED TO - The Consignee, as it appears on the Commercial Invoice; may be "To Order of Shipper," or "To Order of (Customer's) Bank, or to any other entity, on the Conditions of Sale and/or the letter of credit. 6. MARKS AND NUMBERS - The marks recorded on each package, including Shipper's Company Name, Country of Origin (i.e. - Made in USA), Destination Port of Entry, and Customer's Company Name; may also include a Shipper's Control Number (i.e. - C/I No.) and the Customer's Import license Number. "Number" refers to the numbering of the packages in the shipment (i.e. - 1 of 30, 2 of 30, etc.).
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7. NO. OF PACKAGES - The total number of packages, cartons, boxes, skids, etc. per description line, including outer packaging, in kilograms. 8. GROSS WEIGHT - Total weight of packages per description line, including outer packaging, in kilograms. 9. NET WEIGHT - Total weight of all packages per description line, excluding outer packaging, but including inner packaging, in kilograms. 10. DESCRIPTION - Full description of items being shipped, the type of containers, the gross weight per container, and the quantity and unit of measure of the merchandise. May also include cross references to Purchase Order or Commercial Invoice number. 11. SWORN BEFORE - Notary Republic seal/signature, and date notarized. 12. DATE - Date Certificate of Origin was prepared and signed. 13. SIGNATURE - The signature of the owner, employee, or agent appearing in Block 1 above. 14. CHAMBER OF COMMERCE - Name of local Chamber of Commerce (and State) certifying the origin of the merchandise. 15. SECRETARY - Authorized signature of the local Chamber of Commerce Secretary and that organization's seal.
(1)
SHIPPER’S EXPORT DECLARATION
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DISCRIPTION OF THE PROFORMA
1. Exporter - The name and address of the principal party responsible for effecting export from the United States. The exporter as named on the Export License. Report only the first five digits of the ZIP code. 2. Exporter Identification Number - The exporter's Internal Revenue Service Employer Identification Number (EIN) or Social Security Number (SSN) if no EIN has been assigned. 3. Related Party Transaction - One between the exporter and the foreign consignee, that is, an export from a Indian business enterprise to a foreign business enterprise or from a Indian business enterprise to a foreign person or business enterprise, when the person owns (directly or indirectly) at any time during the fiscal year, 10 percent or more of the voting securities of the incorporated business enterprise, or an equivalent interest if an unincorporated business enterprise, including a branch. Otherwise, check UNRELATED.
4. Agent of Exporter - The name and address of the duly authorized forwarding agent.
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5. Ultimate Consignee - The name and address of the party actually receiving the merchandise for the designated end use or the party so designated on the validated export license. 6. Intermediate Consignee - The name and address of the party in a foreign country who affects delivery of the merchandise to the ultimate consignee or the party so named on the export license. 7. Exporting Carrier - The name of the carrier transporting the merchandise out of the United States. For vessel shipments, give the vessel's flag also. 8. U.S. Port of Export 9. Method of Transportation - The mode of transport by which the merchandise is exported. Specify by name, i.e., vessel, air, rail, truck, etc. Specify "own power" is applicable. 10. Loading Pier - (For vessel shipments only) The number or name of the pier at which the merchandise is laden aboard the exporting vessel. 11. Containerized - (For vessel shipments only) Cargo originally booked as containerized cargo and that is placed in containers at the operator's option. 12. Point (State) of Origin or Foreign Trade Zone (FTZ) Number 13. Foreign Port of Unloading - (For vessel and air shipments only) The foreign port and country at which the merchandise will be laden from the exporting carrier. 14. Country of Ultimate Destination - The country in which the merchandise is to be consumed, further processed, or manufactured; the final country of destination as known to the exporter at the time of shipment; or the country of ultimate destination as shown on the validated export license. 15. Marks, Numbers, and Kinds of Packages - Marks, numbers, or other identification shown on the packages and the numbers and kinds of packages (boxes, barrels, baskets, etc.). 16. Commodity Description - A sufficient description of the commodity to permit verification of the Schedule B Commodity Number or the description on the validated export license. 17. Commodity Number 18. Gross Shipping Weight - (For vessel and air shipments only) The gross shipping weight in kilograms, including the weight of containers but excluding carrier equipment (Multiply lbs. by 0.4536 to get kilos; round off to whole numbers.).
19. "D" (Domestic) or "F" (Foreign) • • Domestic exports - Merchandise grown, produced, or manufactured (including imported merchandise which has been enhanced in value) in the United States. Foreign exports - merchandise that has entered the United States and is being reexported in the same condition as when imported.
20. Net Quantity the amount in terms of the unit(s) specified in Schedule B with the unit indicated or the unit as specified on the validated export license. (Report whole units.)
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21. Value - Selling price or cost if not sold, including inland freight, insurance, and other charges to U.S. port of export, but excluding unconditional discounts and commissions (nearest whole dollar, omit cents). 22. Export License Number or Symbol - Validated export license number and expiration date or general license symbol. 23. Export Commodity Control Number (ECCN) - (When required). 24. Bill of Lading or Air Waybill Number - The exporting carrier's bill of lading or air waybill number. 25. Date of Exportation - (Not required for vessel and postal shipments) The date of departure or date of clearance, if date of departure is not known. 26. Designation of Agent - Signature of exporter authorizing the named agent to affect the export when such agent does not have power of attorney. 27. Signature - Signature of exporter or authorized agent certifying the truth and accuracy of the information on the SED.
(6)SHIPPER’S LETTER OF INSTRUCTION
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The Shipper's Letter of Instruction is just that - a "letter" from the Shipper instructing the Freight Forwarder how and where to send the export shipment. In preparing this form, the Shipper also fills in most of the information required on the Shipper's Export Declaration, form 7525V (the Freight Forwarder will complete the rest). After the Shipper completes the form, he or she retains the blue shipper's ply and forwards the rest of the form with the shipment to the Freight Forwarder. DISCRIPTION OF THE PROFORMA 1. EXPORTER - the name and address of the principal party responsible for effecting export from India. The exporter as named on the validated export license. Report only the first five digits of the zip code. 2. EXPORTER EIN NUMBER - the exporter's Internal Revenue Service Employer Identification Number (EIN) or Social Security Number (SSN) if no EIN has been assigned. 3. PARTIES TO TRANSACTION - When either the exporter or the foreign consignee owns (directly or indirectly), at any time during the fiscal year, 10 percent or more of the voting securities of the incorporated business, or an equivalent interest if an unincorporated business enterprise, including a branch, the transaction is between RELATED parties. Otherwise the transaction is between UNRELATED parties. 4. ULTIMATE CONSIGNEE - the name and address of the person/company to whom the goods are shipped for the designated end use, or the party so designated on the Export License.
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5. INTERMEDIATE CONSIGNEE - the name and address of the party who affects delivery of the merchandise to the ultimate consignee, or the party so named on the export license. 6. FORWARDING AGENT - The name and address of the duly authorized forwarder acting as agent for the exporter. 7. INLAND CARRIER - see note 2 on form. 8. POINT (STATE) OF ORIGIN OR FTZ NO. – The Indian Postal Service abbreviation of the state in which the merchandise actually starts its journey to the port of export, or (b) the state of origin of the commodity of greatest value, or (c) the state of consolidation, or (d) the Foreign Trade Zone Number for exports leaving an FTZ. 9. COUNTRY OF ULTIMATE DESTINATION - the country in which the merchandise is to be consumed, further processed, or manufactured the final country of destination, as known to the exporter at the time of shipment; or country of ultimate destination, as shown on the validated export license. 10. SHIPPER'S REFERENCE NUMBER - Shipper's reference with freight forwarder. 11. DATE - date shipment sent to forwarder. 12. SHIP VIA -method of shipment required. 13. CONSOLIDATE DIRECT -determines how forwarder is to instruct Carrier to ship goods. Generally, a choice between speed and economy of shipment. 14. D/F - D (domestic exports) - merchandise grown, produced or manufactured (including imported merchandise which has been enhanced in value) in India. F (foreign exports) - merchandise that has entered India and is being re exported in the same condition as when it entered. 15. MARKS, NOS., & KINDS OF PACKAGES - indicate the numbers and kinds of packages (boxes, barrels, and cases) and any descriptive marks, numbers, or other identification shown on the packages. 16. QUANTITY - SCHEDULE B UNIT(S) - the unit(s) specified in the Harmonized Schedule B with the unit indicated, or the unit as specified on the validated export license. 17. SHIPPING WEIGHT - (for vessel and air shipments) the gross shipping weight in kilos, including the weight of containers but excluding carrier equipment. 18. SHIPPING WEIGHT (pounds) - the gross shipping weight in pounds of the commodities being shipped, not including weight of shipping container. 19. CUBIC METERS - length X width X height in meters, not required, but helpful. 20. VALUE (U.S. DOLLARS, OMIT CENTS) - the selling price, or cost if not sold, for the number of items recorded in the quantity field when they were sold by the vendor to the purchaser. 21. HARMONIZED SCHEDULE B DESCRIPTION - a proper identifying description of the commodity as known in the country of production or exportation. This should be sufficient to permit verification of the Harmonized Schedule B Commodity Number, or the description shown on the export license. 22. VALIDATED LICENSE NO./GENERAL LICENSE SYMBOL - Export License number and expiration date or general license symbol.
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23. DULY AUTHORIZED OFFICER - Signature of exporter authorizing the named agent to effect the export when such agent does not have the formal power of attorney. 24. ECCN - (when required) Export Control Commodity Number - the ECCN number of commodities listed on the Commodity Control List (commodities subject to Department of Commerce export controls) in the Export Administration Regulations. 25. SHIPPER MUST CHECK - specifies whether shipper (prepaid) or consignee (collect) will pay freight charges. 26. SPECIAL INSTRUCTIONS - used to inform forwarder of any special instructions, such as a specific carrier to be used, special telex notification, required certifications, etc. 27. SIGNATURES - lift up the top piles of the form and sign the first Export declaration. This certifies to the U.S. government that all information on the form is true and correct. 28. SHIPPER'S INSTRUCTIONS - instructs the forwarder how to dispose of the shipment in the event it proves to be undeliverable abroad. 29. INSURANCE - used when insurance is required, and the shipper wishes to use an insurer chosen by the Forwarder.
(7). PACKING LIST
EXPORTER INVOICE NO. & DATE BUYER’S ORDER NO. & DATE OTHER REFERENCE(S) CONSIGNEE BUYERS (IF OTHER THAN CONSIGNEE) EXPORTER’S REF. NO.
PRE CARRIAGE BY VESSEL/FLIGHT NO. PORT OF DISCHARGE
COUNTRY OF ORIGIN OF COUNTRY OF FINAL GOODS DESTINATION L/C NO, LCA NO. H.S.CODE NO. REGISTRATION NO. T.I.N. NO.
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MARKS & NOS. / NO. & KIND OF PKGS. DISCRIPTION OF GOODS CONTAINER NO.
WEIGH T
QUANTITY
REMARKS
THE QUANTITY,QUALITY,OTHER PARTICULERS AND UNIT PRICE OF MERCHANDISE SUPPLIED ARE STRICTLY IN CONFERMITY WITH
THE GOODS ARE OF INDIAN ORIGIN
ADDRESS OF FINAL DESTINATION WE DECLARE THAT THIS INVOICES SHOS ACTUAL PRICE OF THE GOODS DESCRIBED AND THAT ALL PARTICULARS ARE TRUE AND CORRECT. SIGNATURE & DATE
DISCRIPTION OF THE PACKING LIST PROFORMA
When goods are exported to a country then during final shipment we send a packing list in which all the necessary information is enlisted. As it is shown above it includes following queries: 1). Name of the exporter and reference number 2). Name of thee consignee 3). Invoice number and invoice date 4). Name of the consignee or the person on behalf 5). Country of origin and Country of final destination 6). Carriage information through which goods are to be sent 7). Number of vessels, Container no., kind of packing and disruption of goods 8). Weight and Quantity of the goods being exported 9). Remarks (in case of some specialty) and finally 10). Declaration by ultimate authority.. Packing lists are asked by several fronts
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DOCUMENTS REQUIRED BY DIFFERENT AUTHOROTIES
Following are some of the department authorities and organization to whom an exporter has to deal in order to carry out export effectively. 1. Custom authorities 2. port authorities 3. The Bank 4. licensing authorities 5. Export promotion council 6. The maritime collector or central excise 7. Reserve bank of India 8. ECGC( for export risk insurance)
? TO THE CUSTOM AUTHORITIES: -
Custom authorities are of much importance and they play a very important in letting the goods reach from seller to buyer. Following documents to be submitted to the custom authorities: 1. Shipping Bill 2. Commercial invoice 3. GR-1 form 4. Shipper declaration form 5. Copy of export contract/L/c/Export order 6. Inspection certificate 7. ARE-1 (Heavy Engineering & Electronic Product Items) 8. Export license ? To THE PORT AUTHORITIES:1. Export application 2. Shipping order( only at Chennai)
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? TO THE BANK:Bank act as an intermediary between exporter and importer and also acts on behalf of them. Following are some of the documents, which are to be submitted by the exporter in the Bank. 1. Commercial invoice 2. Bill of lading 3. Insurance policy certificate 4. Bill of Exchange 5. GR-1 Form 6. Bank certificate( 3 copies) Apart from these documents are submitted to bank for: • Packing credit • Medium term credit PACKING CREDIT: • Performa invoice • Copy of L/C MEDIUM TERM CREDIT: • Export contract • L/C or guarantee from the importer
? TO THE LICENSING AUTHORITIES:
1. 2. 3. 4. 5. 6.
Application form for replenshipment license Bank certificate Commercial invoice attested by the bank Application form for cash assistance Stamped receipt Export house certificate
? TO THE EXPORT PROMOTION COUNCIL 1. Application for registration 2. Bank certificate regarding financial soundness
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3. Registration certificate form 4. Membership form ? TO RESERVE BANK OF INDIA Reserve bank of India is the main governing body relating to monetary transaction of export and import. RBI deals with incoming and outgoing of foreign exchange of country. Documents are submitted to RBI forRemittance of commission: 1. Application for registration of the agency agreement for commission 2. Copy of the agency agreement Remittance of foreign exchange for payment of claims: 1. Application form 2. Copy of the invoice 3. Sales contract 4. Bill of lading 5. Inspection report ? TO THE CENTRAL EXCISE 1. Duplicate copy of ARE-1 form AND copy of B/L or S/B
?SWOT ANALYSIS
SWOT analysis of Indian Apparel & Textile Industry
Problems and prospects of India’s clothing industry
India’s clothing firms are not globally competitive in productivity, technology, number of machine per apparel firm and infrastructure. Hence, it is necessary to see the factors which are affecting the growth of India’s clothing industry and government support to remove these obstacles. The productivity is one of the key determinants of export competitiveness (Hashim 2004). The productivity level of India’s major products of garment segments is compared with some of the Asian competitors as shown in Table 3. The data indicates that India’s productivity is very low as compared to Hong Kong, China and Taiwan. This low level of productivity could be due to poor technology, small plant size and inadequate infrastructure. Table 3 indicates that China, Taiwan, and Hon Kong have a higher number of machine per apparel firm in comparison to the Indian firms. Similarly, the Indian firms also have the less investment per machine.
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Per machine investment in India is estimated to be US$ 250 while it is US$ 1,500 in China. It suggests that India is using low level of technology with poor infrastructure. In addition to this, India’s clothing industry was reserved for small scale sector till 2000. The Indian government recognised that the major constraint affected the growth of the clothing industry was restriction on investments by large domestic and foreign companies. Consequently, the Government de-reserved the clothing industry from SSI list in January 1, 2001 to encourage the establishment of large scale garment manufacturing operations (Ministry of Textiles 2001). The National Textile Policy 2000 took several initiatives, including de-reservation, to give impetus to the industry. To facilitate technological advancement, Technology Up-gradation Fund Scheme (TUFS) was started from April 1, 1999 and the Government has extended again the Scheme up to the XIth Five Year Plan (Ministry of Textiles 2008). However, the benefits of the scheme are mostly availed by the textile firms, not by the apparel firms due to lack of awareness among them (Shekhar 2005). In addition to low productivity and poor technology, inadequate infrastructure has severely affected the export of clothing firms. One of the ways the Government has tried to improve the infrastructure is to create apparel parks for boosting clothing export.
Conclusion
During the MFA phase-out and post-phase-out period, share of clothing export has exceeded the share of textiles export in the world. Comparing India to China, we observe that China exported the textiles and clothing in the proportion of 33:67 while corresponding proportion in India was 50:50 during this period.
We observe that the growth of India’s clothing export was slow and stagnant during 1994 - 2004 which may be due to low productivity, poor technology and less number of machines per apparel firms. The government recognized this fact and adopted several initiatives, including de-reservation of the industry from SSI list, extension of TUFS and setting up integrated textile parks. These initiatives along with removal of QRs in the post-MFA regime would help in enlarging the scope of India’s production and export of clothing. The paper argues that boosting up of clothing export in India is more desirable than that of textiles from the point of view of value addition and employment generation.
The Indian Textile industry adds 14% to the industrial production and 8% to the GDP of India. It provides employment to 38 million people and thus, is the second largest employment provider after agriculture. The Indian Apparel & Textile Industry is one of the largest sources of foreign exchange flow into the country with the apparel exports accounting for almost 21% of the total exports of the country. A systematic SWOT analysis of the textile and apparel industry indicates the following:1. STRENGTH I. Raw material base
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India has high self sufficiency for raw material particularly natural fibres. India’s cotton crop is the third largest in the world. Indian textile Industry produces and handles all types of fibres. II. Labour Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian Apparel and textile Industry. III. Flexibility The small size of manufacturing which is predominant in the apparel industry allows for greater flexibility to service smaller and specialized orders. IV. Rich Heritage The cultural diversity and rich heritage of the country offers good inspiration base for designers. V. Domestic market Natural demand drivers including rising income levels, increasing urbanisation and growth of the purchasing population drive domestic demand. 2. WEAKNESS I. More dependence on cotton Due to over specialization in cotton, the bulk of the international market is missed out, synthetic products in India are expensive and fabric required for items like swimsuit, sky-wear and industrial apparel is relatively unavailable. II. Spinning Sector Spinning sector lacks modernization and there is a need of introducing new technology. III. Weaving Sector India has relatively less number of shuttle-less loom. IV. Fabric Processing Processing is the weakest link in the Indian textile value chain, adversely affecting its ability to compete in exports. 70
V. Poor Infrastructure High power costs and long export lead times are eroding India’s export competitiveness across the textile chain. VI. Low Labour Productivity Productivity levels for manufacturing various apparel items are far lower in India in comparison with its competitors. OTHER WEAKNESSSES VII. Less attention on man power training VIII. Poor quality standards IX. Distance of the potential market X. Lower average consumption in domestic market XI. Lack of professionalism and integration of supply chain XII. Dependence on quota system XIII. Very low investment on R&D XIV. Limited exploitation of economies of scale 3. OPPORTUNITIES I. Growing Industry World textile trade would continue to grow at a rate of 3-4% to reach $200-210 billon by 2010. II. Market access through bilateral negotiation The trade is growing between regional trade blocs due to bilateral agreements between participating countries. III. Integration of Information technology ‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in apparel manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast, easy, transparent and reduces duplication. IV. Opportunity in High Value Items 71
India has the opportunity to increase its UVR’s (Unit Value Realization) through moving up the value chain by producing value added products and by producing more and more technologically superior products. 4. THREATS I. Decreasing Fashion Cycle There has been an increase in seasons per year which has resulted in shortening of the fashion cycle. II. Formation of Trading Blocks Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world trade scenario. Existence of bilateral agreements would result in significant disadvantage for Indian exports. III. Phasing out of Quotas India will have to open its protected domestic market for foreign players thus domestic market will suffer.
Accounting Treatment Related to ExportImport
Export L/C Process Parties Documents Accounting Treatment Vouchers of Export L/C
EXPORT SECTION Payment for goods exported from Bangladesh should be received through an Authorized Dealer in freely convertible foreign currency or in Bangladesh Taka from a Non-Resident Account. PARTIES TO EXPORT TRANSACTIONS ? L/C Issuing Bank ? Importer ? L/C Advising Bank ? Exporter ? Confirming Bank (If any) ? Negotiating Bank ? The paying/Reimbursing
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Export L/C Export L/Cs is issued by a foreign bank favoring Bangladeshi exports through our banks having correspondent relationship with them. SERVICES PROVIDED BY BANKS AGAINST EXPORT L/C A) Advising of export L/C: The advising bank getting the import L/C sent by the issuing bank located abroad will advise the L/C to the beneficiary without any engagement or responsibly on their part. It will see the following only: I. Authenticity of L/C (Test agreed in case of Telex L/C and signature verified in case (air mail L/C). II. Merchandise specified in the L/C is permissible and clauses incorporated in the L/C are not against country’s regulations. B) Add Confirmation of Export L/C: Bank may add additional confirmation to export L/C where there is specific instruction from the L/ C issuing bank to do so. Additional confirmation of L/C gives the seller a double assurance of payment. Bank’s requirement of adding confirmation: I. Issuing Bank should be a reputed bank. II. Credit line/Arrangement with the L/C issuing bank. III. L/C clause are to be acceptable to confirming bank IV. Approval from the competent authority for adding confirmation of export L/C. V. Confirmation charges are to be recovered as per rules. C) Negotiating of Export L/C: Documents/papers to be submitted by exporter to bank for negotiation/collection against export L/C. the exporter submit the documents to bank as per requirement of bank. List of export documents is as follows: I. Export L/C II. EXP Form III. Bill of exchange IV. Invoice V. Bill of Lading
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VI. Packing List VII. Certificate of Origin VIII. Inspection Certificate IX. Insurance Document X. Weight List XI. Any other documents as per L/C Bank must scrutinize all the documents stipulated in the credit with reasonable care to ascertain whether they confirm with the terms and conditions or not. If the documents are drawn strictly in terms of the credit, the bank may negotiate and pay the value of export bill to the exporter at: ? OD buying rate (Sight Draft) ? Usance rate (For DA Bill) ? Appropriate rate for DP Bill Accounting Treatment After adjustment of pre-shipment credit: FBP (foreign bill purchased) A/C Party’s A/C Dr. Cr.
REALIZATION OF EXPORT PROCEEDS: On receipt of credit of the export bill from the foreign correspondent, banks realize the bill at specified rate and following vouchers are passed. H/O (ID) --------------Dr. FBP A/C----------------Cr. Income A/C on exchange earning ------Cr. COLLECTION DOCUMENTS: Export documents not covered by and L/C documents not drawn in terms of the credit are accepted on collection basis with the shipper authority at their documents are forwarded through foreign correspondents to the drawee for payment or acceptance. After realization of the bills on collection, export is paid appropriate rate after adjustment of liabilities on his account (if any)
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Voucher to be passed: Lodgment (Accepted for sending on collection): FBPL A/C FBPC A/C Dr. Cr.
REALIZATION: (REVERSE OF CONTRA VOUCHER) FDPC A/C FBPL A/C H/O (ID) A/C Party’s A/C Income on com/charge Dr. Cr. Dr. Cr. Cr.
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doc_847461044.doc
EXPORT PROCEDURE & DOCUMENTATION AND ACCOUNTING TREAMENT RELATED TO EXPORT AND IMPORT
ON
S.A.M. APPARELS PVT. LTD
Women Wear Exporter & Manufacturer
UNDER EXPERT GUIDANCE OF:
KRIPAL SINGH BISHT MAURYA
EXPORT MANAGER TRADE S.A.M.APPARELS PVT LTD. A-1, SECTOR-64, NOIDA, INDIA.
BY: RAM BARAN
MASTER OF FOREIGN BANARAS HINDU UNIVERSITY VARANASI, INDIA.
1
SUMMER TRAINING PROJECT REPORT ON
EXPORT PROCEDURE & DOCUMENTATION AND ITS ACCOUNTING TREATMENT RELATED TO EXPORT IN S.A.M.APPARELS PVT. LIMITED “ONE OF THE LARGEST WOMEN WEAR
MANUFACTURER & EXPORTER
MASTER OF FOREIGN TRADE
UNDER THE GUIDENCE 0F SUPERVISION OF
UNDER
Prof. …………………… SINGH BISHT COORDINATOR (MFT)
Mr. KRIPAL
SR MANAGER (EXPORT/IMPORT) BANARAS HINDU UNIVERSITY SAM APPARELS PVT. LTD. NOIDA
2
TO WHOM IT MAY CONCERN
THIS IS TO CERTIFY THAT MR. RAM BARAN MAURYA, A STUDENT OF BANARAS HINDU UNIVERSITY FOR FULFILLMENT OF THE COURSE MASTER OF FOREIGN TRADE HAS SUCCESFULLY DONE HIS PROJECT ON EXPORT PROCEDURE & DOCUMENTATION AT SAM APPARELS PVT. LTD.UNDER MY GUIDANCE FROM 15ST MAY 2011 TO 30TH JUNE 2011. DURING THE PERIOD, I FOUND HIM SINCERE AND HARD WORKING. I DECLARE THAT THE WORK DONE BY HIM IS HIS OWN AND ORIGINAL TO THE BEST OF MY KNOWLEDGE & HAS NOT BEEN PIRATED FROM ANYWHERE. I APPRECIATE HIS SPLENDID AND ERNEST JOB. AND I WISH HIM ALL SUCCESS IN LIFE.
KRIP AL SINGH BISHT
SR MANAGER (EXPORT/IMPORT GROUP)
DECLARATION
3
“I, RB MAURYA declare that the project that I have successfully completed on the topic Export Procedure & Documentation and its Accounting treatment related to Export in S.A.M. APPARELS P .Pvt. Ltd. for the partial fulfillment of the requirement for the award of Master of Foreign Trade is my original work to the best of my knowledge and the report has not been submitted for any other award by anyone before this. The fact & figures are mentioned on the basis of my own effort of collection, recording and analysis of primary and secondary data through exploratory, descriptive and casual research.”
RB Maurya Master of Foreign Trade
PREFACE
The textile industry is primarily concerned with the design, manufacture, trade and distribution of fabrics. Textile manufacturing has come a long way, from domestic production
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using wool, cotton and flax in historical times to organized industry using spinning wheels and handlooms in the 18th Century to current day, leveraging modern techniques, electronics and innovation in man-made fibres to produce almost any type of cloth or design a person could desire. By the late 20th Century, the industry in the developed world had gotten a bad reputation, due to widespread exploitation of immigrants in illegal "sweat shops" in countries across South East Asia, the Indian subcontinent and Central America, all of whom were being paid less than minimum wages. As a result of this influx of cheap labour options and globalization in general, manufacturing has been mostly outsourced to overseas labour markets. With its low cost labour base, China has come to dominate the global textile industry, followed by India and Mexico. Meanwhile, the textile industry in areas historically associated with the trade, such as London, New York and Milan, have shifted focus to more refined associated industries such as fashion design, fashion modelling and retail. Performance The textile sector is among India’s largest foreign exchange earners, with a market value of ~$50 billion. After the termination of the Multi-Fibre Arrangement (MFA) in January 2005, the industry saw strong growth and currently, it directly and indirectly employs over 35 million people. Indian textiles contribute a significant proportion of industrial production (15%) and exports (20%) with readymade garments and carpets comprising the bulk of exports. Cotton remains the most significant raw material and India is the second largest producer of the fibre in the world. Other fibres used are silk, jute, wool, and man-made fibres. Specialty fabrics include woolbased Angora and Pashmina and Tasser silk etc. Exports have always remained robust, but now, the domestic textile market is also witnessing a strong upward trajectory due to the improving economic position of the country. The burgeoning middle income segment, increasing disposable
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income of the young elite and rapid proliferation of organized retail are all contributing to this phenomenon. The Indian textile industry can be divided into the organized and unorganized sectors. The unorganized sector is the dominant part of this industry, mainly utilizing the traditional processes of weaving or spinning, which are labour intensive in nature. This sector is largely decentralized and employs the maximum people in the industry. There are close to 2,000 mills in this sector with an installed capacity of almost 40 million spindles as per Ministry of textile records. The organized sector mean while, is focused on capital intensive production processes, with sophisticated mills utilizing technologically advanced machineries. This sector has witnessed a lot of flux over the past decade due to changes in the structural set-up of the industry. Growth Potential In India, textile job openings primarily fall into the categories of textile design jobs, textile pattern makers, fabric and apparel jobs and knitting jobs. Other related jobs for professionals include those with a background in marketing, process development, finance and administration, packaging as well as technicians. There are some great opportunities to be found within the textile fabric manufacturing organizations and the gamut of private companies which are engaged in producing finished textile products both in apparel and home furnishing. Prominent employers include the BK Birla group, Bombay Dyeing, Grasim Industries, JCT Limited, Lakshmi Machine Works and the Mysore Silk Factory amongst others. Future Prospects Most professionals in the industry can expect to work a conventional standard 35 to 40 hour a week. However, the illicit, lower grade workers involved in laborious manual work and particularly shoe and leather workers, laundry, tailors, dressmakers and retail staff usually need to work evenings and weekends.
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For ambitious young graduates with strong skill base and genuine interest, this industry offers a great range of opportunities for development and progress. It is expected that India will maintain its position as one of the leaders in this field for the coming decade, and the industry is poised to move from strength to strength. Hence, candidates will do well do ride the wave now while the prospects look very promising.
Textile & clothing exports: Trends & prospects
The export of world textiles and clothing (T&C) has grown through quantitative restrictions of Multi Fibre Arrangement (MFA) from 1974 to 1994. These restrictions were phased out during 1994 - 2004 in four phases. Now, with the opening of market, since January 1, 2005, the T&C industry has been fully integrated into the World Trade Organisation (WTO).
In this scenario, the world T&C export has grown from US$ 272.43 billion (bn) in 1994 to US$ 530 bn in 2006, registering almost a two-fold rise. It is observed that the export of clothing has exceeded the textile export from 1994 onwards. China, a leading exporter of T&C, exported the textile and clothing in the proportion of 33:67 during 1994 - 2006. In 2006, its export of clothing was US$ 95.39 bn as against only US$ 48.68 bn export of textile. It may be mentioned that as compared to textile, export of clothing is more desirable for the point of view of value addition and employment generation. China has started the strategy to accelerate the growth of clothing production and export much earlier than India. During 1994 - 2006, against the two-third share of clothing in total T&C export of China, India’s share was only 50 per cent. It is significant to note that during the MFA phase-out period, India’s share in the world export of clothing declined from 2.63% in 1994 to 2.55% in 2004;Whereas its share in the world textile export rose from 2.91% in 1994 to 3.58% in 2004. During 1994 - 2006, China has emerged as one of the leading clothing exporters in the world, while India could not improve its share in the global market. Joshi et al (2005) finds that Indian clothing firms are less competitive due to low productivity, low R&D, poor technology and non availability of finishing facilities. Roy (2005) also reveals that India’s clothing products have less advantage than China due to poor quality of fabrics and low productivity. Hashim (2004) finds a negative growth in the total factor productivity of Indian garment industry which is mainly due to outdated technology and diseconomies of scale. Rangrajan (2005) observes that India’s power cost, steam cost, financial cost are higher and, productivity and technology are lower than those of China, thus hampering the export growth of Indian T&C. Even India’s T&C export failed to grow after the dismantling of quota system (Times of India, March 1, 2008). Keeping this in view, this paper examines the trend in the T&C exports, assesses the future prospects of India’s T&C exports, and also discusses competitiveness of India’s apparel industry in terms of productivity, technology, number of machine per firm and infrastructures along with the Government role in supporting the industry.
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Global exports in textiles and clothing
The world export of T&C, which was US$ 273 bn in 1994, increased to US$ 530 bn in 2006, registering nearly a two-fold rise. However, the export of clothing grew faster than that of textile (Figure 1). During this period, the former increased 2.2 times, while the later increased only 1.7 times. The share of clothing in the total T&C export significantly increased from 51.46% in 1994 to 58.68% in 2006. As is depicted by Figure 1, during 1994 - 2006, the gap between the amount of export of clothing and textiles has steadily widened, especially after 2001. It is also observed that the clothing export has started exceeding the textiles export from 1994 onwards. In 2006, the world clothing export was US$ 311 billion, and as against it the textile export was only US$ 219 billion. Fig 1 The regional flow of the T&C export shows that China is the leading world exporter whose clothing export share has immensely increased from 4.0% in 1980 to 30.6% in 2006. The other major exporters are EU (union of 25 countries), Hong Kong, Turkey, India, and Bangladesh. It is evident from the Table 1 that the share of EU in the world export of clothing has significantly declined from 42.0% in 1980 to 26.3% in 2006.While the shares of some developing countries such as China, Turkey, Bangladesh, India, Mexico, and Indonesia among others, have increased (Table 1). For instance, share of India’s clothing export has increased from 1.7% in 1980 to 3.3% in 2006.
Table 1: World’s Leading Textile and Clothing Exporters Leading Exporters of Clothing % Share in world export 1980 China EU (25) Hong Kong, China Turkey India Bangladesh Mexico Indonesia US Viet Nam Source : WTO Trade Statistics 4.0 42.0 12.3 0.3 1.7 0.0 0.0 0.2 3.1 ... 1990 8.9 37.7 14.2 3.1 2.3 0.6 0.5 1.5 2.4 ... 2000 18.2 26.9 12.2 3.3 3.1 2.1 4.4 2.4 4.4 0.9 2006 30.6 26.8 9.1 3.8 3.3 2.8 2.0 1.8 1.6 1.7 Leading Exporters Textile EU (25) China Hong China US Korea, Taipei, Chinese India Turkey Pakistan Japan Kong, of % Share in world export 1980 49.4 4.6 3.2 6.8 4.0 3.2 2.4 0.6 1.6 9.3 1990 48.7 6.9 7.9 4.8 5.8 5.9 2.1 1.4 2.6 5.6 2000 35.6 10.2 8.5 6.9 8.0 7.5 3.8 2.3 2.9 4.4 2006 32.6 22.3 6.4 5.8 4.6 4.5 4.3 3.5 3.4 3.2
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Table 1 also shows the world leading exporters of textile, in which EU is the largest exporter, followed by China, Hong Kong, USA, Korea and India. China is the second largest exporter after EU. Its share in the textile export has increased from 10.2% in 2000 to 22.3% in 2006 with an annual growth of 20%. However, India’s share in textile export marginally declined from 2.4% in 1980 to 2.1% in 1990; Thereafter it rose to 3.8% in 2000 and further to 4.3% in 2006. Comparing trends in India’s export of T&C to that of China, we observe that in China, the export of clothing grew faster than that of textile while in India, it is just the reverse. Currently, India’s share in the world export of textile is higher than that of clothing, as is evident from the information given in Table 1.
India’s T&C export: MFA phase-out and postMFA period
India’s T&C industry grew under MFA quantitative restrictions (QRs) during 1974 - 1994. The QRs were removed in four phases during 1994 - 2004. India’s T&C export rose from US$ 7.3 bn in 1994 to US$ 13.63 bn in 2004. During this period, India’s share in world textiles export increased from 2.63% in 1994 to 3.54% in 2004, whereas share of clothing export decelerated from 2.63% in 1994 to 2.55% in 2004. From Table 2, it is observed that India’s share in T&C export declined in the year 1995, 1998, 2001 and 2004 which were the MFA phase I, II, III and IV out years. This indicates that India’s T&C industry has not benefited from removal of quota restrictions. On the other hand, China’s exports of T&C increased from US$ 35.55 bn in 1994 to US$ 95.28 bn in 2004. Except for 1996 and 1998 when China’s share in T&C export declined, during the entire phase-out and post-phase-out period, its T&C export grew immensely. It indicates that China has used the opportunity of removal of quota restrictions due to which its textile and clothing export increased 282% and 260%, respectively.
Table-2: India’s share of Textile and Clothing Export in World T&C Export Textile Export Year World bn) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 133 152 153 156 150 146 159 149 156 175 196 205 219 (US$ India (% Share) 2.91 2.86 3.23 3.37 3.04 3.48 3.78 3.6 3.87 3.92 3.58 4.13 4.27 China (% Share) 8.98 9.14 7.93 8.88 8.55 8.92 10.17 11.27 13.19 15.41 17.1 20.01 22.27 Clothing Export World (US$ bn) 141 158 166 178 186 185 198 194 206 234 261 278 311 India (% Share) 2.63 2.6 2.54 2.45 2.57 2.79 3.12 2.83 2.93 2.83 2.55 3.31 3.27 China (% Share) 16.86 15.19 15.07 17.91 16.16 16.29 18.21 18.91 20.03 22.24 23.74 26.68 30.63 Total T&C Export India (US$ bn) 7.53 8.47 9.15 9.59 9.34 10.24 12.18 10.86 12.07 13.47 13.64 17.67 19.52 China (US$ bn) 35.55 37.97 37.15 45.63 42.87 43.12 52.21 53.48 61.86 78.96 95.28 115.21 144.07
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Source: Authors calculation, data from World Trade Organization, values at current price, bn = Billion, T&C= Textile & Clothing. http://stat.wto.org Table 2 In the post MFA period, the world T&C export increased from US$ 456.11 bn in 2004 to US$ 530 bn in 2006, in which the textile export grew 4.9% in 2005 and 6.5% in 2006 and clothing export grew 6.6% in 2005 and 12% in 2006. In 2006, China is the leading exporter in clothing and second largest exporter in textiles, its textile export has increased 22.79% in 2005 and 18.5% in 2006, and clothing export grew 19.8% in 2005 and 28.6% in 2006. The analysis indicates that China’s growth in the T&C export was higher than the world T&C export. It could be due to the artificial exchange rate and also proactive steps taken by the Chinese Government in last 20 years (Textile Magazine, June 2007). Roy (2005) also points out that the China’s trade practices are currency manipulation, export subsidies, free capital (US government reported that up to 50% of government loans to Chinese business were never repaid), and direct government subsides to the textile industry. In the post MFA period, India’s T&C export has increased from US$ 13.64 bn in 2004 to US$ 19.52 bn in 2006, in which textile export rose by 20.68% in 2005 and 10.28% in 2006, and clothing export grew by 38.9% in 2005 and 10.6% in 2006. In the post MFA period, India’s clothing export rose from US$ 6.63 bn in 2004 to US$ 10.19 bn in 2006; exceeding the US$ 9.33 bn textile export achieved in 2006 as shown in the Figure 2. India’s T&C export shows significant growth in 2005 but its growth declined in 2006. The Ministry of Textiles (2008) has reported the decline in India’s T&C export in the year 2006 - 2007 over the previous year which is due to appreciation of rupee against dollar and also recession in the US market. Recently an article in Times of India (March 1, 2008) shows that India’s T&C export failed to grow in the post MFA period while neighboring China marched ahead. In the post MFA period, China has also exported more clothing than textile. Figure 3 shows proportion of textile and clothing in the India’s and China’s T&C export. In 1994, the world has exported textile and clothing in the proportion 48:52 and the proportion changed to 41:59 in 2006. It indicates that share of clothing in the total T&C export has increased during 1994 - 2006. In this scenario, China exported 33:67 textile and clothing, whereas the corresponding ratio in India was 50:50. In the year 2006, China made US$ 48.68 bn export of textiles and US$ 95.39 bn export of clothing; as against India made US$9.39 bn export of textile and US$ 10.13 bn export of clothing. It suggests that China has always emphasised on clothing export than the textile export. Since the export in clothing reflects the value addition and integration of value chain in textile and clothing, increasing share of clothing in the total T&C export of China is quite beneficial to China, especially in generating productive employment for the workers. Till the end of MFA, India has exported textile and clothing equally and in 2006, it has exported 48% textile and 52% clothing. It indicates that India has also started exporting larger quantity of clothing than textile in the post-MFA period.
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The National Textile Policy 2000 has set a target of US$ 50 bn export of T&C by 2010, of which garment export will be of US$ 25 bn. Given the large size of the domestic markets, India should use this opportunity to increase the capacity and productivity of integrated textile and clothing industry.
With the advent of development in management and technology a lot of significant changes have been taking place in the industrial sector. On the canvas of Indian economy Garments industry occupies a prominent place Due to its deep forward and backward linkage with several key segment of the economy. Garments industry has a strong multiplier effect and is capable of being the driver of economic growth a second transportation system play a pivotal role in the country’s rapid economic and industrial development. The well developed Indian Garments industry ably fulfills this catalytic role by producing a wide variety of Fashions. The Garments industry is under pressure to perform extremely fast in a flexible way. Both factors are driven, On the one hand by an increasing demand of modern stylish garments for special purpose. On the other hand, by tightening competition on globalize market. Product life cycles have become shorter. Indian Garments industry are highly cost competitive even at lower volumes due to, 1- Better Quality 2- Low cost The Garments sector in India is following the footsteps of Japanese system of manufacturing. They have adopted following important means of productivity enhancement in Garments industries. ? TQM ?TPM ?Production system
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The industry like SUPERIOR INDIA EXPORTS, Aarvee Denims & Exports, Ginni Filaments Ltd BL International, Orient Craft etc are steadly adopting the of quality improvement and new Design to boost their productivity and to produce component of high quality of standard. In fact cost of productivity is our key differentiator wiz a wiz competition from other lower cost economy. To sustain the competitive environment the companies are adopting the way and techniques of JIT (just in time).
? Indian Garments companies have proven capability to
supply on JIT system out of warehouse situated near the customer. ? Most Indian companies have arrangement with major logistic providers for JIT supplies. ? Adequate warehousing support and onsite engineering support is the requirement for today
METHODOLOGY
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This can be termed as method used to undergo at a particular project. This was not as research project that can be completed by using the method of questionnaires. It is an experience based project and here methodology regarding this project can be termed as the training undergone in SAM APPARELS PVT. LTD. I tried to contact every employee from top to bottom level management, who helped me lot. And the knowledge given there, regarding export procedure and documentation which was only possible by undergoing training. Although true picture of the export procedure, documentation and marketing in foreign country can be only obtained by visiting a particular relevant country. But as this was not possible best effort have been made to collect all relevant information within constraints.
The methodology of data collection is based on primary as well as secondary data. ? Primary Data: it’s a kind of original data obtained by researcher directly from subject through observation, survey and interview. The following sources helped me lot to obtain primary data regarding organizational activity • Personal interaction with Internship Site Supervisor.
•
Discussion with other officials. information to which researcher needs to ensure the reliability. I have acquired secondary data from following sources.
? Secondary Data: such data are collected from published
•
Company’s Website, Company’s Magazines, past year data and other available records & reports.
OBJECTIVE
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The objective of this project is to study the process of export procedures and documentation which plays vital role in international market & trade and incentives given by government to promote Indian Garments Export: • To know processes involved in export. • To study the activities undertaken by the company right from the time there is query from the overseas buyer.
•
To have firsthand knowledge of the Documents required for SAPL ’s export. To analyze the current situation of SAPL ’s export.
•
• To know the various types of documents required for export. • To determine logistics cost reduction techniques. The project studies the Export Procedure and Documentation at S.A.M Apparels Pvt. Limited. It is an attempt to study the activities undertaken by the company right from the time there is an order from overseas buyers followed by documentation process, product packing, labeling and dispatch of consignment. Project also deals with policies and relaxations given to Garments Industries in India. It also studies the current status of the Company’s Export. The Documentation takes place in two stages i.e. Pre shipment Documentation and Post shipment documentation. These documents are prepared and sent to SAPL after the order is shipped. Project also deals in brief with Supply Chain Management in S.A.M. Apparels Pvt. Limited where main focus will be on Logistics & its Cost Reduction techniques. This project also studies the potential for export and also discusses the export performance of S.A.P.L.
CONTENTS:
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1. INDUSTRIAL PROFILE 2. COMPANY PROFILE -FOUNDATION OF SAPL -CORPORATE PROFILE -CORPORATE PHILOSOPHY - S.A.P.L.PRODUCT - LANDMARKS OF S.A.P.L. 3. ABOUT S.A.M. APPARELS. PVT. LTD. - SAPL PROFILE
-BRIEF INFO ABOUT PACKING, LABELING, SHIPMENT & FRIEGHT FORWARDER -HOW TO INITIATE EXPORT IN COMMON -EXPORT PROCEDURE AT SAPL -SUMMARY OF EXPORT PROCESS -EXPORT ANALYSIS 4. INCOTERMS 5. DOCUMENTATION -IMPORTANT DOCUMENTS REQUIRED IN EX-PROCESS - FLOW OF DOCUMENTS AT SAPL -DOCUMENTS’ SAMPLE - DOX REQUIRED BY DIFFERENT AUTHOROTIES 6. SWOT ANALYSIS 7. ANNEXURE
PROJECT: EXPORT PROCEDURE
Introduction
The garment and apparel industry involves advertising, designing and selling of fashionable clothes. Each outfit fabricated has a specific theme, purpose and target market of its own. For classifying the upcoming trends, apparel world connects with the designers and marketers who keeps track of all the essential requirement of consumers. The art and work related with the designers is not only restricted with the designing of clothes but also broadens to fashion accessories
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like shoes, bags, jewelry and many more. The interest in fashion apparel is on endless rise, accordingly the concerned opportunities and competition are there. As the apparel industry is growing more and more, there is an increasing need for much specialized and educated staff in the apparel world. Major drives of Apparel world: The two main driving factors affecting garment apparel world are end user tastes and relative manufacturing costs. Apart from this, an apparel organization depends upon its operational efficiency and its ability to catch deals with more clothing marketers comprising clothing wholesale and retail sector. How does Apparel Industry works? For effective functioning, Apparel industry requires versatile skills as well as equipments. Usually most of garment manufacturers specialize in fabricating 1 or 2 forms of outfits. Also, the Integrated manufacturers scheme and make garments in their own manufacturing plants and market their own clothing brands. Apparel manufacturing is one of the most sought after businesses today. With new fabrics, designers, technology coming up in the market, there is tremendous scope of further growth and advancements in the Apparel Industry.
THE COMPANY PROFILE FOUNDATION OF S.A.M. APPARELS PVT. LTD. Mukesh Sharma " In the world of Garments, S.A.M Overseas has a reputation of being a leading manufacturer & exporter of Ladies garments like Tops, Dresses, Blouse, Skirts, Camisoles. since its inception in 1998. This has resulted in the start of the start of the home furnishing business covering kitchen linen, Table Linen, Bed Linen, Cushion Covers, Quilts, Curtains etc. Due to international quality and highly competitive rates we have a strong base in domestic as well as international market.
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CORPORATE PROFILE
SAPL PRODUCTS
THE GROWING WORLD OF S.A.P.L.PRODUCTS, FOR Womens Wear
Ladies Garments Ladies Garments
Ladies Garments
Ladies Ladies Garments Garments
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ABOUT S.A.M. APPARELS PVT. LTD.
S. A. M. APPARELS PVT. LTD.
Company Profile
Business Type Capital in Dollars Export Percentage Primary Competitive Advantages No of Staff Year of Establishment Export Markets Investment on Manufacturing Equipment OEM Service Provided No of Designers Credit Rated Product Range Exporter , Manufacturer US $ 50 Million 100%
Impeccable Quality, Prompt Delivery, Competitive Price
1800 1998
U.S.A, U.K., Spain, Netherland, France, West Asia Rs 30.75 Crores
No 2 Yes
Kitchen linen, Table linen, Bed covers, Cushion covers, Quilts, Curtains, Rugs, Ladies garments as Tops, Dresses, Blouse, Skirts, Camisoles.
SAPL IS COMMITTED TO:
Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of SAPL products, focusing on serving our customer where we can build long term relationships by raising their lifestyle through performance excellence, proactive design & innovative technology. Our innovative solutions will always exceed the changing needs of our customers and provide value added Product. Build the Winning Team with capabilities for success, thriving in a climate for action and delivering results. Our employees are the most valuable assets and we intend to develop them to achieve international level of professionalism with progressive
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career development. As a good corporate citizen, we will conduct our business ethically and socially in a responsible manner with concerns for the environment. Grow through continuously innovating our business processes for creating value and knowledge across our customers thereby earning the loyalty of our partners & increasing our stakeholder value. CORE COMPETENCIES Customer #1 S.A.P.L .put customers first in everything we do. We take decisions keeping the customer in mind. Challenging Spirit
SAPL strive for excellence in everything we do and in the quality of goods & services we provide. We work hard to achieve what we commit & achieve results faster than our competitors and we never give up.
Team-work We work cohesively with our colleagues as a multi-cultural team built on trust, respect, understanding & mutual cooperation. Everyone's contribution is equally important for our success. Frank & Fair Organization We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen to others and participate in healthy & frank discussions to achieve the organization's goals.
PROJECT
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EXPORT PROCEDURE
IMPORTANT CONTANTS INVOLVED IN EXPORT PROCEDURE When shipping a product overseas, the exporter must be aware of packing, labeling, documentation, and insurance requirements. It is important that exporters ensure that the merchandise is:
• • •
•
Packed correctly so that it arrives in good condition; Labeled correctly to ensure that the goods are handled properly and arrive on time at the right place; Documented correctly to meet U.S. and foreign government requirements, as well as proper collection standards; and Insured against damage, loss, pilferage and delay.
Most exporters rely on an international freight forwarder to perform these services because of the multitude of considerations involved in physically exporting goods.
FREIGHT FORWARDERS
An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade. Export freight forwarders are licensed by the International Air Transport Association (IATA) to handle air freight and the Federal Maritime Commission to handle ocean freight. Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their
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services is a legitimate export cost that should be included in the price charged to the customer. Once the order is ready for shipment, freight forwarders should be review all documents to ensure that everything is in order. This is of particular importance with letter of credit payment terms. They may also prepare the bill of lading and any special required documentation. After shipment, they can route the documents to the seller, the buyer, or to a paying bank. Freight forwarders can also make arrangements with customs brokers overseas to ensure that the goods comply with customs export documentation regulations. A customs broker is an individual or company that is licensed to transact customs business on behalf of others. Customs business is limited to those activities involving transactions related to the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.
SHIPPING
The handling of transportation is similar for domestic and export orders. Export marks are added to the standard information on a domestic bill of lading. These marks show the name of the exporting carrier and the latest allowed arrival date at the port of export. Instructions for the inland carrier to notify the international freight forwarder by telephone upon arrival should also be included. Exporters may find it useful to consult with a freight forwarder when determining the method of international shipping. Since carriers are often used for large and bulky shipments, the exporter should reserve space on the carrier well before actual shipment date. This reservation is called the booking contract. International shipments are increasingly made on a through bill of lading under a multimodal contract. The multimodal transit operator (frequently one of the transporters) takes charge of and responsibility for the entire movement from factory to final destination. The cost of the shipment, the delivery schedule, and the accessibility to the shipped product by the foreign buyer are all
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factors to consider when determining the method of international shipping. Although air carriers can be more expensive, their cost may be offset by lower domestic shipping costs (for example, using a local airport instead of a coastal seaport) and quicker delivery times. These factors may give the SAPL exporter an edge over other competitors. Before shipping, the Company should be sure to check with the foreign buyer about the destination of the goods. Buyers often want the goods to be shipped to a free-trade zone or a free port where they are exempt from import duties
INSURANCE
Damaging weather conditions, rough handling by carriers, and other common hazards to cargo make insurance an important protection for exporters. If the terms of sale make the exporter responsible for insurance, the exporter should either obtain its own policy or insure the cargo under a freight forwarders policy for a fee. If the terms of sale make the foreign buyer responsible, the exporter should not assume (or even take the buyer's word) that adequate insurance has been obtained. If the buyer neglects to obtain adequate coverage, damage to the cargo may cause a major financial loss to the exporter. Shipments by sea are covered by marine cargo insurance..Air shipments may also be covered by marine cargo insurance or insurance may be purchased from the air carrier. Export shipments are usually insured against loss, damage, and delay in transit by cargo insurance. Carrier liability is frequently limited by international agreements. Additionally, the coverage is substantially different from domestic coverage. Arrangements for insurance may be made by either the buyer or the seller, in accordance with the terms of sale. Exporters are advised to consult with international insurance carriers or freight forwarders for more information. Although sellers and buyers can agree to different components, coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.
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HOW EXPORT INITIATES?
Any organization does not promptly turns into exporting unit, but to be the same it needs to saturate first the domestic market and has to follow various steps which are briefly explained below under seven fields: A: Understanding and preparing for exports 1. Considering export - If you are considering exporting, you should get yourself up to speed by understanding why you want to export, what the difference is between domestic marketing and export marketing, what the various environments are that you will encounter in international trade and the trade barriers you may face in the international marketplace. 2. Current business viability Analysis - If you are not managing to survive in your current business, then don't consider exporting. 3. Export readiness - Besides for having an existing base (i.e. a viable business) to build on, there are several other factors that contribute to your readiness to export. 4. Set a broad export mission statement and initial research budget for firm - If you're ready to export, then you need to set a broad statement indicating that intention to export (which you may revise later), and you will also identify a small budget that will allow you to do the research and preparation necessary to plan and implement an export strategy. 5. Confirm management's commitment to exports probably one of the main reasons why firms fail with their export endeavors is because management only pay lip service to the firms' export efforts. This is not enough! Get
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management to commit on paper to the firm's exports efforts and have them approve the budget you submitted for your export research.
B: Researching and segmenting export markets 6.Undertaking an initial export SWOT analysis of the firm - as it is important to understand what the export capabilities of the firm are, as this knowledge is used as an input to the export marketing research process, it is necessary at this point in the export process to undertake an export SWOT analysis. But as you do not yet have the foreign market information at your disposal, this SWOT analysis will need to be reviewed again later in the export process as an introduction to the export plan. 7. Selecting and researching potential countries/markets abroad - It is a fact; we cannot export to all the countries in the world. Indeed, even established companies can only concentrate on two or three countries at most (and usually only those that are close to each other either geographically, culturally or in terms of language or some other factor). Smaller companies will barely be able to cope with one additional country (over and above the domestic market). The question is which country? At this point in the export process our firm must evaluate the many potential countries open to you and narrow the list down to no more than three to five countries with the greatest potential to look at more closely (a shortlist of countries). Once we established a shortlist of countries, the next step is to do some desk research and inmarket research to identify the most suitable country (or perhaps two countries) from our shortlist.The purpose of this research will be to understand the foreign environment you intend to enter and to identify potential foreign customers and their needs so that you can plan an export marketing strategy that will meet your potential customers' needs.
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C: Compiling an export plan 8. Preparing your export plan - This is one of the most important steps in the export process and will incorporate a situational analysis (export SWOT), your export objectives and an export marketing strategy.
D: Implementing the export plan 9.Obtain financing/resources for your exports - You will almost certainly need to finance your export efforts in some way and you will have to give thought to how much you need and where you will find the money. You may also need to find the staff and facilities necessary to support your export activities (which, in turn, will cost money). 10.Managing your export risk - When you negotiate and eventually sign an export contract, you need to be aware that you are committing your firm to certain responsibilities (such as delivering on time and according to a certain standard) and that you are making certain assumptions about your business partner (that they will pay, for example). These responsibilities and assumptions represent a serious risk for your firm and you need to be aware of what these risks are and you need to take steps to manage these risks as best possible. 11.Promoting the firm and its products abroad - This involves letting the world know about your firm and what it offers and there are many promotional channels that you could use (such as advertising in trade magazines, e-mail marketing or participating in a trade fair). The channel you use will depend on what your promotional strategy is that you outlined in your export plan. 12.Negotiating and quoting in export markets - You need to approach your customers, convince them to buy from you, negotiate a deal and price that that find acceptable, and
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present them with a quote (usually in the form of a proforma invoice).
13.Revising negotiations, lowering your to revisit your
export costing and price - Following your you will in all probability have to consider price or other sales terms. This may require you costing exercise and pricing strategy.
14.Obtaining the export order - This is all about closing that sale and signing the contract!
15.Producing the goods - With the export order in hand, you now have to get down to producing the goods that you have promised to deliver. This will mean securing raw materials and components from your suppliers, and producing, packaging and labeling the goods for export. E: Export transportation and logistics 16.Handling the export logistics - You have to get the product from your factory to your customer and you will need one or other form of transportation to do this. F: Export documentation and payments 17.Handling export documentation and export payments - A lot of paper work will accompany each consignment. You need to ensure that your export documentation is in order so that you can effect export payment for your goods. 18.Providing follow-up support - Customers will want to be ensured that you will help them if something goes wrong with your product. To this end, you will need to consider what warranties and guarantees you will offer your customer, as well as what support you will provide them. 19.Getting paid - An important part of the export process.
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G: Export management 20.Reviewing the export process - To ensure a successful export department, you will want to review and improve your export process. 21. Export management - The process does not end here. It needs to start all over again with your next customer. This is the focus of export management and involves the way you organize your export department.
EXPORT PROCEDURE IN S.A.P.L.
EXPORT OPERATION IN S.A.P.L. S.A.M. APPARELS PVT. LTD. Export department is a subsidiary to SAPL . As all prime decisions and activities are subject of SAPL beside several cases. SAPL carry out export activity in two forms: 1). Direct Export: In this case SAPL directly takes order from agent in respective countries i.e. USA UK France Netherland and other European Countries. This order is then placed and executed and then order is dispatched to the ordering country. In this case SAPL has no interference at any platform. 2). Indirect/Triangular Export: If SAPL received any order through Buying House SAPL practices triangular trade. In this case export order is rooted through Buying house. i.e. imported deals with SAPL for payments and other related documents. SAPL get fixed amount for each of its garment. In the case the exporter does not have to bother about import position or payment. In fact SAPL is unaware about the price deal between SAPL & the importer. In triangular trade SAPL fetches
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order from overseas market and transfers those order to SAPL by issuing Purchase Order(P/O) and Shipping Instruction(S/I) rather than opening Letter of Credit(L/C).
EXPLAINATION SAPL issues P/O and S/I to export marketing division of SAPL . Within turn export order is registered, scrutinized the purchase order, clarify and revise the order. Further in order to do production planning the plant processes the order and forms a packing detail, invoice etc. and forward it to SAPL. After the invoice preparation and setting up the concerned plan for processing the export order as per purchase order SAPL arrange for Excise Inspection and SGS inspection if required by the importer. Thus obtains AR-4 certificate attested by the excise department and Clean Report of Findings (CRF) from the SGS and arranges for other documents. It dispatches the goods directly to the importer and finally documents are sent to SAPL through fax or courier as per requirement. SAPL in turn delivers the payment to SAPL within thirty days of receiving the delivery. The main advantage of this triangular trade is that it does not have to bear any risk of non -payment by the importer and moreover all marketing expenses are afforded by the SAPL and thus SAPL is able to utilize S.A.P.L.’s international network. The major disadvantage is that SAPL is not able to fetch market price for the products
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THE BEGINNING OF EXPORT IN SEQUENCE AT SAPL
When a buyer country send us written order and we have accepted this order, a contact of sale can now be considered to be in place. At this point, a number of actions and activities need to take place in order for the order to be successfully
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completed. This series of activities is often referred to as the export sequence and can be considered an important component of the overall export process. It involves those activities necessary to ensure that an export order is properly fulfilled. We assume that export sequence begins after our confirmation of the written order/indent sent to us by our foreign buyer (which we will refer to as the importer from now onwards). Under Export Procedure in SAPL following steps as an effective strategy are adopted… STEP 1: The next step is the importer's responsibility. The importer must now approach his/her local bank (referred to as the issuing bank) and request them to issue a letter of credit (L/C) in favor of our firm in case of direct trade. The importer will normally provide the bank with a copy his/her written order or indent and a copy of our confirmation of this order. Our confirmation serves as proof that(a) We received the order and (b) We agree with all of the specifications outlined in the order. For this reason, it is important that we carefully read the order before confirming it! The specifications outlined in the order will become the basis upon which the L/C is drawn up. The issuing bank then forwards the L/C to its correspondent bank in India. The correspondent bank may not necessarily be our own bank. The correspondent bank will then notify us that the L/C has arrived and that we can go to collect them. STEP 2: Once we have received the L/C, our task is to check its contents thoroughly. This is an extremely important task. Documentary credits normally contain certain mandatory information. Banks will only approve payment on presentation of documents that show that we have complied exactly with the requirements of the L/C. If we deviate in any way - even a misspelling of a name or the removal of a comma - may result in rejection of the documentation and end in non-payment of the L/C. Therefore we need to ensure that we comply with the requirements of the L/C. STEP 3: If we couldn’t meet the terms and conditions laid out in the L/C, then we need to urgently request an amendment to the L/C by the importer. We do so by notifying the importer in
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writing of our requested amendment(s). If the importer agrees to these amendments, he/she will notify of the issuing and corresponding bank to incorporate the amendments as requested. Remember, only the importer can request the amendments. STEP 4: Assuming the importer agrees the amendments, the corresponding bank will inform us that the L/C and amendments have been issued and let we have a copy thereof. We need to just check that the amendments are as our request. Now we have an accepted L/C which ensures payment. The time has come to start producing the goods. We inform all of the managers and staff of the receipt of the order and request that the production division to begin producing the goods concerned. Clearly, this process of producing the goods may be quite long and complicated and may require changes to the design of the product and to the manufacturing line. We must have planned for these changes and adaptations (both in terms of time and cost) before quoting for the business. As an export manager I will have to keep an eye on the production department to ensure that we do not fall behind or encounter any problem - if we do, then we may opt to communicate with the importer to warn him/her of any delays or changes to the product (we may also need approval for these changes). We are required to get order for export at least two months before the date of final shipment. However the shipment date can’t be determined only through it but logistic part are also considered. For example- Castro sends us order for 2,00,000 Pcs. of ladies Garments, then time required for production and time required for supply of raw materials from vendor to store room needs to be taken into account. STEP 5: Once we are confirmed with the production schedule and expected completion date, we contact our freight forwarder and book space with our mode of transport of choice - usually sea or air freight for most overseas orders and rail and/or road freight for carrying goods to the airport and sea port. The freight forwarder then confirms that space has been booked with a particular carrier for a particular date. Where containers are involved, arrangements are made to have
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delivery to our premises for packing and collection a short while later. We supply the freight forwarder with precise shipping instructions and these are communicated to the importer either by us or by the freight forwarder. STEP 6: An important step in the production process is the proper packaging and labeling of the goods for export. We need to ensure that they have been properly labeled, packed and marked according to the specifications outlined in the L/C or according to international standards. Not only do the goods need to meet the importer's requirements, but they need to endure the hazards of intercontinental transportation. Although they may be further packed into a container, there are still many hazards that our goods faces. STEP 7: If the importer has requested a pre-shipment inspection, then we arrange for this to be done. Normally, the importer indicates its own nominated inspection agency for inspection. We cannot contact the inspection company at the last minute and expect them to come at our convenience. Instead, we make arrangements well in advance (perhaps a week or two in advance). A good relationship with the inspection company is good for our further relations with the importer. The inspection need to take place before we pack the goods in the container. The inspection company some time wants to see actual products and thus we need to be ready to open up already closed packages that they may select at random in order to inspect the goods inside. These are properly sealed again for shipment. Bear in mind that some importers may require other forms of inspection and/or certification. For example, some importers may require tolerance tests, on-site inspections, destruction tests. These are spelled out in the L/C and thus we need to make the necessary arrangements for these inspections to take place and for the certification to be issued. The cost of these tests may be carried either by our company or by our customers (importer), these are also indicated (hopefully) in the L/C. STEP 8: This is where the export documentation comes into play. The documentation relates to the documentation required by both the export authorities in India and by the importer and
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importing authorities. Once again, the L/C will spell out what documents are required. Some countries require certificates of origin to be issued by the local chamber of commerce and export permits may even be required for selected products. Our freight forwarder assists us in (a) obtaining these documents, and (b) also further helps to complete them. STEP 9: The terms of trade (and the Inco term) that we have negotiated with the importer indicates if the marine insurance is to be obtained by us or by the importer. If it is our responsibility to arrange for insurance cover - again this is spelt out in the L/C. Marine insurance is required for all international cargoes (not just sea freight). STEP 10: Then need to complete an F178 Exchange Control Declaration form which is required by the Reserve Bank. At the same time, we need to complete or obtain all the other documentation necessary to support the order such as:
? ? ? ? ? ? ?
Commercial invoice Packing list Certificate of origin (if required) Beneficiary certificates Specification sheets Fumigation certificate Shipping instructions
We should also provide our freight forwarder with the details outlined in the L/C, perhaps even supplying them with a copy thereof. Our freight forwarder needs this information to ensure that any and all documents they complete are done so in accordance with the requirements of documentary credit. STEP 11: At the time and date agreed (and presumably at end of the production schedule), the containers are delivered to our premises for packing. Obviously, if we do not expect to make this deadline, we inform the freight forwarder, who will arrange an alternate date for the container to be delivered, and we also inform the importer of the possible delay. If we do not intend to use a container, then we arrange delivery of the goods to particular delivery point (usually that of the freight forwarder) or the freight forwarder may agreed to collect the goods from our premises. For small, non-containerized cargoes, they will
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probably consolidate our goods with others into a single container (the freight forwarder will probably do this themselves). If are using palletized cargo, then might deliver to the freight forwarder or to the quay side or have them collect it from us. The freight forwarder also prepares the customs bill of entry, export documents and all appropriate transport documents. Goods moving by sea freight incur obligatory cargo dues payable to Portent and the freight forwarder probably arrange for these to be paid (and bill us accordingly). STEP 12: Once the goods have been loaded onto mode of transport, the transporter will issue one of the following: • The shipping line issues a full set of bills of lading, comprising three originals and six non-negotiable copies • An airline issues us with an air waybill • Transnet issues us with a freight transit order • A road carrier/hauler issues with a road consignment note • At this point, the transport (ship, aircraft, truck, railway truck) departs. STEP 13: Then we prepare the negotiable documents to present to the bank to facilitate payment and the nonnegotiable documents that are send to the importer to allow him/her to take receipt of the goods and to clear them through Customs. The documents will be similar in nature; negotiable documents are marked as such and can be used to receive payment, while non-negotiable documents (marked as such) cannot. Now we fax (or e-mail) a non-negotiable set of documents to the importer as soon as possible., This • (a) informs the importer that shipment has taken place, and • (b) enables him/her to make the necessary arrangements to take receipt of the goods and to clear them through customs. Some countries allow pre-clearing to take place and the sooner the importer has the documents in hand, the sooner he/she can get his/her affairs in order. We need to move quickly with air cargos (and even road cargoes going to nearby countries), as they could arrive
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the very next day (and occasionally even the same day). An importer becomes very frustrated if the cargoes have arrived and we have not yet supplied the documents required to clear the goods through customs. • The negotiable set of documents is taken to the corresponding bank in SAPL to obtain payment. The bank scrutinizes our documents very carefully for any discrepancies from what is stated in the L/C. If any discrepancies are found, the bank informs us of these discrepancies and then we are required to make the necessary changes to ensure that documents are correct. Remember that this all takes time and by ensuring that the documents are correct, we speed up matters considerably resulting in quicker payment for our firm! If payment is against presentation of documents, then the bank pays us immediately (transferring the payment to our local bank). If payment is at sight of documentation, then the SAPL corresponding bank forward the negotiable documents to the issuing bank, which will require the importer to sign a bill of exchange as acknowledgement of debt. STEP 14: The importer's corresponding bank in India (Japan) then forwards the negotiable documents to the issuing bank overseas. The issuing bank will require the importer to make payment and once this is done they release the documents to the importer. Recall that the issuing bank may not necessarily be the importer's own bank (referred to as the remitting bank). Thus the importer may need to arrange for the transfer of monies from his own bank (the remitting bank) to the bank he used to facility payment of this order (the issuing bank). The importer then uses the documents to clear the goods through Customs. Depending on the terms of sale, customs clearance, the payment of duties and the delivery of the goods to the importer's designated premises may be the responsibility of either the importer or the exporter (although it is more common for the importer to take responsibility of this task). The issuing bank, having received payment from the importer transfers this money to the corresponding banks via bill of exchange of bank cheque. The local corresponding bank will notify us that the funds have arrived and we then indicate into which account these funds need to be paid (normally our firm's
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business account which may be held at the same bank or maybe a different bank). STEP 15: It is now up to our firm to pay our agents any commissions that may be due to him/her. STEP 16: The importer normally provides us with proof of delivery after receipt after the goods have been received at the designated place of delivery.
?SUMMARY OF EXPORT PROCESS
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EXPORT-IMPORT PROCEDURE
Seller and Buyer conclude a sales contract, with method of 1 payment usually by letter of credit (documentary credit) or buyer issues an export order. 2 Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary). 3 Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advice, and usually to confirm, the credit. 4 Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit. 5 If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier. 6 Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit. 7 Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate. 8 Bank, if other than the issuing bank, sends the documents and draft to the issuing bank. 9 Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. 10 Documents release to Buyer after payment or on other terms agreed between the bank and Buyer. 11 Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.
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INCOTERMS
(INTERNATIONAL COMMERCIAL TERMS)
The international commercial term is usually recognized set of definitions of International terms, such a FOB, CFR and CIF developed by International Chamber of Commerce (ICC) in Paris and France. It defines the trade contract responsibilities and liabilities between importer & exporter. It is valuable and cost saving tool. The exporter and importer need to undergo who will be responsible for freight, cargo insurance and other cost & risks. Under the incoterm 2000 the international commercial terms are grouped into E, F, C and D designated by the first letter of the term: • EXW (Ex Works) Ex means from & Works means factory, mill or warehouse, which are the seller’s premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks. In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.
FCA (Free Carrier) The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
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FAS (Free Alongside Ship) Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.
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•
FOB (Freight on Board)
The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
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C&F (Cost and Freight)
The delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F. CIF (Cost, Insurance and Freight) The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks.
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CPT (Carriage Paid To)
The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. CIP (Carriage and Insurance Paid To) The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
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DAF (Delivered At Frontier) The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.
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DES (Delivered Ex Ship) The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.
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DEQ (Delivered Ex Quay) The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
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DDU (Delivered Duty Unpaid) The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
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DOCUMENTATION
Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that exporting requires as forwarders are specialists in this process. The following documents are commonly used in exporting; but which of them are necessary in a particular transaction depends on the requirements of the Indian government and the government of the importing country. PURCHASE ORDER: It specifies all details of goods. In it rate and relevant terms and condition of trade like the prices are to be quoted as FOB, CNF or payment to be made in advance or
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through L/C. The order contains description of the goods, date of shipment price quotes etc. PACKING LIST: it is the list showing detail of goods contained in each parcel shipment. Packing list has to be prepared in the aligned document form. The only difference in packing list and invoice is that the packing list does not have description of price and rate of goods but invoices do have. It itemizes the material in each individual package and indicates the type of package, such as a box, crate, drum, or carton. It also shows the individual net, legal, tare, and gross weights and measurements for each package. Package markings should be shown along with the shipper's and buyer's references. The list is used by the shipper or forwarding agent to determine the total shipment weight and volume and whether the correct cargo is being shipped. Packing list are prepared twice- once before AIR WAYBILL: The receipt is issued by shipping agent for goods and is also called consignment note. Air freight shipments are handled by air waybills, which can never be made in negotiable form. BILL OF LADING: The B/L is a document issued by shipping company. It is a contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading which is nonnegotiable and a negotiable or shipper's order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods. There are several types of B/L as mentioned below: Received of shipment B/L-certifies only receipt of goods. On deck B/L- certifies and remark that goods are shipped o n deck. Through B/L- it covers the whole voyage and is acceptable if transshipment is permitted.
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Clause B/L- It is B/L containing additional clause limiting responsibility of the shipping company and including defective condition of the goods. Clean B/L- A clean B/L is one which does not bear any superimposed or annotation, which declares the defectiveness of the goods or the packing. COMMERCIAL INVOICE: A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, and number of copies, language to be used, and other characteristics. The invoice act as basic document on the basis of which other dox are prepared. CONSULAR INVOICE: is a document that is required in some countries. It describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. Certified by the consular official of the foreign country stationed here, it is used by the country's customs officials to verify the value, quantity, and nature of the shipment. CERTIFICATE OF ORIGIN: is a document that is required in certain nations. It is a signed statement as to the origin of the export item. Certificate of origin are usually signed through a semiofficial organization, such as a local chamber of commerce. A certificate may still be required even if the commercial invoice contains the information. In some cases as per requirement of the clients, the embassy of buyer country certifies the Indian manufactured goods. GSP CERTIFICATE: It is very much similar to CoO and is also issued by chamber of commerce and industry. It is required by only Commonwealth Countries. It is issued for goods imported to custom port/airport intended for transshipment. SHIPPER’S ORDER: Issued by shipping line intimating the exporter about the reservation of shipment space of cargo through a particular vessel from a specified port on the specified date.
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FLASH REPORT: A shipment advice is issued to inform the overseas buyer about the shipment of goods. It is prepared in align documents. The exporter only advise his importer about the invoice number, Bill of Lading, Air waybill number, name of the vessel with date, port of export, description of goods, quantity and the date of selling of vessel. GR FORMS: It is an exchange control declaration form, a RBI document containing the name of bank through which payment has to be received and the custom assessable value in rupees. Declaration is made under Foreign Exchange Regulation Act. EXTERNAL INSPECTION AGENCY REPORT: The importer higher an inspection agency operating on international level. These inspection agencies are known as External Inspection Agency (EIA). They have a network of office worldwide. The inspection is carried out for quality, quantity, stuffing, packing, price comparison and marketing with the end product. On successful inspection an inspection and Clean Report of Finding CRF is issued. SAFTA: It is required for products traded among the SAFTA countries (India, Sri Lanka and other South Asian Nation). It is the certificate that approves free trade among the member countries. ISFTA: The document is required when trade takes place between India and Sri Lanka to approve the free trade. INSPECTION CERTIFICATION: is required by some purchasers and countries in order to attest to the specifications of the goods shipped. This is usually performed by a third party and often obtained from independent testing organizations. DOX RECEIPT AND A WAREHOUSE RECEIPT: are used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the ship line for export. LETTER OF CREDIT: Letter of credit is used in case of export to Bangladesh and Nepal. It refers to a promise made by importers bank to exporter that the payment should be made to him in strict compliance with the terms and conditions of the
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export contract. The bank does not deal in goods it deal in documents. DESTINATION CONTROL STATEMENT: It appears on the commercial invoice, and ocean or air waybill of lading to notify the carrier and all foreign parties that the item can be exported only to certain destinations. SHIPPING BILL: Shipping bill is the main document required by custom authority for allowing shipment. Shipping bill lies with the regard to the goods being subject to: Export duty, Entitlement of duty drawback, Entitlement of credit of duty under DEPB Scheme etc. There different formats of shipping bill as follows: White shipping bill: for export of duty free goods Green shipping bill: for export of goods under claim of duty drawback. Yellow shipping bill: for export of excisable goods. Blue shipping bill: for export under DEPB scheme. BILL OF EXCHANGE: A bill of exchange is defined as an unconditional written order prepared by an exporter asking the importer to pay specified sum of money to a specified person in time. The specified amount is represented by the amount of invoice, the specified person refers to the bank and the specified amount is matter of negotiation between the exporter and importer. It is of two types:
Sight B/L: The payment is to be made by importer immediately or on demand to get the documents. Usance B/L: The payment is to be made after expiry of certain period of time. COMBINED TRANSPORT REPORT: Inland container depot has been set up at the various centers in the country. These dry ports have made it possible to cover the entire movements
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of goods from ICD to destination under the transport document called Combined Transport Document. EXPORT LICENSE: is a government document that authorizes the export of specific goods in specific quantities to a particular destination. This document may be required for most or all exports to some countries or for other countries only under special circumstances. INSURANCE CERTIFICATE is used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. ARE-1 FORMS: It is an application for removal of excise from excisable goods for export by air, rail or sea.(This is applicable only Engineering, Motor Vehicle Electronic Product etc.) Documentation must be precise because slight discrepancies or omissions may prevent merchandise from being exported, result in nonpayment, or even result in the seizure of the exporter's goods by importer or foreign government customs. Collection documents are subject to precise time limits and may not be honored by a bank if the time has expired. Most documentation is routine for freight forwarders and customs brokers, but the exporter is ultimately responsible for the accuracy of its documents.
FLOW OF DOCUMENTS
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ORDER RECEIVED FROM IMPORTER Purchase order Letter of credit
ORDER ANALYSIS
ORDER REGISTRATION SEND TO VENDOR
STORE
FORWARD INFORMATION TO THE VENDOR WILL SEND REQUIREMENT TO PLANT
CHECK THE STOCK WITH THE HELP
OF STOREALLOCATIONPARTS REQUISITION WILL ISSUE LIST, IF SHORT FEED SLIP THE REQUIREMENT IN THE SYSTEM. EXPORT QUALITY A WILL VERIFY-ACCEPT SEND TO PURCHASE DEPARTMENT OR REJECT CHECK
INNER CASE & OUTER CASE FILLING IS DONE…
DETAIL SENT TO EXPORT MARKETING Packing list Proforma or order list Weight & dimension list
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PRESHIPMENT DOCUMENTS PREPARATION Invoice Packing list Packing annexure Purchase order
EXPORT (A-1) Invoice Packing list Packing annexure Purchase order
EXPORT (A-64& Phase-II) Invoice Packing list Packing annexure Purchase order
EXCISE (All Unit) NOT APPLICABLE
ADD ARE & SEND TO EXCISE
CHA (LOGISTICS) Invoice Packing list Packing annexure Purchase order Shipping instructions CHA GETS CUSTOM 47 CLEARANCE SHIPPING BILL.
EXCISE GIVES INFORMATION TO BSR TO BRING CONTAINER FOR DISPATCHING.
STUFFING DISPATCH FROM THE PORT
SEA WAYBILL/AIRWAY BILL ISSUE
DOCUMENTS SENT TO SAPL EXPORT MARKETING
PREPARATION OF POST SHIPMENT DOCUMENT DOCUMENTS FOR SAPL (Flash Report) Covering letter Invoice Packing List Packing List annexure 48 B/ L Or Airway Bill P/O or L/C Certificate of
IMPORTER’S BANK (ORIGINAL DOCUMENT)
Invoice Packing List B/L or airway Bill SDF copy Exchange control Copy Of S/B P/O or L/C CRF Invoice
DOCUMENT FOR IMPORTER Covering Letter Invoice Packing List Bill of lading SDF Copy Exchange control copy
DOCUMENT FOR FINANCE SAPL Invoice Packing List Packing List Annexure B/ L or Airway Bill SDF copy Exchange Control Copy Copy Of Shipping Bill Purchase Order or L/C DOCUMENT FROM BANK TO IMPORTER FOR PAYMENT REALIZATION
PAYMENT RECEIVED
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CONTRACT COMPLETED
(1).AIR WAY BILL
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• • • • • • •
BLUE - Original 1 - For Shipper GREEN - Original 1 - For Issuing Carrier WHITE - Invoice WHITE - Remittance Copy PINK - Original 2 - For Consignee GOLDENROD - Delivery Receipt WHITE - For Destination Agent's Copy
(2).COMMERCIAL INVOICE
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DISCRIPTION OF PROFORMA 1. EXPORTER - The name and address of the principal party responsible for effecting export from the United States. The exporter as named on the Export License. 2. CONSIGNEE - The name and address of the person/company to whom the goods are shipped for the designated end use, or the party so designated on the Export License.
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3. INTERMEDIATE CONSIGNEE - The name and address of the party who effects delivery of the merchandise to the ultimate consignee, or the party so named on the Export License. 4. FORWARDING AGENT - The name and address of the duly authorized forwarder acting as agent for the exporter. 5. COMMERCIAL INVOICE NO. - Commercial Invoice number assigned by the exporter. 6. CUSTOMER PURCHASE ORDER NO. - Overseas customer's reference of order number. 7. B/L, AWB NO. - Bill of Lading, or Air Waybill number, if known. 8. COUNTRY OF ORIGIN - Country of origin of shipment. 9. DATE OF EXPORT - Actual date of export of merchandise. 10. TERMS OF PAYMENT - Describe the terms, conditions, and currency of settlement as agreed upon by the vendor and purchaser per the Pro Forma Invoice, customer Purchase Order, and/or Letter of Credit. 11. EXPORT REFERENCES - May be used to record other useful information, e.g. - other reference numbers, special handling requirements, routing requirements, etc. 12. AIR/OCEAN PORT OF EMBARKATION - Ocean port/pier, or airport to be used for embarkation of merchandise. 13. EXPORTING CARRIER/ROUTE - Record airline carrier/flight number or vessel name/shipping line to be used for the shipment of merchandise. 14. PACKAGES - Record number of packages, cartons, or containers per description line. 15. QUANTITY - Record total number of units per description line. 16. NET WEIGHT/GROSS WEIGHT - Record total net weight and total gross weight (includes weight of container) in kilograms per description line. 17. DESCRIPTION OF MERCHANDISE - Provide a full description of items shipped, the type of container (carton, box, pack, etc.), the gross weight per container, and the quantity and unit of measure of the merchandise. 18. UNIT PRICE/TOTAL VALUE - Record the unit price of the merchandise per the unit of measure, compute the extended total value of the line. 19. PACKAGE MARKS - Record in this Field, as well as on each package, the package number (e.g. - 1 of 7, 3 of 7, etc.), shippers company name, country of origin (e.g. - made in USA), destination port of entry, package weight in kilograms, package size (length x width x height), and shipper's control number (e.g. - C/I number; optional). 20. MISC. CHARGES - Record any miscellaneous charges which are to be paid for by the customer export transportation, insurance, export packaging, inland freight to pier, etc. 21. CERTIFICATIONS - any certifications or declarations required of the shipper regarding any information recorded on the commercial invoice.
(3).B/L CERTIFICATE 53
DISCRIPTION OF PROFORMA
1. SHIPPER (From) - Enter the company name and address of the shipper (Consignor). 2. POINT OF ORIGIN (At) - Enter the city and state of the actual shipping point. 3. DATE OF SHIPMENT - Enter the date of the shipment; that is, the date the Carrier took control of the merchandise. 4. TRUCK/FREIGHT - Check the truck block if the shipment is to move by truck, or the Freight block if the shipment is to move by rail. 5. SHIPPER'S NUMBER - Enter a unique control number to reference the shipment with the Carrier. 6. CARRIER - Enter the name of the company which will take initial control of the shipment and cause its delivery to the consignee. 7. AGENT'S NUMBER - Enter Carrier's control number, if known or required.
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8. CONSIGNED TO - Enter the full of the final recipient of the shipment, the ultimate consignee, if different than destination, for Carrier notification purposes. 9. DESTINATION - Enter the street address, city, and zip code where the Carrier will make delivery to the Consignee in Field 8. 10. ROUTE - If applicable, enter the route the Carrier will take to the consignee. This Field may also be used to specify docks, warehouses, etc., and to specify any intermediate Carriers. 11. DELIVERING CARRIER - If applicable, specify the carrier which will deliver the shipment to the ultimate consignee at the Destination, but only if different than the Carrier entered in Field 6. 12. VEHICLE/CAR NO. - Enter any vehicle identifying numbers or initials, if applicable. 13. NO. PACKAGES - Enter the total number of packages per line item; if the packages are consolidated on a pallet or in an outer container, note this information on a second line. Ex: 112 PKGS 3 Pall. 14. DESCRIPTION OF SHIPMENT - Enter the description of each line item, noting the type of package (carton, barrel, etc.) and the quantity per package. Since the correct freight classification is essential in describing an item, there must be a separate line item for each different freight classification description. If more than one type of packaging iss used per freight classification, a separate entry must be used for each type of package. Enter any special package markings, special handling requirements, and delivery instructions. Note: For hazardous material items, special provisions must be met in completing this field. 15. WEIGHT - Enter the total gross weight, in pounds, for each line item. For Bulk shipments, the TARE and Net weights should also be referenced in the description field. For package shipments, include the weights of pallets and skids. The total weight of the merchandise should be shown after the last line item, with pallet and weights shown separately. 16. CLASS OR RATE - Enter the 5-digit class (per the Uniform Freight Classification or the National Freight Classification) or a two digit Class Rate (a percentage of the First class 100 rate) per line item. This information may be determined with the Carrier. 17. WITHOUT RECOURSE - Per standard Bill of Lading terms, the shipper is ultimately liable for freight charges, even when the shipment is sent on a collect basis to the consignee. By signing this statement, the shipper is released from the liability of freight charges for collect shipments delivered by the Carrier to the consignee without the Carrier's collecting the freight charges. For prepaid shipments, leave blank. 18. PREPAID SHIPMENTS - Enter "Prepaid" if shipment is to be paid by the Shipper. If this field is left blank, the Carrier will seek to collect the freight charges from the consignee (see field 17). 19. PREPAYMENTS RECEIVED - Carrier enters any payments received in advance from the Shipper for the shipment. 20. CHARGES ADVANCED - Carrier enters any advanced charges for the shipment, if applicable. 21. C.O.D. SHIPMENT - First, check whether the freight charges are prepaid (the Carrier bills the shipper) or collect (the Carrier deducts the freight charges from the amount collected from the Consignee). Second, enter the amount to be collected for the merchandise itself - be sure to include the freight charges. Third, enter any collection fees, if applicable. Enter total charges to be collected by the Carrier.
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22. SHIPMENT DECLARED VALUE - When the weight charged by the Carrier is dependent upon the value of the shipment, the dollar value per unit of measure (ex: $100/pound) must be stated by the Shipper - enter this information in field 14. 23. SHIPPER - Enter the company name of the shipper. 24. SHIPPER'S AGENT - Enter the signature of the individual preparing the shipment for the shipper. 25. CARRIER'S AGENT - The Carrier's agent will sign here prior to taking control of the shipment. 26. PERMANENT ADDRESS - Enter the permanent (business) address of the shipper. This may be the same as for field 1. 27. CERTIFICATION - A signature is required by the Department of Transportation after this statement for all shipments of hazardous material.
(4)ORIGIN CERTIFICATE
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DISCRIPTION OF THE PROFORMA
1. THE UNDERSIGNED - Name of the individual completing and signing the certificate (see Block 13); may be the Exporter or Agent of the Exporter. 2. FOR - The Company name and address of the Exporter (Distributor or Manufacturer) effecting the shipment of merchandise. 3. SHIPPED ON - Name of the vessel, aircraft, rail, or trucking company. May also include vessel number and flag, flight number and flag, rail car number, and truck Pro number. 4. DATE - The date the carrier left the port/terminal for the destination. 5. CONSIGNED TO - The Consignee, as it appears on the Commercial Invoice; may be "To Order of Shipper," or "To Order of (Customer's) Bank, or to any other entity, on the Conditions of Sale and/or the letter of credit. 6. MARKS AND NUMBERS - The marks recorded on each package, including Shipper's Company Name, Country of Origin (i.e. - Made in USA), Destination Port of Entry, and Customer's Company Name; may also include a Shipper's Control Number (i.e. - C/I No.) and the Customer's Import license Number. "Number" refers to the numbering of the packages in the shipment (i.e. - 1 of 30, 2 of 30, etc.).
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7. NO. OF PACKAGES - The total number of packages, cartons, boxes, skids, etc. per description line, including outer packaging, in kilograms. 8. GROSS WEIGHT - Total weight of packages per description line, including outer packaging, in kilograms. 9. NET WEIGHT - Total weight of all packages per description line, excluding outer packaging, but including inner packaging, in kilograms. 10. DESCRIPTION - Full description of items being shipped, the type of containers, the gross weight per container, and the quantity and unit of measure of the merchandise. May also include cross references to Purchase Order or Commercial Invoice number. 11. SWORN BEFORE - Notary Republic seal/signature, and date notarized. 12. DATE - Date Certificate of Origin was prepared and signed. 13. SIGNATURE - The signature of the owner, employee, or agent appearing in Block 1 above. 14. CHAMBER OF COMMERCE - Name of local Chamber of Commerce (and State) certifying the origin of the merchandise. 15. SECRETARY - Authorized signature of the local Chamber of Commerce Secretary and that organization's seal.
(1)
SHIPPER’S EXPORT DECLARATION
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DISCRIPTION OF THE PROFORMA
1. Exporter - The name and address of the principal party responsible for effecting export from the United States. The exporter as named on the Export License. Report only the first five digits of the ZIP code. 2. Exporter Identification Number - The exporter's Internal Revenue Service Employer Identification Number (EIN) or Social Security Number (SSN) if no EIN has been assigned. 3. Related Party Transaction - One between the exporter and the foreign consignee, that is, an export from a Indian business enterprise to a foreign business enterprise or from a Indian business enterprise to a foreign person or business enterprise, when the person owns (directly or indirectly) at any time during the fiscal year, 10 percent or more of the voting securities of the incorporated business enterprise, or an equivalent interest if an unincorporated business enterprise, including a branch. Otherwise, check UNRELATED.
4. Agent of Exporter - The name and address of the duly authorized forwarding agent.
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5. Ultimate Consignee - The name and address of the party actually receiving the merchandise for the designated end use or the party so designated on the validated export license. 6. Intermediate Consignee - The name and address of the party in a foreign country who affects delivery of the merchandise to the ultimate consignee or the party so named on the export license. 7. Exporting Carrier - The name of the carrier transporting the merchandise out of the United States. For vessel shipments, give the vessel's flag also. 8. U.S. Port of Export 9. Method of Transportation - The mode of transport by which the merchandise is exported. Specify by name, i.e., vessel, air, rail, truck, etc. Specify "own power" is applicable. 10. Loading Pier - (For vessel shipments only) The number or name of the pier at which the merchandise is laden aboard the exporting vessel. 11. Containerized - (For vessel shipments only) Cargo originally booked as containerized cargo and that is placed in containers at the operator's option. 12. Point (State) of Origin or Foreign Trade Zone (FTZ) Number 13. Foreign Port of Unloading - (For vessel and air shipments only) The foreign port and country at which the merchandise will be laden from the exporting carrier. 14. Country of Ultimate Destination - The country in which the merchandise is to be consumed, further processed, or manufactured; the final country of destination as known to the exporter at the time of shipment; or the country of ultimate destination as shown on the validated export license. 15. Marks, Numbers, and Kinds of Packages - Marks, numbers, or other identification shown on the packages and the numbers and kinds of packages (boxes, barrels, baskets, etc.). 16. Commodity Description - A sufficient description of the commodity to permit verification of the Schedule B Commodity Number or the description on the validated export license. 17. Commodity Number 18. Gross Shipping Weight - (For vessel and air shipments only) The gross shipping weight in kilograms, including the weight of containers but excluding carrier equipment (Multiply lbs. by 0.4536 to get kilos; round off to whole numbers.).
19. "D" (Domestic) or "F" (Foreign) • • Domestic exports - Merchandise grown, produced, or manufactured (including imported merchandise which has been enhanced in value) in the United States. Foreign exports - merchandise that has entered the United States and is being reexported in the same condition as when imported.
20. Net Quantity the amount in terms of the unit(s) specified in Schedule B with the unit indicated or the unit as specified on the validated export license. (Report whole units.)
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21. Value - Selling price or cost if not sold, including inland freight, insurance, and other charges to U.S. port of export, but excluding unconditional discounts and commissions (nearest whole dollar, omit cents). 22. Export License Number or Symbol - Validated export license number and expiration date or general license symbol. 23. Export Commodity Control Number (ECCN) - (When required). 24. Bill of Lading or Air Waybill Number - The exporting carrier's bill of lading or air waybill number. 25. Date of Exportation - (Not required for vessel and postal shipments) The date of departure or date of clearance, if date of departure is not known. 26. Designation of Agent - Signature of exporter authorizing the named agent to affect the export when such agent does not have power of attorney. 27. Signature - Signature of exporter or authorized agent certifying the truth and accuracy of the information on the SED.
(6)SHIPPER’S LETTER OF INSTRUCTION
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The Shipper's Letter of Instruction is just that - a "letter" from the Shipper instructing the Freight Forwarder how and where to send the export shipment. In preparing this form, the Shipper also fills in most of the information required on the Shipper's Export Declaration, form 7525V (the Freight Forwarder will complete the rest). After the Shipper completes the form, he or she retains the blue shipper's ply and forwards the rest of the form with the shipment to the Freight Forwarder. DISCRIPTION OF THE PROFORMA 1. EXPORTER - the name and address of the principal party responsible for effecting export from India. The exporter as named on the validated export license. Report only the first five digits of the zip code. 2. EXPORTER EIN NUMBER - the exporter's Internal Revenue Service Employer Identification Number (EIN) or Social Security Number (SSN) if no EIN has been assigned. 3. PARTIES TO TRANSACTION - When either the exporter or the foreign consignee owns (directly or indirectly), at any time during the fiscal year, 10 percent or more of the voting securities of the incorporated business, or an equivalent interest if an unincorporated business enterprise, including a branch, the transaction is between RELATED parties. Otherwise the transaction is between UNRELATED parties. 4. ULTIMATE CONSIGNEE - the name and address of the person/company to whom the goods are shipped for the designated end use, or the party so designated on the Export License.
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5. INTERMEDIATE CONSIGNEE - the name and address of the party who affects delivery of the merchandise to the ultimate consignee, or the party so named on the export license. 6. FORWARDING AGENT - The name and address of the duly authorized forwarder acting as agent for the exporter. 7. INLAND CARRIER - see note 2 on form. 8. POINT (STATE) OF ORIGIN OR FTZ NO. – The Indian Postal Service abbreviation of the state in which the merchandise actually starts its journey to the port of export, or (b) the state of origin of the commodity of greatest value, or (c) the state of consolidation, or (d) the Foreign Trade Zone Number for exports leaving an FTZ. 9. COUNTRY OF ULTIMATE DESTINATION - the country in which the merchandise is to be consumed, further processed, or manufactured the final country of destination, as known to the exporter at the time of shipment; or country of ultimate destination, as shown on the validated export license. 10. SHIPPER'S REFERENCE NUMBER - Shipper's reference with freight forwarder. 11. DATE - date shipment sent to forwarder. 12. SHIP VIA -method of shipment required. 13. CONSOLIDATE DIRECT -determines how forwarder is to instruct Carrier to ship goods. Generally, a choice between speed and economy of shipment. 14. D/F - D (domestic exports) - merchandise grown, produced or manufactured (including imported merchandise which has been enhanced in value) in India. F (foreign exports) - merchandise that has entered India and is being re exported in the same condition as when it entered. 15. MARKS, NOS., & KINDS OF PACKAGES - indicate the numbers and kinds of packages (boxes, barrels, and cases) and any descriptive marks, numbers, or other identification shown on the packages. 16. QUANTITY - SCHEDULE B UNIT(S) - the unit(s) specified in the Harmonized Schedule B with the unit indicated, or the unit as specified on the validated export license. 17. SHIPPING WEIGHT - (for vessel and air shipments) the gross shipping weight in kilos, including the weight of containers but excluding carrier equipment. 18. SHIPPING WEIGHT (pounds) - the gross shipping weight in pounds of the commodities being shipped, not including weight of shipping container. 19. CUBIC METERS - length X width X height in meters, not required, but helpful. 20. VALUE (U.S. DOLLARS, OMIT CENTS) - the selling price, or cost if not sold, for the number of items recorded in the quantity field when they were sold by the vendor to the purchaser. 21. HARMONIZED SCHEDULE B DESCRIPTION - a proper identifying description of the commodity as known in the country of production or exportation. This should be sufficient to permit verification of the Harmonized Schedule B Commodity Number, or the description shown on the export license. 22. VALIDATED LICENSE NO./GENERAL LICENSE SYMBOL - Export License number and expiration date or general license symbol.
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23. DULY AUTHORIZED OFFICER - Signature of exporter authorizing the named agent to effect the export when such agent does not have the formal power of attorney. 24. ECCN - (when required) Export Control Commodity Number - the ECCN number of commodities listed on the Commodity Control List (commodities subject to Department of Commerce export controls) in the Export Administration Regulations. 25. SHIPPER MUST CHECK - specifies whether shipper (prepaid) or consignee (collect) will pay freight charges. 26. SPECIAL INSTRUCTIONS - used to inform forwarder of any special instructions, such as a specific carrier to be used, special telex notification, required certifications, etc. 27. SIGNATURES - lift up the top piles of the form and sign the first Export declaration. This certifies to the U.S. government that all information on the form is true and correct. 28. SHIPPER'S INSTRUCTIONS - instructs the forwarder how to dispose of the shipment in the event it proves to be undeliverable abroad. 29. INSURANCE - used when insurance is required, and the shipper wishes to use an insurer chosen by the Forwarder.
(7). PACKING LIST
EXPORTER INVOICE NO. & DATE BUYER’S ORDER NO. & DATE OTHER REFERENCE(S) CONSIGNEE BUYERS (IF OTHER THAN CONSIGNEE) EXPORTER’S REF. NO.
PRE CARRIAGE BY VESSEL/FLIGHT NO. PORT OF DISCHARGE
COUNTRY OF ORIGIN OF COUNTRY OF FINAL GOODS DESTINATION L/C NO, LCA NO. H.S.CODE NO. REGISTRATION NO. T.I.N. NO.
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MARKS & NOS. / NO. & KIND OF PKGS. DISCRIPTION OF GOODS CONTAINER NO.
WEIGH T
QUANTITY
REMARKS
THE QUANTITY,QUALITY,OTHER PARTICULERS AND UNIT PRICE OF MERCHANDISE SUPPLIED ARE STRICTLY IN CONFERMITY WITH
THE GOODS ARE OF INDIAN ORIGIN
ADDRESS OF FINAL DESTINATION WE DECLARE THAT THIS INVOICES SHOS ACTUAL PRICE OF THE GOODS DESCRIBED AND THAT ALL PARTICULARS ARE TRUE AND CORRECT. SIGNATURE & DATE
DISCRIPTION OF THE PACKING LIST PROFORMA
When goods are exported to a country then during final shipment we send a packing list in which all the necessary information is enlisted. As it is shown above it includes following queries: 1). Name of the exporter and reference number 2). Name of thee consignee 3). Invoice number and invoice date 4). Name of the consignee or the person on behalf 5). Country of origin and Country of final destination 6). Carriage information through which goods are to be sent 7). Number of vessels, Container no., kind of packing and disruption of goods 8). Weight and Quantity of the goods being exported 9). Remarks (in case of some specialty) and finally 10). Declaration by ultimate authority.. Packing lists are asked by several fronts
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DOCUMENTS REQUIRED BY DIFFERENT AUTHOROTIES
Following are some of the department authorities and organization to whom an exporter has to deal in order to carry out export effectively. 1. Custom authorities 2. port authorities 3. The Bank 4. licensing authorities 5. Export promotion council 6. The maritime collector or central excise 7. Reserve bank of India 8. ECGC( for export risk insurance)
? TO THE CUSTOM AUTHORITIES: -
Custom authorities are of much importance and they play a very important in letting the goods reach from seller to buyer. Following documents to be submitted to the custom authorities: 1. Shipping Bill 2. Commercial invoice 3. GR-1 form 4. Shipper declaration form 5. Copy of export contract/L/c/Export order 6. Inspection certificate 7. ARE-1 (Heavy Engineering & Electronic Product Items) 8. Export license ? To THE PORT AUTHORITIES:1. Export application 2. Shipping order( only at Chennai)
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? TO THE BANK:Bank act as an intermediary between exporter and importer and also acts on behalf of them. Following are some of the documents, which are to be submitted by the exporter in the Bank. 1. Commercial invoice 2. Bill of lading 3. Insurance policy certificate 4. Bill of Exchange 5. GR-1 Form 6. Bank certificate( 3 copies) Apart from these documents are submitted to bank for: • Packing credit • Medium term credit PACKING CREDIT: • Performa invoice • Copy of L/C MEDIUM TERM CREDIT: • Export contract • L/C or guarantee from the importer
? TO THE LICENSING AUTHORITIES:
1. 2. 3. 4. 5. 6.
Application form for replenshipment license Bank certificate Commercial invoice attested by the bank Application form for cash assistance Stamped receipt Export house certificate
? TO THE EXPORT PROMOTION COUNCIL 1. Application for registration 2. Bank certificate regarding financial soundness
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3. Registration certificate form 4. Membership form ? TO RESERVE BANK OF INDIA Reserve bank of India is the main governing body relating to monetary transaction of export and import. RBI deals with incoming and outgoing of foreign exchange of country. Documents are submitted to RBI forRemittance of commission: 1. Application for registration of the agency agreement for commission 2. Copy of the agency agreement Remittance of foreign exchange for payment of claims: 1. Application form 2. Copy of the invoice 3. Sales contract 4. Bill of lading 5. Inspection report ? TO THE CENTRAL EXCISE 1. Duplicate copy of ARE-1 form AND copy of B/L or S/B
?SWOT ANALYSIS
SWOT analysis of Indian Apparel & Textile Industry
Problems and prospects of India’s clothing industry
India’s clothing firms are not globally competitive in productivity, technology, number of machine per apparel firm and infrastructure. Hence, it is necessary to see the factors which are affecting the growth of India’s clothing industry and government support to remove these obstacles. The productivity is one of the key determinants of export competitiveness (Hashim 2004). The productivity level of India’s major products of garment segments is compared with some of the Asian competitors as shown in Table 3. The data indicates that India’s productivity is very low as compared to Hong Kong, China and Taiwan. This low level of productivity could be due to poor technology, small plant size and inadequate infrastructure. Table 3 indicates that China, Taiwan, and Hon Kong have a higher number of machine per apparel firm in comparison to the Indian firms. Similarly, the Indian firms also have the less investment per machine.
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Per machine investment in India is estimated to be US$ 250 while it is US$ 1,500 in China. It suggests that India is using low level of technology with poor infrastructure. In addition to this, India’s clothing industry was reserved for small scale sector till 2000. The Indian government recognised that the major constraint affected the growth of the clothing industry was restriction on investments by large domestic and foreign companies. Consequently, the Government de-reserved the clothing industry from SSI list in January 1, 2001 to encourage the establishment of large scale garment manufacturing operations (Ministry of Textiles 2001). The National Textile Policy 2000 took several initiatives, including de-reservation, to give impetus to the industry. To facilitate technological advancement, Technology Up-gradation Fund Scheme (TUFS) was started from April 1, 1999 and the Government has extended again the Scheme up to the XIth Five Year Plan (Ministry of Textiles 2008). However, the benefits of the scheme are mostly availed by the textile firms, not by the apparel firms due to lack of awareness among them (Shekhar 2005). In addition to low productivity and poor technology, inadequate infrastructure has severely affected the export of clothing firms. One of the ways the Government has tried to improve the infrastructure is to create apparel parks for boosting clothing export.
Conclusion
During the MFA phase-out and post-phase-out period, share of clothing export has exceeded the share of textiles export in the world. Comparing India to China, we observe that China exported the textiles and clothing in the proportion of 33:67 while corresponding proportion in India was 50:50 during this period.
We observe that the growth of India’s clothing export was slow and stagnant during 1994 - 2004 which may be due to low productivity, poor technology and less number of machines per apparel firms. The government recognized this fact and adopted several initiatives, including de-reservation of the industry from SSI list, extension of TUFS and setting up integrated textile parks. These initiatives along with removal of QRs in the post-MFA regime would help in enlarging the scope of India’s production and export of clothing. The paper argues that boosting up of clothing export in India is more desirable than that of textiles from the point of view of value addition and employment generation.
The Indian Textile industry adds 14% to the industrial production and 8% to the GDP of India. It provides employment to 38 million people and thus, is the second largest employment provider after agriculture. The Indian Apparel & Textile Industry is one of the largest sources of foreign exchange flow into the country with the apparel exports accounting for almost 21% of the total exports of the country. A systematic SWOT analysis of the textile and apparel industry indicates the following:1. STRENGTH I. Raw material base
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India has high self sufficiency for raw material particularly natural fibres. India’s cotton crop is the third largest in the world. Indian textile Industry produces and handles all types of fibres. II. Labour Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian Apparel and textile Industry. III. Flexibility The small size of manufacturing which is predominant in the apparel industry allows for greater flexibility to service smaller and specialized orders. IV. Rich Heritage The cultural diversity and rich heritage of the country offers good inspiration base for designers. V. Domestic market Natural demand drivers including rising income levels, increasing urbanisation and growth of the purchasing population drive domestic demand. 2. WEAKNESS I. More dependence on cotton Due to over specialization in cotton, the bulk of the international market is missed out, synthetic products in India are expensive and fabric required for items like swimsuit, sky-wear and industrial apparel is relatively unavailable. II. Spinning Sector Spinning sector lacks modernization and there is a need of introducing new technology. III. Weaving Sector India has relatively less number of shuttle-less loom. IV. Fabric Processing Processing is the weakest link in the Indian textile value chain, adversely affecting its ability to compete in exports. 70
V. Poor Infrastructure High power costs and long export lead times are eroding India’s export competitiveness across the textile chain. VI. Low Labour Productivity Productivity levels for manufacturing various apparel items are far lower in India in comparison with its competitors. OTHER WEAKNESSSES VII. Less attention on man power training VIII. Poor quality standards IX. Distance of the potential market X. Lower average consumption in domestic market XI. Lack of professionalism and integration of supply chain XII. Dependence on quota system XIII. Very low investment on R&D XIV. Limited exploitation of economies of scale 3. OPPORTUNITIES I. Growing Industry World textile trade would continue to grow at a rate of 3-4% to reach $200-210 billon by 2010. II. Market access through bilateral negotiation The trade is growing between regional trade blocs due to bilateral agreements between participating countries. III. Integration of Information technology ‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in apparel manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast, easy, transparent and reduces duplication. IV. Opportunity in High Value Items 71
India has the opportunity to increase its UVR’s (Unit Value Realization) through moving up the value chain by producing value added products and by producing more and more technologically superior products. 4. THREATS I. Decreasing Fashion Cycle There has been an increase in seasons per year which has resulted in shortening of the fashion cycle. II. Formation of Trading Blocks Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world trade scenario. Existence of bilateral agreements would result in significant disadvantage for Indian exports. III. Phasing out of Quotas India will have to open its protected domestic market for foreign players thus domestic market will suffer.
Accounting Treatment Related to ExportImport
Export L/C Process Parties Documents Accounting Treatment Vouchers of Export L/C
EXPORT SECTION Payment for goods exported from Bangladesh should be received through an Authorized Dealer in freely convertible foreign currency or in Bangladesh Taka from a Non-Resident Account. PARTIES TO EXPORT TRANSACTIONS ? L/C Issuing Bank ? Importer ? L/C Advising Bank ? Exporter ? Confirming Bank (If any) ? Negotiating Bank ? The paying/Reimbursing
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Export L/C Export L/Cs is issued by a foreign bank favoring Bangladeshi exports through our banks having correspondent relationship with them. SERVICES PROVIDED BY BANKS AGAINST EXPORT L/C A) Advising of export L/C: The advising bank getting the import L/C sent by the issuing bank located abroad will advise the L/C to the beneficiary without any engagement or responsibly on their part. It will see the following only: I. Authenticity of L/C (Test agreed in case of Telex L/C and signature verified in case (air mail L/C). II. Merchandise specified in the L/C is permissible and clauses incorporated in the L/C are not against country’s regulations. B) Add Confirmation of Export L/C: Bank may add additional confirmation to export L/C where there is specific instruction from the L/ C issuing bank to do so. Additional confirmation of L/C gives the seller a double assurance of payment. Bank’s requirement of adding confirmation: I. Issuing Bank should be a reputed bank. II. Credit line/Arrangement with the L/C issuing bank. III. L/C clause are to be acceptable to confirming bank IV. Approval from the competent authority for adding confirmation of export L/C. V. Confirmation charges are to be recovered as per rules. C) Negotiating of Export L/C: Documents/papers to be submitted by exporter to bank for negotiation/collection against export L/C. the exporter submit the documents to bank as per requirement of bank. List of export documents is as follows: I. Export L/C II. EXP Form III. Bill of exchange IV. Invoice V. Bill of Lading
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VI. Packing List VII. Certificate of Origin VIII. Inspection Certificate IX. Insurance Document X. Weight List XI. Any other documents as per L/C Bank must scrutinize all the documents stipulated in the credit with reasonable care to ascertain whether they confirm with the terms and conditions or not. If the documents are drawn strictly in terms of the credit, the bank may negotiate and pay the value of export bill to the exporter at: ? OD buying rate (Sight Draft) ? Usance rate (For DA Bill) ? Appropriate rate for DP Bill Accounting Treatment After adjustment of pre-shipment credit: FBP (foreign bill purchased) A/C Party’s A/C Dr. Cr.
REALIZATION OF EXPORT PROCEEDS: On receipt of credit of the export bill from the foreign correspondent, banks realize the bill at specified rate and following vouchers are passed. H/O (ID) --------------Dr. FBP A/C----------------Cr. Income A/C on exchange earning ------Cr. COLLECTION DOCUMENTS: Export documents not covered by and L/C documents not drawn in terms of the credit are accepted on collection basis with the shipper authority at their documents are forwarded through foreign correspondents to the drawee for payment or acceptance. After realization of the bills on collection, export is paid appropriate rate after adjustment of liabilities on his account (if any)
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Voucher to be passed: Lodgment (Accepted for sending on collection): FBPL A/C FBPC A/C Dr. Cr.
REALIZATION: (REVERSE OF CONTRA VOUCHER) FDPC A/C FBPL A/C H/O (ID) A/C Party’s A/C Income on com/charge Dr. Cr. Dr. Cr. Cr.
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