The term export refers to the concept of a broad network of businesses in international trade. An exporter needs meticulous planning for the particular perishable good he/she is going to promote on the international market.
Processing of an export order is not simple. You can get a few orders at the start of your venture. If you are not getting regular orders, you will not be able to build brand recognition and earn the trust of the audience. The exporters must receive steady orders to handle the export process with the importers efficiently.
The steps required to get online export orders for start an export business are as follows:
- Establishment of an Organization: You need to register a company with your name or a partnership company and attach a suitable logo to represent your business.
- Open a Bank Account: A current account with a bank authorized to deal in foreign exchange should be opened.
- Get a Permanent Account Number: It is mandatory for every exporter and importer to obtain a permanent account number (PAN).
- Importer Exporter Code (IEC): The IEC (Import Export Code) is necessary in every phase of both import and export business. The IEC code issued by the Directorate General of Foreign Trade is a legal document that enables the customs clearance department to manage and track the shipping process.
- Registration and Membership Certificate (RMC): The RCMC (Registration and Membership Certificate) is a custom clearance document you need from Export Promotion Councils (EPCs) in India. If you’re an exporter or importer looking for benefits under the Foreign Trade Policy (FTP) or any EPC schemes, you must present your RCMC at customs.
- Product Selection: If you are exporting a specific product to other countries, you must first select the right product and coordinate with reliable suppliers and manufacturers to source the best quality. Additionally, it's important to understand and meet the international standards required for shipping your product.
- Market research: Understand what people in different places like and require. Look into the economy, culture, and laws. Find an overseas market where your perishable product matches what people want. You can use tools like online surveys, chats with customers, and market reports. These tools help you gather information about how much people want your products in different places.
- Reliable Buyers: Attend trade fairs and exhibitions to meet international buyers and showcase your perishable products. These events can help in finding international buyers. You can also inquire about your country's embassy in the target market for information on buyers.
- Customized Samples: You need to provide samples that align with the demands of the international buyers.
- Pricing Strategy: It’s a must to set the correct price of your perishable product in the foreign market. The price should be competitive, considering the demand and whether the customers are willing to pay. The product not only involves the selling price but also includes sales volume, logistics, tariffs, and additional costs like loading and unloading.
Let’s briefly explain the processing of an export order. The steps are listed below:
1. Receive the order
Generally, the processing of an export order begins with receiving the order. As per an export order, a formal agreement in the form of a document is signed between the exporter and importer before the exporter starts producing or sourcing the goods. An export order can be in the form of a pro forma invoice, purchase order, or letter of credit.
2. Confirmation of Order
After receiving an export order, the exporter should examine the terms of the contract. This stage plays a crucial role, as it depends solely on the exporter whether to confirm the order or not.
The export includes verification of the perishable product’s description, payment in terms of the shipping process, insurance coverage for the loss of goods during transit, releasing payment for documentation, and finally the negotiation of documents with the bank. After addressing all these necessary formalities, and if it meets expectations, the exporter confirms the order.
3. Obtaining a License
The Indian exporter needs to obtain an authorized license from the government of India after receiving an order from the importer. The exporter can submit an application to the Export Trade Control Authority to obtain a valid license.
4. Letter of Credit
The importer sends the letter of credit along with the export order, or the exporter can request the importer for the letter of credit.
5. Foreign Exchange Formalities
An Indian exporter must adhere to the foreign exchange rules under the Foreign Exchange Regulation Act (FERA). They need to submit a declaration stating that:
- The foreign exchange earned by the exporter must be handled according to RBI rules and within the specified time.
- Shipping documents and transactions should be conducted through authorized foreign exchange dealers.
- Payment for transporting perishable goods must be collected using approved methods only.
6. Executing the Order
The exporter must make the proper arrangements to execute the export order.
- Mark and pack the goods based on the importer’s specifications.
- Obtain an inspection certificate from the Export Inspection Agency to make an arrangement for pre-shipment inspection.
- Get an insurance policy from the Export Credit Guarantee Corporation (ECGC) for credit risk protection.
- Get a marine insurance policy as needed.
- Assign a forwarding agent (customs house agent) to handle customs and related matters.
7. Responsibilities of a Forwarding Agent
- The forwarding agent needs to obtain a permit from the customs department to ship the goods.
- The forwarding agent must give all the required details of the goods, including nature, quantity, and weight, to the shipping company.
- A shipping bill or order is prepared by the agent.
- The forwarding agent prepares two copies of the port challan and pays the dues.
- The ship’s master is responsible for loading the perishable cargo onto the ship. The goods should be loaded on the ship in the presence of the customs officials, as mentioned on the shipping order.
- Once the goods are loaded, a receipt is issued by the master of the ship.
8. Bill of Lading
When an Indian exporter hands over the receipt issued by the ship's master to the shipping company, they receive a Bill of Lading in return. The Bill of Lading is an official document that provides a detailed description of the perishable goods loaded onto the ship, including their type and quantity and the name of the port of destination.
9. Advice for the Shipment
Before dispatching the perishable shipment onto the ship, the exporter sends the shipment advice to the importer so that the latter is present at the port of unloading to receive the exported goods. Along with the advice note, the exporter sends a copy of the packing list, a non-negotiable copy of the bill of lading, and the commercial invoice.
10. List of Documents
The exporter sends a list of documents to the importer’s bank, which includes:
- Commercial Invoice
- Packing List
- Certificate of Origin
- Marine Insurance Policy
- Letter of Credit
- GR Form
- Bill of Exchange
- Bill of Lading
- Bank Certification
11. The Acquisition of Export Revenue
The exporter must complete certain banking formalities to realize the proceeds from an export. These are usually initiated upon the submission of the bill of exchange. The exporter receives the payment in foreign exchange.
Conclusion
Processing your first export order successfully involves understanding the necessary paperwork requirements, coordinating with freight forwarding and banking services, and adhering to international trade regulations and norms. You can facilitate smooth international transactions and build a strong foundation for your future export ventures.
Citrus Freight has left no stone unturned to offer you the right solution to export your first order. From analyzing the proper documentation till the freight forwarding services, our dedicated team made your export voyage easy and worry-free.