EXECUTIVE SUMMARY

India is one of the world’s largest producers as well as consumer of food

products, with the sector playing an important role in contributing to the
development of the economy. Food and food products are the largest
consumption category in India, with a market size of USD 181 billion.
Domestically, the spending on food and food products amounts to nearly 21%
of the gross domestic product of the country and constitutes the largest portion
of the Indian consumer spending more than a 31% share of wallet. Going
forward, the Indian domestic food market is expected to grow by nearly 40%
of the current market size by 2018, to touch USD 258 billion by 2018.
Food processing industry in India is increasingly seen as a potential source for
driving the rural economy as it brings about synergy between the consumer,
industry and agriculture. A well developed food processing industry is
expected to increase farm gate prices, reduce wastages, ensure value addition,
promote crop diversification, generate employment opportunities as well as
export earnings. In order to facilitate and exploit the growth potential of the
sector, the government on its part has initiated extensive reforms. Some of the
key measures undertaken by the Government include: amendment of the
Agriculture Produce Marketing Committee Act, rationalization of food laws,
implementation of the National Horticulture mission etc. The government has
also outlined a plan to address the low scale of processing activity in the
country by setting up the mega food parks, with integrated facilities for
procurement, processing, storage and transport. To promote private sector
activity and invite foreign investments in the sector the Government allows
100% FDI in the food processing & cold chain infrastructure. The recent
budget has announced several policy measures, especially for the cold chain
infrastructure, to encourage private sector activity across the entire value
chain.

However, despite of continual efforts and initiatives of the Government to

provide the required stimulus to the sector, processing activity is still at a
nascent stage in India with low penetration. At the same time, though India is a
key producer of food products, having an adequate production base for inputs,
productivity levels are very low in the country. While India remains a top
producer of food, production yield levels are among the lowest amongst the
BRIC countries. Also, the Indian export market, at USD 13.7 billion, has a
share of only 1.4% of the world food trade.

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 RESEARCH METHODOLOGY
Objective:
1. To study the concept and procedure of Export.
2. To study the documents required in Export transaction.
3. To study Inco-Terms.

Types of Data:
While deciding about the method of data collection to be used for the study,
the researcher should keep in mind two types of data:
1. Primary
2. Secondary
The primary data are those which are collected afresh and for the first time,
and thus happen to be original in character.
The secondary data, on the other hand, are those which have already been
collected by someone else and which have already been passed through the
statistical process.

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 INTRODUCTION

EXPORTERS:
Exporters can be basically classified into two groups:

1. Manufacturer Exporter: As the exporter has the facility to manufacture the

products he intends to export and hence he exports the products manufactured
by him.
2. Merchant Exporters: An exporter who does not have the facility to
manufacture an item. But, he procures the same from other manufacturers or
from the market and exports
the same.
An exporter can be both, a manufacturer exporter as well as a merchant
exporter, he can export product manufactured by him or he can export items
bought from the market.
Once it is decided to export, it is mandatory on your part to follow certain
procedures, rules and regulations as prescribed by various authorities such as
DGFT, RBI and customs. These procedures, rules and regulations are laid
down in the Policy, Exchange Control Manual and Custom Act, etc.
Accordingly Export documents are required to be prepared keeping in view of
the requirement of the foreign buyers and our regulatory authorities.
In India ships transport more than 90% of the cargo. It therefore interesting to
study the export processed by ships documentation related to it.

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 Processing of an export order:
Exporter operation starts with the receipt of enquiry by the exporter from
importer. In the enquiry, exporter submits his offer giving complete details of
product technical, specific price, delivery payments terms, etc.
After the process, negotiations importer sends a purchase order follow by
Letter of Credit (if applicable).
The exporter manufactures or purchases the goods according to the
specifications given in purchase order.
As soon as the goods are ready, the exporter invites the representative of
Export Inspection Agency (EIA) for the pre shipment inspection and contains
the certificate of inspection is issued. After that, the exporter prepares
following documents:
1. Invoice
2. Packing List
3. ARE-I from excise department
4. Marine Insurance Policy
5. Copy of Purchase Order
Above those documentation sends to CHA by exporter. Based on these
documents Custom House Agent (CHA) completes the Octroi Formalities,
obtain port permit and prepare shipping bill which is a customs document.
Custom department checks the export cargo on the basis of information
provided on the shipping bill. If satisfy then cargo allow to loaded on the board
of ship.
The shipping line gives mate receipt to CHA after the payments if ocean
freight and port due obtains the bill of lading from shipping line. Bill of lading
is a proof of dispatch of cargo and also a negotiable document.
After that CHA sends various documents back to exporter which is:

1. Customs attested invoice

2. Copy of Shipping Bill
3. Full set of non-board bill of lading
4. Copies of purchase order
5. Copies of ARE 1 Form
6. SDF Form
After that, the exporter submits above documents to bank for negotiation
which include:
1. Commercial Invoice
2. Packing List
3. SDF Form

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 THEORETICAL BACKGROUND
Set Up & Need For An Export Organization:
The proper selection of organization depends upon:
1. Ability to raise finance.
2. Capacity to bear the risk.
3. Desire to exercise control over the business.
4. Nature of regulatory framework applicable to anyone.
Structure of an Export Organization:
Marketing manager for generating sales
Commercial manager for looking activities of the execution of the orders
Staff personnel for carrying out the day-to-day activities, namely:
1. Preparation of pre - shipment documents.
2. Co-coordinating with clearing agents on the progress of the shipment to be
made.
3. Co-ordinations with the ware house\C. excise department regarding packing and
clearance of the goods for export.
4. Preparation of post shipment documents for banks.
5. Follow-up with the bank on dispatch of documents, receipt of payment, an
ailment of
bank loans etc.
To look into the requirement of licenses, claiming of export benefits filing of
documents with the Government Authorities in Discharge of Export
Obligations, if any, filing of returns to the various Government Agencies
which are mandatory, prepare and keep an information bank of various
transaction of the company, their domestic as well as international
competitors. An office boy for doing leg work
A clearing and forwarding agent to handle the documents and goods in the
customs premises\in the port of lading.
Depending upon the size of the business the numbers of personnel under each
category may increase. For example if a company is transacting substantial
volume of business in more than one product. Then it is necessary to have
marketing manager for each product so that the person can concentrate on a
particular trade to enhance the business.

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 How One Begins To Do Exports:
Before entering into the venture of exports, one must look for the product to be
exported and the market where he intends to export.
In case of a manufacturer, obviously he would like to export the product he
manufactures as is or with possible modification as may be required by the
market. However, in case of a merchant exporter or a trader, one has to
identity the product to export. If the exporter is already in the trade in the
domestic market and is familiar with the product it would be an advantage to
export the said product of which he has reasonable knowledge.
Before selecting a product, one must simultaneously made a study and find out
the prospective market. For finding out the market for the selected product, the
following methods will help:
1. Get statistical information as to imports of the product by various countries and
their growth prospects in the respective countries
2. Approach the chamber of commerce for their guidance to find out the market.
3. Approach the Export Promotion Council dealing in the product of selection to
get more
information.
Once you are ready with the product you wish to export and have found the
market for the same, you are ready to proceed further. Following sequences
can be followed:
Anyone, who wishes to export, must first of all get an Importer Exporter Code
Number (IE Code).This can be obtained by making a formal application to the
office of the Regional Directorate General of Foreign Trade (DGFT).
Get yourself registered with the related Export Promotion Council and become
a member. Also arrange to obtain Registration-Cum-Membership Certificate
(RCMC) from the council.
Under the Foreign Trade Policy, it is mandatory that an exporter gets him
registered with the Export Promotion Council to avail of various export
facilities.
Being a member, you will have access to all the information relating to the
product that could be made available by the council.
Many foreign buyers send their enquiries for the imports to the Export
Promotion Council.

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 Hence you will have few customers interested in your product.

1. Understand the local government regulations in relations to the export of

the product.
2. Get information of the government’s regulations of the importing country as to
restrictions on the quantity, product specification, packing regulations,
customs regulations, requirement of specific documents/information etc.
3. Availability of Vessels/Airlines, the transport charges, frequency of operation
etc.,
4. To look for a Custom House Agent (CHA) (clearing agents) for handling the
documents/cargo in the customs.
5. If the product is covered under any quota regulation, find out the agency/council who
is handling the quota distribution for the product and the availability of quota for
exports.
Registration for Obtaining Importer Exporter Code (IEC)
Number:
The Customs Authorities will now allow the exporter to export or import
goods into or from India unless he holds a valid IEC number. Before applying
for IEC number it is necessary to open a bank account in the name of the
company with any commercial bank authorized to deal in foreign exchange.
The duly signed application form should be supported by the following
documents.
1. Bank receipt (in duplicate) / Demand Draft for payment of the fees of Rs. 1000/-
2. Certificate from the banker of the applicant firm as per Annexure 1 to the form given.
3. One copy of PAN number issued by Income Tax Authorities duty attested by the
applicant.
4. One copy of Passport Size photographs of the applicant duly attested by the banker to
the applicant.
5. Declaration by the applicant that the proprietor / directors as the case may be of the
applicant company, are not associated as proprietor / directors in any other firm,
which has been caution, listed by the RBI. Where the applicant declares that they are
associated as proprietor / directors in any other firm, which has been caution, listed
by the RBI, they will be allotted IEC No. but with an additional condition that they
can export only with RBI’s prior approval and they should approach RBI for the
purpose.

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6. Each importer/exporter shall be required to file importer/exporter profile once
with the licensing authority shall enter the information furnished in Appendix
2 in their database so as to dispense with changes in the information given in
Appendix-2, importer/exporter shall intimate the same to the licensing
authority.
Finding a Customer:
Once you have selected the market, the next step is to find a prospective
customer. This you can get,
1. From the directory of importers of the country.
2. By writing to the Embassy of India in that country for assistance.
3. By means of participation in a Fair / Exhibition abroad either directly or through
the export promotion council.
4. By participating in international fair if organized locally.
5. From the personal contacts in that country.

Negotiating Contract:
Once the prospective customer is found, the business deal has to be concluded.
The following aspects may be considered before entering into a final contract
with the customer:
1. Credit worthiness of the customer.
2. Availability of the steamer / airlines and the frequency.
3. The freight charges.
4. The full product specification.
5. The quantity, price.
6. Terms of payment.
7. Type of packing and markings on the packages.
8. Mode of shipment & shipment schedule.
9. Quantity to be shipped.
10. Documentation requirement for the customer.
11. Compliance of the local governmental rules and regulations. Before
entering into contract one should take note of the above factors.

Processing an Export Order:

You should not be happy on receiving an export order.

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 You should first acknowledge the export order, and then processed to examine
carefully in respect of Items:
1. Pre-shipment inspection
2. Special packaging
3. Shipment and delivery date
4. Documentation requirement
5. Specification
6. Payment condition
7. Labelling and marketing
8. Requirements
9. Marine insurance, etc.

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.
Financial Risks Involved In Foreign Trade:
As an exporter while selling goods abroad, you encounter various types of
risks. The major risks which you have to undergo are as follows:
1. Credit Risk
2. Currency Risk
3. Carriage Risk
4. Country Risk
You can protect yourself against the above risks by initiating appropriate steps.

Credit Risk:
You can cover your credit risk against the foreign buyer by insisting upon
opening a letter of credit in your favor. Alternatively one can avail of the
facility offered by various credit risk agencies. A specific insurance cover can
also be obtained from ECGC (Exports Credit & Guarantee Corporation) to
cover your country risk besides covering credit risk.
Currency Risk:

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As regards covering the currency risk, due to the exchange rate fluctuations,
you can request your banker to book a forward contract.
Carriage Risk:
The carriage risk can be covered by taking an appropriate general insurance
policy.

Country Risk:
ECGC provides cover to protect the exporter from country risks.

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 PACKAGING INFORMATION FOR FOOD PRODUCTS
Three types of packaging are used for food. Transport or export
packaging is the outermost layer, which protects the product during
transit. Outer packaging is an intermediate layer, for example a box
containing several bags, tins or pouches of product, which is sometimes used
to display goods in a retail environment. Sales packaging is the immediate
layer of packaging around the goods.
Packaging materials

There are a number of requirements that cover packaging for foods and other
materials. As well as dealing with packaging in direct contact with food, the
rules cover packaging capable of affecting food through the migration of its
constituents into the food. Key rules include:

 Aluminium is considered safe for food contact, although it may not be suitable
for highly acidic foods such as tomatoes and soft fruits.
 Plastics are subject to an overall migration limit of 10 milligrams per square
decimetre of plastic surface area or per kilogram of food. There are also many
specific migration limits that apply to individual substances contained in the
regulations, whether they are plastics monomers or plastics additives that are
used to achieve a particular technical effect. There are also rules about the use
of declarations of legal compliance that apply to packaging moving up and
down the supply chain.
 Other specific rules apply to regenerated cellulose film, ceramics, plasticisers in
seals for food containers, certain epoxy derivatives used in coatings, adhesives
and plastics when used in contact with food.
 New rules apply to contamination from chemicals, including mycotoxin
(mould-related) contamination (in, for example, cereals and dried fruit) and
radiological contamination from the use of pesticides and animal medicines, as
well as nitrates from green, leafy vegetables.

The overriding rule is that any packaging materials must not allow their
constituents to migrate into the food in amounts that could harm human health
or affect the nature or quality of the food. For those that manufacture or
convert packaging materials into particular food packaging, there are also rules
about documenting good manufacturing practice.

Packaging that meets the requirements for food contact is labelled 'for food
contact' and may also bear a specific symbol resembling a wine glass and a
fork.

New types of packaging material that actively maintain or improve the

condition of food, as opposed to simply containing it, are now available. Other
materials, known as 'intelligent packaging', monitor the condition of the food.
These active packaging materials must comply with regulations on food
additives. The 'intelligent' packaging technologies should not be used to
disguise problems such as spoilage. Information should be given on the
package to help consumers use them safely.

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 Products of Animal Origin (POAO) are subject to extra packaging rules. You
must ensure that your products have an identification mark applied before they
go into transit. Depending on the product, you can apply the mark to:

 the wrapping
 the packaging
 a label affixed to the product, the wrapping or the packaging

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 IMPORTANCE OF FUMIGATION IN INTERNATIONAL
TRADE

In most of the cases where in wood materials are used for packing of export
goods, the buyer insists supplier to fumigate cargo and asked to produce
fumigation certificate along with other export documents. Fumigation is a
legal requirement by the buyer in most of the countries. So fumigation
certificate is issued by the fumigator by obtaining approval for fumigation
from the licensing authority. Most of the countries will not allow to import
goods without fumigation certificate, wherever applicable on such goods.

Fumigation is a method of killing pests, termites or any other harmful living

organisms to prevent transfer of exotic organisms. Fumigation is executed, by
suffocating or poisoning pest, within an area of specified space by using
fumigants. Normally, fumigation is done for wood material used for packing
of goods to be exported. In some cases, empty container before stuffing of
cargo is fumigated. Most of the cases, fumigation is done after completion of
stuffing of cargo and closing the door of container. The result of such
fumigation is more effective, as the gases used for fumigation circulates all
spaces in the container without spreading gas outside, as the container is
closed. However, this method of fumigation is not allowed for the cargo for
certain food products for direct consumption and other specified goods.

5 Fumigation Advantages

1. Controls pests at all life stages

2. Efficient and time-saving
3. Fumigants can reach where most other insecticides cannot
4. Offers zero insect tolerance in products or living environments
5. Reduced residue problems in commodities & structures

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PORTS IN INDIA

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 Mode of Transportation
1. Ocean Transport
2. Rail Transport
3. Road Transport

1. Ocean Transport:
More than 95% of international trade is conducted by sea routes since ancient
times, sea routes are being used for transportation of cargo from one country to
another and is also used for transporting the cargo from one port within the
country to another.
For example, In India the cargo can be transported from Chennai port to
Visakhapatnam port using the shipping route.
Sea routes are used for carrying bulk commodities like such as coaling and
thermal coal mines, fertilizers, crude oil acids, cotton bales and all agricultural
product, etc. The modern ships have the capacity to carry 7000 containers. One
of the biggest cargos owned by Maersk-sea land is 1,138 feet long from end to
end and 140 feet wide at mid ship. Such ships are called post-panama ship.

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 Export Documents
Commercial Invoice:
Commercial invoice is an important and basic export document. It is also
known as a 'Document of Contents' as it contains all the information required
for the preparation of other documents. It is actually a seller's bill of
merchandise. It is prepared by the exporter after the execution of export order
giving details about the goods shipped. It is essential that the invoice is
prepared in the name of the buyer or the consignee mentioned in the letter of
credit. It is a prima facie evidence of the contract of sale or purchase and
therefore, must be prepared strictly in accordance with the contract of sale.
Inspection Certificate:
The certificate is issued by the inspection authority such as the export
inspection agency. This certificate states that the goods have been inspected
before shipment, and that they confirm to accepted quality standards.
Marine Insurance Policy:
Goods in transit are subject to risks of loss of goods arising due to fire on the
ship, perils of sea, thefts etc. Marine insurance protects losses incidental to
voyages and in land transportation. Marine Insurance Policy is one of the most
important document used as collateral security because it protects the interest
of all those who have insurable interest at the time of loss.
Types of Policy:
1. SPECIFIC POLICY: This policy is taken to cover different risks for a single
shipment.
2. FLOATING POLICY: This policy is taken to cover all shipments for same
months. There is no time limit, but there is a limit on the value of goods and
once this value is crossed by several shipments, then it has to be renewed.
3. OPEN POLICY: This policy remains in force until cancelled by either party, i.e.
insurance company or the exporter.
4. OPEN COVER POLICY: This policy is generally issued for 12 months period,
for all shipments to one or all destinations.
INSURANCE PREMIUM POLICY: Differs upon from product to product and
a number of other such factors, such as, distance of voyage, type and condition
of packing etc. Premium for air consignments are lower as compared to
consignments by sea.

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 Consular Invoice:
Consular invoice is the most important document, which needs to be submitted
for certification to the Embassy of the importing country concerned. The main
purpose of the consular invoice is to enable the authorities of the importing
country to collect accurate information about the volume, value, quality, grade,
source, etc., of the goods imported for the purpose of assessing import duties
and also for statistical purposes.
In order to obtain consular invoice, the exporter is required to submit three
copies of invoice to the Consulate of the importing country concerned. The
Consulate of the importing country certifies them in return for fees. One copy
of the invoice is given to the exporter while the other two are dispatched to the
customs office of the importer's country for the calculation of the import duty.
The exporter negotiates a copy of the consular invoice to the importer along
with other shipping documents.
Certificate of Origin:
The importers in several countries require a certificate of origin without which
clearance to import is refused. The certificate of origin states that the goods
exported are originally manufactured in the country whose name is mentioned
in the certificate. Certificate of origin is required when:

1. The goods produced in a particular country are subject to’ preferential tariff
rates in the foreign market at the time importation.
2. The goods produced in a particular country are banned for import in the
foreign market.
Bill Of Lading:
The bill of lading is a document issued by the shipping company or its agent
acknowledging the receipt of goods on board the vessel, and undertaking to
deliver the goods in the like order and condition as received, to the consignee
or his order, provided the freight and other charges as specified in the bill have
been duly paid. It is also a document of title to the goods and as such, is freely
transferable by endorsement and delivery.
Bill Of Lading Serves For 3 Main Purposes:
1. As a document of title to the goods
2. As a receipt from the shipping company
3. As a contract for the transportation of goods

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 Airway Bill:
An airway bill, also called an air consignment note, is a receipt issued by an
airline for the carriage of goods. Airway Bill or Air Consignment Note is not
treated as a document of title and is not issued in negotiable form. It is a
contract between the airlines or his agent to carry goods to the destination. It is
the document of instructions for the airline handling staff. It acts as a customs
declaration form. Since, it contains details about freight it also represents
freight bill.
Shipment Advice to Importer:
After the shipment of goods, the exporter intimates the importer about the
shipment of goods giving him details about the date of shipment, the name of
the vessel, the destination, etc. He should also send one copy of non-negotiable
bill of lading to the importer.
Packing List:
The exporter prepares the packing list to facilitate the buyer to check the
shipment. It contains the detailed description of the goods packed in each case,
their gross and net weight, etc. The difference between a packing note and a
packing list is that the packing note contains the particulars of the contents of
an individual pack, while the packing list is a consolidated statement of the
contents of a number of cases or packs.
Bill Of Exchange:
The instrument is used in receiving payment from the importer. The importer
may prefer bill of exchange to LC as it does not involve blocking of funds. A
bill of exchange is drawn by the exporter on the importer, to make payment on
demand at sight or after a certain period of time.
1. Bill of Exchange is a means to collect payment.
2. Bill of Exchange is a means to demand payment.
3. Bill of Exchange is a means to extent the credit.
4. Bill of Exchange is a means to promise the payment.
5. Bill of Exchange is an official acknowledgement of receipt of payment.

Shipping Bill:
Shipping bill is the main customs document, required by the customs
authorities for granting permission for the shipment of goods. The cargo is

18
 moved inside the dock area only after the shipping bill is duly stamped, i.e.
certified by the customs.
Shipping bill is normally prepared in five copies:
1. Customs copy.
2. Drawback copy.
3. Export promotion copy.
4. Port trust copy.
5. Exporter’s copy.

A.R.E. 1 Forms (Central Excise):

This form ARE-1 is prescribed under Central Excise rules for export of goods.
In case goods meant for export are cleared directly from the premises of a
manufacturer, the exporter can avail the facility of exemption from payment of
terminal excise duty. The goods may be cleared for export either under claim
for rebate of duty paid or under bond without payment of duty. In both the
events the goods are to be cleared under form A.R.E-1 which will show the
details of the goods being exported, the relevant duty involved and if the duty
is paid or goods being cleared under bond, details of goods being sealed either
by the exporter or Central Excise officials etc
Exchange Control Declaration Form:
This form ARE-1 is prescribed under Central Excise rules for export of goods.
In case goods meant for export are cleared directly from the premises of a
manufacturer, the exporter can avail the facility of exemption from payment of
terminal excise duty. The goods may be cleared for export either under claim
for rebate of duty paid or under bond without payment of duty. In both the
events the goods are to be cleared under form A.R.E-1 which will show the
details of the goods being exported, the relevant duty involved and if the duty
is paid or goods being cleared under bond, details of goods being sealed either
by the exporter or Central Excise officials etc.
Export Application:
This is the application to be made to the customs officials before shipment of
goods. The prescribed form of the application is the Shipping Bill/Bill of
Export. Different types are required for shipment like ex-bond, duty free

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goods, and dutiable goods and for export under different export promotion
schemes such as claims for duty drawback etc.
Vehicle Ticket/Car Ticket/Gate Pass:
Before the goods are being taken inside the port for loading, necessary
permission has to be obtained for moving the vehicle into the customs area.
This document will contain the detail of the export cargo, name and address of
the shippers, lorry number, marks and number of the packages, driver’s license
details etc.

Other Documents:
1. Black List Certificate: It certifies that the ship/aircraft carrying the cargo
has not touched the particular country on its journey or that the goods are not
from the particular country.
2. Language Certificate:Importers in the European Community require a
language certificate along with the GSP certificate in respect of handloom
cotton fabrics classifiable under NAMEX code 55.09. Generally four copies of
language certificate are prepared by the concerned authority who issues GSP
certificate. Three copies are handed over to the exporter. A copy is sent along
with the other documents for realization of export proceeds.
3. Freight Payment Certificate:In most of the cases, the B/L or AWB will
mention the transportation and other related charges. However if the exporter
does not want these details to be disclosed to the buyer, the shipping company
may issue a separate certificate for payment of the freight charges instead of
declaring on the main transport documents. This document showing the freight
payment is called the freight certificate.
4. Insurance Premium Certificate: This is the certificate issued by the
Insurance Company as acknowledgement of the amount of premium paid for
the insurance cover.

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 Method of Receiving Payments against Export
Method of Payments:
1. Payment in advance
2. Documentary Bills
3. Letter of Credit
Payments In Advance:
This method does not involve any risk of bad debts, provided entire amount
has been received in advance. At times, a certain per cent is paid in advance,
say 50% and the rest on delivery. This method of payment is desirable when:
1. The financial position of the buyer is weak or credit worthiness of the buyer is
not known.
2. The economic/ political conditions in the buyer’s country are unstable.
3. The seller is not willing to assume credit risk.
Documentary Bills:
Under this method, the exporter agrees to submit the documents to his bank
along with the bill of exchange. The minimum documents required:
1. Full set of bill of lading
2. Commercial Invoice
3. Marine Insurance policy and other document, if required.
Letter Of Credit:
A letter of credit can be defined as “An undertaking by importer’s bank stating
that payment will be made to the exporter if the required documents are
presented to the bank within the variety of the L/C”. Contents:
A letter of credit is an important instrument in realizing the payment against
exports. So, needless to mention that the letter of credit when established by
the importer must contain all necessary details which should take care of the
interest of Importer as well as Exporter.

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INCO-TERM:
“International Commercial TERMS”
“INCO-TERMS define the mutual obligations of seller and buyer arising
from the movement of goods under an international contract from the
standpoint of risks, costs and documents”.
Initially created in 1936 by the International Chamber of Commerce (ICC) and
have been
periodically revised. (Inco terms 2010 is the 8th revision)
The seven rules defined by Inco terms 2010 for any mode(s) of transportation
are:
1. EXW – Ex Works (named place of delivery):
The seller makes the goods available at its premises. This term places the
maximum obligation on the buyer and minimum obligations on the seller. The
Ex Works term is often used when making an initial quotation for the sale of
goods without any costs included. EXW means that a seller has the goods
ready for collection at his premises (works, factory, warehouse, plant) on the
date agreed upon. The buyer pays all transportation costs and also bears the
risks for bringing the goods to their final destination. The seller doesn't load
the goods on collecting vehicles and doesn't clear them for export. If the seller
does load the good, he does so at buyer's risk and cost. If parties wish seller to
be responsible for the loading of the goods on departure and to bear the risk
and all costs of such loading, this must be made clear by adding explicit
wording to this effect in the contract of sale.
2. FCA – Free Carrier (named place of delivery):
The seller hands over the goods, cleared for export, into the disposal of the
first carrier (named by the buyer) at the named place. The seller pays for
carriage to the named point of delivery, and risk passes when the goods are
handed over to the first carrier.
3. CPT - Carriage Paid To (named place of destination):
The seller pays for carriage. Risk transfers to buyer upon handing goods over
to the first carrier.
4. CIP – Carriage and Insurance Paid to (named place of destination):
The containerized transport / multimodal equivalent of CIF. Seller pays for
carriage and insurance to the named destination point, but risk passes when the
goods are handed over to the first carrier.

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5. DAT – Delivered at Terminal (named terminal at port or place of
destination):
Seller pays for carriage to the terminal, except for costs related to import
clearance, and assumes all risks up to the point that the goods are unloaded at
the terminal.

6. DAP – Delivered at Place (named place of destination):

Seller pays for carriage to the named place, except for costs related to import
clearance, and assumes all risks prior to the point that the goods are ready for
unloading by the buyer.
7. DDP – Delivered Duty Paid (named place of destination):
Seller is responsible for delivering the goods to the named place in the country
of the buyer, and pays all costs in bringing the goods to the destination
including import duties and taxes. This term places the maximum obligations
on the seller and minimum obligations on the buyer.

Rules for Sea and Inland Waterway Transport:

The four rules defined by Inco terms 2010 for international trade where
transportation is entirely conducted by water are:

1. FAS – free alongside Ship (named port of shipment):

The seller must place the goods alongside the ship at the named port. The
seller must clear the goods for export. Suitable only for maritime transport but
NOT for multimodal sea transport in containers (see Inco terms 2010, ICC
publication 715). This term is typically used for heavy-lift or bulk cargo.
2. FOB – Free on Board (named port of shipment):
The seller must load the goods on board the vessel nominated by the buyer.
Cost and risk are divided when the goods are actually on board of the vessel
(this rule is new!). The seller must clear the goods for export. The term is
applicable for maritime and inland waterway transport only but NOT for
multimodal sea transport in containers (sees Inco terms 2010, ICC publication
715). The buyer must instruct the seller the details of the vessel and the port
where the goods are to be loaded, and there is no reference to, or provision for,
the use of a carrier or forwarder. This term has been greatly misused over the

23
last three decades ever since Inco terms 1980 explained that FCA should be
used for container shipments.
3. CFR – Cost and Freight (named port of destination):
Seller must pay the costs and freight to bring the goods to the port of
destination. However, risk is transferred to the buyer once the goods are
loaded on the vessel (this rule is new!). Maritime transport only and Insurance
for the goods is NOT included. This term is formerly known as CNF (C&F).

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EXPORT CHART OF FOOD PRODUCTS IN INDIA

25
 LEARNING OUTCOME

1. The process is developed in such a way that it performs its work without
interruption.
2. The flow chart provides the detailed information about export process.
3. Government plays important role for promotion of export.
4. Export Oriented Unit (EOU) enjoys government subsidy benefits and generates
more revenue.
5. The company has to face delay while receiving the payments from clients due
lack of proper follow up of documents.

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 CONCLUSION

1- Development of food industry necessitates effective networking and

constructive partnerships between industry and Government, agriculture
industry and research organizations. The Ministry of Food Processing
Industries should set up a small Committee with 10-12 members representing
these interests to coordinate policies and activities.
2 - Foods should be healthy and nutritious. Hence:
(a) Limits should be set for trans-fats and encouragement given to the use of
omega 3 fatty acids
(b)Fruits and vegetables contain important nutrients which have proved to
reduce the incidence of many non-communicable diseases like cancer, cvd,
diabetes, cataract,

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 BIBLIOGRAPHY

Books:

[1]. EXPORT WHAT.WHERE.HOW, 43rd (Nov. 09) edition, Anupam

Publication, Based on new foreign trade policy by Paras Ram.
[2]. Research Methodology, Methods and Techniques, Second Revised Edition
by C. R. Kothari.

Websites:

[1]. www.dgft.gov.in
[2]. www.idexport.com
[3]. www.wikipedia.com
[4]. www.infodrive.com
[5]. www.tradeindia.com

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 ANNEXURE
1. Commercial Invoice

29
2. Consular Invoice

30
3. Packing List

31
4. Bill of Lading

32
5. Bill of Exchange

33
6. Export Declaration

34
7. Export Application

35
8. Shipping Document

36