PRESENTATION ON THE TOPIC EXPORT DOCUMENTATION AND COMMON PROBLEMS RELATED TO EXPORT

INTRODUCTION
At the outset it must be mentioned that improved system of documentation for exports announced by the government of India on 31 March,1991 is fine and should be adapted by the exporters as far

as possible. However a word of caution would be in order. To date we

have arrangements we have arrangements with only 80 countries around the world where UN key Layout(Master Documents) are followed.

EXPORT DOCUMENTATION
Once the goods are ready, an exporter has to prepare and execute various documents at different stages of sending the shipment of goods

to the importer. These documents are important for two reasons:

as an evidence of shipment and title of goods and for obtaining payment

CONT..
The various documents are therefore, of vital interest to the exporter and the bank which is the usual media of payment. The documentary requirements are both regulatory and operational in nature and have to comply with the rules and regulations of the

Indian Government as well as the importing country of different

types of products. These requirements are different for different types of products. When exporting for the first time, exporters

should , always find out from the buyers the documents required for
the product concerned.

NEED FOR PREPARING EXPORT DOCUMENTS

Export documents have to be prepared for various purposes, viz.
Declaration for exports as per Exchange Control Regulations of the country. Transportation of the goods. Customs clearance of the goods. Other purposes.

Some of the forms for preparing documents have been standardized under the
Aligned Documentation System introduced w.e.f. 1.10.1991.

MASTER DOCUMENTS
United nations key Layout has made it possible to many countries
to reproduce in one run the repetitive information on all the export documents from just one document called the MASTER

DOCUMENT.
Master Documents are of two types:One for commercial use Other for regulatory use.

COMMERCIAL DOCUMENTS
Commercial documents are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. Out of the 16 commerce documents in the export documentation framework as many as 14 have been standardized and

aligned to one another. These are performa invoice, commercial invoice,

packing list, shipping instructions, intimation for, inspection, certificate of inspection of quality control, insurance declaration, certificate of insurance, mates receipt, bill of ladingor combined transport document application for certificate origin, certificate of origin, shipment advice and letter to the bank for collection or negotiation.

CONT..
The following are the 16 commercial documents generally involved at the pre-

shipment stage: Proforma invoice Commercial invoice Packing list Shipping instruction Intimation of inspection Certificate of inspection

Insurance declaration
Certificate of insurance

CONT..
Shipping order

Mates receipt
Bill of lading Application for certificate of origin Certificate of origin Bill of exchange Shipment Advice Letter to the bank for collection/Negotiation of Documents

REGULATORY DOCUMENTS
Regulatory export documents are prescribed by the different

government departments and bodies in order to comply with various

rules and regulations under the relevant laws governing export trade such as export inspection, foreign exchange regulation, export trade

control, customs etc. . Out of 9 regulatory documents four have

been standardized and aligned. These are shipping bill or bill of export, exchange control declaration (GR form), export application dock challan or port trust copy of shipping bill and receipt for payment of port charges.

CONT..
The various regulatory documents are as follows: AR-4 form Shipping bill/Bill of Export Export application/Dock Challan/Port trust copy of Shipping bill Receipt for payment of Port charges Vehicle chit Exchange control declaration Forms

Freight payment certificate

Insurance Premium Payment certificate

CATEGORISATION OF DOCUMENTS
Documents related to goods. Documents related to shipment.

Documents related to payment.

Documents related to inspection Documents related to excisable goods. Documents related to foreign exchange regulation

DOCUMENTS RELATED TO GOODS

INVOICE
An invoice is the sellers bill for merchandise and contains particulars of goods, such as the price per unit at a particular location, quantity, total value, packing

specifications, terms of sale, identification marks of

the package, bill of lading number, name and address of the importer, destination, name of the ship, etc.

CONT..
Some importing countries insist that the invoice should be

signed by the importing countrys consul located in the

exporters country. Such invoices signed by the consul is known as consular invoice. The main purpose of the consular invoice is to enable the authorities of the importing country to collect accurate information about the volume, value, quality, grade, source etc of its imports for purpose of assessing import duties an also for statistical purposes.

PACKING NOTE AND LIST

The difference between the packing note and packing list is that the packing note refers to the particulars of the contents of an individual pack, while the packing list is a consolidated statement of the contents of a number of cases or packs. A packing note should include the packing note number, the date of packing, the

name and address of the exporter, the name and address of the importer, the
order no., date, bill of lading number and date, marking numbers, case number to which the note relates, and the contents of the goods in terms of quantity and weight. Apart from the details in the packing note, a packing list should also include item-wise details.

CONT..
No particular form has been prescribed for the packing note or packing list. Normally then copies of packing note/packing list should be prepared.

The first is to be sent with the shipping documents,

two copies in advance to the buyer, one to the

shipping agent and the remaining retained by the

exporter.

CERTIFICATE OF ORIGIN
A certificate of the origin as the name indicates, is a certificate which specifies the

country of the production of the goods. The certificate has to be produced before
clearance of goods and assessment of duty, for the customs law of the country may require this procedure. This certificate is a necessity where a country offers a preferential tariff to India and the former is to ensure that only goods of Indian origin benefit from such concession. A certificate of origin may be required when goods of a particular type from certain countries are banned. A certificate of origin form may be obtained from Chambers of Commerce, Export Promotion Councils and the various trade associations which have been authorized by the Government.

DOCUMENTS RELATED TO SHIPMENT

MATE RECEIPT
A mate receipt is a receipt issued by the commanding office of the ship when

the cargo is loaded on the ship, and contains information about the name of
the vessel, berth, date of shipment, description of packages, marks and numbers, condition of the cargo at the time of receipt on board the ship etc. The mate receipt is first handed over the Port Trust Authorities so that all the port dues may be paid by the exporter. After paying all the port dues, the merchant or the agent may collect the mate receipt from the Port Trust authorities. The bill of lading is prepared by the shipping agent after the mate receipt has been obtained.

SHIPPING BILL
The shipping bill is the main document on the basis of which the customs permission for the export is given. The shipping bill contains particulars of the goods exported, the name of the vessel, master or agents, flag, the port at which the goods are to be discharged, the country of final

destination, the exporters name and address etc. It also contains details
of the packages and the goods such as number and description, marks and numbers, quantity details about each case, real value as defined in the Sea Customs Act, whether Indian or foreign merchandise to be reexported, total number of packages, their total weight and value etc.

CONT..
The following three forms of the shipping bill are available with the Customs authorities: DUTIABLE SHIPPING BILL for goods for which there is export duty. FREE SHIPPING BILL for goods for which there is no export duty.

DRAWBACK SHIPPING BILL which is required for claiming the customs

drawback against goods exported.

CART TICKET
A cart ticket also known as cart chit, vehicle and gate pass, is prepared by the exporter and includes details of the export cargo in terms of shippers name, the number of packages, the shipping bill number, the port of destination and the number of the vehicle carrying the cargo. The driver of the vehicle carrying the

cargo should possess the ticket and when the vehicle is brought at the port gate, it
should be presented to the gate warden/inspector/keeper along with other shipping and port documents. The gate keeper/warden/inspector, after satisfying himself that the vehicle is carrying the cargo as mentioned in the document, allows it to pass the gate.

CERTIFICATE OF MEASURMENT
Freight is charged either on the basis of weight or measurement. When it is charged on
the basis of weight, the weight declared by the shipper may be accepted. However a certificate of measurement from the Indian Chamber of Commerce or other approved organization may be obtained by the shipper and given to the shipping company for the calculation of the necessary freight. The certificate contains the name of the vessel, port and destination, the description of goods, the quantity, length, breadth, depth, etc of the packages.

BILL OF LADING
The bill of lading is a document wherein the shipping company gives its official receipts for the goods shipped in its vessel and at the same time contracts to carry them to the port of destination. It is also a document of title to the goods and as such is freely transferable by endorsement and delivery.

A bill of lading serves three main purposes: As a document of title to the goods As a receipt from the shipping company and

As a contract for the transportation of goods.

CONT..
Each shipping company has its own bill of lading. The exporter prepares

the bill of lading in the forms obtained from the shipping company or from
the agents of the shipping company. The information contained in the bill of lading includes the date and place of the shipment, the name of the

consignor, the name and destination of the vessel; the description, quality
and destination of the goods; the marks and numbers; the invoice number and the date of export; the gross weight and the net weight; the number of packages; the amount of freight etc.

AIRWAY BILL
An airway bill also called an air consignment note, is a receipt issued by an airline for the carriage of goods. As each shipping company has its own bill of lading, each airline has its own airway bill.

DOCUMENTS RELATED TO PAYMENT

LETTER OF CREDIT
A letter of credit is a document containing the
guarantee of a bank to honour drafts drawn on it by

an exporter, under certain conditions and up to

certain amounts, provided that the beneficiary fulfills

the stipulated conditions.

BILL OF EXCHANGE
The Negotiable Instruments Act,1881, defines the bill of exchange as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the

instrument.

CONT..
There are five important parties to a bill of exchange: THE DRAWER:- The drawer is the person who has issued the bill. The drawer is the creditor to whom the money is owned. THE DRAWEE:- The drawee is the person to whom the bill is addressed or against whom the bill is drawn. THE PAYEE:- The payee is the person to whom the bill is payable. The bill can be drawn payable to the drawee or his bank. THE ENDORSER:- The endorser is the person who has placed his name and signature at the back of the bill signifying that he has obtained title to the bill and payment is due to him on his own account.

THE ENDORSEE:- The endorsee is the person to whom the bill is endorsed. The endorsee can
obtain payment from the drawee.

CONT..
There are the following important types of bill of exchange:-

SIGHT BILL OF EXCHANGE:- A sight or demand B/E is one which is required to be paid by the drawee immediately on presentation of the bill.

USANCE BILL OF EXCHANGE:- In case of the usance or time B/E, there is maturity period called the tenor, and the payment is to be made only on the

maturity of the bill.

CONT..
CLEAN BILL OF EXCHANGE:- A bill of exchange not accompanied by the relative

shipping documents is known as a clean bill of exchange. In respect of the clean B/E, the documents are sent to the consignee directly, and he can take delivery of the goods on their arrival at the port of destination.
DOCUMENTARY BILL OF EXCHANGE:- A documentary B/E is a bill of exchange

accompanied by the relative shipping documents such as the bill of lading, marine insurance
policy, commercial invoice, certificate of origin, etc. The documents accompanying the bill are delivered to the importer by the bank only upon either acceptance or payment of the bill. The former is called documents against acceptance and the later is called documents against payment. It is the documentary B/E that is commonly used in foreign trade transactions.

TRUST RECEIPT
If the importer is unable to take possession of the documents by making the payment following the arrival of the goods, the merchandise may be made available to the importer by his bank under an arrangement whereby the importer signs a trust receipt. Under this arrangement, the importer is allowed to sell the imported goods by acting as an agent of the bank but he retains ownership of the merchandise until the importer has made full settlement; all sum received from the sale of goods must be credited to the bank until such settlement is made.

LETTER OF HYPOTHECATION
A letter of hypothecation is a document signed by the customer conveying to a

banker the full ownership of goods at the port of destination in respect of which he
has made advances either by loan or by acceptance or negotiation of bills of exchange. This a sort of blanket document which any banker, who accepts bills,

advances money or negotiates bills and shipping documents, demands from a

customer to give him recourse on the bills and control of the documents. The letter of hypothecation pledges the documents of title with the banker as a security for an advance and gives the bank power to sell the goods. If necessary, to insure them and to warehouse them at the customers expense.

BANK CERTIFICATE OF PAYMENT

It is a certificate issued by the negotiating bank of the

exporter, certifying that the bill covering particular

consignments, has been negotiated and the proceeds

received in accordance with exchange control

regulations in the approved manner.

DOCUMENTS RELATED TO INSPECTION

CERTIFICATE OF INSPECTION
It is a certificate issued by the Export Inspection Agency, certifying
that the consignment has been inspected as required under the Export( Quality control and Inspection ) Act, 1963, and satisfies the conditions related to quality control and inspection as applicable to it , and is certified export worthy.

DOCUMENTS RELATED TO EXCISABLE GOODS

G.P FORMS A GP form is a gate pass for the removal of excisable goods from a factory or warehouse. Form GP 1 is used for the removal of excisable goods an payment of duty and form GP 2 is used for the removal of excisable goods without payment of duty.

FORM C

Form C is to be used for applying for rebate

of duty on the excisable goods(other than

vegetable, non- essential oils and tea) exported

by sea. It is to be submitted in triplicate to the

collector of Central Excises.

FORMS A.R. -4/A.R.- 4A

These forms are meant for applying for the removal
of excisable goods for export by sea/ post. Form A.R.-4 is used for applying for excise inspection at the factory and Form A.R.4-A is used when goods are to be exported under a claim for rebate of excise duty or under bond.

DOCUMENTS RELATED TO FOREIGN EXCHANGE REGULATION

Foreign Exchange regulations in India require the

exporter to fill several forms.

There are four important types of form, namely

GR\PP,VP\COD and SOFTEX form for export of

computer software obtainable from the RBI or a bank authorized to deal the foreign exchange.

COMMON PROBLEMS RELATED TO EXPORT

LACK OF INTEGRATED APPROACH

An important reason for the poor export performance of India has been the absence of an
integrated view of the development potentials and development objectives and a long term strategy based on such an integrated approach. Needless to say, absence of proper environmental analysis and definite objectives and policy directions are crux of the

problem. Had there been a realistic assessment of the overall effect of modernization and
economically efficient development of a sector on export earnings, employment, income generation etc., the development of several sectors would not have been made to suffer by such policies as reservation for small scale sector, import controls, size and growth

restrictions, etc.

HIGH COSTS
In a large no. of cases, high domestic costs is an inhibiting factor. The problem has been succinctly stated by Abid Hussain Committee: India is often at a disadvantage vis--vis competing countries because its cost of production, hence export prices, are higher than in competing countries, not only because of the higher prices of importable and non traded inputs, or because of time and cost over runs implicit in managerial

inefficiency, but also because of much lower level of productivity, all of which stem from
the aforesaid problems. Technological factors and low productivity also contribute to the high cost of production in India. It has been pointed out that the productivity in resource use in a

large number of export industries is still very low compared to the levels observed in
many other developing and developed countries.

POOR QUALITY OF IMAGE

India has a poor quality image abroad. Despite the measures taken under the exports(

quality control and inspection) Act and other laws, our exports continue to suffer because of
the quality problems. Occasional blacklisting by the U.S of shrimp and pepper exports from India is a manifestation of the inadequacy of the quality control and pre-shipment inspection system in India. Poor quality/inadequacy of inputs, technology and facilities affect the quality. On several instances, carelessness or lack of commitment on the part of the exporters are also responsible. Adulteration and duping are also not uncommon. There is a general impression

that the proper export culture is lacking in India.

UNRELIABILITY
Besides quality, Indian exporters have been regarded as unreliable on

certain other facors. As the Tandon committee has observed, a very

important black mark on the Indian exporters is reneging- a term used in the USA to refer to going back on a contract and refusing to fulfill it on its original terms. Indian exporters have been regarded as unreliable also because of their

inability to provide prompt after sales service.

SUPPLY PROBLEMS
A serious drawback of the Indian export sector is its inability to provide continuous and smooth supply in adequate quantities in respect of several products. The problem is that much of the exporting is the result of the residual approach rather than the conscious effort of producing for export. The tendency for exporting what we produce rather than producing for export still continues to

characterize the export behavior.

CONT..
The committee for export strategy for the 1980s has observed that

the stop go exports are considered abroad as causing much

avoidable damage to the Indian export effort; one which can be avoided through a careful planning of supplies where possible through buffer stocks- in the case of a new product and some sacrifice by domestic consumer in an unforeseen shortage; and a

permissiveness towards importers with valid contracts for fortuitous

gains.

FACELESS PRESENCE
Although India is an important supplier of several commodities in foreign markets, her presence in these markets is faceless in the sense that the consumers do not know that these commodities are Indian. Major export items of India like seafoods, leather manufacturers, spices etc, have in many cases, a faceless presence in foreign markets. Although these exports may undergo further processing or repacking in many cases, in several cases the Indian exports are sold in the foreign markets in the same condition as they are exported but under foreign brand name sometimes it fetches a much higher price than the same product with an Indian name.

INFRASTRUCURAL BOTTLENECKS
The following observation made by the National Convention on exports organized by the federation of Indian Chamber of Commerce and Industry is indeed a recapitulation of indisputably held view of the infrastructural situation in India. Infrastructure shortages such as energy shortages, inadequate and unreliable transport and communication facilities hinder growth in exports. Power shortages and breakdowns disrupt production schedules, increase cost and adversely affect timely shipments. The continental size of the country necessitates that the inland

haulage of export cargo as also its shipment at ports is done efficiently and at
reasonable cost.

CONT..
Exports also suffer for want of efficient and economic communication

facilities. Indeed with advancements in communication and computer

technologies, the very complexion of international trading has changed with more and more of cargo documentation and banking transactions getting into the electronic media. The Indian exporter, however, has to communicate through inefficient and relatively

outdated telecommunication network.

STRUCTURAL WEAKENESS
A major handicap of the Indian export sector is the structural weakness. Two of the important factors responsible for this, viz, lower efficiency and productivity in resource use and poor technology have already been described. Another very important factor is the absence of a systems approach to a process on management, marketing, information, planning and decision making.

CONT..
It is important to note that Indias exports do not pick up in periods of boom conditions in the world economy to the same extent as the exporters of many other competitors. On the other hand India is quick to pick up sluggishness in world trade much more quickly than other exporters. The asymmetry in the response of the export activity to world market condition is a reflection of structural weakness of

the export sector as a whole.