Export and important House – Firms specializing in exports and imports are called export and import houses respectively. They are mostly located at important port towns. These firms may very from foreign large international trading organizations specializing in a few products to firm dealing in a wide variety of commodities. They render very useful services to the small exporters or importers.
Kinds of foreign trade: Foreign trade consists of three branches-
- Import trade: Purchasing from foreign country or bringing goods in the own country is import trade. It includes all activities undertaken to bring goods in the home country.
- Export trade: Selling in foreign country is export trade. It covers all trade activities engaged in sending goods from the home country for sale to abroad. .
- Entry-port trade: Re-export or export of imported goods is known as entry-port trade. It means such a trade in which goods are imported in a country for the purpose of export to some other countries.
Export Trade and its Procedure:
Selling in another country is known as export trade. The world is fragmented into a number of fractions known as nation or country. No nation is self-sufficient in production of all necessary products.
Some countries have redundancy of some commodities, while others have deficit or no production at all. By the virtue of foreign trade, the necessities of all countries are met through the judicious exchange process. Hence, We find the existence of export trade and import trade in the whole world.
The internal imbalances of availability of different commodities are balanced through indigenous trade or internal distribution, while international imbalances are met through international trade. The importer and exporter are usually at distant places. In the middle of them, bank, insurance, customs authority, port and shipping authority are relevant authorities.
A number of importers or exporters or exporters are not acquainted with the complex inter-governmental procedure of import and export. To meet this gap, a number of middlemen have developed, through whom foreign trade can be performed. These are substitutes to direct export or import and are as follows:
- Export Trade,
- Importer’s Agent,
- Indenting Agent, etc.
- Export-Commission Agent,
- Forwarding Agent,
Export Procedure: Export means the sale of goods to other country or countries. But exporting goods is not an easy task. It needs many formalities. The procedures of export are given below:
First the exporter get indent form foreign importer. The indent may be closed or open. After getting the indent, the exporter sends news by letter to receive the indent. After receiving the indent, the exporter will apply to the chief controller of exports for granting him an export permit. Then the exporter send news to the importer to open a Letter of Credit (L\C).
Then the exporter packs the goods properly. Later on, the exporter arranges to collect customs permit. He will apply to the custom office on which he will give details of the commodities and the place of destination.
Then he contracts with a shipping company to carry the goods and the shipping company will give him a shipping document. Then the exporter pay the customs duties to the customs office. Later on, he collects dock challan by payment of the dock dues.
After the shipping contract, the dock authority loads the goods on ship. Than the captain of the ship will give him a receipt known as mates receipt. At this stage, he collects ‘Bill of Lading’ from the shipping company. Then the exporter gets his goods insured by an insurance company. Now the exporter makes a foreign invoice.
It contains details, such as the name of the ship, port of the shipment, port of destination, details regarding packing, and marking prices of goods and other expenses including freight, dock dues and insurance charges. After handing over documentary bills to the bank the exporter will write a letter to the importer informing him about the dispatch of goods and export documents.
On receiving documents, importer’s bank makes payment. If he receives payment, through the exporter’s bank, the procedure is complete. In short, the procedure is as follows:
- Receipt of Order Letter: The export process starts from the receipt of order letter from the foreign buyer (importer). This order may be open order letter or closed order letter. In an open letter, there is only some description of goods and other matters are decided by the exporter. In a closed order letter, the product or material, the price, quality and quantity are specifically mentioned. The exporter has no choice in respect of the goods to be exported.
- Opening of ‘Letter of Credit (L\C)’: If the export order is accepted, then the exporter requests the importer to open a ‘Letter of Credit’ in his favor to be sure to have the export value. The next steps of export are dependent on the receipt of L\C from the importer. L\C may be of different types, such as, Confirmed L\C, Unconfirmed L\C, Standby (Bid \ Performance) L\C, Back-to-Back L\C, and Transferable L\C.
- Contract with the Shipping Company: The next step is to make a contract with the shipping company about the carriage of goods.
- Receipt of Payment: After shipping, the bill or payment is received and the procedure comes to an end.