We Need IEC Code for the International Trade ; Spotlight on the Indian Business Views With the Worldwide Business Procedures!

What is Export?

As per Section 2(e) of Foreign Trade (Development & Regulation) Act. 1992, the term ‘export’ is defined to mean ‘taking out of India any goods by land, sea or air’. As such, the goods must leave india, or cross the customs frontiers of India to a foreign destination, for being reckoned as export.

However, certain supplies of goods by main/sub-contractors to specified persons (who ultimately export such goods in the same form or after further processing) are reckoned at par with exports and thus called  popularly as ‘deemed  exports’. Such supplies are specified in chapter 8 of the Foreign Trade Policy.

Common Steps involved in starting Export Business.

  • Setting up of a most suitable type of business organizations.
  • Obtaining PAN from Income Tax Authorities, Securing Importer-Exporter Code No. from the Regional Licensing Authority, and Registration-cum-Membership Certificate from the concerned  Export Promotion Councils, and Registration  with the concerned VAT/Sales Tax Authorities etc. Obtaining registration as small scale industrial unit, medium or large scale unit or as a service provider from the concerned authorities.
  • Doing Export Business Correspondence.
  • Sending/Exporting samples and exhibits.
  • Appointing overseas agents.
  • Negotiating with prospective Buyers and entering into export Contracts.
  • Understanding new Foreign Trade Policy and Procedures.
  • Obtaining Credit Limit for the Buyer/Buyer’s Country from E.C.G.C.
  • Obtaining Finance for Export.
  • Booking Forward Exchange Contracts for Avoiding Loss from Adverse Exchange Rate
  • Ensuring Compliance with Quality Control and Pre-shipment Inspection of
  • Labelling, Packaging , and Marketing Export Consignments.
  • Obtaining Excise Clearance.
  • Arranging Marine Insurance of the Goods.
  • Complying with the Exchange Control Regulations regarding Declaration of Goods.
  • Preparing /Obtaining Export Documents.
  • Shipping and Customs clearance of the Goods and Indian Customs EDI System.
  • Tendering the Documents to the Bank.
  • Understanding Foreign Exchange Regulations and Facilities.
  • Obtaining various Facilities under the new Foreign trade Policy 2004-09
  • Obtaining export incentives under the Duty Drawback Scheme, Natural  Rubber Subsidy Scheme, Marketing Development Assistance etc.
  • Reimbursement of Central Sales Tax.
  • Availing Tax Exemptions /Deductions under the Income Tax Act and sale Tax Laws.

Starting  Export Business

  • Choosing appropriate mode of operations.

You Can choose any of the following modes of operations:

  1. Merchant Exporter i.e. buying the goods from the market or from a manufacturer and then selling them to foreign buyers.
  2. Manufacturer Exporter i.e. manufacturing the goods yourself for export.
  • Sales Agents/ Commission Agent/Indenting Agent i.e. acting on behalf of the seller and charging commissions.
  1. Buying Agent i.e. acting on behalf of the buyer and charging commission .
  2. Service provider i.e. providing service from India to another country.
  • Naming the Business.

Whatever the form of business organization has been finally decided, naming  the  business is an essential task for every exporter. The name and style should be soft. Attractive,short and meaningful. Simple and attractive name indicating the nature of business is ideal. The office should be located preferably in a commercial complex, in clean and workable surroundings. The letterhead should be simple and super providing information concerning Registered Office, Head Office, Corporate Office. email address, telephone number, fax, mobile number, bankers name and address etc. Pick up a beautiful trade name and logo which reinforce your organisation’s name and image.  Open a current account with a reputed Bank in the name of the Organisation in whose name you intend to export. It is advisable to open an account with the Bank that is authorized to deal in foreign exchange.

  • Selecting the Product.

Carefully select the product to be exported.  For proper selection of the product, study the trends of export of different items from India. The selected product must be in demand in the countries where it is to be exported.  It should be possible to procure or manufacture the selected product at most economical cost so that it can be competitively priced. If should also be available in sufficient quantity acceptable quality standards; attractive packaging and it should be possible to supply it repeatedly and regularly.  Besides, while selecting the product. If has to be ensured that you are conversant with Government policy and regulations in respect of the products selected for export. You should also know import regulations in respect of such commodities by the importing countries. If would be preferable if you have previous knowledge and experience of commodities selected by you for export. A non-technical person should avoid dealing in high-tech products.  Another important feature to be kept in mind is that product should be adapted as per market requirement.

  • Making effective Business Correspondence.

Business communication is an interaction which clarifies issues. Resolves conflicts    and misunderstanding and helps in decision making.  Messages also reflect many angles and levels: factual, emotional and cultural. With the information technology modes and paperless communication being used. Conveyance of information amongst the interacting parties will speed up and these will cut down on the business process costs and times. Technologically advanced media are required to be used in business communication.

For creating a very favourable and excellent impression, you must use a decent  letterhead on airmail paper and a good envelope, nicely printed, giving full particulars of your firm’s name, postal address, telephone number, mobile number, fax number and email address etc. Your language should be polished, polite, soft, brief and to the point, giving a very clear picture of the subject to be put before the customer. Letters should be typed/computer typed set, preferably in the language of the importing country.  Also make sure that the full and correct address is written and the envelope is duly stamped.

5). Selecting the Overseas Market.

Overseas markets are identified as traditional, potential and new.  Target markets should be selected after careful consideration of various factors like political relations of India with the importing country, embargo, scope of exporter’s selected product, demand stability. Preferential treatment to products from developing counties, market penetration by competitive countries and product, distance of potential market, transport problems, language problems. Tariff and non-tariff barriers, distribution infrastructure, six of demand in the market, expected life span of market and product requirements, sales and distribution channels.

For this purpose you should collect adequate market information before  selecting  one or more target markets. The information can be collected from various sources like Export Promotion Councils (Epics) /Commodity Boards.  Federation  of Indian Export Organisation (FIEO). Indian Institute of Foreign Trade (IIFT). Indian Trade Promotion Organisation (ITPO). Indian Embassies and High Commissions  abroad, Foreign Embassies and High Commissions in India. Import Promotion Institutions Abroad, Overseas Chambers of Commerce & Industries. Various Directories, and Journals, market Survey Reports etc.

  • Selecting prospective overseas buyers.

You can collect address of the prospective buyers of the commodity from the following sources:

  • Enquiries from friends and relatives or other acquaintances residing in foreign countries.
  • Visiting /participating in International Trade Fairs and Exhibition s in India and abroad.
  • Contact with the Export Promotion Councils, Commodity Board and other Govt. Agencies.
  • Consulting International Yellow Pages. ( A publication from New York) by Dun & Broadstreet, USA or other Yellow Pages of different Counties like Japan, Dubai etc.)
  • Collecting address from various Private Indian Publications.
  • Collecting information from international Trade Directories/Journals/Periodicals available in the libraries of Directorate General of Commercial Intelligence and Statistics, IIFT, EPCs, ITPO etc.
  • Browsing the Internet.
  • Making contacts with Trade Representatives of Overseas Governments in India and India Trade and Other Representatives/International Trade Development Authorities abroad).
  • Reading biweekly, fortnightly. Monthly bulletins such as Indian Trade Journal, Export Service Bulletin, Bulletins and Magazines issued and published by Federation of Exporters Organisation, ITPO, EPCs, Commodity Boards and Other allied agencies.
  • Visiting Embassies, Consulates etc. of other countries and taking note of addresses of importers for products proposed to be exported.
  • Advertising in newspapers having overseas editions and other foreign  newspapers   and magazines etc.
  • Consulting ITPO. IIFT etc.
  • Contacting authorized dealers in foreign exchange with whom exporter is maintaining bank  account .
  • Visiting popular Websites by making use of Internet Services.
  • Creating a detailed Website about your Organisation.

How to contact Overseas Importers?

  • By corresponding and sending and sending brochure and product literature to prospective overseas buyers.
  • By undertaking trips to foreign markets and establishing personal rapport with overseas buyers. The number of trips will depend on you budget and    But it is essential for long term success in international marketing to establish personal rapport.  Foreign trip will provide first hand information regarding the market.  Overseas customers, their requirement, taste.  Preference and better out communication about the merits of exporter’s products.
  • MSME units can take the help of SIDO’s Scheme- SSI MDA.
  • Participation in buyers-sellers meet and meeting the members of foreign delegation invited by Export Promotion Council Concerned.
  • Participation in International Trade Fairs, Exhibitions, Seminars and Buyer’s Sellers meet. Trade Fairs held in India as well as important world Centres provide contacts with a large number of buyers if an exporter has good quality products with reasonable price. These fairs are expensive, no doubt but such expenses are covered by future business.
  • Advertisement and publicity in overseas reputed newspapers and magazines as well as in popular websites which people usually visit. Facilities of free publicity can be availed from Import Development Centres.
  • Creating Websites and making it popular on international arena.
  1. Selecting Channels of Distribution

The following channels of distribution are generally utilized while exporting to overseas


  • Exports through Export Consortia.
  • Export through Canalizing Agencies.
  • Export through Other Established Merchant Exporters or Export Houses. Or Trading Houses.
  • Direct Exports.
  • Export through Overseas Sales Agencies.
  • Exports through e-Commerce which is in developmental stage in India.
  • Negotiating with Prospective Overseas Buyers.

Whatever the channels or distribution for exporting to the overseas countries is proposed to be Utilized, it is essential that the exporters should possess necessary skill for negotiating with the overseas channels of distribution. The ability to negotiate effectively is needed for discussion with importers or trade agents. While conducting business negotiations, the prospective exporter should avoid conflict, controversy and criticism vis-a-vis the other party. During conversation the attitude should be to communicate effectively.There should be eight Cs’i.e. coherence. Creativity, compromise. Concessions. Commonality. Consensus. Commitment and compensation in business negotiations.

The general aspect to be kept in mind by you is about pricing.  The buyer’s  contention is that prices are too high.  It should be noted that though the price is only one of the many considerations which are discussed during business negotiations, if influences the entire negotiating process. Since this is the most sensitive issue in business negotiations, it should be fully postponed until all the other issues have been discussed and mutually agreed upon. As far as the price is concerned, you should try to determine the buyer’s real interest in the product  from the outset, only then a suitable counter proposal should be presented.  It should also be remembered that the buyer may request modifications in presentation of the product. You should show the willingness to meet such request, if possible, provided that it will result in profitable export business.

Price being the most important sales tool, it has to be properly developed and presented. Therefore, in order to create a favourable impression, minimize costly errors and generate repeated business. The following points should be kept in mind while preparing the price list:

  1. Submit a computer printed list, printed on a regular bond paper and laid out simply and clearly (with atleast an inch between column and between groupings.)
  2. Prominently, indicate the name of your company, its complete address, telephone number, mobile number and fax numbers and email address, including the country and city codes.
  3. Fully describe the items being quoted.
  4. Group the items logically (i.e. the fab rics together, all the made ups together etc .)
  5. Specify whether shipped by sea or by air, f.o.b.,or c.i.f., and to which port.
  6. Quote exact amount and not rounded off figures.
  7. Mention the dates upto which the prices quoted will remain valid .
  8. Where there is an internal reference number which must be quoted try to keep it as short as possible ( the buyer has no interest in the detail and the more complex it is, the greater the risk of errors. As regards the factors determining your price, please refer to the papa on ‘Export Pricing and Costing ‘ further in the chapter.
  9. Clearly mention payment terms required by you .
  10. Preshipment  inspection should be well defined.

One main point regarding export pricing is that while negotiating with overseas buyer.  You may not remember the cost of a product.  It may also be difficult for you to remember the profit margin built in various prices quoted by  you.  A clear jotting of this information is not free from the risk of being leaked out to the competitors or to the overseas buyers.  Some coding is, therefore, essential for the prices quoted by you so that at any stage/ point of time, you can always utilize the information enabling you to profitably negotiate with the overseas buyers.  This can be done by assigning  codes to the cost prices.

  • Processing an Export Order.

You should first acknowledge the export order, and then proceed to examine carefully in respect of items, specification, Preshipment  inspection, payment conditions, special packaging, labelling and marketing requirements, shipments and delivery date, marine insurance, documentation etc. and if you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise clarification should be sought from the buyer  before confirming the order.  After confirmation of the export order immediate steps should be taken for procurement/manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.

  •  Entering into export Contract.

In order to avoid disputes, if is necessary to enter into an export contract with the overseas buyer. For this purpose. Export contract should be carefully drafter incorporating comprehensive but in precise terms. All relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specific actions of goods and terms of sale including export price. Mode of payment, storage and distribution methods, type of packaging.  Port of shipment, delivery schedule etc.  The different aspects of an export contract are enumerated as under:

  1.    Product, Standard and Specifications.
  2. Total Value of the contract.
  3. Terms of Delivery.
  4. Duties and Charges,
  5. Period of Delivery/Shipment.
  6. Labelling and Marking.
  7. Terms of Payment – Amount /Mode and Currency.
  8. Discounts and Commissions.
  9. Licences and Permits.
  10. Documentary Requirements.
  11. Force Majeure of Excuse for Non-Performance of Contract.

It will not be out of place to mention here the importance of arbitration clause in an  export  contract.  Court proceedings do not offer a satisfactory method for settlement of commercial disputes as they involve inevitable delays, costs and technicalities. On the other hand, arbitration provides an economics, expeditious and informal remedy for settlement of commercial disputes.  Arbitration proceedings are conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the subjects matter of dispute.  The dates for arbitration meetings are fixed with the convenience of all concerned. Thus arbitration is the most suitable way for the settlements of commercial disputes and it may be invariable used by the businessmen in their commercial dealings.

  • Export Pricing and Costing.

Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is the price that we pay/incur for the product. Price includes our profit margin.  Cost includes only expenses. We have incurred.

Export pricing is the most important tool for promoting sales and facing international  competition. The price has to be realistically worked out taking into consideration all export benefits and expenses. However there is no fixed formula for successful export pricing. It will differ from exporter to exporter depending upon whether the exporter is a merchant agency. You should also assess the strength of your competitor and anticipate the move of the competitor in the market. Pricing strategies will depend on various circumstantial situations. You can still be competitive with higher price but with better delivery package or other advantages. Your prices will be determined by the following factors:

  • Range of products offered.
  • Prompt deliveries and continuity in supply.
  • After Sales Service in products like machine tools, consumer durables.
  • Product differentiation and brand image.
  • Frequency of purchase and total Annual Requirement.
  • Presumed relationship between quality and price.
  • Specialty value goods and gifts items.
  • Credit Offered.
  • Preference or prejudice for products originating from a particular source.
  • Aggressive marketing and sales promotion;
  • Prompt acceptance and settlement of claims:
  • Unique value goods and gift items.

Manual & Documentation.

As regards quoting the prices to the overseas buyers. The some are quoted in the following international accepted terms. For example.

Ex-Works (Exw)

‘Ex-works’ means that the seller’s responsibility is to make the goods available  to the buyer at works or factory.  The full cost and risk involved in bring the goods form this place to the desired destination will be borned in by the buyer. This term thus represents the minimum obligation for the seller.  It is mostly used for sale of plantation commodities such as tea, coffee and cocoa.

Free Career (FCA)

‘Free Carrier ‘ means the seller’s obligations are fulfilled when the goods are delivered to the carrier named by the buyer of the named place. The term may be used for all the modes of transport including multimodal transport.

Free Alongside Ship ( FAS)

Once the goods have been placed alongside the ship. The seller’s obligations are fulfilled and the buyer notified. The seller has to contract with the sea carrier for the carriage of the goods to be destination and pay the freight.  The buyer has to bear all the costs and risks or loss or damage to the goods hereafter.

Free on Board (FOB)

The seller’s responsibility ends the moment the contracted goods pass the ship’s rail at the port of shipment named in the sales contract. This means that the buyer that the buyer has to bear all costs and risks of loss or damages to the goods from that point.  The seller is required to clear the goods for export.

Cost and Freight ( C & F )

The ‘Cost and Freight ‘ means that the seller delivers when the goods pass the ship’s rail in  the port of shipment. The seller must on his own risk contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight.  The  being a shipment contract. The point of delivery is fixed to the ship’s rail and the risk of loss or to damage to the goods it transferred from the seller to the buyer at the very point as will be seen though the seller bears the cost of carriage to the named destination. the risks is already transferred to the buyer at the port shipment itself.

Cost insurance freight (CIF)

The terms is basically the same as CIF, but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage  is most commonly quoted price and it helps both exporter as well as importer to know exact amounts for receipts and payments. Under CIF it is important to mention the name of destination city.

Carriage paid to ( CPT)

CPT’ means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. The buyer bears all risks and any other costs after the point of delivery.  The seller is required to clear the goods for export.

Carriage and insurance paid to (CIP)

CIP is the same as CPT, with the addition that the seller is also required to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage.

Delivered at frontier (DAF)

 The term is primarily intended to be used when the goods are to be carried by rail or road.  The seller’s obligations are fulfilled when the goods have arrived at the frontier, but before the ‘Custom Border’ of the country named in the sales contract.

Delivered Ex-ships (DES)

This is an arrival contract and means that the seller makes the goods available to the buyer in the ship at the name port of destination as per the contract.  The seller has to bear the full cost and risk involved in bringing the goods there. The seller’s obligation is fulfilled before the customs border of the foreign country and it is for the buyer to obtain necessary import licence at his own risk and expenses.

Delivered Ex-Quay (DEQ)

Ex-Quay means that the seller makes the goods available to the buyer at a named quay.  As in the term ‘Ex-ship ‘ the points of division of costs and risks coincide, but they have now been moved one step further from the ship into the quay of wharf i.e. after crossing the  Customs border at destination. Therefore, in addition to arranging for carriage and paying freight and insurance the seller has to bear the cost of discharging the goods on the quay.

The buyer is required to clear the goods for import and to pay for all formal formalities, duties, taxes and other charges upon import.

Delivered Duty Unpaid (UDP)

DDU’ means that the seller delivers the goods to the buyer, at the port of destination.  The seller has to bear the cost and risks involved in bringing the goods thereto.  The buyer has to get the goods unloaded and cleared for import, by paying the applicable duty.

Delivered Duty Paid (DDP)

This term may be used irrespective of the type of  transport involved and denotes the seller’s maximum obligation as apposed to ‘Ex-Works’  The seller has not fulfilled his obligation till such time that the goods are made available at his risk and cost to the buyer at his premises or any other named destination.  In the latter case necessary documents (e.g. transport document or Warehouse warrant) will have to be made available to the buyer to enable him to take delivery of the goods.

Understanding risks in International Trade.

While selling abroad, you undergo the following risks:

  • Credit risk,
  • Currency risks.
  • Carriage risks.
  • Country risks.

These risks can be insured to a great extent by taking appropriate steps. Credit risk against the buyer can be covered  by insisting upon an irrevocable letter of credit from the overseas buyer to be issued by a bank of good standing.  An appropriate policy from Export Cre3dit Guarantee Corporation of India can also be obtained for this purpose.  Country risks are also covered by the ECGC.  As regards currency risk, i.e. Possible loss due to ad verse fluctuation in exchange rates, you should obtain forward cove r from your bank authorized to deal in foreign exchange.

Registration of Exporters.

  1. Registration with Reserve Bank of India no more required.

Prior to 1.1.1997, it was compulsory for every exporter to obtain an exporters’ code number from Reserve Bank of India before engaging into export.  This has since been dispensed with and registration with the licensing authorities is sufficient before commencing export or import.

2.Registration with Regional Authorities of Director General of Foreign Trade (Obtaining Importer-Exporter Code Number)

The Customs Authorities will permit you to import or export goods into or from India only if you are holding goods to Nepal or to Myanmar through Indo-Myanmar through Indo-Mayanmar Border areas or to China through Gunji, Namgaya, Shipkila or Nathula ports, you are not required to obtain IEC number provide the CIF value of a single consignment does not exceed Indian Rs. 25000/-

Application  for Grant of IEC number.

An application for grant of IEC number shall be made by the Registered/Head Office ot the applicant to the Regional Authority (list given in Appendix II ) under whose jurisdiction  the Registered Office in case of company and Head office in case of others, falls in the  ‘Aaayaat Niryaat Form (ANF 2 A) given in Appendix 1 ( in duplicate) and shall be accompanied by documents prescribed therein.  In case of STPI/EHTP/BTP units, the Regional Office of the DGFT having jurisdiction over the district in which the Regional / Head Office of the STPI un it is located shall issue or amend the IECs.

Only one IEC would be issued against a single PAN number.  Any proprietor can have only one IEC number and in case there are more than one IEC allotted to a proprietor, the same may be surrendered to the Regional Office for cancellation.

Before applying for IEC number it is necessary to (i) obtain Permanent Account Number from the Income Tax Authorities and (ii) open a bank account in the name of your company/firm with any commercial bank authorized to deal in foreign exchange.  The procedure of application for IEC No. has been simplifie3d since August 2006. The new system also allows online submission of the application.  An applicant may now choose:-

1) To file on online application and submit a physical copy of the application by taking print

out of the online application.

  • To submit the application in physical form directly at the regional DGFT Office.

Process of Online Application.

  1. Applicants can file an on-line application at the DGFT website http://dgft.gov.in Online form has been designed to ensure feeding of all the required information by prompting user wherever a field is left blank. Applicant has to submit scanned copies of PAN and bank certificate along with their application.
  2. There are two options for payment of fee (A) If fee is paid by Demand Draft, IEC will be generated only after receipt of the physical copy of the application (B) If IEC application fee is paid through Electronic Fund Transfer facility, IEC number will be generated by the licensing office automatically and the number can be viewed online by the applicant.
  • On the receipt of physical copy of the application, the same IEC will be printed in 24 hours time and dispatched to the firm.

Procedure for Physical Application.

The duly signed application form should be supported by the physical documents:

  • Bank Receipt (in duplicate) /Demand Draft/ EFt details evidencing payment of application fee of Rs.1000 (Rs.500 for Electronically filed application ) in terms of Appendix 21 B of the Foreign Trade Handbook of Procedure, April 2007 Ed.
  • Certificate from the banker of the application firm in Part B of the form.
  • Self certified copy of Permanent Account Number (PAN) issued by Income Tax Authorities.
  • Two copies of passport sixed photographs of the applicant.
  • Photograph on the banker’s certificate should be attested by the banker of the applicant.
  • Self-addressed envelope and stamp of Rs.30.
  • These documents may be kept secured in a file cover.

The Regional Authority concerned shall grant an IEC number to the applicant in the prescribed format.  A copy of such IEC number shall be endorsed to the concerned format.  A copy of such IEC number shall be endorsed to the concerned banker.  The number should normally be given within two working days provided the application is complete in all respects and is accompanied by the prescribed documents.

An IEC number allotted to an applicant shall be valid for all its branches/divisions/units/ factories as indicated on the IEC number.

Hints for filling IEC Applications.

  • Application must be made in the prescribed form in duplicate, duly accompanied by Bank Receipt/Demand Draft evidencing payment of fee.
  • Application form should be neatly typed / handwritten in bold capital letter only.
  • Each page of the application form should be signed in ink by the authorized person.
  • Supporting documents in duplicate, duly self-attested as specified earlier in this Chapter must be enclosed wherever applicable.
  • Items of information relevant to applicant should only be filled in and remaining items may be marked ‘not applicable’
  • Two copies of the passport size photograph of the applicant duly attested by the applicant’s banker shall be submitted.
  • Modifications of particulars of the applicant should also be furnished oin this foirm by filling the relevant items.

Duplicate Copy of IEC No.

Where an IEC no. is lost or misplaced the issuing authority may considered request for grant of a duplicate copy of IEC number, if accompanied by an affidavit and a fee of Rs.200/-

Surrender of IEC No.

If an IEC holder does not wish to operate the allotted IEC number he may surrender the same by informing the issuing authority.  On receipt of such intimation, the issuing authority shall immediately cancel the same and electronically transmit to DGFT for onward transmission to the Customs and Regional Authorities.

Registration  with Export Promotion Councils /Commodity Board / Authorities.

In order  to enable you to obtain benefits/concessions under the Foreign Trade Policy. You are required to register yourself with the concerned Export Promotion Council or Commodity Board or Authority by obtaining registration-cum-membership (RCMC) For this purpose you should apply in the prescribed form given at Appendix III of this Book to the Export Promotion Council relating to your main line of Business.  However. A status holder has the option to obtain RCMC from Federation of Indian Exporters Organisation (EIEO).  Exporters of Drugs and Pharmaceutical shall obtain RCMC from Pharmexcil only.  Exporters of minor forest produce and their value added products shall obtain RCMC from Shellac Export Promotion Council (SHEFEXIL).  Software exporters shall register themselves with Electronic and software Export Promotion Council.

An application for registration should be accompanied by a self certified copy of Importer-Exporter Code Number issued by the Regional Authority concerned and  bank certificate in support of the applicant’s financial soundness,  If the applicant is already registered with any other EPC, a copy of RCMC should be furnished.  In case an exporter desires to get registration as a manufacturer exporter, he should furnish evidence to that effect. In the case of manufacturer Exporter, the licensing authority  may seek copy of registration with SSI/any other sponsoring authority in addition to the application in the prescribed form.  Membership fee should be paid in the form of cheque /draft after ascertaining the amount from the EPC concerned.  Service provider will furnish copy of registration/approval from the concerned authority.  If the application for registration is granted, the EPC or FIEO shall issue the RCMC indicating the status of the applicant as merchant exporter or manufacturer exporter.

Registration with Value Added Tax Authorities.

Goods which are to be shipped out of the country for exports are eligible for exemption from both value Added to and Central Sales Tax. For this purpose, you should get yourself registered with the Value Added Tax Authority of your State after following the procedure prescribed under the value Added Tax Act applicable to your State.

Registration with Central Excise Authorities.

Goods meant for export are exempt from Central Excise duty.   For this purpose the manufacturer and merchant exporters have two options. Either they can deposit Central excise duty at the time of clearance from factory and later on take refund or avail the procedure for export of goods without payment of duty.

Obtaining Permanent Account Number (PAN)

Every person whose taxable income exceeds the basic exemption limit during an accounting year, is required to obtain Permanent Account Number (PAN) once for  ever by making an application in Form 49 A, before 31 st May of the assessment year In case the total sales, turnover or gross receipts of the business or profession of the assesse, exceeds or is likely to exceed Rs. 5,00,000/- during an accounting year the application for allotment of PAN should be made before the end of the accounting year.  It is compulsory to apply for PAN, in above cases even though the tax payable is nil.

Further, the following persons are compulsorily required to obtain PAN –

  1. Exporters and importers, who are required to obtain an importer-exporter code.
  2. Assesse under the Central Excise Act.
  3. Persons issuing Cenvatable invoice under rule 57AE and registered under the Central Excise Rule, 1944;
  4. Service-tax assesses;
  5. Persons registered under the Central Sales Tax Act, 1956 or the general sales tax law of the appropriate State or Union Territory.

Arranging Finance for Exports.

Financial assistance to the exporters is generally provided  by the Commercial anks before shipment as well as after shipment of goods. The assistance provided before shipment of goods. The assistance provided before shipment of goods is know as pre-shipment finance and that provided after the shipment of goods is known as post shipment finance. Pre-shipment finance is given for working capital for purchase of raw material. Processing, packaging, transportation, ware-housing etc. of the goods meant for export. Post-shipment finance is provided for bridging the gap between the shipment of goods and realization of export proceeds. The later is done by the Banks by purchasing or negotiating the export documents or by extending advance against export bills accepted on collection basis.  While doing so, the Banks adjust the pre-shipment advance, if any, already granted to the exporter.

  1. Preshipment Finance

An application for pre-shipment advance should be made by you to your baker alongwith the following documents:

  1. Confirmed export order/contract of L/C etc. in original. Where it is not available, an undertaking to the effect that the same will be produced in the Bank, within the reasonable time for verification and endorsement, should be given.
  2. An undertaking that the advance will be utilized for the specific purpose of procuring /manufacturing/shipping etc., of the goods meant for export only. As stated in the relative confirmed export order or the L/C.
  • If you are a sub-supplier and want to supply the goods to the Export/Trading/Star Trading House or Merchant Exporter, an undertaking from the Merchant Exporter or Export/Trading/Star Trading House stating that they have not/ will not avail themselves of packing credit facility against the same transaction of the same purpose till the original packing credit is liquidated.
  1. Copies of income Tax/Wealth Tax Assessment Order for the late 2/3 years in the case of sole proprietary and partnership firm.
  2. Copy of Importer’s Code Number.
  3. Copy of valid RCC held by you and /or the Export /Trading/star Trading House Certificate.
  • Appropriate policy /guarantee of the ECGC.
  • Any other documents as required by the Bank.

Post shipment Finance in Indian Rupees

Post Shipment finance is finance provided against shipping documents. It is also provided against duty drawback claims. It is provided in the following forms.

  1. Purchase of Export Documents drawn under Export Order.
  2. Advances against Export Bills sent on Collection.
  3. Advance against Goods sent on Consignment Basis.
  4. Advance against Undrawn Balance.
  5. Advance against Retention Money.
  6. Advance against Claim of Duty Drawback.
  7. Negotiation of Export Documents Drawn under L/C.

Institutional Support for Exporters.

As explained in the class, number of institutions is extending various kinds of support for export promotion.  The list along with the addresses in Maharashtra is given below.

Sr. No.                         Office /Depart./ Organisation            Office in Maharashtra

1          Office of the Development  Commissioner (MSME) 7 th Floor, Nirman  Bhavan New Delhi 110011            Director, Small Industries Service Institute. Govt. of India. Ministry of MSME, Sakinaka, Mumbai 400072

Tel. 022-28576090/3091



2          Director General Foreign Trade

  • Udyog Bhavan, New Delhi 110011 The Joint Director General Foreign Trade, Central Govt. Offices New Bldg. New Marine Lines, Churchgate Mumbai 400020

Tel. 022-22016421

  • DGFT.

PMT Commercial Complex.

Swargate, Pune-411037


3          National Small Industires Corpopration NSIC Ltd., Okhala, New Delhi       NSIC

Prestige Chambers, Kalyan Street, Masjid (East) Mumbai 40009

4          State Directorate of Industries     Development Commissioner (Industries)  Govt. of Maharashtra  2 nd Floor, New Administrative Bldg. Opp. Mantralaya  Mumbai 400032 Or

Office of General Manager  District Industries Centre in each District.

5          Khadi and Village Industries Commission (KVIC)             KVIC

Vile Parle, Mumbai 400056

6          Federation of Indian Export Organisations (EIEO)           Federation of Indian Export Organisation (EIEO)

World Trade Centre No. 1. 11 th floor Cuffe Parade, Mumbai 400005


7          Indian Institute of Foreign Trade (IIFT)

B-21,Kutub Institutional Area Mehruli Road , New Delhi 110016

8          Indian Institute of Packaging (IIP)           Indian Institute of Packaging (IIP)

E-2, MIDC, Marol, Andheri (East)

Mubai 400093

9          World Trade Institute      WTI, World Trade Centre No.1

31 st Floor , Cuffe Parade, Mumbai 400005

10         Export Import Bank of India (EXIM Bank)           Export Import Bank of India (EXIM Bank )

21 st floor , world centre No.1 Cuffe Parade, Mumbai 400005

MSME _ Development Institute, Mumbai


…in the service of small scale industries in Maharashtra


Small Scale Industry Sector occupies an important position in the country’s industrial economy and continues to contribute to industrial production, exports, creation of employment opportunities etc. This is a sector that has emerged victorious in the face of rising threats from large sector within the country and from multi-nationals abroad. The Micro, Small & Medium Enterprises – Development Institute, Mumbai is the field office of Development Commissioner (MSME). Ministry of MSME. Govt. of India, set up for the promotion and development of Small Scale Industries in the state in the early fifties. This institute provides support/services to the State Government as well as coordinates various activities at the state level for the promotion & development of small scale industries. This Institute, along with SISI, Nagpur and Branch Institute at Aurangabad extend their services in Maharashtra.

O/o. DC(MSME), under the Ministry of MSME is the Apex body at the national level, headed by Development commissioner, (MSME) formulates the policy governing the Micro, Small & Medium Industries Sector in the country and chalk out schemes and programmes for development of the SSI sector. MSME also monitors the implementation of policies and the activities of promotion of small scale industries with active involvement of the State Directorate of Industries, through its network of 30 Small Industries Service Institutes (SISI), in all the states.

MSME-DI, Mumbai provides various types of extension services and assistance in setting up of units, promotions and development of products and services by the MSME. The Institute has technical Officers to provide guidance in all trades i.e. Metallurgy, Mechanical, Chemical, Leather, Glass & Ceramics, Electrical, Electronics, Food Industry, Management & Economic Investigation etc.


  • Technical Consultancy
  • Industrial Management Training
  • Economic Information
  • Entrepreneurial Development Programmes, Schemes for Educated Unemployed Youth/Prime

Minister’s Rozgar Yojana (PMRY)

  • Technology Resource Centre Facilities
  • Ancillary Development/Sub Contract Exchange
  • Marketing Assistance
  • Modernisation/Technology Upgradation
  • Export Promotion & Marketing Assistance for rehabilitation of sick units
  • Common Facility and Training
  • Bio-Technology
  • Library Facility
  • Assistance to State Govt. Agencies
  • Technical Assistance to various Central Govt. Agencies, Incentives for Small Scale Sector


  • Technical guidance
  • Identification and preparation of Project profiles/reports
  • Selelction of Equipment, Machinery & Raw Materials.
  • Technical Up-gradation /Quality control.
  • Technical Seminar/ Workshop/ Clinic.
  • To prepare technical literature/ papers etc.
  • Conduct various Industrial Management Course e.g. Personnel, Finance, Marketing, Taxation,

Export etc.

  • Improvement of Quality, Productivity of Labour etc.
  • Techno-Economical and Managerial, Appraisal reports to Banks/Financial Institutions.
  • Technical Training Course on product development etc.
  • Short-term / Tailor-made Technical Courses.


  • Industrial Potential Survey / Market Surveys.
  • Feasibility reports / State Industrial Profile.
  • Sample Survey / Collection of Statistics.
  • SSI Census.
  • Review Report / Production Index
  • Assistance and Rehabilitation of sick Units.
  • Advise/ guidance on policy issues.
  • Guidance on facilities available with Banks, Financial Institutions etc.


  • General One Month EDP Course.
  • Product and process EDP Programmes.
  • EDP for Women Entrepreneurs.
  • Product / Process Demonstrations.
  • To assist various institutions and Agencies for EDP.
  • To Provide information about the different Schemes.
  • To help beneficiaries in identifying suitable projects.
  • To collect application forms in the district of Mumbai & place them before Task Force


  • To Co-ordinate PMRY activities with State Government.
  • Nodal Agency. Identified by Department of Public Enerprises for implementation of the

above  programme.

  • Conducts sensitization programmes & Awareness Campaigns for motivation VRS Optees

& VRS released employees to join for the programmes.

  • Conduct training programme of 20/40 days duration, useful for self-employment of VRS



A Technology Resource Centre has been functioning in the Institute since Sept/ OCT. 2001.  It serves as one stop Technology Sourcing through highly computerized connective environment linkages. It serves the need of existing & Prospective entrepreneurs at minimal & competitive costs.  Technical divisions of the Institute also source the technologies for providing to short and long training courses   held by the Institutes in the fields of Chemical, IMT Mechanical, etc.  A data base related to SS is under creation.


  • Identifications of Ancillary items for large/ small scale industries.
  • Interaction with public / private sector undertakings.
  • Preparation of Ancillary report/ Directory.
  • Organising State Level Ancillary Development Programme-Cum-Exhibition or SMEs.

Both Global & Joint Venture Out Sourcing.

  • Provide Market information .
  • Assist to prepare market feasibility report.
  • Indirect market support through Sub-Contract Exchange.
  • Marketing assistance for Govt./ Semi-Govt. programme through single point NSIC


  • Marketing Buyer-Sellers-Meet-cum-Exhibition.
  • Export Market information.
  • Export process and procedures information .
  • Export Management training.
  • Export Packaging training.
  • Seminar / Workshop on Export related procedures.
  • Arrange and forward exhibits to foreign trade fairs..
  • Preparation of Export directory and reports.
  • Seminar or “Bar Coding”
  • WTO Sensitization Seminars & Activities.
  • Seminars on IPR/Investigation of Anti-Dumping etc.


  • Undertaking in-plant studies.
  • Conduct cluster studies.
  • Programmes on Technology up-gradation / quality up-gradation & ISO-9000/Energy Conservation.
  • Conducting Awareness Programme/ Seminar/ Workshop on Pollution Control & ODS Phase Out.
  • Undertaking industry studies.
  • Co-ordination of Modernisation Activities.


  • Workshop facilities for undertaking jobs, jigs and fixtures, pressed tools, complicated jobs etc.
  • Industrial Design.
  • Machines Shop Practices for six month.
  • Short term courses on CNC Wire-cut machine and CNC Milling & Boring Machine.


  • The Institute has enriched Library containing different types of Technical Books. Magazines, Journals & reports relating to Industries.


The Biotechnology Cell set up in this Institute performs the activities such as:

  • Dissemination of Techno Commercial Information on Bio-Tech Projects.
  • Organise Workshop, Seminars in Biotechnology.
  • Technical Counselling for modernisation of existing Biotech SMEs.

The Centre caters to the design & of the needs of the Toy Industries especially in the following areas:

  • It centres a Toy Design Cell with the latest Softwares.
  • Assist existing and new small scale toy manufacturers in designing new toys .
  • Counselling for Mould making.
  • Organizes Seminars, Workshops etc. for capacity building of S.S. Toys Industries.


In Association with Indo German Tools Room Aurangabad (an ISO 9000 company). This Institute has set up CAD/CAM Training Centre.  The training programmes in the following softwares are offered to the Engineering Graduates, Diploma Holders and working Professionals, in engineering disciplines.



Provide all sorts of technical and other assistance to State Agencies like DICs, State Directorate of Industries, Corporation and various other industrial developmental agencies in the State.


  • All sorts of assistance and support to various NGOs. Associations and Institutions involved in the promotion and development of industries

MSME- Development Institute

Ministry of MSME, Govt. of India,

Kurla Andheri Road, Sakinana


 Khadi & Village Industries  Commission (KVC)


OBJDECTIVES;   The broad objectives that the KVIC has set before it are…

  • The social objective of providing employment.
  • The economic objectr5ive of producing saleable articles.
  • The wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit.

FUNCTIOPNS: Some of the major functions of KVC

  • The KVIC is charged with the planning. Promotion, organisation and implementation of programs for the development of khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary.
  • Its functions also comprise building up of a reserve of raw materials and implements for supply to producers. Creation of common service facilities for processing of raw materials as semi-finished goods and provisions of facilities for marketing of KVI product apart the organization of training of artisans engaged in these industries and encouragement of co-operative efforts amongst them. The promote the sale and marketing of Khadi and / or products of village industries or handicrafts, the KVIC may forge linkages with established marketing agencies wherever feasible and necessary.
  • The KVIC is also charged with the responsibility of encouraging and promoting research in the production techniques and equipment employed in the Khadi and village Industries sector and providing facilities for the study for the problems relating to it, including the use of non-conventional energy and electric power with a view to increasing productivity, eliminating drudgery and otherwise enhancing their competitive capacity and arranging for dissemination of salient results obtained from such research.
  • Further, the KVIC is entrusted with the task of providing financial assistance to institutions and individuals for development and operation of Khadi and village industries and guiding them through supply of designs. Prototypes and other technical information.
  • In implementing KVIC activities, the KVIC may take such steps as to ensure genuineness of the products and to set standards of quality and ensure that the products of Khadi and village industries do conform the standards.
  • The KVIC may also undertake directly or through other agencies studies concerning the problems of Khadi and /or village industries besides research or establishing pilot projects for the development of Khadi and village industries.
  • The KVIC is authorized to establish and maintain separate organisations for the purpose of carrying out any or all of the above matters besides carrying out any other matters incidental to its activities.
Khadi & Village Industries Commission, Royal Insurance Building, 4th floor 14 Jamshedji Tata Road,

City : Mumbai ● Pin code: 400 020

Phone 22822113
Telefax 2281 7449


National Small Industries Corporation Ltd. (NSIC). On ISO 9001 certified company. Since its establishment in 1955, has been working to fulfil its mission of promoting, aiding and fostering the growth of smalls ale industries and industry related small scale services / business enterprises in the country.  Over a period of five decades of transition. Growth and development, NSIC has proved its strength within the country and abroad by promoting modernization, up gradation of technology, quality consciousness.  Strengthening linkages with large and medium enterprises and enhancing exports projects  and products from small industries.

NSIC operates through 6 Zonal Offices.  26  Branch Offices. 15 Branch Offices. 15 Sub Offices, 5 Technical Services Centres, 3 Extension Centres and 2 software Technology Parks supported by a team of over 5000 professionals spread across the country.  The manage operations in Gulf and African countries NSIC operates from its offices in Dubai and Johannesburg.

NSIC carries forward its mission to assist small enterprises with a set of specially tailored schemes designed to put them in a competitive and advantageous position. The schemes comprises of facilitating marketing support , credit support, technology support and other support services.

  • Marketing
  • Consortia and Tender Marketing.
  • Single Point Registration for Government Purchase.
  • Exhibitions and Technology Fairs.
  • Buyer-Seller meets.
  • Export of Products and Projects.
  • Credit Support
  • Equipment Financing .
  • Financing for procurement of Raw Material (Short term)
  • Financing for Marketing Activities (Short term)
  • Finance through syndication with Banks.
  • Performance and Credit Rating Scheme for small industries.
  • Informediary Services.
  • Mentoring and Advisory Services.
  • Software Technology Parks.
  • Science and Technology Part /Technology Business Incubators.
  • International Cooperation.
  • International consultancy services.


Prestige Chambers,  Kalyan  Street.

Masjid (East)


Textile Committee

 The Textiles Committee’s main objective is to ensure the quality of textiles and textile machinery both for internal consumption and export purposes. The Textiles Committee. As corollary to its main objective of ensuring the quality of textiles and textiles machinery has been entrusted with the following functions, under Section 4 of the Act :

  1. To undertake, assist and encourage, scientific, technological and economic research.
  2. To establish standard specifications for textiles, textile machinery and the packing


  • To establish laboratories for the testing of textiles and textile machinery.
  1. To provide training in the techniques of quality control.
  2. To provide for the inspection and examination of textiles and textile machinery
  3. To promote export of textiles.
  • To collect statistics and
  • To advise the Central Government on all matters relating to textiles and textile machinery.

Textiles Committee

  1. Balu Road, Off. Veer Savarkar Marg.

Prabahadevi Chowk, Prabhadevi,

Mumbai- 400 025

Tel: 91-22-66527507, 66527500 (Board)

Fax: 91-22-66527509


Textiles Committee,

Ministry of Textiles, Govt. of India

162/11, Railway Lines


Maharashtra, India.

Exim Bank

Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation (ECGC) of India. A financial institution, public  sector banks, and the business community.

The Bank’s functions are segmented into several operating groups including:

Corporate Banking Group which handles a variety of financing programmes for Export Oriented Units (EOUs), Importers, and overseas investment by Indian companies.

Project Finance / Trade Finance Group handles the entire ranges of export credit services such as supplier’s credit.  Pre-shipment credit, buyer’s credit, and finance for export of projects & consultancy services. Guarantees, forfeiting etc.

Lines of Credit  Group  Lines of Credit (LOC) is a financing  mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs. And serves as an effective market entry tool.

Agri Business Group,  to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing.

Small and Medium Enterprises Group to the specific financing requirements of export oriented SMEs.  The group handles credit proposals from SMEs under various lending programmes of the Bank.

Export Services Group offers variety of advisory and value-added information services aimed at investment promotion.

Fee based Export Marketing Services  Bank offers assistance to Indian company ies, to enab le them establish their products in overseas markets.

Besides these the Support Services groups, which include: Research & Planning Corporate Finace, Loan Recovery, Internal Audit, Management information Services. Information Technology, Legal, Human Resources Management and Corporate Affairs.

Exim Bank

Centre One Building, Floor 21

World Trade Centre Complex,

Cuffee Parade,

Mumbai 400 005

Phone : 91 22 22185272

Fax: 91 22 22182572


Indian Trade Promotion Organisation ( ITPO)

India Trade Promotion Organisation (ITPO) is the nodal agency of the Government of India  for promoting the country’s external trade. ITPO, during its existence of nearly three decades, in the form of trade Fair Authority of India and Trade Development Authority, has played  a proactive role in catalysing trade , investment and technology transfer process. It promotional tools include organizing of fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion Programmes.Product Promotion Programmes and Promotion through Overseas Department stores, Market surveys and information Dissemination.

ITPO has an extensive infrastructure as well as marketing and information facilities that are availed by both exporters and importers.  ITPO’s overseas offices assist buyers seeking information relating to sourcing products from India. ITPO’s  overseas offices at New Your. Frankfurt, Tokyo “ Moscow and sao Paulo are pursing opportunities for enhancement of lndia’s trade and investment.

Indian Trade Promotion Organisation (ITPO)

Pragati Bhawan, Pragati Maidan

New Delhi- 110 001

New Delhi-110 001


Mumbai Office

Jhansi Castle,

7, Cooperage Road


Tel.: 022-228221041

Fax : 022-22044922

Email :

Diretorate of Industries

The Directorate of Industries is an executive arm of the Industries Department and is engaged in implementation of Govt’s policies for all round development of industries in the State by seeking coordination amongst the State level promotional corporations and other Departments/ agencies of the Govt. relating to industries.

Its main functions are:

  1. To implement Industrial Policy 2001 / 2006 of the Government .
  2. Suggest Policy measure to the Government for effecting healthy and all round industrial development in the State in view of challenges and opportunities posed to the industry in the prevailing economic scenario .
  3. Assist Government in formulation of various polices viz. Industrial Policy, SEZ Policty, It policy. It policy , BT Policy , Package Scheme of Incentives, etc.
  4. Implement various promotional schemes.
  5. Resolving the operational problems of industry by inter departmental coordination.


Directorate of Industies.

Government of Maharashtra

2nd Floor, New Administrative Bldg.,

Opposite Mantralaya.

Mumbai-400 032


Head Office Office in Maharashtra
Agricultural & Processed Food Products Export Development Authority,

3 rd Floor, Ansal Chambers II, 6,Bhikaji Cama Place, New Delhi 110 066

Tel. : 011-612159/2148

Fax: 011-6195016



Agricultural & Processed Food Products Export Development Authority,


Tel. : 2183106/9060

Fax:  2189060



Apparel Export Promotion Council

15 NBCC Tower,

6 Bhikaji Cama Place,

New Delhi 110 066

Tel. : 011-6183351/6169393-4


Website: www. aepcindia.com

Apparel Export Promotion Council

Bajaj Bhavan, 12 th Floor,

Nariman Point,

Mumbai-400 005

Tel. : 2853419/3420/2823800

Fax: 2043178


Website: www. aepc.com


Basic Chemicals, Pharmaceuticals & Cosmetics

Export Promotion Council (CHEMEXCIL)

Jhansi Castle, 4 th Floor,

7, Cooperage Road, Mumbai-400 039

Tel.: 2202 1288 /1330/6549

Fax: 2202 6684

Basic Chemicals, Pharmaceuticals & Cosmetics

Export Promotion Council (CHEMEXCIL)

World Trade Centre, Centre 1, 12 th Floor,

Cuffe Parade,  Mumbai-400 005.

Tel.: 2218 8344 / 8339


Website: www. chemexcil.org

Carpet Export Promotion Council

110-A/1, Krishna Nagar (Gali No.5)

Safdarjung Enclave, New Delhi 110029

Tel.: 011- 6102742/1024

Fax: 011-616 5299


Website: www.Indiancarpets.com

Cashwe Export Promotion Council of India.

P.B.No.1709, Chitoor Road,

Ernakulam South, Cochin 682 016

Tel.: 0484-361 459 /369 080/ 353 357

Fax: 0484 370973

Chemical & Allied Products Export Promotion

Council ( CAPEXIL)

14/1 B, 2 nd Floor.World Trade Centre, Ezra Street, Calcutta 700 001

Tel. :  033-220 7620

Fax: 033 -225 5070

Email: 1)

Chemical & Allied Products Export Promotion

Council ( CAPEXIL)

D-17. Commerce Centra, Taredo Road,

Mumbai 400 034

Tel.: 494 3410

Fax : 493 7665

Email :


Coffee Board.

1.     Dr, Ambedkar Veedhi

Bangalore-560 001

Tel : 080-22 2917/0250

Fax : 080-226 5557

Coir Board

Coir Hous

M.G. Road, Ernakulam South

Cochine 682 016

Tel.: 351807/788

Fax : 370034


Cotton Textiles  Export Promotion Council

Engineering Centre

9,Mathew Road, Mumbai-400 004

Tel: 2363 2910-13

Fax: 2363 2914

Email :


Cotton Textiles  Export Promotion Council.

Cecil Court, 26 Mahakavi Bhushan Marg

Mumbai-400 039

Tel: 202 1477/ 1522 /7221

Fax: 202 2510

Email :


Council for Leather Exports

Leather Centre

53, Raja Muthiah Road,

Chennai 600 003

Tel: 044-589 098/ 582 041 /580 834

Fax: 044-588 713/ 587 083

Email :


Council for Leather Exports

11/4, World Trade Centre, Centre 1,

Cuffe Parade, Mimbai 400 005

Tel: 218 4060

Fax: 215 1207

Email :


Electronics & Computer Software Export

Promotion Council PHD House, 3 rd Floor, Ramakrishna Dalmia Wing.

Off. Asiad Village

Tel. : 011-696 5103/4463

Fax : 011-651 0632/ 685 3412

Email :  

Engineering Export Promotion Council

World Trade Centre, 1 st  floor

14/1 B Ezra Street,

Calcutta 700 001

Tel : 033-250 442 /443

Fax : 033-225 8968

Email :


Engineering Export Promotion Council

World Trade Centre, 1

Cuffee Parade

Mumbai -400 005

Tel : 218 6655/56/60

Fax : 218 0119

Email : . 


Federation of Indian Export Organisations

PHD House, 3 rd Floor,

Opp, Asian Games Village.

New Delhi 110 016

Tel : 011-685 1310/ 312/ 314

Fax : 011-686 3087

Email :


Federation of Indian Export Organisations

World Trade Centre, 1  11th  Floor, Cuffee  Parade, Mumbai – 400 005

Tel : 218 5093/3354

Fax : 218 3875

Email :


Gem & Jewellery Export Promotion Council

Diamond Plaza

391-A, Dr. B.Bhandkamkar Marg.

Mumbai 400 004

Tel. 2382 1801 / 06 /385 6916

Fax.: 2386 8752

Email :  


Gem & Jewellery Export Promotion Council

Diamond Plaza

391-A, Dr. B. Bhandkamkar Marg.

Mumbai 400 004

Tel. 2382 1801 / 06 /385 6916

Fax.: 2386 8752

Email :


Handloom Export Promotion Council

18 ,Chatedral Garden Road ,Nungambakam

Madras 600 034

Tel.: 044-827 8879 /6043

Fax:  044-827 1761

Indian Silk Export Promotion Council

62, Mittal Chambers, Nariman Point

Mumbai 400 021

Tel:, 2202 5866 /7662/204 9113

Fax : 2287 4606

Email :


Marine Products Export Development Authority


Panampilly Nagar Avenue

Cochin 682 015

Tel.: 0484-311 979-83

Fax : 0484-313361


Website: www.mpedacom

Indian Silk Export Promotion Council

62, Mittal Chambers , Nariman Point

Mumbai 400 021

Tel:, 2202 5866 /7662/204 9113

Fax : 2287 4606

Email :


Marine Products Export Development Authority

605, Regent Chambers

Nariman Point

Mumbai 400 021

Tel.: 283 1399

Fax : 283 4354


Website: www.mpedacom

Overseas Construction Council of India

H-118 Himalaya House

23 , Kasturba Gandhi Marg

New Delhi 110 001

Tel.: 011-372 2425/332 7550

Fax : 011- 3312936

Overseas Construction Council of India

Commerce Centre. 7 th Floor,

Tardeoi Mumbai 400 034

Tel.:  494 3243/2344

Fax : 495 0507


Plastic & Linoleums Export Promotion

World Trade Centre

Centre 1,  11th floor,

Cuffee  Parade, Mumbai 400 005

Tel.:  2218 4474/456

Fax : 2218 4810

Plastic & Linoleums Export Promotion

World Trade Centre

Centre 1,  11th floor,

Cuffee  Parade, Mumbai 400 005

Tel.:  2218 4474 / 456

Fax : 2218 4810


Website: www. Plexconcil.org/plexc on.org

Powerloom Export Promotion Council

Cecil Court, ‘B’ Wing 4 th floor,

Mahakavi Bhushan Marg

Colaba, Mumbai 400 039

Tel.:  2284 6518/19

Fax : 2284 6517

Powerloom Export Promotion Council

Cecil Court, ‘B’ Wing 4 th floor,

Mahakavi Bhushan Marg

Colaba, Mumbai 400 039

Tel.:  2284 6518/19

Fax : 2284 6517


Website: http:// www.pdexcil.org

Rubber Board

Shastri Road P.B. No.1122 Kottayam 686 002

Tel.:  0481-571 231/2/5/6/361

Fax :  0481-571 380

Shellac Export Promotion Council

14/ a B Ezra Street

World Trade Centre

Calcutta 700 001

Tel.:  25-4556

Fax :  033-248 4046 / 1 F-384 &

033-248 2070/1 F-384

Spice Board

Sugandha Bhavan

Cochin N.H. Bye Pass Road

Palarivattam P.B.No. 2277

Cochin  682 025

Tel.:  04894-333 610

Fax :  0484-331 429

Spice Board

Panchli Hospital Builkding , 2 nd fllor

90 ft. Road

Nath Pai Nagar, Ghatkopar

Tel.:  512 1471/ 3673

Fax :   514 3673

Sports Goods Export Promotion Council

2 nd Floor, 1-E/6 Swami Ram

Tirth Nagar New Delhi 110 055

Tel.:  011-525 695

Fax :  011-753 2147

Synthetic & Rayon Textiles Export Promotion Council

Resham Bhavan

78’ Veer Nariman Road

Mumbai – 400 020

Tel.: 204 8797 / 8690 /0168

Fax :  204 8358

Website:  www.synthetictextile.com

Synthetic & Rayon Textiles Export Promotion Council

Resham Bhavan,78’ Veer Nariman Road

Mumbai – 400 020

Tel.: 204 8797 / 8690 /0168

Fax :  204 8358

Email :

Website:  www.synthetictextile.com

Tea Board

14 B. T.M. Sarani

Calcutta 700 001

Tel, : 033-225 1411

Fax : 033-225 1417

Tea Board

78, Reham Bhavan ,

Veer Nariman Road.

Mumbai- 400 020

Tel, : 2204 1699

Tobacco Board

Shrinivas Rao Thota

G.T. Road, P.B. No.322 Gunture, Andhar Pradesh

Tel. : 522 004

Wool & Woolen Export Promotion Council

612/714 Ashoka Estate

24, Barakhamba Ropad

New Delhi 110 001

Tel.: 011- 331 5512

Fax :  011- 331 4626

Email :

Website:  http://www.wwepc.com

Wool & Woolen Export Promotion Council

Churchgate Chamers

5, New Marine Linces,

Mumbai 400 020

Tel. : 262 4651 / 4680

Fax : 262 4651


Jt. Direcotr General for Foreign Trade

(For Exim Policy )

Website:  http://www.nic.in/eximpol

Reserve Bank of India

(For Exchange Control Manual

Website : http://www.ecm.rbi.org.in

Export and Import Financing, Procedure, and Primary Consideration

Introducing: Firms engaged in international trade face a problem – they have to trust someone who may be very difficult to track down if they default on an obligation.  Due to the lack of trust, each party to an international transaction has a different set of preferences regarding the configuration of the transaction. Firms can solve the problems arising from a lack of trust between exporters and importers by using a third party who is trusted by both–normally a reputable bank.  A bank issues a letter of credit, abbreviated as L/C at the request of an importer.  It states that the bank promises to pay a beneficiary, normally the exporter, upon presentation of documents specified in the letter of credit.  A draft (bill of exchange) is the instrument normally used in international commerce to effect payment.  It is an order written by an exporter instructing an importer, or an importer’s agent, to pay a specified amount of money at a specified time.

14 Steps step for conducting export transaction

The entire 14-step process for conducting an export transaction is summarized.  Take for example an Indian importer and US exporter.

Step 1  : The Indian importer place an order with the US exporter and asks the American if he would be willing to ship under a letter of credit.

Step 2 :  The US exporter agrees to ship under a letter of credit and specifies relevant information such as price and delivery terms.

Step 3 :  The Indian importer applies to (e.g) State bank of India for a letter of credit to be issued in favour of the US exporter from the merchandise the importer wishes to  buy.

Step 4 : The state bank of India issues a letter of credit in the Indian importer’s favour and sends it to the US exporter’s  bank, the bank of New York.

Step 5 :  The bank of New York advices the US exporter of the opening of a letter of credit in his favour.

Step 6 : The US exporter ships the goods to the Indian importer on a common carrier. An official of the carrier gives the exporter a bill of lading.

Step 7 :  The US exporter presents a 90 day-time draft (bill of exchange ) drawn on the State Bank of India, in accordance with its letter of credit and the bill of lading to the bank of New York. The US exporter endorses the bill of lading so title of goods is transferred to the Bank of New York.

Step 8  : The bank of New York sends the draft and the bill of lading to the State Bank of India.  The State Bank of India accepts the draft, taking possession of the documents and promising to pay the now accepted draft in 90 days.

Step 9 :  State Bank of India returns the accepted draft to the bank of New York.

Step 10  :  The bank of New York tells the US exporter that it has received the accepted bank draft, which is payable in 90 days.

Step 11 :  The exporter sells the draft to the bank of new York at a discount from its face value and receives the discounted cash value of the daft in return.

Step 12  :  State Bank of India notifies the Indian importer of the arrival of the documents.  He agrees to pay the State Bank of India in 90 days.  State Bank of India releases the documents so the importer can take possessions of the shipment.

Step  13 :  in 90 days, the State Bank of India receives the importer’s payment, so it has funds to pay the maturing draft.

Step 14 :  In 90 days the holder of the matured acceptance i.e. bank of New York presents it to the State Bank of India for payment. The State Bank of India pays.

Export Assistance

Exporters in the Indian can draw upon two types of government-backed assistance to help finance their exports; the Export-Import bank and Export Credit Guarantee Corporation (ECGC) The Export-Import Bank (EXIM BANK ) is a public sector financial institution established in January 1 ,  1982 . it was established by an act of parliament for the purpose of financing, facilitating, and promoting foreign trade in India. Export Credit Guarantee Corporation (ECGC) : this institution covers the exporter against various risks. It also provides guarantees to the financing banks to enable them to provide Adequate finances to exporters.

Export Import Primary Consideration

It will discuss the preliminary considerations that anyone intending to export should consider. Before beginning to export and on each export sale thereafter, a number of considerations should be addressed to avoid costly mistakes and difficulties. Those companies that begin exporting or continue to export without having addressed the following issues will run into problems sooner or later Products initially, the exporter should think about certain considerations relating to the Product it intends to export.  For example, is the product normally utilized as a component Ina customer’s manufacturing process? Is it sold separately as a spare part? Is the product a raw material, commodity, or finished product? Is it sold singly or as part of a set or system? Does the product need to be modified– such as the size, weight, weight, or color-to be saleable in the foreign market? Is the product new or used?  (If the product is used, some countries prohibit importation or require independent appraisals of Value, which can delay the sale.) Often the appropriate   methods of manufacturing, marketing, the appropriate documentation, the appropriate procedures for  exportation, and the treatment under foreign law, including Foreign customs laws, will depend upon these considerations.


 What is the expected volume of export of the product? Will this be an isolated? Sale of a small quantity or an ongoing series of transactions amounting to substantial Quantities? Small quantities may be exported under purchase orders and purchase Order acceptances. Large quantities may require more formal international sales agreements: more secure methods of payment: special shipping, packing, and handling procedures: the appointment of sales agents and /or distributors in the foreign country: or After-sales service.

Country Market and Product Competitiveness  Research On many occasions, a company’s  sole export sales business consists of responding to orders from customers located in foreign countries without any active sales efforts by the company. However, as matter of successful exporting, it is imperative that the company adequately e valuate the various world markets where its product  is likely to  be marketable.  This will include review of  macro-economic factors such as the size of the population and the economic development level and buying power of the country, and the economic development level and buying power of the country, and specific factors, such as the existence of competitive products in that country.

 Identification of Customers:  End user, Distributors, and sales Agents Once the countries with the best market potential and the international competitiveness of your company’s products have been evaluated, the specific purchasers, Such as end users of the products, sales agents who can solicit sales in that country for the products, or distributors who are willing to buy and resell the products in that country, must be identified.

Compliance with Foreign Law

Prior to exporting to a foreign country or even agreeing to sell to a customer in a foreign country, U.S. company should be aware of any foreign laws which might affect the sale. Some specific examples are as follows:

Industry Standards

Foreign Customs Laws

Government Contracting

Buy American Equivalent Laws

Exchange Controls and Import Licenses

Value-Added Taxed

Specialized Laws


 Introduction:  Although the sales agreement is by far the most important single document in an export sales transaction, the are numerous other documents with which the exporter must be familiar. In some cases, the exporter may not actually prepare such documents, especially if the exporter utilizes the services of a freight forwarder. The exporter is responsible for the content of the documents prepared and filed by its agent, the freight forwarder.  Since the4 exporter has legal  responsibility for any mistakes of the freight forwarder, it is very important for the exporter to understand what documents the freight forwarder is preparing and for the exporter to review and be totally comfortable with the contents of such  documents. Furthermore, the documents prepared by the freight forwarder are usually prepared based on information supplied by the exporter.  If the exporter does not understand the documents or the information that is being requested and a mistake occurs, the freight forwards will claim that the mistake was due to improper information provided by the exporter

Freight Forwarder’s Powers of Attorney:

A freight forwarder will ordinarily provide a form contract that specifies the services it will perform and the terms and conditions of the relationship.  Among other things, the contract will contain a provision appointing the freight forwarder as an agent to prepare documentation and granting a power of attorney for that purpose. Under new regulations, if the freight forwarder will have the authority to prepare shipper’s Export Declarations that must be expressly stated in the power of attorney.) Usually, however, the freight forwarder will have a more elaborate contract which includes other specific terms of or provisions relating to, the Services which it will provide.

Shipper’s Letters of Instructions

 On each individual export transaction, the freight forwarder will want to receive instructions  from the exporter on how the export is to be processed.  The terms or Conditions of sale agreed between the seller and the buyer may vary from sale to sale. Consequently, in order for the freight forwarder to process the physical export of the goods and prepare the proper documentation, it is necessary for the exporter to advise the freight forwarder as to the specific agreement between the seller and buyer for that sale.  Freight forwarders offer provide standard forms containing spaces to be filled in by the exporter for the information that it needs.

Commercial Invoices

 When the exports  is shipped, the exporter must prepare a commercial invoice, which is a statement to the buyer for payment. Usually English is sufficient but some countries require the seller’s invoice to be in their language.  Multiple copies are usually required, some of which are sent with the bill of lading and other transportation documents.  The original is forwarded through banking channels for payment (except on open account sales, where it is sent directly to the buyer).  On letter of credit transactions, the invoice must be issued by the beneficiary of the letter of credit and addressed to the applicant for the letter of credit.  Putting the commercial invoice number on the other shipping documents helps to tie the documents together.

Bills of Lading

 Bills of lading are best understood if considered as bills of loading.  These documents are issued by transportation carriers as evidence that they have received the shipment and have agreed to transport it to the destination in accordance with their usual tariffs s(rate schedule). Separate bills of lading may be issued for the inland or domestic portion of the transportation and the ocean marine) or air transportation, or a through bill of lading covering all transportation to the destination may be issued.

The domestic portion of the route will usually be handled by the trucking company or railroad transporting the product to the port of export.  Such  transportation companies have the own forms of bills of lading and, again, commercial stationers make available forms that can be utilized by exporters, which generally say that the exporter agrees to all of the specific terms or conditions of transport normally  contained in the carrier’s usual bill of lading and tariff. The inland bill of lading should be prepared in accordance with the freight forwarders or transportation carrier’s instructions.

The ocean transportation will be covered by a marine bill of lading prepared by the exporter or freight forwarder and issued by the steamship company. Information in bills of lading (except apparent condition at the a time of loading) such as marks, numbers, quantity, weight, and hazardous nature is based on information provided to the carrier by the shipper, and the shipper warrants its accuracy.  Making, altering, negotiating, or transferring a bill of lading with intent to defraud is a criminal offense.  If the transportation is by air, the airline carrier will prepare and issue an air waybill. A freight consolidator will issue house air waybills which are not binding on the  carrier buy are given to each shipper to evidence inclusion of its shipment as part of the consolidated shipment. In such cases the freight consolidator becomes the  “shipper” on the master bill of lading.

Dock and Warehouse Receipts

 Upon completion of the inland transportation to the port of export, the inland carrier may deliver the goods to a warehouse company or to a warehouse operated by the steamship company as arranged by the freight forwarder.  A dock receipt is often prepared by the freight forwarder on the steamship company’s form and is signed by the ware houseman or agent of the steamship company upon receipt of the goods as evidence of the receipt.  The inland carrier then provides a signed copy of the dock receipt to the freight forwarder as evidence that it has completed the delivery .

Consular Invoices

 In addition to a commercial invoice, some countries, including Panama, Bolivia, Haiti, the Dominican Republic, and Honduras, also require that a consular invoice be prepared.  A consular invoice is usually prepared from the information in the commercial invoice, but it must be signed by a representative of the country of destination stationed at that country’s embassy or consulate located in the United States nearest the exporter. One reasons for requiring such invoices is that the country of destination may deduct certain charges from the price of the goods in order to determine the value for customs duties. If the commercial invoice does not contain all of the information necessary, the foreign customs service would be unable to complete the duty assessment. The consular invoice list the specific items about which that country requires information. The consular charges a fee for this service.

Certificates of Origin

  Some countries  require that goods shipped to the country be accompanied by a certificate of origin designating the place of manufacture or production of the goods. This is signed by the exporter, and usually, a local chamber of commerce that is used to performing this service (again, for a feed) certifies to the best of its knowledge that  the products are products of the country specified  the exporter.  The exporter may exports to or imports from Canada or Mexico. In general, in order to be eligible for the duty-free or reduced duty rates under NAFTA, all items imported from outside of North America must have undergone the “tariff shift”   specified in Annex 401 during the manufacturing process for that product.

Certificates of Free Sale

 Sometimes an importer will request that an exporter provide a certificate of free Sale.  Loosely speaking, this a certification that a product being purchased by the  importer complies with any U.S. government regulations for marketing the product  And may be freely sold within the United States. Sometimes, depending upon the Type of product involved, the importer will be able to accept a self-certification by the Exporter.  Frequently, however, the importer seeks the certificate of free sale because the importer’s own government requires it.

For example, these request are common With regard to food, beverages, pharmaceuticals, and  medical devices.  The foreign Government may or may not require the importer to conduct its own testing of the Products for safety but may, either as a primary source or as backup for its own testing, seek confirmation that the products are in compliance with the U.S. Food, Drug and Cosmetics Act.  Delivery Instructions and Delivery Orders The Delivery Instructions form is usually  issued by the freight forwarding company to the inland transportation carrier ( the  trucking or rail company), indicating to the inland carrier which pier or steamship company has been selected for the ocean transportation and giving specific instructions to the inland carrier as to where to deliver the goods at the port of export.

This must be distinguished from the Delivery Order, which is a document used to instruct the customs broker at the foreign port of destination what to do with the  goods , in particular, the method of foreign inland transportation to the  buyer’s place of business.

Shipper’s Declarations for Dangerous Goods

 Under the U.S. Hazardous Materials Transportation Act, the international  Air  Transport Association Dangerous Goods Regulations, and the International Maritime  Dangerous Goods Code, exporters are required to provide special declarations or  notice to the inland and ocean transportation companies when the goods are hazardous. This includes explosives, radioactive materials, etiological agents, flammable liquids or solids, combustible liquids or solids, poisons, oxidizing or  corrosive  materials, and compressed gases . These include aerosols, dry ice, batteries, cotton, anti-freeze, cigarette lighters, motor vehicles, diesel fuel, disinfectants, cleaning liquids, fire extinguishers, Pesticides, animal or vegetable fabrics or fibres, matches, paints, and may other products.  The shipper must certify on the invoice that the goods are properly Classed, described, packaged, marked and labelled, and are in proper condition for Transportation in accordance with the regulations of the Department of Transportation Precursor and Essential Chemical Exports Those who export ( or import ) “ precursor” chemicals and “ essential “  chemicals that can be used to manufacture illegal drugs are required to file Drug Enforcement Administration (DEA) Form 486 In some case,. This form must be filed fifteen days in advance of exportation ( or importation ).

Animal, Plant , and Food Export Certificates

  The U.S. Department of Agriculture is supportive of companies that want to export Livestock, animal product s, and plants and plant products. Often, the destination Country will have specific requirements in order to permit import to that country, But sometimes the foreign country will         accept or require inspections performed and Certificates issued in the United States. In general, the U.S. Department of Agriculture Offers inspection services and a variety of certificates to enable exporters to satisfy Foreign Government requirements.

Drafts for Payment

  If payment for the sale is going to be made under a letter of credit or by documentary  Collection, such as documents against payment ( “DP” or sight draft ) or documents against acceptance (“DA or time draft ), the exporter will draw a draft on the buyer’s  bank in a little  of credit transaction or the l buyer in a documentary collection  transaction payable to itself ( sometimes it will be payable to the seller’s bank on a  confirmed letter or credit ) in the amount of the sale. This draft will be sent to the seller’s bank along with the instructions for collection, or sometimes the seller will sent it directly to the buyer’s bank. If the payment agreement between the seller and buyer is at sight, the buyer will pay the draft when it is received, or if issued under a letter of credit, the buyer’s bank will pay the draft when it is received.  If the agreement between the seller and the buyer is that the buyer will have some grace period before making payment, the amount of the delay, called the usance, will be written on the draft (time draft), and the buyer will usually be responsible for  payment of interest to the seller during the usance period unless the parties agree otherwise. The time period may also be specified as some period after a fixed date, such as ninety days after the bill of lading or commercial invoice date, or payment simply may be due on a fixed date.

Freight Forwarder’s Invoices

The freight forwarder will issue a bill to the exporter for its services. Sometimes. The  forwarder will include certain services in its standard quotation while other services. Will be add-ons. It is important to make clear at the outset of the transaction Which services will be performed by the exporter, the freight forwarder, and other, Such as the bank.

Shipper’s Export Declarations

The Shipper’s Export Declaration (SED) is important because it is the on by one of all of the export documents that is filled with and U.S. Governmental agency. The SED is given to the exporting steamship carrier or air carrier and is filed by them with the  U.S. Customs Service prior to clearing the port. This document may be prepared by the exporter, or it may be prepared by the exporter’s agent, the freight forwarder, and the exporter may not see it.  Nevertheless, the SED form specifically states that any false statements in the form (which is interpreted to include accidentally false  statements as well as intentionally false statements ) will subject the exporter to various civil and criminal penalties, including a $ 10,000 fine and up to five year’s imprisonment.

Letters of credit

  When the buyer has agreed to provide a letter or credit as part of the payment terms, the buyer will apply to its local bank in its home country and a letter of credit will be issued. The seller should send instructions to the buyer before the letter of credit is opened, advising the seller as to the terms and conditions it desires.  The seller should always specify that the letter of credit must be irrevocable.  The bank in the buyer’s country is called the issuing bank. The buyer’s bank will contact a correspondent bank near the seller in the United States, and the U.S. bank will send a notice or advice to  the exporter that the letter of credit has been opened.  If the letter of credit is a  confirmed letter of credit, the U.S bank is called the confirming bank; otherwise, it is  called the advising bank. The advice will specify the exact documents that the  exporter must provide to the bank in order to receive payment.  Since the foreign and U.S. banks are acting as agent and subagent, respectively, for the buyer, the U.S. bank will refuse to pay unless the exact documents specified in the letter of credit are  provided. The banks never see the actual shipment or inspect the goods; therefore, they are extremely meticulous about not releasing payment unless the documents  required have been provided. The issuing bank and advising bank each have uyp to  seven banking days to review the documents presented before making payment When the exporter reeceiv es the advice of the opening of a letter of credit, the exporter should review in detail the exact documents required in order to be paid under the letter of credit.

Introduction to Letters of Credit

  Letters of credit are a payment mechanism, Particularly used in international trade.  The Seller gets paid, not after the Buyer has inspected the goods and approved them,  but when the Seller present certain document ( typically a bill of lading evidencing  shipment of the goods, an insurance policy for the goods, commercial invoice, etc.) to  his bank. The bank does not verify that the documents presented are true, but only whether they “ on their face” appear to be consistent with each other and comply with the terms of the credit. After examination the bank will pay the Seller (or in LC terms the beneficiary of the letter of credit).


  • Buyer and Seller sign a purchase contract that stipulates payment by letter of credit. It is good practice to agree already in the purchase contract which documents the Seller/ Beneficiary has to present.
  • The Buyer goes to his bank (so called issuing bank ) opening the credit to the benefit of the Seller, in particular the Buyer tells his bank which documents the  Beneficiary has to present, where and how, and the amount of the credit and details of payment ( by sight, deferred sight payment, against acceptance or negotiation of drafts).
  • The issuing Bank, which is normally located in a foreign country, advises the Beneficiary through a correspondence baznk located in the country of the Beneficiary of the credit.
  • The Buyer ships the goods and presents the necessary documents to his local bank which pays him after examinging them.  The obligation of the bank is independent of the rights of the parties under the purchase/service contract.  This means that absent  fraud, the bank has to pay when conforming documents are presented, even though  the goods are not of the contractually agreed quality or quantity.

The Seller can strengthen his position by requesting a “confirmed“ letter of credit.  The confirmation of a bank in the Seller’s country means that the payment obligation of the confirming bank is independent of the issuing bank. If the issuing bank cannot wire funds outside the country due to governmental restrictions, the confirming bank  still has to pay, even though it will not be reimbursed by the issuing bank. The Seller thus can a void currency transfer restrictions which are sometimes found in   developing countries. A standby letter of credit is basically a bank guarantee.   Previously US banks were not allowed to issue guarantees and circumvented this limitation by issuing standby letters of credit where the beneficiary basically has to present his face to get paid.  Most  letters of credit, particularly in international transactions, are subject to the Uniform Customs and Practices (UCP ) issued and published by the International Chamber of Commerce (ICC).  The current revision UCP 600 is publication No. 600 of the ICC and takes effect as of July 1 ,2007  Since the ICC lacks legislative authority, meaning it is not the arm of or authorized by any government but rather a trade association, the  UCP are no laws and have to be explicitly incorporated into individual transaction.  Some countries and states have enacted statutes regarding letters of credit  (see eg. Article 5 US Uniform Commercial Code). In international trade however, most parties choose to use the UCP.

The Letter of Credit

  A letter of credit is a document typically issued by a bank r financial institution ,  which authorizes the recipient of the letter ( the “customer “ of the bank ) to draw  amounts of money up to a specified total, consistent with any terms and conditions set forth in the letter.  This usually occurs where the bank’s customer seeks to assure a seller ( the “ beneficiary “ ) that it will receive payment for any goods it sells to the customer.

For example, the bank might extend the letter of credit conditioned upon the beneficiary’s providing documentation that the goods purchase with the line of credit have been shipped to the customer. The customer may use the letter of credit to assure the beneficiary that, if it satisfies the conditions set forth in the letter, it will be paid for any goods it sells and ships to the customer.

In simple terms, a letter of credit could be said to document a bank customer’s line of credit, and any terms associated with its use of that line of credit.  Letters of credit are most commonly used in association with long-distance and international commercial transactions.

Confirmed Letter of Credit.

A letter of credit, issued by a foreign bank, which has been verified and guaranteed by  a domestic bank in the even of default by the foreign bank or buyer.  Typically, this form of letter of credit will be sought when a domestic exporter seeks assurance of payment from a foreign importer.

Commercial Letter of Credit.

 A commercial letter of credit assures the seller that the bank will provide payment for any goods or merchandise shipped to the bank’s customer, assuming the seller provides any required documentation of the transaction and its shipment of the purchased goods.

Irrevocable Letter of Credit

  An irrevocable letter of credit includes a guarantee by the issuing bank that if all of the terms and conditions set forth in the letter are satisfied by the beneficiary, the letter of credit will be honored.

Standby Letter of Credit.

  In the even that the bank’s customer defaults on a payment to the beneficiary, and  the beneficiary documents proof of its loss consistent with any terms set forth in the letter, a standby letter of credit may be used by the beneficiary to secure payment from the issuing bank.

 Export-Import Policy of India

 Trade policy governs exports from and imports into a country. Its is one of the various policy  instruments used by a country to attain her goals of economic development.  This policy is thus, formulated keeping in view, the national priorities for economic  development  and  the international l commitments made by the country.  It is essential that the entrepreneurs and the export managers understand the trade policy as it provides the vital inputs for the formulation of their business growth strategies. In India, the trade policy le., export-import policy is formulated by the Ministry of  commerce, Government of India in terms of section 5 of the Foreign Trade  (Development and Regulation ) Act, 1992 Besides, the Government of India also announced on January 30 , 2002 a Medium Term Export strategy, to guide the formulation the Export-Import Policy: 2002-07  with the, objective of achieving a share of 1 % in world trade by the end of 2006-07 from the present I share of 0.6%  (23000-01).  The text of this strategy is given as Appendix VII at the end of the book.  The present Export –Import Policy was announced on 31.3.2002 for a period of 5 years with effect from 1.4.2002 to 31.3.2007 co-terminus with Tenth Five Year Plan. It covers both the trade in merchandise and services. The present chapter explains legal framework affecting foreign trade of India particularly with reference to Export-Import Policy; 2002-2007.  It also discusses the preferential trading arrangements affecting exports and imports of India.


 The foreign trade of India is guided by the Export-Import (EXIM) Policy of the Government of Inda arid is regulated by the Foreign Trade (Development and Regulation ) Act, 1992

 EXIM Policy contains various policy decisions taken by the government in the sphere of foreign trade, i.e., with respect to imports and exports from the country and more especially export promotion measures, policies and procedures related thereto. It is prepared and announced by the Central Government (Ministry of Commerce). India’s EXIM policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favourable balance of payments position.


In India, the legal framework for the regulation of foreign trade is mainly provided by the Foreign Trade ( Development and Regulation ) Act, 1992 , Garments Export  Entitlement Policy: 2000-2004, Export (Quality Control and Inspection ) Act, 1963, Customs and Central Excise Duties Drawback Rules, 1995 , Foreign Exchange Management Act, 1999-and the customs and Central Excise Regulations.  The main objective of the Foreign Trade (Development and Regulation) Act is to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India.  This Ac t has replaced the earlier law namely, the imports and Ex(Control) Act 1947. A comparison of the nomenclature of the two Acts makes it very dear that there is a shift in the focus of the law from control to development of foreign trade. This shift in the focus is the outcome of the emphasis on liberalisation and globalisation as a part of the process of economic reforms initiated in India since June 1991. The application of provisions of the Foreign Trade (Development & Regulation) Act 1992 has been exempted for certain trade transactions vide Foreign Trade (Exemption from application of Rules in certain case) Order 1993.


 Government control import of non-essential items through an import policy.  At the same time, all-out efforts are made to promote exports.  Thus, there are two aspects of trade policy; the import policy which is concerned with exports not only promotion but also regulation. The main objective of the Government policy is to promote exports to the maximum extent.  Exports should be promoted in such a manner that the economy of the country is snot affected by unregulated exports of items specially needed within the country.  Export control is, therefore, exercised in respect of a limited number of items whose supply position demands that their exports should be  regulated in the larger interests of the country.  In other words, the policy Aims at (i) Promoting exports and augmenting foreign exchange earnings; and (ii) Regulating exports wherever it is necessary for the purposes of either avoiding competition among the Indian exporters or ensuring domestic availability of essential items of mass consumption at reasonable prices. The government of India announced  sweeping changes in the trade policy during the year 1991. As a result, the new Export-Import policy came into force from April 1,1992.  This was an important step  towards the economic reforms of India. In order to bring stability and continuity, the policy was made for the duration of 5 years.  In this policy import was liberalised and export promotion measures were strengthened.  The  steps were also taken to boost  the domestic industrial production.  The more aspects of the export-import policy (1992-97) include: introduction of the duty-free Export Promotion Capital Goods (EPCG) scheme, strengthening of the Advance Licensing System, waiving of the condition on export proceeds realisation, rationalisation of schemes related to Export Oriented Units and units in the Export Processing Zones.  The thrust area of this policy was to liberalise imports and boost exports.  The need for further liberalisation of imports and promotion of exports was felt and the Government of India announced the new Export-Import Policy (1997,2002). This policy has further  simplified  the procedures and reduced the interface between exporters and the. Director General of foreign Trade (DGFT) by reducing the number of documents required for export by half. Import has been further liberalised and efforts have been made to promote exports. The new EXIM Policy 1997-2002 aims at consolidating the gains made so far, restructuring the schemes to achieve further liberalisation and increased transparency in the changed trading environment. It focuses on the strengthening the domestic industrial growth and exports and enabling higher level of employment with due recognition of the key role played by the SSI sector.  It recognises the fact that there is no substitute for growth, which creates jobs and generates income.  Such trade activities also help in stimulating expansion and Diversification of production in the country.  The policy has focussed on the need to let exporters concentrate on the manufacturing and marketing of their products globally and operate in a hassle free environment. The effort has been made to simplify and streamline the procedure. The objectives will be achieved through the coordinated efforts of all the departments of the Government in general and the Ministry of Commerce and the Directorate General of Foreign Trade and its network of Regional Offices in particular.  Further it will be achieved with a shared vision and commitment and in the, best spirit of facilitation in the interest of export.


  The principal objectives of the EXIM Policy 1997-2002  are as under:

  1. To accelerate the economy from low level of economic activities to high level of economic activities by making it a globally oriented vibrant economy and to derive maximum, benefits from expanding global market opportunities.
  2. To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, ‘consumables and capital goods require for augmenting producing.
  3. To enhance the technoloca 1 strength and efficiency of Indian agriculture, industry and services, thereby, improving their competitiveness.
  4. To generate new employment.  Opportunities and encourage the attainment of internationally accepted standards of quality.  To provide quality consumer products at reasonable prices.


  1. Period of the Policy

This policy is valid for five year instead of t): 1 years as in the case of earlier policies.  It is effective from 1st April 1997 to 31 March 2002.

  1. Liberalisation

A very important feature of the policy is liberalisation. It has substantially eliminated licensing, quantitative restrictions and other regulatory and discretionary controls. All good, except those coming under negative list, may be freely imported or exported .

  1. Imports Liberalisation of 542 items from the restricted list 150 items have been transferred to Special Import Licence (SIL) list and remaining 392 items have  been transferred to Open General Licence (OGL) List.
  2. Export Promotion Capital Goods (EPCG) Scheme.

The duty on imported capital goods under EPCG scheme has been reduced from 15 % to 10 % Under the zero duty EPCG Scheme, the threshold limit has been reduced  from Rs. 20 crore to Rs.5 crore for agricultural and allied!  Sectors.

  1. Advance Licence Scheme Under Advance License Scheme, the period for export obligation has been extended from 12 months to 18 months.

A further extension for six months can be given on payment of 1 % of the value of unfulfilled exports.

  1. Duty Entitlement Pass Book (DEPB) Scheme.

Under the DEPB, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency.  Such credit can be can be utilized for import of raw materials, intermediates, components, parts, packaging materials, etc. for export purpose.

  1. Special Import Licence (SIL)

150 items from the restricted list have been transferred to SIL. SIL on exports from SSIs  has been increased from 1 % to 2 %. Export houses and all forms of trading  houses are eligible for additional SIL of 1 % on exports of products from SSIs from North Eastern States.  Additional SIL has been declared for exploration of new markets and for export of are products. The SIL  entitlement  of exporters holding ISO 9000 certification  has been? from 2 % to 5 % of the FOB value exports.

  1. Export Houses and Trading House :-  The criteria for recognition of export houses and all forms of trading houses has been modified.


The major implications of the EXIM Policy 1997-2002 are:

  • Globalisation of Indian Economy: The EXIM policy 1997-02 proposed to prepare an framework for globalisation of Indian economy. Economy from low level of economic activities to – high level of economic activities by making it a globally oriented vibrant economy and to derive maximum benefits from expanding global market   “The Indian economy has been exposed to more foreign competition. The regime of high protection is gradually‘ vanishing.  It means , in order to survive,  Indian companies will have to pay due attention to cost reduction, improvement in  quality, delivery schedules and after sales service.  At the same time,; Indian industry’s  have also been given an opportunity to globalise their business by allowing them to import machineries and raw materials from abroad on liberal terms.
  • Impact on the Indian Industry: In the EXIM policy 1997-02, a series of reform measures have been introduced in order to give boost to India’s industrial growth and generate employment opportunities in non-agricultural sector.

The reduction of duty from 15 % to 10 % under SEPCG scheme will enable Indian firms  to import capital goods.  This will improve the quality and productivity of the Indian industry.  However, liberalisation of imports by transferring 542’ items from restricted list to OGL and SIL list would adversely affect the growth of, consumer goods industry in India, as most of these  items are consumer goods items.

  1. b) Impact on Agriculture: – many encouraging steps have been taken in order to given a boost to Indian agricultural sector. Double weight age for agro exports while calculating the eligibility for export houses and all forms of trading houses.  Additional  SIL of 1 % for export of agro products.  EOUs’ and units in EPZs in agriculture and allied sectors can sell 50 % of their output in the domestic tariff are (DTA) on payment of duty.  Under the zero duty EPCG scheme, the threshold level has been reduced from Rs. 20 crore to Rs. 5 crore for agriculture and allied sectors.
  2. c) Impact on Foreign Investment ….

In order to encourage foreign investment in India, the SEXIM policy 1997-02 has permitted 100 % foreign equity participation in the case of 100 % EOUs, and units set up in EPZs. Due to liberalisation of procedural formalities, foreign companies may be attracted to set up manufacturing units in India. Full Convertibility of Indian Rupee on revenue account would also give a fillip to foreign investment in India.

  1. d) Impact on Quality Up gradation:

The SIL entitlement of exporters holding ISO 9000 certification has been increased from 2 % to 5 % of the FOB value of exports.  This would encourage Indian industries to undertake research and development programmers and upgrade the quality of their product.  Liberalisation of EPCG scheme would encourage Indian industries to import capital goods and improve quality and increase productivity of goods.

  1. Impact on Self-reliance : –

One of the long-term objective of the Indian planning is to become self  reliant. This objective is well reflected in the EXIM Policy 1997-02.  The policy aims at encouraging domestic sourcing of raw materials, so as to building up strong domestic production base.  In order to achieve this  the policy has also extended the benefits given to exporters to deemed exporters.  This would lead to import substitution. Oil, Power and natural gas sectors have also been brought under the purview of deemed Exports. However, the globalisation policy of the government may harm the interests of SSIs and cottage industries, as they may not be able to compete with MNCs.


The export- Import Policy : 2002-2007 deals with both the export and import of merchandise and services.  It is worth mentioning here that the Export-Import Policy:  1997-2002 had accorded a status of exporter to the business firm exporting services with effect from 1.4.1999 . Such business firms are known as Services Providers.

The Export-Import Policy has been described in the following documents:

Export-Import Policy: 2002-2007

Handbook of Procedures Volume I

Handbook of Procedures Volume II

ITC (HS) Classification of Export-Import Items.

The main policy provisions are given in the policy document entitled “Export-Import Policy 2002-2007”. An exporter will l have to refer to the Handbook of Procedures Volume-I to know the procedure3s. the agencies and the documentation required  to take advantage of a certain provision of the policy.

There is a para-by-para correspondence between the Policy and the Handbook of Procedures Volume-I. Thus, if an exporter finds that  para 6.2 of the policy is relevant  for his business enterprise then he should also refer to the corresponding para of the  Handbook of Procedures Volume-I to know precisely what is to be done to 1ake advantage of the policy provision. The Handbook of Procedure Volume-II provides a  very vital information as regards the standard input-output norms in regard to items  of export from India.  Based on these norms exporters are provided the facility to make duty-free import of inputs required for manufacture of export products under the Duty Exemption Scheme /Scheme/Duty Remission Scheme.  The policy regarding import or export of a specific tem is given in the document entitled “ITC (HS) Classifications of Export-Import Items“.  In addition to these policy documents, an export  enterprise regulatory authorities dealing with different aspects of foreign trade. One can refer to these notice either by visiting the relevant web site of the authority concerned or buy referring to carious trade magazines which circulate them.