Commerce · Ch 4 — International Trade
Export Trade Procedure and Documents
Export Trade Procedure and Documents
Executing an export order is a multi-step process because the goods, the money, and the documents all have to move correctly across two different countries' legal and banking systems. A BIEAP Intermediate second-year commerce student should be able to describe the sequence in outline, even though the exact steps a firm follows may vary slightly with the product and destination country.
Registration stage — Before an exporter can ship even a single consignment, the firm must register with the authorities: obtaining an Importer-Exporter Code (IEC) from the Directorate General of Foreign Trade (DGFT), registering with the concerned Export Promotion Council to obtain a Registration-cum-Membership Certificate (RCMC), and completing GST registration, along with credit-insurance registration (e.g. with the Export Credit Guarantee Corporation) where needed.
Pre-shipment stage — On receiving an export order, usually confirmed through a proforma invoice and often backed by a Letter of Credit opened by the importer's bank, the exporter procures or manufactures the goods, arranges pre-shipment quality inspection where the product is covered by compulsory inspection rules, completes GST-related clearances, and packs and marks the goods as required by the buyer and the mode of transport. The exporter then appoints a Clearing and Forwarding (C&F) agent to handle port formalities, books shipping space, and prepares the Shipping Bill, the main document required for customs clearance of export cargo.
Shipment stage — The goods move to the port or airport, customs clearance is completed, cargo insurance is arranged, and the goods are loaded on board under the C&F agent's supervision, who obtains a Mate's Receipt from the ship's captain. This receipt is exchanged with the shipping company for the Bill of Lading (sea cargo) or Airway Bill (air cargo) — the document of title to the goods.
Post-shipment stage — The exporter assembles the full set of shipping documents (invoice, bill of lading/airway bill, packing list, certificate of origin, insurance certificate, bill of exchange) and sends them to the importer, usually through the exporter's own bank, which negotiates the documents against the Letter of Credit so the exporter is paid, and forwards the documents so the importer's bank can release them against payment or acceptance. Finally, the exporter realises the export proceeds and reports the transaction under foreign exchange regulations.
The table below lists the principal documents used at each stage and the purpose each serves:
| Document | Purpose |
|---|---|
| Proforma Invoice | Quotation sent to the buyer before the actual order is confirmed |
| Commercial Invoice | Final bill of the goods, stating price, quantity and terms — the basis for customs valuation |
| Packing List | Details how the goods are packed (cases, weight, dimensions) to help the buyer and customs identify the cargo |
| Shipping Bill | Main document for customs clearance of export cargo at the port |
| Mate's Receipt | Issued by the ship's captain acknowledging goods loaded on board; exchanged for the Bill of Lading |
| Bill of Lading / Airway Bill | Document of title to the goods and evidence of the contract of carriage; sea cargo uses a Bill of Lading, air cargo an Airway Bill |
| Certificate of Origin | Certifies the country in which the goods were manufactured; needed for import-duty concessions in the buyer's country |
A 10-digit Importer-Exporter Code issued by the DGFT; mandatory registration number without which a firm cannot lega …
Registration-cum-Membership Certificate issued by the relevant Export Promotion Council, needed to claim …
A document issued by the shipping company acknowledging receipt of goods for carriage by sea; serves as a receipt, evidence of the contract of carri …