FOREIGN TRADE PROCEDURE & DOCUMENTATION FOR BBA (IB)

UNIT -1

FOREIGN TRADE POLICY 2004-2009

The new Foreign Trade Policy of the Union Government was unveiled by the commerce
Minister Shri. Kamal Nath on August 31, 2004. With foreign trade largely freed and import
duties falling progressively, the policy have necessarily restricted itself to a facilitating role
rather. This policy stated, “Trade is not an end in itself , but a means to economic growth.

2.Objectives:
2.1. To double India’s percentage share of global merchandise trade by 2009.India had a share
of 0.8% in Foreign Trade between 2003-2004, the target in this policy was set to achieve 1.5%
share in world trade by 2009. It was 1.1% in 2005 & 1.2% in 2006 and in May 2007 it had
touched 1.5%.
2.2. To act as an effective instrument of economic growth by giving a thrust to employment
generation, especially in semi-urban and rural areas.

3.The key strategies:

3.1. Unshackling of controls and creating an atmosphere of trust and transparency
3.2. Simplifying procedures and bringing down transaction costs
3.3. Neutralizing incidence of all levies on inputs used in export products and adopting the
fundamental principle that duties and levies should not be exported.
3.4. Identifying and nurturing different special focus areas to facilitate development of India
as a global hub for manufacturing, trading and services.
3.5. Facilitating technological and infrastructural up gradation of the Indian Economy.
Especially through import of capital goods and equipment.
3.6. Avoiding inverted duty structure and ensuring that domestic sectors are not harmed.
3.7. Revitalizing Board of trade.
3.8. Activating Indian Embassies as key players in the export strategy of our country.

4. Special Focus Initiatives:

4.1. Sectors with significant export prospects coupled with potential for employment
generation in semi-urban and rural areas have been identified as thrust sectors, and specific
sectoral strategies have been prepared.
4.2. Further sectoral initiatives in other sectors will be announced from time to time. For the
present, Special Focus Initiatives have been prepared for Agriculture, Handicrafts,
Handlooms, Gems & Jewelry and Leather & Footwear sectors.
4.3. The threshold limit of designated ‘Towns of Export Excellence’ is reduced from Rs.1000
crores to Rs.250 crores in these thrust sectors.

5. Agriculture
5.1. A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports
of fruits, vegetables, flowers, minor forest produce and their value added products.
5.2. Capital goods imported under EPCG for agriculture permitted to be installed anywhere in
the Agri Export Zone.
5.3. ASIDE funds to be utilized for development for Agri Export Zones also.
5.4. Import of seeds, bulbs, tubers and planting material has been liberalized.
5.5. Export of plant portions, derivatives and extracts has been liberalized with a view to
promote export of medicinal plants and herbal products.

6. Gems & Jewelry

6.1. Duty free import of consumables for metals other than gold and platinum allowed up to
2% of FOB value of exports.
6.2. Duty free re-import entitlement for rejected jewelry allowed up to 2% of FOB value of
exports.
6.3. Duty free import of commercial samples of jewelry increased to Rs.1 lakh.
6.4. Import of gold of 18 carat and above shall be allowed under the replenishment scheme.

7. Handlooms & Handicrafts

7.1. Duty free import of trimmings and embellishments for Handlooms & Handicrafts sectors
increased to 5% of FOB value of exports.
7.2. Import of trimmings and embellishments and samples shall be exempt from CVD.
7.3. Handicraft Export Promotion Council authorized to import trimmings, embellishments
and samples for small manufacturers.
7.4. A new Handicraft Special Economic Zone shall be established.
8. Leather & Footwear
8.1. Duty free entitlements of import trimmings, embellishments and footwear components
for leather industry increased to 3% of FOB value of exports.
8.2. Duty free import of specified items for leather sector increased to 5% of FOB value of
exports.
8.3. Machinery and equipment for Effluent Treatment Plants for leather industry shall be
exempt from Customs Duty.

9.Export Promotion Schemes

9.1. Target Plus: A new scheme to accelerate growth of exports called ‘Target Plus’ has been
introduced. Exporters who have achieved a quantum growth in exports would be entitled to
duty free credit based on incremental exports substantially higher than the general actual
export target fixed. (Since the target fixed for 2004-05 is 16%, the lower limit of performance
for qualifying for rewards is pegged at 20% for the current year).
9.2. Rewards will be granted based on a tiered approach. For incremental growth of over
20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% of FOB value of
incremental exports.
9.3. Vishesh Krishi Upaj Yojana:
9.4. Another new scheme called Vishesh Krishi Upaj Yojana (Special Agricultural Produce
Scheme) has been introduced to boost exports of fruits, vegetables, flowers, minor forest
produce and their value added products. Export of these products shall qualify for duty free
credit entitlement equivalent to 5% of FOB value of exports. The entitlement is freely
transferable and can be used for import of a variety of inputs and goods.
9.5. Served from India Scheme: To accelerate growth in export of services so as to create a
powerful and unique ‘Served from India’ brand instantly recognized and respected the world
over, the earlier DFEC scheme for services has been revamped and re-cast into the ‘Served
from India’ scheme. Individual service providers who earn foreign exchange of at least Rs.5
lakh, and other service providers who earn foreign exchange of at least Rs.10 lakh will be
eligible for a duty credit entitlement of 10% of total foreign exchange earned by them. In the
case of stand-alone restaurants, the entitlement shall be 20%, whereas in the case of hotels, it
shall be 5%. Hotels and Restaurants can use their duty credit entitlement for import of food
items and alcoholic beverages.
9.6. EPCG: Additional flexibility for fulfillment of export obligation under EPCG scheme in
order to reduce difficulties of exporters of goods and services. Technological up gradation
under EPCG scheme has been facilitated and incentivized. Transfer of capital goods to group
companies and managed hotels now permitted under EPCG. In case of movable capital goods
in the service sector, the requirement of installation certificate from Central Excise has been
done away with. Export obligation for specified projects shall be calculated based on
concessional duty permitted to them. This would improve the viability of such projects..
10.1.EOUs shall be permitted to retain 100% of export earnings in EEFC accounts
10.2.Income Tax benefits on plant and machinery shall be extended to DTA units which
convert to EOUs.
10.3.Import of capital goods shall be on self-certification basis for EOUs.
10.4.For EOUs engaged in Textile & Garments manufacture leftover materials and fabrics
upto 2% of CIF value or quantity of import shall be allowed to be disposed of on payment of
duty on transaction value only.
10.5.Minimum investment criteria shall not apply to Brass Hardware and Hand-made Jewelry
EOUs (this facility already exists for Handicrafts, Agriculture, Floriculture, Aquaculture,
Animal Husbandry, IT and Services).

11. FTWZ Free Trade & Warehousing Zone

A new scheme to establish Free Trade and Warehousing Zone has been introduced to create
trade-related infrastructure to facilitate the import and export of goods and services with
freedom to carry out trade transactions in free currency. This is aimed at making India into a
global trading-hub.FDI would be permitted up to 100% in the development and establishment
of the zones and their infrastructural facilities. Each zone would have minimum outlay of
Rs.100 crores and five lakh sq. mts. built up area. Units in the FTWZs would qualify for all
other benefits as applicable for SEZ units.

12. Import of Second Hand Capital Goods

12.1.Import of second-hand capital goods shall be permitted without any age restrictions.
12.2.Minimum depreciated value for plant and machinery to be re-located into India has been
reduced from Rs.50 crores to Rs.25 crores.

13. Services Export Promotion Council:

An exclusive Services Export Promotion Council shall be set up in order to map opportunities
for key services in key markets, and develop strategic market access programmes, including
brand building, in co-ordination with sectoral players and recognized nodal bodies of the
services industry.

14. Common Facilities Centre:

Government shall promote the establishment of Common Facility Centers for use by
home-based service providers, particularly in areas like Engineering & Architectural design,
Multi-media operations, software developers etc., in State and District-level towns, to draw in
a vast multitude of home-based professionals into the services export arena.

15. Procedural Simplification & Rationalization Measures

15.1.All exporters with minimum turnover of Rs.5 crores and good track record shall be
exempt from furnishing Bank Guarantee in any of the schemes, so as to reduce their
transactional costs.
15.2.All goods and services exported, including those from DTA units, shall be exempt from
Service Tax.
15.3.Validity of all licenses/entitlements issued under various schemes has been increased to
a uniform 24 months.
15.4.Number of returns and forms to be filed have been reduced. This process shall be
continued in consultation with Customs & Excise.
15.5.Enhanced delegation of powers to Zonal and Regional offices of DGFT for speedy and
less cumbersome disposal of matters.
15.6.Time bound introduction of Electronic Data Interface (EDI) for export transactions.
15.7.75% of all export transactions to be on EDI within six months.

16. Pragati Maidan:

In order to showcase our industrial and trade prowess to its best advantage and
leverage existing facilities, Pragati Maidan will be transformed into a world-class complex.
There shall be state-of-the-art, environmentally-controlled, visitor friendly exhibition areas
and marts. A huge Convention Centre to accommodate 10,000 delegates with flexible hall
spaces, auditoria and meeting rooms with high-tech equipment, as well as multi-level car
parking for 9,000 vehicles will be developed within the envelope of Pragati Maidan.
17. Legal Aid:
Financial assistance would be provided to deserving exporters, on the
recommendation of Export Promotion Councils, for meeting the costs of legal expenses
connected with trade-related matters.
18. Grievance Redressal:
A new mechanism for grievance redressal has been formulated and put into place by
a Government Resolution to facilitate speedy redressal of grievances of trade and industry.
19. Quality Policy:
19.1.DGFT shall be a business-driven, transparent, corporate oriented organization.
19.2.Exporters can file digitally signed applications and use Electronic Fund Transfer
Mechanism for paying application fees.
19.3.All DGFT offices shall be connected via a central server making application processing
faster. DGFT HQ has obtained ISO 9000 certification by standardizing and automating
procedures.
20. Bio Technology Parks :
Biotechnology Parks to be set up which would be granted all facilities of 100%
EOUs.
21. Co-acceptance:
Validation introduced as equivalent to irrevocable letter of credit to provide wider
flexibility in financial instrument for export transaction
22. Board of Trade:
The Board of Trade shall be revamped and given a clear and dynamic role. An
eminent person or expert on trade policy shall be nominated as President of the Board of
Trade, which shall have a Secretariat and separate Budget Head, and will be serviced by the
Department of Commerce.

EXPORT LICENSING PROCEDURES AND FORMALITIES

What is an export license?

Within the list of products that can be exported, the Government of India
categorizes them into: a) Freely exportable, b) Restricted and c) Prohibited. The
Indian Trade Clarification (ITC), which is based on the Harmonized System of
Nomenclature (HSN) of coding, classifies export goods in India.

While prohibited goods cannot be exported, an export license is given to

goods in restricted category, allowing Indian exporters to sell these products
internationally. Once you have decided to export, you can check which category
your products fall under and, accordingly, obtain a license if required. This license
is issued after a careful review of facts provided in the export transaction .

How to apply for an export license?

Here’s the step-by-step process to apply for an export license from DGFT : 2

• On the DGFT website, go to the Online ECOM Application section under

services.
• Select ‘Restricted Item Import License or Restricted Export Item’.
• Fill the application online and add all the required details.
• Mail a copy of the application to export-dgft@nic.in in a PDF format and attach
mandatory documents.
The application is processed by the export cell. Post a screening, the
exporter receives a deficiency letter in three working days. After submitting
required documents or information, the EXIM facilitation committee (EFC)
reviews the application and sends an authorization letter to the exporter. The
exporter must then approach the jurisdictional regional authority (RA) of the
DGFT with a copy of the permission letter, application, and the supporting
documents. The RA then issues the export license.

The formalities involved in getting an export license are as follows :

1. Opening a bank account in any bank authorised

by the Reserve Bank of India (RBI) and getting an account number.
2. Obtaining Import Export Code (IEC) number from the Directorate General of Foreign Trade
(DGFT) or Regional Import Export Licensing Authority.
3. Registering with appropriate Export Promotion
Council.
4. Registering with Export Credit and Guarantee Corporation (ECGC) in order to safeguard
against risks of non-payments.
EXPORT PRICE QUOTATION:
Generally, an export transaction would begin with buyer requesting for quotation form to the
seller. Quote serves as a promise in form of a formal statement by the seller that he would
provide the product at a specified time and price. Seller would be presenting the quotation in
proforma invoice form.

DEEMED EXPORT:

Deemed Exports "Deemed Exports" refer to those transactions in which the goods supplied do not
leave the country, and the payment for such supplies is received either in Indian rupees or in free
foreign exchange. The following categories of supply of goods by the main/ sub-contractors are
regarded as "Deemed Exports" under the Foreign Trade Policy, provided the goods are manufactured
in India:

(a) Supply of goods against Advance Authorisation/Advance Authorisation for annual

requirement/DFIA
(b) Supply of goods to Export Oriented Units (EOUs) / Software Technology Park (STP) units /
Electronic Hardware Technology Park (EHTP) units / Bio Technology Park (BTP) units
(c) Supply of capital goods to Export Promotion Capital Goods (EPCG) Authorisation holders
(d) Supply of goods to projects financed by multilateral or bilateral Agencies/Funds as notified by
the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding
(ICB) in accordance with the procedures of those Agencies/Funds, where the legal agreements
provide for tender evaluation without including customs duty
(e) Supply of capital goods, including in unassembled/disassembled condition as well as plants,
machinery, accessories, tools, dies and such goods which are used for installation purposes till the
stage of commercial production, and spares to the extent of 10% of the FOR value to fertilizer
plants (f) Supply of goods to any project or purpose in respect of which the Ministry of Finance,
by a notification, permits the import of such goods at zero customs duty
(g) Supply of goods to the power projects and refineries not covered in (f) above (h) Supply of
marine freight containers by 100% EOU (Domestic freight containers - manufacturers) provided
the said containers are exported out of India within 6 months or such further period as permitted
by the customs
(i) Supply to projects funded by UN agencies
(j) Supply of goods to nuclear power projects through competitive bidding as opposed to ICB. The
benefits of deemed exports shall be available under paragraph (d), (e), (f) and (g) only if the
supply is made under the procedure of ICB.
 BENEFITS OF DEEMED EXPORT:
Deemed exports shall be eligible for any/all of the following benefits in respect of manufacture and
supply of goods qualifying as deemed exports subject to the terms and conditions as given in the
Chapter-8 of Handbook of Procedures (Vol.I), 2009-2014 of the Department of Commerce, Ministry
of Commerce & Industry:
(a) Advance Authorisation/Advance Authorisation for annual requirement/DFIA
(b) Deemed Export Drawback.
(c) Exemption from terminal excise duty where supplies are made against ICB.
In other cases, refund of terminal excise duty will be given. The details of “Deemed Exports”
scheme are available in Chapter-8 of India’s Foreign Trade Policy and Procedures on the website
of the Department of Commerce, Ministry of Commerce & Industry.
CATEGORIES OF SUPPLY ROLE OF EXPORT PROMOTION IN
EXPORT CREDIR GUARANTEE COPORATION(ECGC)

he ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Ltd.)
wholly owned by government of India, was set up in 1957 with the objective of promoting
exports from the country by providing credit risk insurance and related services for exports.
Over the years it has designed different export credit risk insurance products to suit the
requirements of Indian exporters. ECGC is essentially an export promotion organisation,
seeking to improve the competitiveness of the Indian exports by providing them with credit
insurance covers. ECGC Ltd. also administers the National Export Insurance Account
(NEIA) Trust which caters to project exports of strategic and national importance.
The Corporation has introduced various export credit insurance schemes to meet the
requirements of commercial banks extending export credit. The insurance covers enable the
banks to extend timely and adequate export credit facilities to the exporters. ECGC keeps its
premium rates at the optimal level.
ECGC provides
• a range of insurance covers to Indian exporters against the risk of non-realization of
export proceeds due to commercial or political risks
• different types of credit insurance covers to banks and other financial institutions to
enable them to extend credit facilities to exporters
• Export Factoring facility for MSME sector which is a package of financial products
consisting of working capital financing, credit risk protection, maintenance of sales
 ledger and collection of export receivables from the buyer located in overseas
country.
• Export Credit Guarantee Corporation of India is fundamentally an export
promotion organization, which seeks to enhance the competitiveness of
Indian exports by offering them credit insurance covers.
• Over the years ECGC has considered various export credit risk insurance
products suiting the needs of Indian exporters. This corporation was set up
for ensuring the smooth functioning of Indian exporters by minimizing the
risks associated with the payments emanating from other nations. This
insurance cover which is provided by ECGC also assists the Indian
exporters with better access to credit facilities from banks and other
financial institutions.
• ECGC is the 5th largest credit insurance company dealing with the exports
of any country. Export Credit Guarantee Corporation of India offers
protection against the non-payment by an importer. Due to this insurance
cover, the financial institutions are better placed for lending and providing
larger credit to exporters. ECGC also offers credit ratings as well as shares
information on various countries and risks associated with doing business
with/in those countries.

EXPORT PROMOTION AND COUNCIL:

There are fourteen Export Promotion Councils under the administrative control of the
Department of Commerce. These Councils are registered as non-profit organizations under the
Companies Act/ Societies Registration Act. The Councils perform both advisory and executive
functions. The role and functions of these Councils are guided by the Foreign Trade Policy,
2009-14. These Councils are also the registering authorities for exporters under the Foreign
Trade Policy 2009-14.

Export Promotion Councils are set up by the Government of India to assist Indian exporters in
expanding their businesses to the international markets. The main role of a council is to promote the
product category that it handles and support exporters in that industry.

COMMODITY BOARDS:
 Commodity Boards
There are five statutory Commodity Boards under the Department of Commerce. These
Boards are responsible for production, development and export of tea, coffee, rubber, spices
and tobacco.

Coffee Board

The Coffee Board is a statutory organisation constituted under Section (4) of the Coffee
Act, 1942 and functions under the administrative control of the Ministry of Commerce and
Industry, Government of India. The Board comprises 33 Members including the Chairperson,
who is the Chief Executive and functions from Bangalore. The remaining 32 Members
representing various interests are appointed as per provisions under Section 4(2) of the Coffee
Act read with Rule 3 of the Coffee Rules, 1955. The Board is mainly focusing its activities in
the areas of research, extension, development, quality upgradation, economic & market
intelligence, external & internal promotion and labour welfare. The Board has a Central Coffee
Research Institute at Balehonnur (Karnataka) and Regional Coffee Research Stations at
Chettalli (Karnataka), Chundale (Kerala), Thandigudi (Tamil Nadu), R.V.Nagar (Andhra
Pradesh) and Diphu (Assam), and a bio-technology centre at Mysore, apart from the extension
offices located in coffee growing regions of Karnataka, Kerala, Tamil Nadu, Andhra Pradesh,
Orissa and North Eastern Region.

Rubber Board

The Rubber Board is a statutory organisation constituted under Section (4) of the
Rubber Act, 1947 and functions under the administrative control of Ministry of Commerce and
Industry. The Board is headed by a Chairman appointed by the Central Government and has
twenty seven members representing various interests of natural rubber industry. The Board’s
headquarters is located at Kottayam in Kerala. The Board is responsible for the development
of the rubber industry in the country by way of assisting and encouraging research,
development, extension and training activities related to rubber. It also maintains statistical
data of rubber, takes steps to promote marketing of rubber and undertake labour welfare
activities. The activities of the Board are exercised through nine departments viz. Rubber
Production, Research, Processing & Product Development, Training, License & Excise Duty,
Statistics and Planning, Market Promotion, Finance & Accounts and Administration. The
Board has five Zonal Offices and 43 Regional Offices. It has a Central Rubber Research
Institute in Kottayam and 10 regional research stations located in various rubber growing states
of the country. It also has a Rubber Training Institute located at Kottayam.

Tea Board

Tea Board was set up as a statutory body on 1st April, 1954 as per Section (4) of the
Tea Act, 1953. As an apex body, it looks after the overall development of the tea industry. The
Board is headed by a Chairman and consists of 30 Members appointed by the Government of
India representing various interests pertaining to tea industry. The Board’s Head Office is
situated in Kolkata and there are two Zonal offices-one each in North Eastern Region at Jorhat
in Assam and in Southern Region at Coonoor in Tamil Nadu. Besides, there are fifteen regional
offices spread over in all the major tea growing states and four metros. For the purpose of tea
promotion, three overseas offices are located at London, Moscow and Dubai. During the year
under report a separate directorate has been established to look after the developmental needs
of the small tea sector in the country. Several Sub regional offices have been opened in all the
important areas of small growers concentration to maintain a closer interface with the growers.
The functions and responsibilities of Tea Board include increasing production and productivity,
improving the quality of tea, market promotion, welfare measures for plantation workers and
supporting Research and Development. Collection, collation and dissemination of statistical
information to all stake holders is yet another important function of the Board. Being the
regulatory body, the Board exerts control over the producers, manufacturers, exporters, tea
brokers, auction organisers and warehouse keepers through various control orders notified
under Tea Act.

Tobacco Board

The Tobacco Board was constituted as a statutory body on 1st January, 1976
under Section (4) of the Tobacco Board Act, 1975. The Board is headed by a Chairman
with its headquarters at Guntur, Andhra Pradesh and is responsible for the development
of the tobacco industry. While the primary function of the Board is export promotion
of all varieties of tobacco and its allied products, its functions extend to production,
distribution (for domestic consumption and exports) and export promotion of Flue
Cured Virginia (FCV) tobacco.
 Spices Board

The Spices Board was constituted as a statutory body on 26th February, 1987 under
Section (3) of the Spices Board Act, 1986. The Board is headed by a Chairman appointed by
Central Government and consists of 32 members. The Board’s Head Office is at Kochi with
Regional/ Zonal/ Field offices throughout India. It is responsible for the development of
cardamom industry and export promotion of the 52 spices listed in the Schedule of the Spices
Board Act, 1986. The primary functions of the Board include production development of small
and large cardamom, development and promotion of export of spices. The Board is also
implementing programmes for development of spices in North Eastern region, post-harvest
improvement of spices and organic spices in the country. The activities of the Board include
issue of certificate of registration as exporter of spices; undertaking programmes and projects
for promotion of export of spices like setting up of spices parks, support of infrastructure
improvement in spices processing, assisting and encouraging studies and research on medicinal
properties of spices, development of new products, improvement of processing, grading and
packaging of spices; and controlling & upgrading quality for export (including setting up of
regional quality evaluation labs and training centres). With regard to cardamom, the Board’s
licenced auctioneers and dealers facilitate the domestic marketing through e-auctions. The
research activities on cardamom are also done by the Board through its Indian Cardamom
Research Institute.

EXPORT PROMOTION SCHEME:

Key Export Promotion Schemes In India For Exporters:

The following section shall cover all the primary export schemes in detail. The benefit
under more than one scheme can be taken for a given consignment with some exceptions. So go
through all the schemes and examine your eligibility to access export incentives in India.
Merchandise Exports From India Scheme (MEIS Scheme):
The objective of this Export Promotion Scheme is to encourage the producer and export of
notified products/goods from India.

• Funds Allocated – 40,000 Cr. Annually (Approx)

• Under the said scheme, an incentive of 2 to 5 per cent of the FOB value of exports is
provided to exporters and manufacturer cum exporters regardless of their yearly turnover.
• The export of items notified in Appendix 3B only have access to MEIS benefits.
• There are over 8000 items/products that fall under this scheme
 • There is no limitation of the nation. i.e. eligible items shipped to any nation can access the
MEIS scheme.
• MEIS rate of incentives varies product-wise.
• Application relating to MEIS scheme is to file digitally to the respective DGFT office
• MEIS incentives are not provided in the form of bank transfers or cash. It is available in
the form of duty credit scrip, also called MEIS licenses. These licenses can be utilised for
payment of import-related duties or can be sold in the open marketplace at a discounted
rate.
• MEIS is soon to be replaced with the new RoDTEP Scheme. However, shipments till
December 2020 or March 2021 can still claim MEIS benefits.

Rebate Of Taxes And Duties On Export Items (RoDTEP Scheme):

• The new RoDTEP Scheme serves as a replacement for MEIS Scheme, which came into
effect in December 2020.
• RoDTEP Scheme was launched because the former scheme was not WTO-compliant
[1]

and it didn’t comply with the international trade rules.

• This Export Promotion Scheme seeks to remit all those undercover taxes and levies,
which was otherwise not available under any schemes, for example:
• State and Central taxes on fuel utilised for shipment of exportable products.
• The duty imposed by the state on electricity utilised for production
• Mandi tax imposed by APMCs.
• Stamp duty and toll tax on the shipping documents
• Toll tax & stamp duty on the import-export documentation.

Service Export From India Scheme (SEIS Scheme):

• Service Exports from India Scheme aims to advocate and strengthen export of notified
services from India.
• Service exports also facilitate the massive foreign exchange to the nation, henceforth, the
motivation of the service exporters is vital, and it is the need for an hour.
• Under this scheme, an incentive of 3 to 7 per cent of net foreign exchange earnings is
facilitated to service exporters.
 • This Export Promotion Scheme seeks service providers to have a valid IEC code with
minimum net foreign exchange earnings amounting to 15,000 USD to be eligible under
the scheme.
• Services mentioned in Appendix 3D are only eligible to access the rewards.
• Just like the MEIS scheme, rewards under this scheme are facilitated in the form of duty
credit scrips.
• An application under this scheme is to be filed digitally to the respective DGFT office

Advance Authorisation Scheme (AAS):

• Advance License scheme came into effect to ensure duty-free import of raw materials
required for the production of exportable items
• It indicates that no import shall be imposed on the import of raw material if it is used for
the production of exportable items.
• An Advance license can be granted for deemed exports (For supply to any AA/EPCG
holder or Ex. Supply to EOU units) and physical exports (including supply to SEZ).
• Advance License comes with a requirement of maintaining at least 15 per cent value
addition and export the items within 18 months from the date of the issuance of the
license.
• The materials imported under this scheme come with “Actual User condition”-meaning
they cannot be sold or transferred to any third party.
• This Export Promotion Scheme is introduced by the Directorate General of Foreign Trade

Duty-Free Import Authorisation (DFIA Scheme):

• The aim of this scheme is to facilitate duty-free import of raw material. But, unlike AA,
this scheme refers to a post-export scheme. It implies that duty-free import is permissible
only after the export is made.
• DFIA scheme covers only those items which are listed under Standard Input-Output
Norms (SION).
• Another key feature of this scheme is that it is transferable in nature. However, the
condition relating to the actual user condition doesn’t apply here.
 • Just like the Advance Authorisation Scheme, the DFIA scheme is launched by the DGFT.

Duty Drawback Scheme (DBK Scheme):

• DBK scheme proposes refund of the duties encountered by the exporter during shipment.
The scheme was launched and probed by the Department of Revenue [Customs
Department].
• Under this scheme, duties of central excise and customs authority that are chargeable on
imported and domestic material utilised in the production of exportable items are
refunded back.
• The duty drawback rate differs product-wise. One can locate the entire Duty Drawback
schedule on the CBIC’s portal.
• Unlike other schemes, the amount under this scheme is directly credited into the
exporter’s bank account within two months from the date of shipment.
• If you are accessing the GST refund, then you should choose a lower rate of the Duty
Drawback.
• DBK can be integrated with any other schemes as mentioned, but it cannot be integrated
with the DFIA Scheme or Advance Authorisation scheme

RoSCTL Scheme: Rebate On State And Central Taxes And Levies:

• The new RoSCTL Scheme was introduced by GOI as a replacement for its predecessor on
07.03.2019.
• RoSCTL scheme only covers Apparels & made-up Industries encompassing Chapters 61,
62 & 63 of ITC (HS).
• This Export Promotion Scheme facilitated a refund of Central and State taxes and levied
like VAT on fuel, Mandi tax, Captive power, Electricity Duty, etc.
• Directorate General of Foreign Trade implemented this scheme for rewarding exporters
via duty credit scrips.
Export Promotion Capital Goods Scheme (EPCG Scheme):

• The aim of this Export Promotion Scheme is to provide the import of capital
goods/machinery for manufacturing goods and improve India’s manufacturing
competitiveness.
• Under the EPCG Scheme, Manufacturer cum exporter or a merchant exporter connected
with a supporting manufacturer can import capital goods/equipment required for Pre-
production, production and post-production of exportable items at zero per cent duty
• Application to secure an EPCG License should be made to the respective DGFT office.
• The Service exporters earning in overseas currencies can also apply for an EPCG license.
Various service exporters can leverage this scheme to minimise capital costs. Service
Exporters like Tour and travel operators, hotels, logistics facilities, construction entities
can use this scheme by importing capital goods/machinery at zero per cent duty.
• EPCG schemes underpin some export obligations. The import of capital goods under this
scheme is subject to an export obligation which is equivalent to six times of duty saved,
to be fulfilled within six years from the date of issuance of EPCG authorisation.

EOU/EHTP/STP/BTP Schemes:

• EOU Scheme [Export-oriented Units] is accessible to units that are only engaged with
exporting activities.
• This scheme came to effect in 1981, and it aims at increasing export activities in the
country.
• The EOU schemes intend to facilitate a viable framework to the companies involved with
100 per cent exports by rendering them certain waivers and concessions in compliance
and tax-related matters, thereby making it seamless for them to operate a business.
• The primary benefits of this scheme include; Nil import duties for the procurement of raw
materials or capital goods, swift custom clearance, etc.
• An application has to be filed with the Board of approval to establish an EOU unit.
• The minimum investment in production facility and machinery required is 1 Cr with
exemptions to certain sectors.
• Around 2011-12, the EOU scheme turned out less effective owing to the unavailability of
tax benefits under the IT Act.
GST Refund For Exporters / LUT Bond / 0.1% GST Benefit For
Merchant Exporters:

• Exporters have facilitated an array of preferential facilities as per the GST Act.
• The LUT facility under GST enables exporters to skip GST payment in the pre-shipment
phase. For this purpose, the exporters need to secure a letter of undertaking/bond.
• Exporters can prompt customs for reemitting claim refund on IGST paid for the shipment.
• Merchant exporters/traders can procure exportable goods from domestic suppliers at a
concessional GST rate of 0.1%. This minimizes the burden of GST and resolves problems
relating to working capital to a great extent.

Transport And Marketing Assistance Scheme (TMA Scheme):

• This Export Promotion Scheme was introduced on 01.03.2019, and it covers agricultural
export products only.
• Under this scheme, the GOI subsidises the freight cost to make Indian agricultural items
competitive in the international market.
• The TMA scheme covers export products cited under chapters 1 to 24 of the ITC HS
code, including plantation and marine products. But, some specific products enlisted
under Chapters 1 to 24 would not be encompassed under the scheme for assistance
• Assistance under this scheme shall be facilitated in cash via a bank transfer as a part of
subsidisation of freight cost addressed by the exporter.
• DGFT is the prime authority that has launched this scheme.

Deemed Export Benefits:

The objective of deemed export benefits is to inculcate the transparent and unprejudiced
environment for the domestic manufacturers in certain specified scenarios, as may be directed by
the GOI from time to time.
Given supplies are deemed as Deemed Exports :

• Supply of items against Advance Authorisation (AA) / Advance Authorisation for annual
requirement /DFIA;
• Supply of items to EOU/ EHTP/ STP /BTP Units;
• Supply of capital goods against EPCG License.

Common benefits available to Deemed Export supplies include:

1. Advance Authorisation/DFIA;
2. Refund of terminal excise duty.
3. Deemed Export Duty Drawback;

Market Access Initiative (MAI Scheme):

• Market Access Initiative (MAI Scheme) rolled out by the GOI on 16th February 2018.
• This Export Promotion Scheme aims to play a proactive role in encouraging export from
India by pinpointing new markets and supporting the export promotion undertakings in
the new markets.
• The scope of the scheme is to facilitate financial aid to eligible departments for executing
undertakings like market research, direct/indirect marketing, and promotion & branding
in new markets, handling statutory compliance costs in the importing nation.
• The eligible department includes all the Commodity Boards, Export Promotion Councils,
certified trade promotion agencies, recognised associations, individual exporters, reputed
institutions like IITs, IIM’s, etc.

How Does The MAI Scheme Benefit Individual Exporters?

• MAI scheme benefits individual exporters in two different ways. To avail of such
benefits, the Individual exporters need to contact the respective EPC.
• Reimbursement of Airfare for Global Events – Maximum of Rs. 70,000/- (Individual
ceiling) (Rs.1lakhs for LAC nations). However, such benefit is only accessible to
 exporters having annual turnover below 30 cr in the preceding FY. Also, the exporter
should be the EPC’s members for at least one year to become eligible for this benefit.
• Statutory compliances in the buyer nation- Maximum ceiling of Rs, 50, 00,000/annum per
exporter on a 50-50% sharing basis. Statutory compliance entails Registration charges
paid in the importing nation in the case of biotechnology, pharma, chemicals/
agrochemicals, animal/marine products, etc.

Market Development Assistance (MDA) Scheme:

• This is an erstwhile Export Promotion Scheme that was clubbed into new Market Access
Initiative, 2018
• The new scheme encompasses the scope of both the previous MAI scheme and the
Market Development Assistance scheme.

Towns Of Export Excellence (TEE):

• The overall export valuation of town goods is more than Rs 750 Cr. And owing to high
export potential, these goods are tagged as Towns of export excellence (TEE).
• Fiscal support is facilitated to recognised facilities in those towns as per the norms cited
under MAI Scheme
• According to Appendix 1B, there are 37 towns of export excellence pan India.
• TEE aims to indirectly benefit the Individual exporters

Interest Equalisation Scheme (IES):

• IES (aka Interest subvention scheme) came to effect in April 2015. This scheme aims to
facilitate pre and post-shipment export credit in domestic currency.
• The scheme facilitates 5 per cent interest support to MSME industries and 3 per cent
support to all exporters in respect of the identified 416 tariff lines.
• This scheme is introduced and regulated by the Reserve Bank and other designated banks.
 • Banks pass on the benefit of lower interest to the exporters and then claim a
reimbursement from the Reserve bank.

NIRVIK Scheme:

• The Export Credit Guarantee Corporation of India rolled out the NIRVIK scheme to
facilitate higher insurance cover, lower premiums for small exporters, and a user-friendly
claim settlement process.
• It typically serves as an insurance cover guarantee scheme that renders a coverage up to
90 per cent of principal and interest as against the prevailing credit guarantee of only up
to 60 per cent loss. The cover shall encompass the pre and post-shipment export credit.
• This scheme shall ensure that the overseas and rupee credit interest rate shall remain
below 4 per cent and 8 per cent, respectively.
• This scheme is launched by ECGC Ltd, a wholly-owned department of the Ministry of
Commerce and Industry.

Conclusion:
An availability of proper credit schemes has prevented Indian exports to touch its real potential
for years. GOI launched these Export Promotion Schemes to patch export loopholes by
incentivizing exporters.

UNIT-2
EXPORT PROMOTION
EXPORT ORIENTED UNITS(EOU) SCHEMES:

Export Oriented Units:

Export-oriented units are units undertaking to export their entire production of goods. EOUs can
engage in manufacturing, services, development of software, repair, remaking, reconditioning, re-
engineering including making of gold/silver/platinum jewellery and articles. Further, units involved in
agriculture, agro-processing, aquaculture, animal husbandry, biotechnology, floriculture, horticulture,
pisciculture, viticulture, poultry, sericulture and granites can also obtain the status of EOU.
Benefits of Export Oriented Units:
The Export Oriented Units enjoys the below following benefits
EOUs has a permit to procure raw material or capital goods duty-free, either through import or
through domestic sources;
EOUs are eligible for reimbursement of GST;
EOUs are eligible for reimbursement of duty paid on fuels procured from domestic oil companies;
EOUs are eligible for claiming input tax credit on the goods and services and refund thereof;
Fast track clearance facilities;
Exemption from industrial licensing for the manufacture of items reserved for SSI sector.

Eligibility Criteria for EOU:

For the status of EOU, the project must have a minimum investment of Rs.1 crore in plant and
machinery. This condition does not apply for software technology parts, electronics hardware technology
parks and biotechnology parks. Further, EOU involved in handicrafts, agriculture, animal husbandry,
information technology, services, brass hardware and handmade jewellery does not have any minimum
investment criteria.

What Is the Export Oriented Units (EOU) Scheme?

The Export Oriented Units (EOU full form) scheme is a government
programme that was introduced in India. The goal of the EOU scheme is to
promote exports and create jobs in the export sector. The scheme offers a number
of incentives to exporters, including tax breaks and subsidies.
The EOU scheme is based on the premise that exports are a key source of growth
for Indian businesses. In addition, the scheme is designed to help small and
medium-sized businesses (SMBs) become more competitive in global markets.
The EOU scheme provides a range of incentives, including tax breaks and
subsidies, to help exporters start and grow their businesses.
The EOU scheme is divided into two parts: the first part focuses on boosting
exports from companies within certain sectors (such as textiles and
pharmaceuticals), while the second part offers incentives for companies that are
looking to expand their exports. The EOU scheme offers a range of benefits for
companies who participate in it, including tax breaks and subsidies.
The EOU programme has been very successful in promoting exports in India. In
the fiscal year 2018, Indian companies exported $263 billion worth of goods – a
20% increase over the previous year.

OBJECTIVES:
1. To increase exports,
2. Earn foreign exchange to the country,
3. Transfer of latest technologies
4. Stimulate direct foreign investment and
5. To generate additional employment.

The Statistics of the Export Oriented Units (EOU)

Scheme:
The Export Oriented Units (EOU) scheme is a policy framework launched
by the Indian government to encourage exports. The scheme provides incentives to
exporters, including tax holidays and exemption from customs duties. In the fiscal
year 2018-19, the government approved grants worth ₹ 1,356 crore under the EOU
scheme.
Since its inception, the EOU scheme has received acclaim from both
domestic and international businesses. According to various reports, the scheme
has led to a 50% increase in exports from small and medium enterprises (SMEs).
In addition, the reports state that the EOU scheme has created over 28,000 jobs.
The main objectives of the EOU scheme are to support exports and create jobs.
The benefits of the scheme are available to both domestic and foreign companies.
The scheme also aims to promote innovation and development in export sectors.

Who Supports the EOU Scheme?

The Export Oriented Units (EOU) scheme has been garnering support from
many quarters. A number of corporations have spoken in favour of the scheme.
The government is hopeful that the scheme will spur growth and create jobs in the
export sector. It has also earmarked ₹ 10,000 crore for the scheme over the next
five years.

Why Do Some Companies Choose to Use EOU Scheme?

The Export Oriented Units (EOU) scheme is a way for companies to reduce
their tax liability by moving their profits overseas. The main benefits of using the
EOU scheme are that it can reduce your tax bills, and it can make you more
competitive in the global market.
Companies can use the EOU scheme to move profits from any type of business,
including manufacturing, retail, and services.

Consequences of the EOU Scheme:

The Export Oriented Units (EOU) Scheme has had a significant impact on
the Indian economy. The scheme has been designed to promote exports and create
foreign investment opportunities in India. Several key consequences of the scheme
have arisen, including:
– The growth of the Indian exports sector has been accelerated
– The creation of employment opportunities in the export sector has been
facilitated
– The establishment of infrastructure in the export sector has been facilitated
– Foreign investment in the export sector has been encouraged

Potential for Future Changes to the EOU Scheme:

Some potential changes that could be made to the scheme include increasing
the amount of support available, extending the expiry date, and making it more
flexible. It is also possible that the scheme could be merged with other government
support schemes, such as the Regional Development Agencies (RDAs).
 Whatever happens, it is important that any changes are considered carefully
so that the scheme continues to support exports and help businesses to become
more competitive.

Key Takeaways of EOU:

The Export Oriented Units (EOU) scheme is a government initiative that
was introduced to promote exports and create a global market for Indian products.
The EOU scheme offers incentives to companies that export goods and services
worth ₹ 500 crores or more. The benefits of the EOU scheme include exemption
from customs duty, reduced rate of excise duty, and income tax rates of 10-25%.
The EOU scheme is administered by the Commerce and Industry Ministry.
Eligibility for the scheme is based on the company’s export performance and its
compliance with certain conditions, such as maintaining a certain level of exports
over a period of three years.
The main benefits of the EOU scheme are:
• reduced customs duty rates;
• income tax relief;
• exemption from excise duty; and
• facilitation in getting export licenses.

SETTING UP OF EOU
setting up an EOU, the procedure is as follows:
1. For setting up an EOU application shall be file in ANF 6A (Applications should be in triplicate) to
the Development Commissioner Officer.

2. Application shall be file alongwith a crossed Demand Draft of Rs. 5000/- drawn in favor of the
pay & accounts, officers, Ministry of Commerce & Industry, Department of Commerce, payable at the
Central Bank of India, Udhyog Bhawan, New Delhi.

3. Application for setting up of EOU shall be approved or rejected by Units Approval

Committee within 15 days, as per the criteria specified in appendix 6A
 4. Minimum investment in Plant & Machinery and Building should be as prescribed [This does
not apply to already existing units and units present in Handicrafts/ STP/EHTP/Floriculture/
Agriculture/Animal Husbandry/Aquaculture/ Information Technology/ services and other similar
sectors as determined by BOA].

SUPPLIES BY DATA(DOMESTIC TARIFF AREA) UNITS TO EOU:

Domestic Tariff Area (DTA) or Domestic Tariff Zone (DTZ) means an area within India that is
outside the Special Economic Zones and EOU/EHTP/STP/BTP. [1]

The units operating under certain specific schemes such as EPZ/SEZ/EOU are expected to carry out their
activities within a customs bonded area. Any area which is not under the jurisdiction of a custom bonded
area is called a Domestic Tariff Area. [2]

Procedure for the procurement from the domestic tariff area

Supplies from the DTA to a SEZ unit or developer without payment of central excise duty shall be
on the cover of ARE-1, [clarification needed]
as is the case for normal exports out of India, i.e. under a bond
or undertaking executed by the DTA supplier with the jurisdictional central excise officer. [3]

A bill of export needs to be filed by the DTA supplier or the unit/developer on behalf of DTA to the
authorized officer for assessment before the arrival of goods. [4]

If the goods arrive before the bill of export is filed, they shall be kept in a place meant for keeping
such goods and shall be released only after the assessment of the bill of export.
A copy of ARE-1 and the bill of export need to be forwarded to the central excise officer having
jurisdiction over the DTA within 45 days.
The developer or unit can claim drawback or a duty entitlement pass book if the bill of export has
been filed under it and if the unit or developer does not intend to claim, a disclaimer to this effect shall be
given to the DTA supplier for claiming such benefits, provided the Duty Entitlement Pass Book DEPB
scheme may be claimed by the DTA supplier.
The unit or developer may procure goods from the DTA without availing himself of exemptions,
drawbacks and concessions on the basis of an invoice or transport document issued by the supplier.
A SEZ unit or developer may also procure

• Goods from international exhibitions held in India

• Goods or services without payment of duty from an EOU/STP/BTP.
• Goods or services from another unit located in the same or any other SEZ.
SPECIAL ECONOMIC ZONES (SEZ) SCHEMES:
The main objectives of the SEZ Scheme is generation of additional economic activity,
promotion of exports of goods and services, promotion of investment from domestic and foreign
sources, creation of employment opportunities along with the development of infrastructure facilities.
All laws of India are applicable in SEZs unless specifically exempted as per the SEZ Act/ Rules. Each
Zone is headed by a Development Commissioner and is administered as per the SEZ Act, 2005 and
SEZ Rules, 2006. Units may be set up in the SEZ for manufacturing, trading or for service activity.

Special Economic Zone :

Definition:
An SEZ is an enclave within a country that is typically duty-free and has different business and
commercial laws chiefly to encourage investment and create employment.

• Apart from generating employment opportunities and promoting investment, SEZs are created also
to better administer these areas, thereby increasing the ease of doing business.

Read about Exclusive Economic Zone (EEZ) in the linked article.

SEZ Background:”
An SEZ Policy was announced for the very first time in 2000 in order to overcome the obstacles
businesses faced.

• There were multiple controls and many clearances to be obtained before starting a venture.
• Infrastructure facilities were shoddy and well below world standards in India.
• The fiscal regime was unstable as well.
• In order to attract huge foreign investments into the country, the government announced the Policy.
• The Parliament passed the Special Economic Zones Act in 2005 after many consultations and
deliberations.
• The Act came into force along with the SEZ Rules in 2006.
• However, SEZs were operational in India from 2000 to 2006 (under the Foreign Trade Policy).
• Note:- A precursor to the SEZs, the Export Processing Zones were set up in India well before. The
first EPZ came up in Kandla in 1965 to promote exports. This was the first EPZ not only in India
but in all of Asia as well.

Special Economic Zones Act, 2005:

“It is defined as an Act to provide for the establishment, development and management of the
Special Economic Zones for the promotion of exports and for matters connected therewith or incidental
thereto.”
The chief objectives of the SEZ Act are:

1. To create additional economic activity.

2. To boost the export of goods and services.
3. To generate employment.
 4. To boost domestic and foreign investments.
5. To develop infrastructure facilities.

SEZ Rules:
The Rules provide for:

1. Simplified procedures to develop, operate and maintain SEZs and also to set up units and conduct
businesses in the SEZs.
2. Single-window clearance to set up a Special Economic Zone, and also to set up a unit in an SEZ.
3. Single-window clearance for matters connected to the Central and State governments.
4. Simplified compliance procedures and documentation with a focus on self-certification.
5. Different minimum land requirements for different classes of Special Economic Zones.

SEZ Approval Mechanism:

The SEZ approval mechanism is a single-window process provided by a 19-member inter-ministerial
SEZ Board of Approval (BoA).

• The developer has to submit the proposal to the state government.

• The state government forwards this proposal to the BoA along with its recommendation within
forty-five days.
• The developer or applicant can also directly submit the proposal to the BoA.
• The Board, which has been constituted by the Central Government, and is a 19-member Board takes
the decision considering the merits of the proposal. All decisions taken by the Board are by
consensus.

• The Board is chaired by the Secretary of the Dept. of Commerce, Ministry of Commerce and
Industry.
• The other members are from various bodies and ministries such as the Central Board of Excise and
Customs (CBEC), the Central Board of Direct Taxes (CBDT), Department of Economic Affairs,
Dept. of Commerce, Ministry of Science and Technology, Ministry of Home Affairs, Ministry of
Law and Justice, Ministry of Urban Development, etc.

• Once the BoA gives its approval, and the central government notifies the area of the SEZ, units are
allowed to be established inside the SEZ.

SEZs Facilities & Incentives:

The government offers many incentives for companies and businesses established in SEZs. some of the
important ones are:
 • Duty-free import or domestic procurement of goods for developing, operating and maintaining SEZ
units.
• 100% Income tax exemption on export income for SEZ units under the Income Tax Act for first 5
years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
(Sunset Clause for Units will become effective from 2020).
• Units are exempted from Minimum Alternate Tax (MAT).
• They were exempted from Central Sales Tax, Service Tax and State sales tax. These have now
subsumed into GST and supplies to SEZs are zero-rated under the IGST Act, 2017.
• Single window clearance for Central and State level approvals.
• There is no need for a license for import.
• In the manufacturing sector, barring a few segments, 100% FDI is allowed.
• Profits earned are permitted to be repatriated freely with no need for any dividend balancing.
• There is no need for separate documentation for customs and export-import policy.
• Many SEZs offer developed plots and ready-to-use space.

Read about Directorate General of Foreign Trade (DGFT) in the linked article.
Apart from the firms operating in SEZs, developers of SEZs also receive many benefits and incentives from
the government.
CONDITION
Though all efforts have been made to ensure the accuracy and currency of the content on this
website, the same should not be construed as a statement of law used for any legal purposes. In
case of any ambiguity or doubts, users are advised to verify / check with the Department(s) and /
or other source(s), and to obtain appropriate professional advice.
Under no circumstances will this Department be liable for any expense, loss or damage including,
without limitation, indirect or consequential loss or damage, or any expense, loss or damage
whatsoever arising from use, or loss of use, of data, arising out of or in connection with the use of
this website.
The information posted on this website could include hypertext links or pointers to information
created and maintained by non-Government / private organisations. Department is providing these
links and pointers solely for your information and convenience. When you select a link to an outside
website, you are leaving the SEZ website and are subject to the privacy and security policies of the
owners / sponsors of the outside website.

• SEZ does not guarantee the availability of such linked pages at all times.
• SEZ cannot authorize the use of copyrighted materials contained in linked websites. Users
are advised to request such authorizations from the owner of linked website.
• SEZ does not guarantee that linked websites comply with Indian Government Web Guidelines.
HOW TO APPLY FOR SEZ:
These terms and conditions shall be governed by and construed in accordance with the
Indian Laws. Any dispute arising under these terms and conditions shall be subject to the
jurisdiction of the courts of India.
Individual, co-operative society, company or partnership firm can file an application for
setting up of Special Economic Zone. The application is to be made in Form-A to the concerned
State Government and the Board of Approval (BOA) in the Department of Commerce, Government
of India. However the application would be considered by the BOA only when the State
Government recommendation is received.
A SEZ or FTWZ other than a SEZ for IT/ITES, Biotech or Health (other than hospital)
service, shall have a contiguous land area of 50 hectares or more. In case a SEZ is proposed to be
set up in Assam, Meghalaya, Nagaland, Arunanchal Pradesh, Mizoram, Manipur, Tripura,
Himachal Pradesh, Uttarakhand, Sikkim, Goa or in a UT, the area shall be 25 hectares or more.
There shall be no minimum land area requirement for setting up a SEZ for IT/ITES, Biotech or
Health (other than hospital) services but the minimum built up processing area requirement shall
be applicable as per SEZ (3rd Amendment) Rules, 2019 notified vide notification dated 17.12.2019.
Once the BOA gives formal approval and the concerned Development Commissioner gives an
inspection report certifying the contiguity and vacancy of the area, the area is notified as SEZ.

NEW STATUS HOLDER CATEGORIZATION:

Qualifying Requirement as Status Holder: Chapter 3 and paragraph 3.21 of Foreign Trade Policy
2015-20 has prescribed the following requirement to recognize an exporter as Status Holder.
(i) All exporters of goods, services and technology having an import – export code (IEC) number shall
be eligible for recognition as a status holder.
(ii) Status recognition will depend on export performance.
(iii) An Applicant shall be categorized as status holder on achieving export performance during the
current and previous three financial years but in case of Gem & Jewellery sector the performance
during the current and previous two years.
(iv) The export performance will be counted on the basis of FOB of export earning in freely
convertible.
v) For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at the
exchange rate notified rate notified by CBEC, as applicable on 1’st April of each Financial Year. (vi)
For granting status, export performance is necessary in at least two out of four years.

ONE TO FIVE STAR EXPORT HOUSE:

 As per the updates to the Foreign Trade Policy of 2015-2020, exporters of goods and
services in India are assigned status holder positions in accordance with their export
performance.
If you have attained a leadership position in your business niche and have an excellent
track record of international commerce, you can be a status holder. You must have also made
significant contributions to India's foreign trade. Furthermore, you must agree to undertake the
mentoring of upcoming Indian entrepreneurs and thus help strengthen India's export-related
commerce.
Important Notes:
1. Turnover of only those shipments can be counted for which e-brc has been
generated.
2. Export performance in at least two out of the four Financial Years is compulsory,
in order to get Status Holder Certificate.
3. The DGFT does not recognize exports made on re-export basis.
For the export performance, the DGFT will consider the Free on Board (FOB) value of
export earning in free foreign exchange. In the case of deemed exports—that is, transactions
involving goods that remain in the country and which are paid for either in Indian or foreign
freely convertible currency —the DGFT will take into account the FOB/FOR value of the
exports after it is converted from Indian rupees to US dollars. For this conversion, the exchange
rate will be as declared by the Central Board of Excise and Customs (CBEC) on 1st April of
the Financial Year.
The Government of India launched the Star Export House Certificate / Status Holder Certificate
as an export promotion scheme under foreign trade policy. The Certificate/Status is granted to
business leaders who have excelled in international trade and have successfully contributed to the
country's foreign trade.

FREE TRADE AND WAREHOUSING ZONES:

Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and
warehousing and other activities related thereto are carried on. It is a deemed foreign territory within
the geography of India for the purpose of tariff and trade.
Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and warehousing
and other activities related thereto are carried on. It is a deemed foreign territory within the geography
of India for the purpose of tariff and trade.
 Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and
warehousing and other activities related thereto are carried on. It is a deemed foreign territory within
the geography of India for the purpose of tariff and trade.

What is the governing Act and Rule for FTWZ?

The Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006
are the legal framework for FTWZ. Instructions are also issued by the Ministry of Commerce
& Industries from time to time to clarify various operational aspects of FTWZ.

What are the activities allowed inside the FTWZ?

o Warehousing of goods on behalf of foreign or domestic clients

o Trading with or without labelling

o Packaging and repacking

o Re-sale, re-invoice, or re-export of goods

o Assembly of complete and semi-knockdown goods

o Kitting and various value optimization services on the goods/cargo

In what ways can companies operate through FTWZ?

There are two ways in which companies can operate through FTWZ:
Trading Unit: A company can become a Unit in the FTWZ for the purpose of trading,
warehousing and other related activities called authorized operations.
Service Unit: Company can avail the services of Arshiya Logistics Services.(ALSL),
which is a Unit in the FTWZ, for trading, warehousing and other related activities called
authorised operations. ALSL will provide various value optimization services to its clients.

What is the nature of authorized operations in the FTWZ?

In an FTWZ, the authorised operations comprise of trading, warehousing, packing,
labelling, lashing, shrink wrapping, strapping, palletization, bottling, clubbing, consolidation,
quality checking, testing, kitting, combination packing etc. as may be authorised by the Unit
Approval Committee in Letter of Approval.
What is a Letter of Approval (LOA)?
A Letter of Approval is the permission granted by the Unit Approval Committee to an
entrepreneur to set up a unit in the FTWZ to carry on authorized operations. LOA is valid for
five years from the date of commencement of the activity. It is extendable for a further five
years at a time.

Who can become a Unit the in FTWZ?

Any Indian entity who are Trader, Importers / Exporters, 3PLs, CHAs, Freight
Forwarders, Shipping Lines, Manufacturers etc., can become Units in the FTWZ. The Units
are required to execute a bond-cum-legal undertaking for import and warehousing of goods
inside the FTWZ.

What kind of export benefit is available in FTWZ?

Export entitlement is available for supply of goods from Domestic Tariff Area (DTA)
to FTWZ for authorised operations. The Unit or Developer can claim drawback or Duty
Entitlement Pass Book in respect of goods procured from DTA. Alternatively, the same can
be claimed by the DTA supplier on the basis of a disclaimer from the Unit or Developer.

Is service tax exempt in an FTWZ?

Inbound taxable services as well as those performed inside the FTWZ for use in
authorized operations are exempt from service tax. Similarly, taxable services in relation to
transportation of goods from Port to FTWZ or from one FTWZ to another FTWZ would also
be exempt.

Is customs duty exempt for import into FTWZ?

Customs duty is exempt when goods are imported into FTWZ for authorized
operations.

At what stage customs duty is payable in the FTWZ?

Customs duty and GST becomes payable at the time of clearance of goods into DTA.
In case of piecemeal clearance, the customs duty would be payable on such piecemeal
quantity cleared into DTA and not on the full quantity received into FTWZ. Therefore, the
customs duty can be deferred by importing the goods into FTWZ.
 UNIT 3

IMPORT LICENSING PROCEDURE AND SCHEMES

PROCEDURE FOR REGISTRATION OF IMPORTERS:

India’s import and export system is governed by the Foreign Trade (Development &
Regulation) Act of 1992 and India’s Export Import (EXIM) Policy.Import and export of all
goods are free, except for the items regulated by the EXIM policy or any other law currently
in force. Registration with regional licensing authority is a prerequisite for the import and
export of goods. The customs will not allow for clearance of goods unless the importer has
obtained an Import Export Code (IEC) from the regional authority.Indian Trade
Classification (ITC)-Harmonized System (HS) classifies goods into three categories:

1. Restricted
2. Canalized
3. Prohibited

Goods not specified in the above mentioned categories can be freely imported without
any restriction, if the importer has obtained a valid IEC. There is no need to obtain any
import license or permission to import such goods. Most of the goods can be freely imported
in India.
Licensed (Restricted) Items:
Restricted items can be imported only after obtaining an import license from the
relevant regional licensing authority. The goods covered by the license shall be disposed of in
the manner specified by the license authority, which should be clearly indicated in the license
itself. The list of restricted goods is provided in ITC (HS). An import license is valid for 24
months for capital goods, and 18 months for all other goods.
Canalized Items:
Canalized goods are items which may only be imported using specific procedures or
methods of transport. The list of canalized goods can be found in the ITC (HS). Goods in this
category can be imported only through canalizing agencies. The main canalized items are
currently petroleum products, bulk agricultural products, such as grains and vegetable oils,
and some pharmaceutical products.
Prohibited Items:
These are the goods listed in ITC (HS) which are strictly prohibited on all import
channels in India. These include wild animals, tallow fat and oils of animal origin, animal
rennet, and unprocessed ivory.

PROCEDURE FOR REGISTRATION OF IMPORTERS:

• Category of imports
• Special schemes for imports
• Obtaining export license
• Application of grant Import license for certain category.
• Territiorial jurisdication of import licensing authorities
• Licensing period,condition and validity of import licensing.
CATEGORIES OF IMPORTERS:
ONE TIME IMPORT:
This handles importing most profile information for both people and
organizations. You can import from a CSV file. A list or filter shared by another
nation can also be imported using the one-time import. Begin a new import and
review status of previous imports at People > Import > One-time import.
Recurring import:
A list or filter shared by another nation can be imported using the recurring
import. Public information connected to a Twitter account can also be imported using
recurring import. Twitter followers imports people who follow a particular Twitter
account. Twitter followings imports the profiles followed by a particular Twitter
account. Begin a new recurring import at People > More > Import > New recurring
import. Review and edit previous recurring imports at People > Import > X
recurring import. "X" represents the number of active recurring imports in your
nation.
Voter file import:
This type of import requires that you enable voter features at Settings >
Defaults > Basics. This will import profile information for voters. It also allows you
to import a larger number of signup fields, including voting districts and party
affiliation. You can also request a U.S. voter file from the NationBuilder Election
Center. This requires you to enable voter features in your nation. Begin a new import
and review status of previous imports at People > Import > Voter file.
Ballot import:
This type of import requires that you enable voter features at Settings >
Defaults > Basics. View a historical record of when elections occurred and whether
an individual voted in that election. Voters must already exist in the nation for you to
import vote history through the control panel. Once voters exist, ballots can be
imported in the People section at People > Import > Ballots.
Scanned survey import:
Import information collected during a phone bank or door knock using
scannable sheets. Scannable sheets include the results of a survey. Begin a new import
and review status of previous imports at People > Import > Scanned survey import.
Donation import:
This type of import requires that you enable donor features at Settings >
Defaults > Basics. Import donation records. Each record represents a separate
transaction. Donations are stored in the finances table, which is connected to a
particular signup profile by unique identifiers. Begin a new import and review status
of previous imports at Finances > More > Import donations.
Membership import:
This type of import requires that you enable membership features in Settings >
Defaults > Basics. Memberships are stored in the membership table and are
connected to a particular signup profile by unique identifiers. A signup can have more
than one type of membership, but only one membership per type. Begin a new import
and review status of previous imports at Settings > Nation defaults > Membership
types > Import memberships.

IMPORTER REGISTRATION WITH REGIONAL LICENSING

AUTHORITY:
Registration With The Regional Licensing Authorities:
The Customs Authorities will now allow the exporter to export or import goods into or
from India unless he holds a valid IEC number. Before applying for IEC number it is
necessary to open a bank account in the name of the company with any commercial bank
authorized to deal in foreign exchange. The duly signed application form should be supported
by the following documents.

• Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs. 1000/-
• Certificate from the banker of the applicant firm as per Annexure 1 to the form given.
• One copy of PAN number issued by Income Tax Authorities duty attested by the
applicant.
• One copy of Passport Size photographs of the applicant duly attested by the banker to
the applicant.
• Declaration by the applicant that the proprietor/partners/directors as the case may be
of the applicant company, are not associated as proprietor/partners/directors in any
other firm, which has been caution, listed by the RBI. Where the applicant declares
that they are associated as proprietor/partners/directors in any other firm, which has
been caution, listed by the RBI, they will be allotted IEC No. but with an additional
condition that they can export only with RBI’s prior approval and they should
approach RBI for the purpose.
• Each importer/exporter shall be required to file importer/exporter profile once with
the licensing authority shall enter the information furnished in Appendix 2 in their
database so as to dispense with changes in the information given in Appendix-2,
importer/exporter shall intimate the same to the licensing authority.
IMPORT OF CAPITAL GOODS UNDER EPCG SCHEME:
 UNIT-4

METHODS OF PAYMENT

GENERAL PROVISION FOR IMPORTS:

FINANCING IMPORT:

Import finance is the other half of the supply chain that provides funding to
the buyer to purchase goods exported from overseas.
Importers purchasing goods also need to cover their expenses while waiting for the
products to arrive.
Import finance helps bridge this gap between the purchase and delivery time of
goods.
This can be achieved in 2 ways:
1. Purchase Order Finance:
Businesses use this facility to finance the purchase of goods requested in
the purchase order.
 In this case, the importer can solely use the funds to pay for production
expenses incurred for goods stated in the PO.
2. Loan
When an importer needs capital to procure materials for goods not
backed by a PO, it is classified as an import loan.
The good being imported acts as the collateral in this case.
An importer may need these materials to increase inventory safety
margin, meet peak season demands, or shorten the trade cycle.

FOREIGN EXCHANGE FACILITIES TO IMPORTERS

Forex Services in India:

Forex Services or Foreign Exchange Services is exchanging a particular currency for another or
converting cash to another. Foreign exchange transactions comprise everything from a traveler’s money
conversion at an airport kiosk to multi-billion dollar payments processed by governments, corporations,
and financial institutions. This article discusses the various Forex Services that one may opt for in India.

Foreign Currency Travellers Cheques:

Banks offer Foreign Currency Travellers Cheques (FCTCs), a safe and easy way to protect money
during international travel. FCTCs can be encashed when needed and only against the holder’s signature,
unlike cash which has the possibility of being stolen or misused by anybody. Loss of a Travellers Cheque
can be reported anywhere in the world by making a single phone call, and the pre-fixed amount on the
cheque is refundable to the holder/ buyer. Travelers’ Cheques are offered in major currencies such as USD,
GBP, Euro, CAD, AUD, and JPY. Travelers’ Cheques are available in various denominations to suit
clients’ needs. Currently, many Indian banks offer American Express Travellers Cheques, which are
widely accepted at Merchant Establishments and Financial Institutions across more than 200 countries.

Foreign Currency Cash:

Banks sell foreign Currency notes to their clients to meet expenses on travel abroad. Foreign
Currency is a convenient way of meeting personal expenses during the journey, paying for taxis/ internal
travel, food expenses, etc. Usually, currencies sold are in USD, GBP, EURO, AUD, and CAD.

Foreign Currency Demand Drafts:

Banks in India offer FC Demand Drafts to their clients for various expenses such as the following.
 • Payment of fees at any foreign university
• Making a gift remittance to a relative or friend
• Application fees are paid to register for exams like TOEFL, GMAT, etc.
• Payment for medical treatment abroad
• All other permitted purposes as per the RBI guidelines.

FC Demand Drafts are typically issued in seven currencies: USD, GBP, EURO, AUD, NZD, JPY, and
CAD.

Deposit of Foreign Currency Cheques:

Clients can deposit their foreign currency cheques, currency demand drafts, and Travellers’
Cheques into their savings or current accounts. The bank will then have the cheques sent for collection,
and on being honored, the funds will be credited to the client’s account in Indian Rupees. Banks in India
usually accept cheques of various currencies like USD, GBP, EURO, JPY, Australian Dollars, Canadian
Dollars, UAE Dirhams, Hong Kong Dollars, and Swiss Francs. The collection period could vary from 2
international working days for Euro cheques in Frankfurt to 5 days for USD cheques in New York and 10-
15 working days for accepted drawn in other currencies at other centers.

Remittances:
Banks offer their clients remittance facilities by which they can send and receive money to and
from friends and relatives abroad. Most such payments are executed through SWIFT, a secure, inter-bank
communication facility.

Cash to Master:
Often, foreign ships travel through India and dock their vehicles at various ports/harbors in the
country. One of the essential requirements during such temporary stays is that foreign Currency must be
made available to the ship’s Captain to cover crew wages or other expenses on the vessel. These
requirements are usually met through a facility called “Cash to Master.” To collect this cash, the master of
the shop has to approach the designated branch of an authorized bank with his passport and a duly filled-up
application form. This product is available only in United States Dollars, Pounds Sterling, and Euros.

Advance Remittance:
The client’s overseas exporter may require the client to make full payment in advance for the
goods to be exported to him. The exporter would dispatch the goods to the importer client only after he
receives the total amount in advance. For this purpose, banks will make remittances in foreign Currency to
the importer.
Documents required for sending Advance Remittance:
 • Request Letter/ Debit Authority/ OGL/ FEMA Declaration (Giving all beneficiary’s banking
details)
• IE Code Number Certificate
• Form A1 (Duplicate)
• KYC Report
• Purchase Order/ Performa Invoice accepted by the importer with Advance payment term.
• Bill of Entry Declaration with Commercial Invoice.
• Original Bank Guarantee from the Exporter’s Bank if the Advance amount is more significant
than $1,00,000 or equivalent.

Direct Remittance:
An importer client may require the exporter overseas to dispatch the goods first and then remit the
payment. The exporter would then ship the goods to the client. The overseas exporter will then forward the
documents directly to the client. The bank will process the payment when the client approaches his bank
with the papers for sending remittances to the exporter.

Documents required for Direct Remittance:

• Request Letter/ Debit Authority/ OGL/ FEMA Declaration (Giving all the beneficiary’s banking
details)
• IE Code Number Certificate
• Form A1
• KYC Report
• Transport documents in original/ copy – Bill of Lading/ Airway Bill
• Invoice
• Bill of Entry (Exchange Control Copy) (Original)
• Original License (Exchange control copy), if applicable.

Import Collection:
The exporter from overseas exports the goods to the importer client. The foreign exporter/
exporter’s bank sends the documents to the client’s bank for collection. The bank will then inform the
importer client about the receipt of the papers. Then the importer will authorize his bank to debit his
account and send the remittance to the exporter’s bank. The necessary documents and the debit authority is
collected from the importer, and remittance is made to the exporter’s bank. The documents are released to
the importer if it is a sight bill (Documents against Payment). If it is a usance bill (Documents against
Acceptance), the acceptance letter is taken from the importer, and the documents are released. On the due
date, remittance is made to the exporter’s bank by debiting the importer’s account.
Documents required for Import Collection:

• Request Letter/ Debit Authority/ OGL/ FEMA Declaration

• IE Code Number Certificate
• Form A1
• KYC Report
• Bill of Entry Declaration
• Acceptance Letter with Debit Authority for Usance Bill

Letters of Credit:
In a business cycle, an importer must pay for his purchases in international and domestic markets.
Letters of credit help Indian importers to facilitate the purchase of goods in international and domestic
trading operations. Letters of credit issued by central Indian banks are accepted worldwide.

Documents required for Letters of Credit:

• L/C Application Form

• General Undertaking/ Indemnity on Stamp Paper (value applicable as per the state)
• Recommend Board Resolution for Companies/ Partnership Deed for Partnership Firms
• IE Code Number Certificate
• OGL cum FEMA Declaration
• KYC Report
• Purchase Order/ Performa Invoice (accepted by the applicant)
• Insurance Copy only on FOB Basis
• Annexure to the LC (Mentioning additional conditions to be incorporated in the LC)
• Original License (Exchange control copy), if applicable.

Export Collection:
When an exporter client sells goods overseas, he needs to receive payment for the goods that have
been exported. Through a network of correspondent banks, Indian banks ensure a faster collection process
for all export bills, provided all the necessary documents are in place, which will be sent to the overseas
bank for collection.

Documents required for Export Collection:

• Request Letter
• IE Code Number Certificate
 • FEMA Declaration
• KYC Report
• SDF (exchange control copy)/ GR Form/ PP Form/ Softex Form
• Original Transport Documents – Bill of Lading or Airway Bill
• Insurance Copy (if on CIF terms)
• Bill of Exchange (in case of D/A)
• Original L/C in case of L/C Bill
• Clarification letter for delay beyond 21 days of export
• Any other documents per terms and conditions between Exporter and Importer Commercial
Invoice.

Export Advance Payment:

An Indian exporter might require the importer overseas to make advance payment for the goods he
is importing. The exporter can ask his counterparty to send the cost to the exporter’s bank through their
network of correspondents.

Documents required for Export Advance Bill:

Export Advance Bill requires all the documents as mentioned for Export Collection. Additional
Documents are as follows.

• Invoice of Export
• Original FIRC

Miscellaneous Outward Remittance:

Outward Remittances (Miscellaneous) for other purposes can be effected quite easily. Remittances
by way of SWIFT can be made through a network of correspondent banks to any part of the world. All
transactions are subject to FEMA regulations.

Documents required for Outward Remittances:

• Request Letter
• Form A2
• Invoice Copy/ Agreement Copy
• FEMA Declaration
• Annexures A & B
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CUSTOMER AND CENTRAL EXCISE DUTY DRAWBACKS IN

EXPORT GOODS:

Duty drawback refers to the refund of customs duties and internal taxes paid
while importing goods, which in turn are used to manufacture final products
exported from India. For instance, refund of custom duties and taxes paid on
machinery imported that is used to manufacture textile products. It was introduced
by the Ministry of Finance under section 74 and 75 of the Customs Act, 1962.

Duty Drawback Scheme: Customs Act 1962:

The duty drawback scheme allows exporters to get a refund on customs
duties paid on imported products that:
• Are used or incorporated in other products for export
• Remain unused since importation

All the provisions in this scheme are described under Section 74 and Section
75 under the Customs Act, 1962 . As stated in these sections, the following
1

conditions must be met to be able to claim duty drawback:

• If the imported goods are re-exported within two years from the date of payment
of duty on the importation, then exporters can claim 98% of the duty paid.
To be able to claim duty drawback, the following aspects should be considered:
• Products being exported must be different from inputs
• Inputs refer to imported goods on which customs and taxes have been paid
• Products utilized in making the goods for export must have undergone a physical
change
• Number of inputs utilized in processing export products per piece must not be
uniform

The government fixes a rate of drawback (for different types of goods) to be paid
per unit of the final product at the time of exports. This rate depends on how
verified the mode of manufacturing, raw materials used, amount of duty paid on
inputs and standards of making the final product are.

Duty drawback might not be allowed under the following conditions : 2

• Export value of products is less than the value of imported products.

• If the sale of finished products is not received by the exporter within the allowed
time, then drawback shall be deemed by the government.

What are the types of Duty drawback?

Following are some of the main types of Duty drawback : 3

Direct identification manufacturing:

When the imported material is used to manufacture another product and that
product gets exported, then the import duty can be reclaimed. For example, you
import machinery and parts for manufacturing a bicycle, which is later exported. In
this case, the duties paid on importing the machinery utilized in manufacturing the
bicycle can be claimed under the Duty Drawback Scheme.

Substitution manufacturing:
When imported products are of the same kind and quality as the export
products – irrespective of whether they were used to produce the end export
products – a substitutional manufacturing duty drawback can be claimed. For
instance, a manufacturing plant imports 1,000 motors after paying duties. It also
already has 500 motors of the same quality as the imported motors. In total, the
inventory now has 1,500 motors. Out of the total, a few motors are used to
manufacture products. Regardless of which ones were used, the exporter is entitled
to claim a refund on duties paid on importing motors that might have or might not
have necessarily been used.

Unused merchandise direct identification manufacturing:

Import duty can be claimed for refund if the imported material is directly
exported without being used. The duty paid at the time of import is tracked to be
able to claim duty drawback. For instance, a business imported plastic bangles to
manufacture embedded plastic bangles for export. They paid the required duties
during imports. Even if the same plastic bangles are exported without any
modification, the company is still eligible to claim duty drawback in this case.

Unused merchandise substitution manufacturing:

Import duty can be claimed when any unused material which was exchanged
with other imported duty-paid material, is exported. For instance, a manufacturer
imports textiles and pays the required duties. It is stored in the inventory where
similar textile goods have also been stored. Consider that the two units were
combined and, thus, they were not necessarily used in manufacturing export
products. In this case, the manufacturer is still eligible to claim duty drawback on
exporting unused (substituted) merchandise.

FOREIGN CURRENCY ACCOUNTS IN INDIA AND ABROAD

PERMITTED CURRENCIES

oreign Currency Account Opened In India:

A resident of India can open, hold and maintain foreign currency accounts in
and outside India. The Foreign Exchange Management (Foreign currency accounts
by a person resident in India) Regulations, 2015 regulates the foreign currency
accounts opened in India.

A person resident in India can open a foreign currency account in India with
an authorised dealer. It is opened, held and maintained in the form of a current or
savings or term deposit account. The account can be held either singly or jointly in
the name of the person eligible to open, hold and maintain such an account.

Foreign Currency Account:

A ‘Foreign Currency Account’ means an account held or maintained in a

currency that is not the currency of India or Bhutan, or Nepal. Any person who is
residing in India can open, hold and maintain a foreign account. ‘Person Resident
in India’ is defined under Section 2(v) of the Foreign Exchange Management Act,
1999 (FEMA).

‘Person resident in India’ means

Every person residing in India for more than one hundred and eighty-two days
during the preceding financial year but does not include –

• a person who has gone or stays outside India for taking up employment or
carrying a business or vocation outside India or any other purpose where
he/she indicates their intention to stay outside India for an uncertain period,
• a person who has come to or stays in India, otherwise than for taking up
employment or carrying on business or vocation in India or any other
purpose where he/she indicates their intention to stay for an uncertain period
in India.
• Every person or body corporate incorporated or registered in India,
• An office, agency or branch in India that is owned or controlled by a person
resident outside India,
• An office, agency or branch outside India that is owned or controlled by a
person resident in India.

Foreign Currency Accounts Opened In India

The major foreign currency accounts which a person resident in India can open are
as follows

Exchange Earner’s Foreign Currency (EEFC) Account:

Exchange Earner’s Foreign Currency (EEFC) account is in the form of a

non-interest bearing current account. Special Economic Zones (SEZ) developers
can open, maintain and hold EEFC accounts and credit their foreign exchange
earnings to this account. The claims which are settled in rupees by the Insurance
companies or the Export Credit Guarantee Corporation of India is not construed as
the export realisation in foreign exchange, and thus, the claim amount cannot be
credited to this account.

The sum total of the accruals during the current month in the account should
be converted into Indian Rupees before the last day of the next month after
adjusting for utilisation of the balances for forward commitments or approved
purposes. Credit facilities, both non-fund and fund-based, are not granted against
the balances held in this account.

The exporters can repay the packing credit advances, whether obtained in
foreign currency or Rupee from the balances in their EEFC account up to the
extent of exports that have actually taken place.

The balances in EEFC accounts can be credited to Non-Resident External

(NRE) account or Foreign Currency Non-Resident (Bank) [FCNR (B)] account at
the request or option of the account holders upon the change in the residential
status from resident to non-resident. This account is useful for exporters who
receive and keep foreign exchange payments in the banks in India.

Resident Foreign Currency Account (RFC):

 • Resident Foreign Currency (RFC) account can be opened by a person
resident in India with an Authorised Dealer (AD) bank in India out of
foreign exchange acquired or received by him/her from the following –
• Foreign Exchange received as superannuation benefits, pension or any other
monetary benefits received from his employer outside India,
• By converting assets acquired by a person when he/she was a non-resident
or through gift or inherited by a person resident outside India and repatriated
to India,
• Received as the proceeds of the life insurance policy claims or maturity or
surrender values that are settled in foreign currency from an insurance
company permitted by the Insurance Regulatory and Development
Authority for undertaking the life insurance business in India.
• The RFC account can be in the form of current or savings or term deposit.
The funds in this account will be free from all restrictions regarding the
utilisation of foreign currency balances, including any restrictions on
investments in any form outside India. The balances in the NRE account and
FCNR (B) account can be credited to the RFC account upon a change in the
residential status of the Non-resident Indian (NRI) to that of a Resident.

Resident Foreign Currency (Domestic) Account [RFC(D)] Account:

A person resident in India can open the Resident Foreign Currency

(Domestic) Account [RFC (D)] account in India out of the foreign exchange
acquired him/her in the form of banknotes, currency notes and travellers’ cheque
from overseas sources as follows:

• By way of payment for services which is not arising from any business or
anything done in India while visiting any place outside India,
• As gift or honorarium or in settlement of any lawful obligation or for
services rendered by any person who is not a resident in India and who is on
a visit to India,
 • Gift or honorarium while visiting any place outside India,
• A gift from a relative,
• In the form of unspent foreign exchange acquired from an authorised person
for travelling abroad,
• By way of disinvestment proceeds obtained by the resident account holder
upon conversion of the shares held by him/her to American Depositary
Receipts or Global Depositary Receipts under the Depository Receipts
Scheme, 2014,
• Received as the proceeds of the life insurance policy claims or maturity or
surrender values that are settled in foreign currency from an insurance
company permitted by the Insurance Regulatory and Development
Authority for undertaking the life insurance business in India.
• RFC(D) account is a current non-interest earning account with no ceiling on
balances in this account. The balances in this account can be credited to the
NRE account, or FCNR(B) account at the account holders’ request or option
upon the change in their residential status from resident to non-resident.
• The sum total of the accruals during the present month in the account should
be converted into Indian Rupees before the last day of the next month after
adjusting for utilisation of the balances for forward commitments or
approved purposes.

Diamond Dollar Account (DDA):

The firms and companies may open and maintain Diamond Dollar Account
(DDA) with the authorised dealer banks, subject to the following conditions:

• The exporters must comply with the eligibility criteria laid down in the
Foreign Trade Policy of the Government of India, issued from time to time.
• The DDA will be opened in the exporters’ name and maintained only in US
Dollars.
 • The account can be only in the form of a current account, and there is no
interest paid on balance held in the account.
• No intra-account transfer is allowed between the DDAs maintained by the
account holder.
• An exporter firm or company is permitted to open and maintain five or less
than five DDAs.
• The balances held in the accounts are subject to Statutory Liquidity Ratio
(SLR) and Cash Reserve Ratio (CRR) requirements.
• The exporter firms and companies holding and maintaining foreign currency
accounts, except EEFC accounts, with banks in India or abroad will not be
eligible to open DDAs.
• The sum total of the accruals during the present month in the DDA should
be converted into Indian Rupees before the last day of the next month after
adjusting for utilisation of the balances for forward commitments or
approved purposes.

METHODS OF PAYMENT:

As a small business owner, you’ll need to decide what types of payment

you’ll accept from customers.
You might offer customers the choice to pay with:

• Cash
• Checks
• Debit cards
• Credit cards
• Mobile payments
• Electronic bank transfers
 Payment
Type Advantages
Cash • One of the most common and • Customers might not want to
easiest forms of payment.
Many customers will expect
you to accept cash.
You won’t have to pay any
fees to accept cash.
Checks • May lead customers to make • After depositing a check, you’ll
more frequent or larger
purchases.
Allows customers to safely
make large purchases.
You won’t have to keep as
much cash in your store.
You won’t have to pay any
fees to accept checks.
Debit, • May lead customers to make • You’ll have to wait for the
Credit and more frequent or larger
purchases.
Disadvantages
make large purchases with cash.
Storing cash at your place of
business or home, or
transporting it to the bank, can
be dangerous.
Ensuring your register is
stocked with bills to make
change can tie up money you
could use for other business
purposes.
Counting money at the end of
each day is time-consuming.
need to wait for the bank to
process the check and put the
money in your account.
There’s a risk that someone will
try to pay with a fake check, or
that a check will “bounce” if the
customer doesn't have enough
money and you won’t receive
the payment.
transaction to process before
getting money in your account.
 Payment
Type Advantages
Prepaid Allows customers to safely
Cards make large purchases.
Can be quicker and more
convenient for customers at
checkout than cash or checks.
You won’t have to keep as
much cash in your store.
You don’t have to worry about
bad checks or fake cash.
Allows foreign travelers to
more easily make purchases.
Mobile • May lead customers to make
Payments more frequent or larger
purchases.
Allows customers to safely
make large purchases.
Can be quicker and more
convenient than accepting cash
Disadvantages
This usually takes between one
and three days.
You may have to pay
transaction fees, a small
percentage of the transaction.
Debit cards generally have
lower fees.
You will need to purchase or
rent a device to accept payment
(called a point-of-sale device).
You may be responsible if a
customer uses a fake or stolen
card to make a purchase.
If a customer disputes a charge
(i.e., initiates a “chargeback”),
the transaction may be reversed
and you won’t receive a
payment.
• You’ll have to wait for the
transaction to process before
getting money in your account.
This usually takes between one
and three days.
You may have to pay
transaction fees, which is
usually a small percentage of
 Payment
Type Advantages
or checks.
You won’t have to keep as
much cash in your store.
You don’t have to worry about
bad checks or fake cash.
Mobile payments may be more
reliable than card-based
transactions in some areas.
If you sell items at markets,
conferences or trade shows,
you can bring your mobile
payment system with you.
Allows foreign travelers to
more easily make purchases.
Electronic • Allow you to receive large
Bank payments without paying fees.
Transfers
Allows customers to safely
make large purchases.
Can be quicker and more
convenient than accepting cash
or checks.
You won’t have to keep as
much cash in your store.
Disadvantages
the transaction.
You will need to purchase or
rent a device to accept payment
(called a point-of-sale device).
You may be responsible if a
customer uses a fake or stolen
payment information to make a
purchase.
If a customer disputes a charge
(i.e., initiates a “chargeback”),
the transaction may be reversed
and you won’t receive a
payment.
• Non-business customers might
not feel comfortable transferring
money directly from their bank
account to your business.
You’ll have to wait for the
transaction to process before
getting money in your account.
You may need to set up this
type of transaction with your
 Payment
Type Advantages Disadvantages
bank and the customer’s bank,
You don’t have to worry about which isn’t always easy.
bad checks or fake cash.

Could be a good option if you

sell products or services to
other businesses.
Mobile • Mobile Wallet payments allow
Wallet customers to pay without using
a physical card
• Requires you to rent or own a
device to process the “tap” to
complete the transaction

Often more secure to

customers than using a
physical card as the data is
encrypted and cannot be seen

All smartphones are now

equipped with a mobile wallet

Quick, efficient checkout

process can encourage
customers to make more
frequent purchases
QR “Quick • Contactless payment option for
Response” customers who want a hands-
Codes off experience
Enabled in all smartphones
and does not require a specific
app for customers to access
• Requires a strong wifi
connection
May require customers to input
credit or debit card information
more than once since
information is not automatically
stored
 Payment
Type Advantages Disadvantages
Does not require a POS or
payment terminal to complete
transactions
AutoPay • AutoPay is very easy to set up • Overdraft payments occur more
for customers often with AutoPay resulting in
reverse transactions
Beneficial for subscription
services or recurring payments Customers may forget about the
AutoPay they’ve set up and
Ensures on-time payments that request refunds after the fact
aren’t reliant on customers
being reminded to submit
payment

Less time spent following up

with customers to remind them
to submit payments
Email • If your business is providing • Primarily for service providers
Invoicing services, email invoicing and less useful for retail,
immediately following the consumer goods or online
service allows customers to businesses
pay and receive a receipt
automatically Potential for lost emails or
being flagged as "junk mail"
Allows you to streamline your
reporting and manage data
securely, connecting with your
CRM and accounting systems

>More efficient and

environmentally friendly
 Payment
Type Advantages Disadvantages

Quicker transactions and less

follow up required to collect
payment

CUSTOMS FORMALITIES FOR CLEARANCE OF IMPORTS GOODS:

Customs Clearance Process in India:

After removing trade barriers, there has been an upsurge in India's number of exports and imports.
Foreign exchange regulations Act, 1973 was repealed and replaced by the Foreign exchange management
Act, Of 1999 to improve the numbers through liberalization and economic reforms. As the shipping
continued to rise, there was a dire need for customs clearance services in the country. As per the reports and
data published in the Ministry of Commerce and Industry, Government of India, the average value of
imported merchandise trade was 3,276,835 cr. representing an increase of 67.51% YoY.

Typically, importing goods and services includes obtaining a license and compliance before shipment.
By law, all goods imported to India are examined, appraised, assessed, and evaluated at customs to determine
the proper tax and check the imported commodities against illegal imports. We will highlight a few things
through this blog:

• What is customs clearance?

• Customs clearance procedure

• Documents required for customs clearance

• Customs clearance cost and timeline

Brief Introduction to Customs Clearance Services in India:

Customs clearance is an arduous process in India and could be time-consuming. Most of the customs
clearance services documents are alike, though some depend on the nature of imported goods. A customs
clearance services procedure includes obtaining, preparing, and submitting the documentation required to
facilitate export procedures and imports into the country, informing the client about the customs
examination, evaluation, and payment of duty, and bringing the cargo into the country after it has been
cleared with documentation.

Customs clearance process is required in the following cases:

• Wherever the goods are loaded for exports.

 • Sea and Airports

• International courier services in Airports

• Wherever the goods are unloaded for the imports

• Coastal ports

• Land and Sea customs stations

• Those places which have inland import of the goods

Import Customs Clearance Process:

All investors, manufacturers, and businesses must undergo the import customs clearance process
at the time of Import from India. Certain guidelines must be obeyed to import their goods. Let’s take a look
at major steps to follow:

• Calling of vessels:

If the goods reach a country, the person who was there in carrying the vessels shall ensure that
the calling of ships is done at the customs port. So, if the goods are being imported via vessel, the pilot
is responsible for the call of the vessels at the sea port. There is no requirement for the importer to get
involved in this process.

• IGM ( Filing Import General Manifest):

The procedures to file IGM (Import General Manifest) are done by the carrier of goods or his
agent and can be done electronically before the goods arrive/reach. This file contains all the details of
the goods imported by the vessel.

• Operations on post verification :

On review of the IGM( Import General Manifest) and the post verification of the documents,
the customs authorities will grant the goods for entry and will assign an IGM number to the manifest
and permit the master to bring the vessel to this land and unload the cargo.

As the vessel arrives, the goods will further remain in the custody of the Custodian until it clears
the entire customs procedure. A custodian can be a person that has been approved by the Principal
Commissioner or by the Commissioner of Customs for this whole procedure. Imported goods can be
unloaded if they fulfill certain conditions.

• Bill of Entry:

1. The importer should comply with the import customs clearance formalities as the goods arrive
at the customs station. For the other goods that are offloaded, importers can clear the goods for
home consumption after payment of duties.

2. Hence, every importer must file in Section 46 an entry (Bill of entry) for home consumption or
warehousing.
 3. If the clearance of the goods is from the EDI system, then there will be no formal Bill of Entry
filed that will be generated in the computer system, but it is mandatory for the importer to file
a cargo declaration having prescribed particulars that are required for the customs clearance
processing.

4. The Bill of entry, wherever filed, is to be given in a certain set, as different copies are meant for
the different meanings and also come in different color schemes. On the body, generally, the
purpose for which it will be used is clearly mentioned in the case of a non-EDI declaration.

5. The importer who wants to clear the goods for consumption has to file a Bill of entry in 4 copies,
in which the original and the duplicate are for customs, the 3rd copy for the importer, and the
4th copy is for the bank for making remittances.

6. There are documents required for the non-EDI system like the Signed invoice, Bill of Lading
or Delivery Order/Airway Bill, License wherever necessary, Letter of Credit/Draft/wherever it
is necessary, Insurance related document, Industrial License, if required, Test report in case of
chemicals, Adhoc exemption order, DEEC Book/DEPB in original, Certificate of Origin, etc.

When you are filing the Bill of entry and giving your information, you have to keep in mind the
correctness of the particulars, and it has to be also certified by the importer in the form of a declaration that
can be done at the foot of the Bill of entry.

But in case of, any misdeclaration or incorrect declaration by the importer may lead to legal
consequences. So all the precautions should be taken care of by the importer while signing/mentioning all
the information and the declarations.

Under the Electronic Data Interchange system, the importer shall not submit documents as such for
assessment but has to submit its declarations in electronic format as it contains all the necessary information.

A checklist is then developed for the verification process of the data given by the importer. After the
verification procedure, the data is further submitted to the SCO(Service Center Operator) system. Then the
system generates a B/E Number. This number is endorsed on the printed checklist and then returned to the
importer. In this stage, no such original documents are taken/required. Original documents are only taken
during the time of examination. On the final document, the importer shall also sign after the import customs
clearance.

• Assessment:

The value appraising officer of customs then has to verify that the goods that will be imported
are the same which the importer reported in submitted documents. If required, an assessing officer of
customs can also give his order to inspect a hundred percent of the imported goods. In these cases, all
the pieces and packets of the goods are sent to the customs bonded area, and then a thorough inspection
of imported goods is arranged. After checking, a report on such a hundred percent inspection is to be
delivered to the assessing officer of customs by the deputed inspection team of customs.
 After the completion of the above formalities on assessment, the appraising officer of customs
specifies the rate of duty on imported goods, in case it is applicable. Once the classification of imported
goods is derived, the rate of import duty is reflected electronically on the basis of the software system
of Customs Tariffs.

• EDI Assessment:

In EDI Assessment of a bill of entry, the declaration of cargo is transferred to the assessing
officer and will be assessed by him. Further, the EDI system provides the information regarding the
calculation of duty, if required, and it will automatically apply to the relevant rate of exchange while
calculating.

After the assessment is over, a copy of the assessed Bill of entry and all the other supporting
documents are inspected at the time of examination of goods. The importer has to pay the duty calculated
by the system.

• Examination of goods:

All the imported goods are examined to verify the correctness of the description given in the
Bill of entry. However, the part of the consignment is therefore selected and randomly looked. Also, the
goods will be inspected prior to assessment in case the importer does not have complete info. At the
time of Import or even if the Customs Appraiser or Assistant Commissioner requires the goods are to
be examined before assessment. The appraiser examines the goods as per the examination order and
then records his approval.

• Green Channel facility

Green channel clearance facilities have been given to some major importers. It simply means
that the procedure of clearance of goods is done without the routine examination of the goods. A
declaration is made in the declaration form during the time of filing of the Bill of entry. The appraisement
is usually done as per normal procedure, but there would be no such physical examination of the goods.
In such cases, only marks and numbers are to be checked. There are a few rare cases. When some specific
doubts regarding the description or quantity of the goods arise, the senior officers/investigation wing-
like SIIB may order for the physical examination.

• Payment of duty

The duty can be easily paid either in the designated banks or via TR-6 challans. Different
Custom Houses have authorized certain banks for payment of duty. It is important to check the name of
the bank and its branch before you deposit the duty. Bank approves the payment particulars in the
challan, which is then submitted to the Customs.

If there are no such discrepancies at the time of examination of goods “Out of Charge” order is
given, the goods can be cleared.
Documents Required for Import Customs Clearance Process:

The below-mentioned documents are necessary for the Customs Clearance:

• Bill Of Entry

• Airway Bill/ Bill of Lading (If the Import of Goods is through Ship)

• Commercial Invoice

• License related to Import

• Insurance certificate

• Purchase order/ Letter of Credit

• Technical write-up, literature for some specific goods like machinery, etc.

• Information on the Goods or test report of goods (If Required)

• Central Excise Duty document (If Any)

• Industrial License (If Any)

• Import Export and Registration cum Membership Certificate

• DEEC(Duty Exemption Entitlement Certificate)/DEPB /ECGC or any other documents for

duty benefits

• DGFT/GATT Declaration

Customs Clearance Charges:

In addition to the import duties, India charges a 1% customs handling fee on all the imports. This
cost is charged on the entire/total value of the goods+the freight costs and Insurance.

Here is a simple example to understand the calculation of the import duty.

Serial No. Duty Type Rate Calculation Value

A Assessable value of the goods CIF+ 1%(customs fee) INR 600

B Basic customs duty 30% INR 180

C Social Welfare Surcharge 10% BX10/100 INR 18

D IGST 18% (A+B+C)X18/100 INR 143.64

E Total duty applicable B+C+D INR 341.64

Total Amount A+E INR 941.64

PLEASE NOTE: Assessable value might vary depending on the Incoterm used.
Thus, the customs clearance process can be quickly done hassle-free by following all the steps carefully. So
I hope that all the points and doubts related to the Customs clearance process in India are clear now, and you
are ready for your customs clearance.

SHIPMENT OF GOODS:
Shipment of Goods:
Skin agrees to ship, at a time convenient to you, one container to the Philippines for which
Nu Skin will cover the cost of shipping, handling, and insurance charges. You will use your best
efforts to arrange for duty free importation of these goods. (Nu Skin understands and accepts that
some of the items shipped may be among those listed on IAPE page 6 but that in no event will it
include a car.) This benefit will not foreclose the possibility of a later shipment as provided on
IAPE page 9 to address needs arising out of an extended stay abroad or relocation to another place
of assignment (e.g. Latin America). Sample 1 Based on 1 documents.
EXAMPLES of Shipment of Goods in a sentence Some limited form of spatial indexing
can be provided by maintaining sets of z-elements (see Section 4.2.1) for the geometries in special
relations which in turn can be indexed through a B-tree.Dual Architecture. Shipment of Goods,
provision of Services, and delivery and use of technical information under Buyer’s Order is subject
to all decrees, statutes, laws, rules, and regulations which govern export, re-export, or otherwise
pertain to export controls of the United States, including, but not limited to, the United States
Department of Commerce Export Administration Regulations (EAR), and the United States
Department of State International Traffic in Arms Regulations (ITAR).

UNIT-5
EXPORT-IMPORT DOCUMENTATION

EXPORT-IMPORT DOCUMENTATION:

IMPORT DOCUMENTATION:
The customs clearance department will ask for this document first as it contains information
about the order, including details such as description, selling price, quantity, packaging costs, weight
or volume of the goods to determine customs import value at the destination port, freight insurance,
terms of delivery
EXPORT DOCUMENTATION:
An export license is a government document that authorizes the export of specific goods in
specific quantities to a particular destination for a particular end-use. This document may be
required for most or all exports to some countries or for other countries only under special
circumstances.
EXPORT-IMPORT DOCUMENTATION FRAMEWORK
An exporter needs to keep himself thoroughly updated on all documentationrequ
irements to carry out an export transaction successfully and it is one of
hisprimary responsibilities to ensure that all documentary formalities are duly complied
with. Proper documentation will ensure smooth sailing with the requirements of each
of these agencies and the resulting transaction will be a successful one. Inaccurate
complete documentation will result in serious financial and goodwill losses .Export
documentation in India has evolved a great deal particularly since 1990.Efforts are on,
on a faster footing to streamline and modernize the system further. Prior to 1990, the
documentation was all manual and not at all coordinated. The result was lot of delays and
mistakes, rendering the task very clumsy, tire some ,repetitive and
truly frustrating. India adopted the ADS in 1991. ADS
refers toAligned Documentation System, which is the internationally accepteddocument
ation system. ADS uses a Master Document that contains the information common to all
documents forming part of the aligned series.

• Documentation plays a vital role in the international business

• It facilitates the smooth flow of goods/services and payments across national
frontiers
• Every document accompanying the shipment must be correct and properly filled
• Export documents are complex and more in number
• Requirement of documents differ from country to country
• Wrong documents will lead to loss of time in clearance of consignment, storage
charges, frustration to the importer who will be reluctant to import again from
the same exporter
• Advisable to take the help of shipping and forwarding agents to complete the
relevant documents in correct order.
 STANDARDIZED PRE-SHIPMENT EXPORT DOCUMENTS:
There are 16 Commercial Documents (of which 8 are “Principal Export
Documents” and the remaining 8 are “Auxiliary Documents”) and 9 Regulatory
Documents. Exporters are required to send the Principal Export Documents play a
supportive role and are required for the preparation and procurement of the principal
export trade. Auxiliary Documents play a supportive role and are required for the
preparation and procurement of the principal export documents. Regulatory
documents are associated with the pre-shipment stage of an export transaction and
are issued by the Government authorities.

A. PRINCIPAL EXPORT DOCUMENTS:

1. Commercial invoice
2. Packing list
3. Bill of Lading/Combined transport document
4. Certificate of inspection /Quality Control (Where required)
5. Insurance certificate/Policy (Incase of CIF export sales contract)
6. Certificate of Origin
7. Bill of Exchange
8. Shipment Advice

B. AUXILIARY DOCUMENTS:

1. Proforma invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance declaration
5. Shipping order
6. Mate’s receipt
7. Application for Certificate of origin
8. Letter to the Bank for Collection/Negotiation of documents
C. REGULATORY DOCUMENTS:

1. Gate Pass-I Gate Pass-II Prescribed by Central Government

2. AR4/AR4A Form Excise Authorities
3. Shipping Bill/Bill of export Customs Authorities
4. Export application/Dock challan/Port Trust Copy of shipping bill port trust
5. Receipt for payment of port charges
6. Vehicle ticket
7. Exchange control Declaration/GR/PP/Forms-Reserve Bank of India
8. Freight payment certificate
9. Insurance Premium Payment Certificate.

COMMERCIAL AND REGULATORY DOCUMENTS:

Commercial documents are written records of commercial transactions describing various

aspects of those transactions.
Commercial documents are written records of commercial transactions describing various
aspects of those transactions. They may include orders, invoices, shipping documents, transport
papers, and certificates of origin.
International trade in particular requires a lot of documentation, such as commercial
documents, financial documents, transport documents, insurance documents, and other
international trade-related documents. While the number of documents involved in international
trade is high, most of them are rather common.
The different commercial and regulatory documents may be classified into -
Documents related to goods, Documents related to shipment, Documents related to payment,
Documents related to inspection, Documents related to excisable goods and Documents
related to foreign exchange regulations.
Common Import/Export Commercial Documents

• Quotation - an offer to sell goods, clearly outlining the price, quality details, quantities,
terms of the trade, delivery, and payment terms. The exporter must prepare this
document.
• Sales contract - an agreement between the exporter and importer. This should stipulate all
the details of the transaction. Both parties must prepare this document. It's important to
note that the sales contract is a legally binding document. Therefore, it is wise to seek
legal counsel before signing anything.
• Pro forma invoice - an invoice created by the supplier before the merchandise is shipped.
This will inform the buyer of the types and quantities of goods that need to be shipped,
along with their value and specifications, i.e., size, weight, and dimensions. The exporter
must prepare this document.
• Commercial invoice - a formal demand note requesting payment from the exporter to the
importer for all items sold under the agreed-upon sales contract. This invoice should
provide details pertaining to the goods and payment/trade terms. A commercial invoice is
often used to clear Customs and is sometimes needed by the importer for foreign
exchange purposes.
• Packing list - a list containing detailed packing information regarding the goods shipped.
The exporter must prepare this document.
• Inspection certificate - a report created by an independent surveyor, inspection company,
or exporter regarding the specifications of the shipment. This will include things like
quantity, quality, and price. Certain countries and buyers will require this certificate.
Either the exporter or an inspection company must prepare this document.
• Insurance policy - a document for insurance that details the coverage and confirms that
insurance has been taken out. Either the insurer or an insurance agent must prepare this
document.
• Insurance certificate - a document that certifies that the shipment is insured under an open
policy and will cover any loss or damage to the goods in transit. Either the insurer or an
insurance agent must prepare this document.
• Product testing certificate - a document that certifies the products meet specified
international and national technical standards, including quality and safety. An accredited
laboratory must prepare this document.
• Health certificate - a document that certifies compliance with legislation in the exporter's
country. This pertains to agricultural or food products. It certifies that the products were
in good condition at the time of the inspection and able to be consumed by humans.
Either the exporter or inspection authority must prepare this document.
• Phytosanitary certificate - a document stating that any plants or planting materials are
free from pests and disease. This is often required for international trade.
• Fumigation certificate - a certificate that guarantees that the products underwent
fumigation and quarantine prior to shipping. Typically, the United States, Canada, the
United Kingdom, Australia, and New Zealand require this for any solid wood packing
material coming from the Chinese mainland or Hong Kong. Either the exporter or an
inspection company must prepare this document.
• ATA carnet - a document that obtains a duty-free/temporary admission of goods.
Examples include an exhibit for a trade show, samples, or professional equipment. The
exporter must prepare this document.
• Consular invoice - a document outlining shipment information, including a consignee,
consignor, and value descriptions. This will need to be certified by the consulate of the
importing country stationed in foreign territory. Customs officials will use this document
to verify the nature of the shipment, including value and quantity. The exporter must
prepare this document.