EXPORT DOCUMENTATION OF AGRO PRODUCT

Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that exporting requires; freight forwarders are specialists in this process. The following documents are commonly used in exporting; which of them are actually used in each case depends on the requirements of both our government and the government of the importing country.

1.

Commercial invoice

This is the basic document in an export transaction. It contains all the information which is required for preparation all other documents. It is, therefore, a document of contents or in other words, a master document. There is no standard form of commercial invoice. The exporter has to design their own form. Some countries, however, prescribe their own forms. In such cases, the exporter has necessarily to use the form prescribed by the importing country several copies of invoice will be required, some for the use by buyer and some for the information of various authorities in India. Its purpose is to inform the buyer of the kinds and quantities of goods to be sent, their value and important specifications (weight, size & so on). Some of the invoice prescribed by the importing countries are

2.

Bill of lading

Bill of lading may be defined as a receipt for goods, signed by the master or other duly authorized person on behalf of ship-owner and constitute a document or title to the goods specified therein. A bill of lading is a receipt given by the master of vessel or his agent is acknowledgement of the shipment goods mentioned in the Bill of Lading. It is a document of title for those goods by mans of which the property may be transferred and upon which money may be advanced. It also contains or evidences the terms of the contract of carriage under which goods are to be carried and delivered by the ship owners. Roles: 1. Document of title:

A bill of lading is a document of title without which delivery or goods can't normally be obtained. 2. Receipt:

A B/L is a receipt Tor the goods shipped and contains certain admission as to the quantity and condition of the goods when put on board. 3. Negotiable document:

A B/L is a commercially negotiable document that can be bought and sold in exactly the same way as the goods themselves.

4.

Evidence of contract:

A B/L sets and the terms of the contract or carriage but is not the actual contract itself. The contract has been made by the offer of cargo for shipment by the shipper and the acceptance of the cargo by the shipowner.

3.

Consular invoice

A consular invoice is the commercial invoice stamped or notarized by the consulate or embassy of your customers country, if required. For example, if you are exporting to Egypt and your buyer requires a consular invoice, the Egyptian embassy in Washington, D.C. will do this for a small fee. Usually a freight forwarder will offer this service, but an exporter can send the original invoice to the consulate, have it notarized/legalized as required, pay the fee, and have the documents returned or forwarded on. It is important to understand that consular invoices are required in the buyers country, so you need to add the time/costs associated with obtaining one to the price of the goods you are shipping. The invoice should include a [non]-diversion statement, as provided below. As the U.S. Principal Party of Interest (or exporter of record), this statements attests to and informs your customers that you are using due diligence to control the shipment and abide by regulations, particularly shipments to embargoed/sanctioned countries.

4.

Certificate of origin

The Certificate of Origin is an instrument to establish evidence on the origin of goods imported into any country. The certificates are issued under the ambit of the Rules of Origin of any importing country that grants such concessions to tariffs or merely stipulates a non preferential certificate without granting any tariff concession. The Agreement on Rules of Origin within the framework of the World Trade Organisation (WTO) is the foundation on which the Rules of Origin are framed by the respective countries. The basic principles enunciated in the WTO agreement on Rules of Origin are transparency, objectivity, impartiality, predictability, consistency and neutrality. The avowed objectives of these rules are to bring about further liberalization and expansion of world trade. It also desires to bring about the transparency of laws, regulations and practices regarding the Rules of Origin.

There are two categories of Certificate of Origin viz. (1) Preferential (2) Non-Preferential.
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Amongst the Preferential Certificate of Origin are the:

1.

Generalised System of Preferences (GSP) is a non contractual instrument by which industrialised

(developed) countries unilaterally and on the basis of non reciprocity extend tariff concessions to developing countries.

2.

Global System of Trade Preference (GSTP): In the GSTP trade concessions are exchanged among

developing countries, who have signed the agreement. Presently, there are 46 member countries of GSTP and India has exchanged tariff concessions with 12 countries on a limited number of products. Export Inspection Council (EIC) is the sole agency authorized to issue Certificate of Origin under GSTP.

3.

The Agreement establishing SAPTA was signed by the seven SAARC countries namely India,

Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives The list of agencies, which are authorized to issue Certificate of Origin under SAPTA.

4.

The Bangkok agreement is a preferential trading arrangement designed to liberalise and expand trade

in goods progressively in the Economic and Social Commission for Asia and Pacific (ESCAP) region through such measures as the relaxation of tariff and non tariff barriers and use of other negotiating techniques.)The agencies authorized to issue Certificate of Origin under Bangkok agreement.

5.

A Free Trade Agreement (FTA) between India and Sri Lanka was signed on 20thDecember,1998.

The agreement was operationalised in March, 2000 following notification of the required Customs tariff concessions by the Government of Sri Lanka and India in February, and March, 2000 respectively. Export Inspection Council is the sole agency to issue the Certificate of Origin under ISLFTA.

5.

Inspection certification

This is also a regulatory document which is required for the regulatory requirements of both the importers country as well as the exporters country. There are various "Export Inspection Agencies" establish by the Government of India for conducting quality control and pre shipment inspection. If the goods conform to the prescribed specification, an inspection certificate is issued. However this inspection certificate can be obtained by such agency as stipulated in the L/C Certifying that the goods were in good and sound condition immediately before the shipment.
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One important thing which is to be kept in mind while preparing the pre-shipment inspection certificate is that the contents of the same should been a strict accordance with the terms and conditions of letter of credit.

6.

Destination control statement

Destination control system is the document that accompanies all the shipments when the goods are transported from one place to another. DCS forms an integral part of the transportation of goods in ecommerce system. The destination control shipment contains the address of where that box is to be transported. This is very important because the box should have the proper address of the place where the goods are to be transported.

7. Insurance certificate
This document indicates the type and amount of insurance in force on a particular shipment for loss or damage while in transit. It is sometimes referred to as Marine insurance, but may cover the entire voyage.

8.

Export license

A document indicating that a government has granted a licensee the right to export specified goods to specified countries.

9. Export packing list

Its purpose is to facilitate customs clearance, keep tract of inventory of goods and identification of inventory and lost goods at the importing country. The contents of the usual packing list or shipment plan are : Description of goods Type & No. of packages or pieces Total weight of the goods being exported Marking & Nos. on them. Colour marking (in case of bulk cargo)

One important point to be kept in mind while preparing the packing list is that the contents of the packing list should be strictly in agreement with the terms of L/C. (source: APEDA)

EXPORT PROCEDURE OF AGRO PRODUCT

STEP1: Enquiry :
The starting point for any Export Transaction is an enquiry. An enquiry for product should, inter alia, specify the following details or provide the following data Size details - Std. or oversize or undersize Drawing, if available Sample, if possible Quantity required Delivery schedule Is the price required on FOB or C& F or CIF basis Mode of Dispatch - Sea, air or Sea/air Mode of Packing Terms of Payment that would be acceptable to the Buyer - If the buyer proposes to open any Letter of Credit, any specific requirement to be complied with by the Exporter Is there any requirement of Pre-shipment inspection and if so, by which agency Any Certificate of Origin required - If so, from what agency.

STEP 2: - Proforma generation :

After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter will provide a Proforma Invoice to the Buyer.

STEP 3: Order placement :

If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then place an order on the Exporter, giving as much data as possible in terms of specifications, Part No. Quantity etc. (No standard format is required for such a purchase order)

STEP 4: Order acceptance :

It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for the delivery committed.

STEP 5: Goods readiness & documentation :

Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of despatch), the Invoice is prepared by the Exporter. If the number of packages is more than one, a packing list is a must. Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as export goods are exempt from Central Excise, but the AR4 procedure is to be followed for claiming such an exemption. Similarly, no Sales Tax also is payable for export of goods.

STEP 6: Goods removal from works :

There are different procedures for removing Export consignments to the Port, following the AR4 procedure, but it would be advisable to get the consignment sealed by the Central Excise authorities at the factory premises itself, so that open inspection by Customs authorities at the Port can be avoided. If export consignments are removed from the factory of manufacture, following the AR4 procedure, claiming exemption of excise duty, there is an obligation cast on the exporter to provide proof of export to the Central Excise authorities

STEP 7: Documents for C & F agent : The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents,
who are entrusted with the task of shipping the consignments, either by air or by sea.

Invoice Packing List Declaration in Form SDF (to meet the requirements as per FERA) in duplicate. AR4 - first and the second copy Any other declarations, as required by Customs On account of the introduction of Electronic Data Interchange (EDI) system for processing shipping
bills electronically at most of the locations - both for air or sea consignments - the C&F Agents are required to file with Customs the shipping documents, through a particular format, which will vary depending on the nature of the shipment. Broad categories of export shipments are:

Under claim of Drawback of duty

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 Without claim of Drawback Export by a 100% EOU Under DEPB Scheme STEP 8: Customs Clearance :
After assessment of the shipping bill and examination of the cargo by Customs (where required), the export consignments are permitted by Customs for ultimate Export. This is what the concerned Customs officials call the LET EXPORT endorsement on the shipping bill.

STEP 9: Document Forwarding :

After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter the following documents: Customs signed Export Invoice & Packing List Duplicate of Form SDF Exchange control copy of the Shipping Bill, processed electronically AR4 (original duplicate) duly endorsed by Customs for having effected the Export Bill of Lading or Airway bill, as the case may be.

STEP 10: Bills negotiation :

With these authenticated shipping documents, the Exporter will have to negotiate the relevant export bill through authorized dealers of Reserve Bank, viz., Banks. Under the Generalized System of Preference, imports from developing countries enjoy certain duty concessions, for which the exporters in the developing countries are expected to furnish the GSP Certificate of Origin to the Bankers, along with other shipping documents. Broadly, payment terms can be: DP Terms DA Terms Letter of Credit, payable at sight or payable at... days. (Source: APEDA)

Methods of payments
There are 3 standard ways of payment methods in the export import trade international trade market: 1. Clean Payment 2. Collection of Bills 3. Letters of Credit L/c 1. Clean Payments In clean payment method, all shipping documents, including title documents are handled directly between the trading partners. The role of banks is limited to clearing amounts as required. Clean payment method offers a relatively cheap and uncomplicated method of payment for both importers andexporter There are basically two type of clean payments: Advance Payment In advance payment method the exporter is trusted to ship the goods after receiving payment from the importer. Open Account In open account method the importer is trusted to pay the exporter after receipt of goods. The main drawback of open account method is that exporter assumes all the risks while the importer get the advantage over the delay use of company's cash resources and is also not responsible for the risk associated with goods. 2. Payment Collection of Bills in International Trade The Payment Collection of Bills also called Uniform Rules for Collections is published by International Chamber of Commerce (ICC) under the document number 522 (URC522) and is followed by more than 90% of the world's banks. In this method of payment in international trade the exporter entrusts the handling of commercial and often financial documents to banks and gives the banks necessary instructions concerning the release of these documents to the Importer. It is considered to be one of the cost effective methods of evidencing a transaction for buyers, where documents are manipulated via the banking system. There are two methods of collections of bill : Documents Against Payment D/P In this case documents are released to the importer only when the payment has been done. Documents Against Acceptance D/A
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In this case documents are released to the importer only against acceptance of a draft.

3. Letter of Credit L/c Letter of Credit also known as Documentary Credit is a written undertaking by the importers bank known as the issuing bank on behalf of its customer, the importer (applicant), promising to effect payment in favor of the exporter (beneficiary) up to a stated sum of money, within a prescribed time limit and against stipulated documents. It is published by the International Chamber of Commerce under the provision of Uniform Custom and Practices (UCP) brochure number 500. Various types of L/Cs are : Revocable & Irrevocable Letter of Credit (L/c) A Revocable Letter of Credit can be cancelled without the consent of the exporter. An Irrevocable Letter of Credit cannot be cancelled or amended without the consent of all parties including the exporter. Sight & Time Letter of Credit If payment is to be made at the time of presenting the document then it is referred as the Sight Letter of Credit. In this case banks are allowed to take the necessary time required to check the documents. If payment is to be made after the lapse of a particular time period as stated in the draft then it is referred as the Term Letter of Credit. Confirmed Letter of Credit (L/c) Under a Confirmed Letter of Credit, a bank, called the Confirming Bank, adds its commitment to that of the issuing bank. By adding its commitment, the Confirming Bank takes the responsibility of claim under the letter of credit, assuming all terms and conditions of the letter of credit are met.

AGRI EXPORT ZONES

The Concept of Agri Export Zone

Sporadic efforts have been made in the past for promoting export of agricultural produce/products from the country. Thus, on the one hand Research and Development has taken place with little bearing on the development of a particular agricultural produce for the purpose of export, on the other hand financial and fiscal incentives are being provided for exporting a particular produce without actually addressing preharvesting and post-harvesting practices. The concept of agri export zone thus attempts to take a comprehensive look at a particular produce/product located in a contiguous area for the purpose of developing and sourcing the raw materials, their processing/packaging, leading to final exports.

Measures envisaged to promote exports from such Zone

i. Financial Assistance Both Central as well as State Government and their agencies are providing a variety of financial assistance to various agri export related activities. These extend from providing financial assistance for Training and Extension, R&D, Quality Upgradation, Infrastructure and Marketing etc. Thus, whereas Central government Agencies like APEDA, NHB, Deptt. of Food Processing Industries, Ministry of Agriculture provide assistance, a number of State Governments have also extended similar facilities. All these facilities would have to be dovetailed and extended to promote agri exports from the proposed Zones in a coordinated manner. Some additional features like providing grants from Market Access Initiative fund could also be considered.

ii. Fiscal Incentives The benefits under Export Promotion Capital Goods Scheme, which were hitherto available only to direct exporters, have now been extended to service exporters in the Agri Export zones. Thus, even service provided to ultimate exporters will be eligible for import of capital goods at a concessional duty for setting up of common facilities. They shall fulfil their export obligation through receipt of foreign exchange from ultimate exporters who shall make the payments from their EEFC account. Exporters of value added agri products will be eligible for sourcing duty free fuel for generation of power, provided the cost component of power in the ultimate product is 10% or more and the input-output norms are fixed by the advance licencing committee of the DGFT. In view of the power intensive nature of most of the value addition, almost all the exporters of value added agriculture produce will become eligible for such
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facility. Similarly, input-output norms can also be fixed for sourcing other inputs, like fertilizer, pesticides etc. duty free for cultivation purpose.

Anticipated benefits
i) Strengthening of backward linkages with a market oriented approach. ii) Product acceptability and its competitiveness abroad as well as in the domestic market. iii) Value addition to basic agricultural produce. iv) Bring down cost of production through economy of scale. v) Better price for agricultural produce. vi) Improvement in product quality and packaging. vii) Promote trade related research and development. viii) Increase employment opportunities.

Operation of the Concept

The entire approach of promoting the Agri Export Zone would have to be taken on a project mode. This would mean that the State Governments would need to identify potential export products which could be selected for development with a cluster approach. State Governments will have to evolve Projects which are feasible and are possible to be implemented immediately. They have also to conform to the indicative guidelines given below. The States will forward such project proposals to APEDA which will conduct the initial scrutiny of the proposals .If found feasible ,APEDA may provide necessary guidance in preparing the detailed project report. This report, after preliminary scrutiny, will be placed before the Steering Committee which has been constituted under the chairmanship of Commerce Secretary with the following members:

i) Director General of Foreign Trade, Member ii) Joint Secretary (EP Agri Division, DOC) Member iii) Joint Secretary (Deptt. of F.P.I.,MOA) Member iv) Joint Secretary [Infrastructure Division, DOC] Member v) Executive Director , NHB Member iv) Representative of DG, ICAR Member vii) Director (Finance, Deptt. of Commerce) Member viii) Chairman, APEDA Convenor

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Once the project proposal of a State has been approved by the Committee, an MOU would be signed between APEDA (on behalf of the Central Government) and the State Government for providing possible assistance at each stage of the project.. The responsibilities of the State government would also be defined in the MOU, a draft of which is under preparation.

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