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(4) Earning of Foreign Exchange

                     A country with surplus production may earn foreign exchange by selling
                       goods and services to other countries.
               (5) Increase the National Income


                     Earning of foreign exchange due to exports add to the national income of
                       a country.
                     This help in improving the standard of living of people.





               Export Procedure
               The number of steps and the sequence in which these are taken vary from one
               export transaction to another. Steps involved in a typical export transaction are
               as follows.

               i.      Receipt of enquiry and sending quotations:
                         The  prospective  buyer  of  a  product  sends  an  enquiry  to  different
                        exporters requesting them to send information regarding price, quality
                        and terms and conditions for export of goods. Exporters can be informed
                        of such an enquiry even by way of advertisement in the press put in by
                        the importer. The exporter sends a reply to the enquiry in the form of a
                        quotation—  referred  to  as  proforma  invoice.  The  proforma  invoice
                        contains.
                        information  about  the  price  at  which  the  exporter  is  ready  to  sell  the
                        goods  and  also  provides  information  about  the  quality,  grade,  size,
                        weight, mode of delivery, type of packing and payment terms.

               ii.     Receipt of order or indent:
                         In case the prospective buyer (i.e., importing firm) finds the export price
                        and  other  terms  and  conditions  acceptable,  it  places  an  order  for  the
                        goods  to  be  dispatched.  This  order,  also  known  as  indent,  contains  a
                        description  of  the  goods  ordered,  prices  to  be  paid,  delivery  terms,
                        packing and marking details and delivery instructions.
               iii.     Assessing importer’s creditworthiness and securing a guarantee for
                       payments:
                        After receipt of the indent, the exporter makes necessary enquiry about
                        the  creditworthiness  of  the  importer.  The  purpose  underlying  the
                        enquiry is to assess the risks of nonpayment by the importer once the
                        goods  reach  the  import  destination.  To  minimize  such  risks,  most
                        exporters demand a letter of credit from the importer. A letter of credit is
                        a guarantee issued by the importer’s bank that it will honor payment up
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