Exports are essential to any country, especially a developing economy like India. They help to maintain the balance of payments and build up our foreign exchange reserves.Exporting goods or anything for that matter comes under the aegis of the Foreign Trade (Development and Regulation) Act 1992.
Export in India is very well regulated with perfectly laid down procedures. Let us look at how to export goods from India. We shall concentrate on 5 things that you should know about exporting goods from India.
How to export goods from India
- Do the basics right like opening an account in a bank authorized to deal in foreign exchange, get your IEC number, and register with the
Export promotion councils and so on.
- Know the raw materials and commodities you are permitted to export.Exporting goods becomes easy in case you are aware of what you can export.
- Find the right kind of buyers. Some of these buyers might require samples.
- The pricing is important. You should consider the cost of raw materials, packaging, customs duty, transportation charges, and bank interest on export finance, insurance, and exchange rate fluctuations before arriving at the right price. All these costs are a part of exporting goods.
- Negotiate with buyers for procurement of Letter of Credit. This ensures payment.
- Cover your exports with the Export Credit Guarantee Corporation.
- On receiving the confirmed order, procure the goods and ensure a quality check before exporting goods.
- If you are exporting goods under LC, check out whether pre-shipment credit is available. Banks finance against such LCs if the document allows them the facility. Usually, all banks do post-shipment finance at concessional rates for a maximum of 180 days. Note that you have to realize the proceeds within 180 days failing which you will have to pay commercial rate of interest for the entire period.
- Do the packaging and prepare the documents as per the terms of the LC. Ensure to avail the services of custom house agents. Do the shipment and submit the documents to the bank for despatch to the importer. The bank assumes the responsibility of realizing the export proceeds and crediting to your account.
Documents required for exporting goods from India
The rules regarding exporting goods from India are well documented. It is also necessary to submit the right documents to the bank to facilitate the realization of the export proceeds.
These documents are as follows.
- Bill of Exchange
- Letter of Credit – If you are exporting goods under LC.
- Commercial invoice in 3 originals
- Airway bill / Bill of Lading
- GR Form or Form SDF
- Packing List in 3 originals
- Insurance certificate
- Certificate of origin of Goods
- Inspection Certificate
- Declaration under Foreign Exchange
- Any other documents as specified in the Letter of Credit that is required for exporting goods.
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Duty on Export from India
Export duties are general or specific taxes on goods and services exported from India if these goods or products are mentioned in the Second Schedule of Export Tariff. The Central Board of Excise and Customs (CBEC) stipulate that services rendered to non-residents are taxed. If you do the export from an Export Processing Zone or SEZ, there is no need to pay tax on income earned through exporting goods.
Duty-free exports from India
Most of the raw materials exported from India are exempt from duty. If the goods are listed in the Second Schedule of Export Tariff Act 1975, you have to pay the basic customs duty. Otherwise, all items are exempt from paying export duty.
Exports are the principal foreign exchange earnings for India. In order to promote exports, the Government has announced various concessions to facilitate exports. Take advantage of these concessions and avail benefits of exporting goods from India.
To read about importing raw material in India click here.
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