Trade

1. IntroductionIntroduction
Buying and selling of goods between twoBuying and selling of goods between two
countries are called External Trade or Foreigncountries are called External Trade or Foreign
Trade.Trade.
In this chapter we will discussIn this chapter we will discuss
the nature and importance of External Tradethe nature and importance of External Trade
export import proceduresexport import procedures
export import documentsexport import documents
export promotion measures, etc,.export promotion measures, etc,.

2. 1.1. Increase in production, sales and profitIncrease in production, sales and profit
External trade new markets largeExternal trade new markets large
scale production reduction in costscale production reduction in cost
increase in profitincrease in profit
2. Improves quality of products2. Improves quality of products
3. Advanced technology3. Advanced technology
4. Diversification of products and markets4. Diversification of products and markets
and thus reduce business riskand thus reduce business risk
(Firms engaged in foreign trade
Has to face global competition)

3. 5. Stability in price-5. Stability in price-by importing goodsby importing goods
having short supply and exporting goods havinghaving short supply and exporting goods having
excess supply.excess supply.
6. Better use of national resources6. Better use of national resources
7. Generates employment-7. Generates employment- due todue to
increased productionincreased production
8. Earning of foreign currency8. Earning of foreign currency
9. Economic growth of the country9. Economic growth of the country
10.Promote co-operation among10.Promote co-operation among
nationsnations

4. Export Procedure
The exporter has to follow certain procedures
before exporting goods from one country to
another. They are,
(1) Obtaining IEC number:- as the first step in export, the
Exporter has to obtain Importers Exporters Code number. This
number is to be quoted in various export documents.
(2) Obtaining RCMC (Registration-cum-Membership
certificate):-to get various facilities benefits and concessions
provided under EXIM policy
(3) Conducting Market Research- to explore export
potential export market and to procure export order

5. Export Procedure
(4) Confirmation of Export Order- after examining
the importers order carefully.
(5) Manufacturing/Purchasing Goods–
according the importers’ specification and quality.
(6) Excise Clearance- materials used for manufacture
of export goods are exempted from excise duty. The
exporter is to obtain excise clearance in order to exempt or
get refund of excise duty.
(7) Pre-shipment Inspection- the custom
authorities permits shipment of goods only if there
is inspection certificate regarding the quality of
goods

6. Export Procedure
(8) Customs Clearance – a shipping bill is to be
prepared and submitted by the exporter to the custom
authorities for custom clearance.
(9) Port Procedure – after getting the custom
clearance, the exporter approaches the port authorities
for the permission of bringing the goods inside the
shed by producing shipping bill. Then the shed
appraiser issues Let Export Order. Then goods are
loaded on the ship under the supervision of custom
authorities. Then the chief officer of the ship issues
‘Mate’s Receipt’ acknowledging the receipt of goods on
the ship.

7. Export Procedure
(10) Obtaining Bill of Lading- The shipping co.
issues Bill of Lading (document acknowledging
the receipt of goods by the shipping Co) to the
exporter on the receipt of Mate’s receipt
(11) Submission of Document to the bank-
The exporter after shipment of goods sends the
relevant documents like bill of lading, bill of
exchange, letter of credit, invoice etc. to bank for
getting payment.