Export documentation and procedures upon prevalent statutes/ amendments and country-specific requirements related to exporting from India are explained in this post.
Definition of export:
Export means selling goods or services by a person or a company of one country to a buyer in another country.
The supplies made to IBRD/IDA/ADB aided projects are termed as Deemed Exports. Specified sales viz., sales to foreign tourists during their stay in India is also termed as deemed export.
Exports are allowed freely in India subject to the condition that the item under export should not be in the Negative list of exports. The negative list consists of goods, the imports or exports of which are prohibited or restricted through licensing or otherwise canalized. However, it is obligatory on the part of the exporter that he/she must ensure that the amount representing the full export value of the goods exported must be realized through an authorized dealer of foreign exchange.
The Export procedure in India involves the following;
i. licence requirement,
ii. custom formalities,
iii. submission of declaration form related to exports
iv. permitted method of payment etc.
At the outset, a prospective exporter should obtain Importer-Exporter Code (IEC) Number in the name of his firm/company. As per Foreign Trade Policy, it is mandatory to obtain IEC for export import from India. An application for IEC is filed online at www.dgft.gov.in as per ANF 2A. Online payment of RS.500 through online banking or credit/debit card is made along with requisite documents as mentioned in the application form.
If exporting without paying integrated goods and services tax (IGST), a bond or letter of undertaking (LUT) is required. Besides this, tax invoices with details such as name, address, and GSTIN of the supplier; invoice number and date; name and address of the recipient; HSN code for goods; quantity and the total value of goods and signature of the supplier are required.
Registration cum membership certificate (RCMC): For availing authorisation for import/export or any other concession under FTP 2015-20 as also avail the service/guidelines, exporters are required to obtain RCMC granted by concerned Export Promotion councils/FIEO/Commodity Boards/authorities.
Document procedures for export and import in India
As per DGFT Notification dated March 12, 2015, Indian exporters and importers require the following three mandatory documents in foreign trade.
MANDATORY DOCUMENTS IN INDIA FOR EXPORT & IMPORT
|1||Bill of Lading/ Airway Bill||Bill of Lading/ Airway Bill|
|2||Commercial Invoice cum Packing List||Commercial Invoice cum Packing List|
|3||Shipping Bill*/ Bill of Export||Bill of Entry|
In the case of a Post Parcel, no Shipping Bill is required.
Other necessary paperwork includes export order/purchase order; letter of credit; inspection/quality check certificate; marine insurance policy; health certificate (applicable only when exporting food products that are of animal or non-animal origin); certificate of insurance; warehouse receipt etc. For more details of other documents required in specific cases/products/tariff lines etc. Click “other documents“.
Labeling is an important element for products for exporting/importing a container out of/into the country. Primarily, labeling is the technique of identifying the cargo during the operation till the cargo touches the importer’s doorstep. The label on the consignment also gives information about how the package or product should be used. (Read: Labeling)
LEO: Let export order is the final customs clearance procedure to export any goods outside the country. Similarly, pass out or ‘Passed out of customs’ is the concluding procedure of import customs clearance procedures to take delivery of imported goods. (Click: LEO for details)
Exporter of good track record:
An exporter is called an ‘exporter of good track record’, whose export outstanding does not exceed 5% of the average export realization during the preceding three calendar years.
Permitted period of realization for export proceeds:
The entire export proceeds should be realized and received at the exporter’s bank within six months of shipment. The time period is relaxed to status holders up to 12 months. Where export is to a warehouse with the permission of RBI, the export proceeds should be received within 15 months. In the case of Exports of books on a consignment basis, 360 days can be allowed.
Permitted methods of payment of export- proceed:
The following mode of payment is permitted for payment of export proceeds.
- Demand Draft/ TT/SWIFT/Personal cheques, TC or foreign currency during buyer’s visit to India
- Payment from the NRE or FCNR account of the buyer.
- Payment can be made through International Credit Cards. The amount should be received through the NOSTRO account of the exporter’s account. If some other bank is making a payment they have to certify that the receipt is through their NOSTRO account.
- Transactions between India and Nepal are normally in Indian Rupees only. However, if Nepal Rastriya Bank permits it can be settled in foreign currency.
The limit for a reduction in value:
The reduction should not exceed 25% of the invoice value. The invoice should not relate to the export of commodities subject to floor price stipulations. The exporter is not on the caution list of the Reserve Bank. The exporter should be advised to surrender proportionate export incentives if availed.
Normal Transit period: Normal transit period means the average period normally involved from the date of negotiation/purchase/discount till the receipt of bill proceeds in the Nostro account of the bank concerned. Foreign Exchange Dealers Association of India (FEDAI) prescribes the NTP from time to time. The details are as under.
Foreign Currency bill: 25 days
Reimbursement by TT/SWIFT: 5 days (if a notice period is prescribed, it should be added)
For Rupee bills:
Reimbursement at the center of negotiation …………………: 3 days.
Bills under LC with reimbursement at other centers ……………..: 7 days
Reimbursement outside India and bills not under collection …..: 20 days
Export to Russia under LC for which Reimbursement is by RBI. : 20 days.
Condition for receipt of Advance payment:
Where an advance payment is received, by the exporter, he has to complete the .export within one year from the date of receipt of documents. The responsibility of ensuring the export is vested with the Authorized Dealer who processed the advance receipt. Interest payment if any, should not exceed LIBOR+100bps.
The ceiling for partial drawing:
The undrawn portion of shipment proceeds should not exceed 10% of the full value of the export. The exporter should give a suitable undertaking on duplicate GR/PP/SDF that he will surrender or account for the balance proceeds of shipment within the period prescribed for realization.
Whether AD can send the documents directly to the buyer?
AD should normally send the documents to its overseas branch or its correspondent. An exporter can also send the documents directly to the buyer where the track record and standing of the exporter are good. Where submission of export declaration is exempted, the documents valued not more than Rupees Twenty-Five thousand; AD can send the documents directly to the consignee. Where 100% advance payment is received, an exporter can directly send the documents to the consignee. Status holders and units in SEZ can send the documents directly to the buyer subject to the condition that the payments will be received through the AD.
Conditions for self-write-off by exporter:
i. Where all exporters including Status holders, Aggregate of bills written off and extended should not exceed 10% of export proceeds due during the calendar year.
ii. Bills should not be subject to investigation by the enforcement directorate.
Are there any provisions for the extension of the export realization period by AD?
AD can permit extension on the following instances; where the invoice does not exceed USD 1,000,000 subject to the following conditions:
- Reasons for non-realization are beyond the control of the exporter and the Exporter should submit a declaration that he will realize the proceeds during the extended period.
- An extension can be granted for up to a period of 3 months at a time. While considering an extension beyond one year, the total export outstanding of the exporter should not be more than 10% of the average export realization during the preceding 3 financial years.
- If a suit has been filed by the exporter on his buyer, the ceiling would not apply.
- For all other cases, especially when the subject bill is under investigation and where the amount is more than USD 1,000,000 RBI permission is necessary.
What is the Ceiling for Agency-Commission?
There is no ceiling limit for agency commission. AD can allow payment of commission provided it is declared in GR/PP/SOFTEX and the relative shipment is already made. Even in cases where it is not declared in GR/PP/SOFTEX, an agency commission may be made. This is subject to a valid agreement/written understanding between the exporter and beneficiary for the payment of commission exists.
What is Short shipment and shut-out shipment:
The part shipment is one which was already declared to customs, and later short-shipped. Then it is called short shipment. The exporter should file a notice of short shipment to Customs and a copy of the notice to be handed over to the Authorized Dealer. If there is a delay in making arrangements to re-ship or the shipment is entirely shut out it is called a Short shipment. In cases of shutout shipment, the exporter shall give notice to Customs in the prescribed format and attach the unused duplicate copy of the GR form and the shipping bill. After verifying the documents submitted by the exporter, Customs certify them and forward the same to Reserve Bank. The Custom will cancel the originals If the exporter makes a shipment subsequently, he has to prepare a fresh set of GR forms and complete the formalities.
Indian Owned warehouse:
In case of exports made to Indian owned warehouse abroad established with the permission of RBI, the export proceeds must be realized maximum within a period of fifteen months.
Originally posted on January 21, 2014, edited and reposted on March 12, 2023