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INTERNATIONAL
TRADEDOCUMENTATION AT
Abhilasha Exim Pvt. Ltd.
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AMIT MATHUR
KANIKA GUPTA
LALIT SHARMAPANKIL MOOLCHANDANI
SWATI SINGHANIA
VED PRAKASH SHARMA
GROUP MEMBERS
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PRESENTATION FLOW
Introduction of Export Firm
Methods of Payment
Pre-Shipment Finance
Post-Shipment Finance
Letter of Credit Open Account
Factoring
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Company 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.) INDIA
Ph: +91-141-277 0728, 277 0729Cell: +91- 94140 76688Fax: +91-141- 2771399
Production capacity: 25,000 - 40,000 units of Hi-Fashion garments per month.
Turnover: US $ 3.4 million
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Members of..
Registered with the following Export PromotionOrganisation (s), Association (s), & Chamber (s) ofCommerce : :
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)
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Bankers : Punjab National Bank
Swift Code - BIC : PUNB IN BB JMI
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Cliental Details
USA
Canada
Spain
South Africa
Egypt
Greece
Australia
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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 ratefluctuation
Unequal distribution of
wealth
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FISCAL INCENTIVES TO PROMOTE
EXPORT
Duty Drawback
Tax Concession
Market development assistance
Export promotion of capital goods scheme
Cash compensatory support
Air Freight Subsidiary
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METHODS FOR INTERNATIONAL
TRADE FINANCE
According to stage of financing
Pre-shipment finance
Post-shipment finance
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METHODS FOR INTERNATIONAL
TRADE FINANCE
Instruments/methods of financing
Letter of credit
Open account
Factoring
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Financial assistance extended to theexporter from the date of receipt of theexport order till the date of shipment is
known as pre-shipment credit.
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Export Documents
Commercial Documents Regulatory Documents
Principal Auxiliary
EXPORT DOCUMENTATION
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Document Functions Prepared by
Quotation
Sales
Contract
An offer to sell goods and shouldstate clearly the price, details ofquality, quantity, trade terms,delivery terms, and payment terms.
An agreement between the buyerand the seller stipulating everydetails of the transaction. It is a
legally binding document. It istherefore advisable to seek legaladvice before signing the contract.
Exporter
ExporterandImporter
Commercial Documents
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Document Functions Prepared by
PerformaInvoice
Commerci
al Invoice
An invoice provided by a supplier prior tothe shipment of merchandise, informingthe buyer of the kinds and quantities ofgoods to be sent, their value, andimportation specifications (weight, size
and similar characteristics).
It is a formal demand note for paymentissued by the exporter to the importer forgoods sold under a sales contract. It
should give details of the goods sold,payment terms and trade terms. It is alsoused for the customs clearance of goodsand sometimes for foreign exchangepurpose by the importer.
Exporter
Exporter
Commercial Documents
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Document Functions Prepared by
Packing List
Inspection
Certificate
A list with detailed packinginformation of the goods
shipped.
A report issued by anindependent 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
InspectionCompany orExporter
Commercial Documents
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Document Functions Prepared by
InsurancePolicy/
Certificate
Product
Testing
Certificate
An insurance policy is an insurancedocument evidencing insurance has beentaken out on the goods shipped, and itgives full details of the insurancecoverage. An insurance certificate
certifies that the shipment has beeninsured under a given open policy and isto cover loss of or damage to the cargowhile in transit.
A certificate to certify the products areconformed to a certaininternational/national technical standard,such as product quality, safety andspecifications, etc.
Insurer orInsurance
Agent orInsuranceBroker
AccreditedLaboratories
Commercial Documents
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Document Functions Prepared by
Bill of
Lading
(B/L)
An evidence of contract between theshipper of the goods and the carrier.The customer usually needs the
original as proof of ownership to takepossession of the goods.
ShippingCompany
Transport Documents
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Document Functions Prepared by
AirWaybill
(AWB)
Packing
List
A kind of waybill used for the carriageof goods by air. This serves as areceipt of goods for delivery andstates the condition of carriage but is
not a title document or transferable/negotiable instrument.A list providing information needed fortransportation purpose, such as details ofinvoice, 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 detailsof the goods, including packing information.
Airline
Shipper
Transport Documents
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Document Functions Prepared by
Documentary Credit
Bill of
Exchange
(B/E) or
Draft
A bank instrument began (issuing or openingbank), at the request of the buyer,evidencing the bank's undertaking to theseller to pay a certain sum of moneyprovided that specific requirements set out in
the D/C are satisfied.
An unconditional written order, inwhich the importer addressed to and
required by the exporter to pay ondemand or at a future date a certainamount of money to the order of aperson or bearer.
Issuing Bankupon anapplicationmade by theImporter
Exporter
Financial Documents
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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
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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
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Government steps in by picking up a part ofthe interest burden
Interest subvention of 2 per cent on the pre-
shipment credit for seven employment-oriented export sectorTextiles including handloomsHandicraftsCarpetsLeatherGems & JewelleryMarine productsSmall & Medium exporters.
INTEREST SUBVENTION
SCHEME
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Post Shipment Finance is a kind of
loan provided by a financial institutionto an exporter or seller against ashipment that has already been made.
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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
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CompetitivenessExporter able to offer creditterms to buyer
Energized Cash flowsProducer receives cashfrom export proceeds upfront and can continue
production activities.
Expansion Of Client BaseExporter able toexpand client base due to availability offinancing
BENEFITS TO EXPORTERS
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A formal document issued by a bank
on behalf of customer, stating theconditions under which the bank willhonour the commitment of thecustomer
The letter of credit isalso known as bankers
commercial credit ordocumentary letter ofcredit.
L/C used in domestictrade are called inland
L/Cs. 28
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Importer or Applicant
Issuing Bank
Beneficiary
Advising Bank
Negotiating/ The Paying Bank.
PARTIES TO A LETTER OF CREDIT
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1. ContractSeller(Beneficiary)
Buyer
Applicant
2. Documentary
credit Application
ISSUING
BANK.
3. Documentary creditAdvising Bank
4. Advice of
Documentay
credit
LETTER OF CREDIT THE
PROCESS
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Open Account is aform of trade
whereby sales aremade to the buyer
without entering intoany formal contract.
The system works oncomplete trust
between buyer &
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Open Account is the most advantageous optionto the importer in cash flow and cost terms.
It is consequently the highest risk option for anexporter.
Exporters may also wish to seek export working
capital financing to ensure that they have accessto financing for both the production for exportand for any credit while waiting to be paid.
OPEN ACCOUNT
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Open account terms may be offered in competitivemarkets with the use of one or more of the followingtrade finance techniques:
1. Export Working Capital Financing
2. Export Credit Insurance
3. Export Factoring
OPEN ACCOUNT
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Pros & 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
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TARGET VENDOR
BANK
Purchase order
Goods
OPEN ACCOUNT PROCESS
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Financial transaction
whereby a business
sells its accountsreceivable to a thirdparty called a factor
(financial institution) at
a discount in exchangefor immediate moneywith which to financecontinued business.
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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
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