Q. 4

Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd., located in Australia. Discuss the procedure that Rekha Garments would need to go through for executing the export order.

Answer :

Rekha will have to do the following to execute the export order:


a. Rekha must make an inquiry about the creditworthiness of the importer- Swiss importer limited. She may ask for a letter of credit by the importer's bank.


b. Next, they have to register themselves and receive an import-export code number to obtain an export license.


c. The company will have to obtain pre-shipment finance from the importer's Bank to obtain the raw material required for production and packaging.


d. Rekha can proceed to get the garments ready as per the specifications from the importer but only after obtaining the pre-shipment finance from the bank.


e. Rekha must contact the export inspection agency or any other designated agency for obtaining a certificate of inspection.


f. After clearing the pre-shipment inspection, it will have to obtain excise clearance from the Excise Commissioner. The Excise Commissioner would examine the invoice and will issue an excise clearance to the exporter if satisfied.


g. The company has to obtain a certificate of origin which state the country in which the goods have produced. This might help the importer to gain benefit from any tariff concession.


h. The company then has to apply to a shipping company for the provision of shipping space. All the necessary information including the types of goods to be imported, date of shipment and port of shipment has to be mentioned clearly.


i. The goods are properly packed and labeled them with all the necessary information.


j. They have to get the goods insured against the risks involved and obtain customs clearance. k. The goods are loaded on the ship and the commanding officer issues a mate's receipt.


l. The shipping company would issue a bill of lading after the receipt of the freight, as a token of acceptance.


m. After the goods are shipped, the exporter prepares and invoice including the quantity of the good send and the amount to be paid by the importer.


n. The exporter then sends a set of documents to the banker which has to be given to the importer on the acceptance of a bill of exchange. After receiving it, Swiss imports limited will instruct its bank to transfer the money to the exporter's bank account.


o. The expoter will collect a bank certificate of payment stating that the necessary documents and the bill of exchange have been presented to the importer for the payment and the payment has been received according to the exchange control regulations.


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