GARMENT EXPORT PROCEDURE

INTERNATIONAL INTERNATIONAL TRADE TRADE

DOCUMENTATION ATDOCUMENTATION AT

AAbhilasha bhilasha EExim xim PPvt. vt. LLtd.td.

1

AMIT MATHURKANIKA GUPTALALIT SHARMAPANKIL MOOLCHANDANISWATI SINGHANIAVED PRAKASH SHARMA

GROUP MEMBERS

2

PRESENTATION FLOW

• Introduction of Export Firm•Methods of Payment

•Pre-Shipment Finance•Post-Shipment Finance

•Letter of Credit• Open Account

•Factoring

3

Company profileCompany profile Name : Abhilasha Exim Pvt. Ltd. Established As : A Private Ltd. Company & as Manufacturers & Exporters Products : Ready to Wear Garments, Textiles & Fashion Accessories. Year of Establishment 1997 Address : Reg. Office:

Jwala Building, C/21A, Bhagwan Das Road, Jaipur-302 001 (Rajasthan) INDIAPh: +91 - 93140 63699

Works: F-160/A, Sitapura Industrial Area, Tonk Road, Jaipur-302 022 (Raj.) INDIAPh: +91-141-277 0728, 277 0729 Cell: +91- 94140 76688 Fax: +91-141- 2771399

Production capacity : 25,000 - 40,000 units of Hi-Fashion garments per month.

Turnover : US $ 3.4 million

4

Members of..Members of..Registered with the following Export Promotion

Organisation (s), Association (s), & Chamber (s) of Commerce : :

Apparel Export Promotion Council. (Govt. Of India)

Export Promotion Council for Handicrafts & Textiles (Govt. of India)

CII (Confederation of India Industry) CIAe (Confederation of Indian Apparel

Exporters) 5

Bankers : Punjab National Bank

Swift Code - BIC : PUNB IN BB JMI

6

Cliental DetailsCliental DetailsUSACanadaSpainSouth AfricaEgyptGreece Australia

7

INTERNATIONAL TRADE

Advantages

•Market expansion

•Economies of scale

•Surplus not wasted

•BOP

•Global productivity

•Socio economic setup of country

Disadvantages

•Annihilation of infant industry

•Exchange rate fluctuation

•Unequal distribution of wealth

8

FISCAL INCENTIVES TO PROMOTE EXPORT

Duty DrawbackDuty Drawback

Tax ConcessionTax Concession

Market development assistanceMarket development assistance

Export promotion of capital goods schemeExport promotion of capital goods scheme

Cash compensatory supportCash compensatory support

Air Freight SubsidiaryAir Freight Subsidiary

9

METHODS FOR INTERNATIONAL METHODS FOR INTERNATIONAL TRADE FINANCETRADE FINANCE

According to stage of financingAccording to stage of financing

Pre-shipment financePre-shipment finance

Post-shipment financePost-shipment finance

10

METHODS FOR INTERNATIONAL METHODS FOR INTERNATIONAL TRADE FINANCETRADE FINANCE

Instruments/methods of financingInstruments/methods of financing

Letter of creditLetter of credit

Open accountOpen account

FactoringFactoring

11

Pre-Shipment FinancePre-Shipment Finance

“Financial assistance extended to the exporter from the date of receipt of the export order till the date of shipment is

known as pre-shipment credit”.

12

Export Documents

Commercial Documents Regulatory Documents

Principal Auxiliary

EXPORT DOCUMENTATION

13

Document Functions Prepared by

Quotation

Sales Contract

An offer to sell goods and should state clearly the price, details of quality, quantity, trade terms, delivery terms, and payment terms.

An agreement between the buyer and the seller stipulating every details of the transaction. It is a legally binding document. It is therefore advisable to seek legal advice before signing the contract.

Exporter

Exporter and Importer

Commercial Documents

14


Performa Invoice

Commercial Invoice

An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and importation specifications (weight, size and similar characteristics).

It is a formal demand note for payment issued by the exporter to the importer for goods sold under a sales contract. It should give details of the goods sold, payment terms and trade terms. It is also used for the customs clearance of goods and sometimes for foreign exchange purpose by the importer.

Exporter

Exporter


15


Packing List

Inspection Certificate

A list with detailed packing information of the goods shipped.

A report issued by an independent surveyor (inspection company) or the exporter on the specifications of the shipment, including quality, quantity, and/or price, etc; required by certain buyer and countries.

Exporter

Inspection Company or Exporter


16


Insurance Policy/ Certificate

Product Testing Certificate

An insurance policy is an insurance document evidencing insurance has been taken out on the goods shipped, and it gives full details of the insurance coverage. An insurance certificate certifies that the shipment has been insured under a given open policy and is to cover loss of or damage to the cargo while in transit.

A certificate to certify the products are conformed to a certain international/national technical standard, such as product quality, safety and specifications, etc.

Insurer or Insurance Agent or Insurance Broker

Accredited Laboratories


17


Bill of Lading

(B/L)

An evidence of contract between the shipper of the goods and the carrier. The customer usually needs the original as proof of ownership to take possession of the goods.

Shipping Company

Transport Documents

18


Air Waybill (AWB)

Packing List

A kind of waybill used for the carriage of goods by air. This serves as a receipt of goods for delivery and states the condition of carriage but is not a title document or transferable/ negotiable instrument. A list providing information needed for transportation purpose, such as details of invoice, buyer, consignee, country of origin, vessel/flight date, port/airport of loading, port/airport of discharge, place of delivery, shipping marks / container number, weight / volume of merchandise and the fullest details of the goods, including packing information.

Airline

Shipper

Transport Documents

19


Documentary Credit

Bill of Exchange (B/E) or Draft

A bank instrument began (issuing or opening bank), at the request of the buyer, evidencing the bank's undertaking to the seller to pay a certain sum of money provided that specific requirements set out in

the D/C are satisfied.

An unconditional written order, in which the importer addressed to and required by the exporter to pay on demand or at a future date a certain amount of money to the order of a person or bearer.

Issuing Bank upon an application made by the Importer

Exporter

Financial Documents

20

Regulatory DocumentsThere are seven regulatory documents associated with the pre-shipment

stage of the export transaction. They are:

1. GRE Form ( for Central Excise)

2. Shipping Bill/Bill of Export (for Customs)

- For export of goods Ex. Bond

- For export of duty free goods

- For export of dutiable goods

- For export of goods under claim of drawback

- For export of goods under claim of DEPB

21

3. Port Trust Copy of Shipping Bill/ Export Application/Dock Challan

4. Vehicle ticket

5. Exchange Control Declaration/GR/PP forms

6. Freight Payment Certificate

7. Insurance Premium Payment Certificate

22

Government steps in by picking up a part of the interest burden

Interest subvention of 2 per cent on the pre-shipment credit for seven employment-oriented export sector

Textiles including handloomsHandicraftsCarpetsLeatherGems & JewelleryMarine products Small & Medium exporters.

INTEREST SUBVENTION SCHEME

23

Post Shipment Finance is a kind of loan provided by a financial institution

to an exporter or seller against a shipment that has already been made.

24

Export Bills Purchased / Discounted

Export Bills Negotiated

Advance Against◦Export Bills Sent On Collection Basis◦Export On Consignments Basis◦Claims Of Duty Drawback

TYPES OF POST SHIPMENT FINANCE

25

Competitiveness – Exporter able to offer credit terms to buyer

Energized Cash flows – Producer receives cash from export proceeds upfront and can continue production activities.

Expansion Of Client Base – Exporter able to expand client base due to availability of financing

BENEFITS TO EXPORTERS

26

A formal document issued by a bank on behalf of customer, stating the conditions under which the bank will honour the commitment of the customer

• The letter of credit is also known as banker’s commercial credit or documentary letter of credit.

•L/C used in domestic trade are called inland L/C’s.

27

Importer or Applicant

Issuing Bank

Beneficiary

Advising Bank

Negotiating/ The Paying Bank.

PARTIES TO A LETTER OF CREDIT

28

1. Contract

Seller(Beneficiary)

BuyerApplicant

2. Documentary credit Application

ISSUING BANK.

3. Documentary creditAdvising Bank

4. Advice of Documentay credit

LETTER OF CREDIT – THE PROCESS

29

Open Account is a form of trade whereby sales are made to the

buyer without entering into any

formal contract. The system works on complete trust

between buyer & seller.

30

Open Account is the most advantageous option to the importer in cash flow and cost terms.

It is consequently the highest risk option for an exporter.

Exporters may also wish to seek export working capital financing to ensure that they have access to financing for both the production for export and for any credit while waiting to be paid.

OPEN ACCOUNT

31

Open account terms may be offered in competitive markets with the use of one or more of the following trade finance techniques:

1. Export Working Capital Financing

2. Export Credit Insurance

3. Export Factoring

OPEN ACCOUNT

32

Pros & ConsPros & Cons

Pros: Boost competitiveness in the global market.

Establish and maintain a successful trade relationship.

• Cons: Exposed significantly to the risk of nonpayment

Additional costs associated with risk mitigation measures.

33

TARGET VENDOR

BANK

Purchase order

Purchase

order

Goods

Doc

umen

ts

Docum

ent status.

Payment

Paym

ent

OPEN ACCOUNT – PROCESS

34

“Financial transaction whereby a business

sells its accounts receivable to a third party called a factor

(financial institution) at a discount in exchange for immediate money with which to finance continued business.”

35

Customer Client

Factor

(1) Credit Sale of Goods

(2) Invoice

(3) Submit Invoice Copy

(4) Payment upto 80% initially

(6) Pays the

balance

(5) Pays the amount (In recourse type

customer pays through client)

FLOW CHART OF FACTORING

36

37