Exporting step by step

Suppose an Indian firm makes T-shirts, and a buyer in America wants them. Exporting goes step by step:

• Receipt of enquiry and sending the quotation: the exporter replies with a proforma invoice, giving the price, quality and terms.
• Receipt of the order or indent.
• Checking the buyer's creditworthiness: the exporter asks for a letter of credit, in which the buyer's bank guarantees payment.
• Getting an export licence: opening a bank account; getting an Importer-Exporter Code (IEC) number from the Directorate General of Foreign Trade (DGFT); registering with the right export promotion council (which issues the RCMC, registration-cum-membership certificate) and with the ECGC (which insures exporters against the risk of not being paid).
• Pre-shipment finance, from a bank, to buy raw materials and make the goods.
• Production or procurement of the goods.
• Pre-shipment inspection by an approved agency, to check quality.
• Excise clearance, and a certificate of origin, which shows where the goods were made.

Then the goods are shipped:

• Reservation of shipping space on a ship.
• Packing and forwarding, with clear marks on the packages.
• Insurance of the goods.
• Customs clearance, using a shipping bill.
• When the goods are loaded, the ship's captain gives a mate's receipt. The shipping company exchanges this for a bill of lading.
• The exporter prepares the invoice.

Finally, the exporter gets paid. The documents are sent to the buyer through a bank, together with a bill of exchange, which may be a sight draft (paid at once) or a usance draft (paid after a stated time). Once the payment is received, the bank gives a bank certificate of payment.