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to a certain amount of export bills to the bank of the exporter. Letter of
credit is the most appropriate and secure method of payment adopted to
settle international transactions.
iv. Obtaining export license:
Having become assured about payments, the exporting firm initiates the
steps relating to compliance of export regulations. Export of goods in
India is subject to custom laws which demand that the export firm must
have an export license before it proceeds with exports. Important pre-
requisites for getting an export license are as follows:
a. Opening a bank account in any bank authorized by the Reserve
Bank of India (RBI) and getting an account number.
b. Obtaining Import Export Code (IEC) number from the Directorate
General Foreign Trade (DGFT) or Regional Import Export Licensing
Authority.
c. Registering with appropriate export promotion council.
d. Registering with Export Credit and Guarantee Corporation (ECGC)
in order to safeguard against risks of non payments.
e. Registration with the ECGC is necessary in order to protect overseas
payments from political and commercial risks. Such a registration
also helps the export firm in getting financial assistance from
commercial banks and other financial institutions.
v. Obtaining pre-shipment finance:
Once a confirmed order and also a letter of credit have been received,
the exporter approaches his banker for obtaining pre-shipment finance
to undertake export production. Preshipment finance is the finance that
the exporter needs for procuring raw materials and other components,
processing and packing of goods and transportation of goods to the port
of shipment.
vi. Production or procurement of goods:
Having obtained the preshipment finance from the bank, the exporter
proceeds to get the goods ready as per the specifications of the importer.
Either the firm itself goes in for producing the goods or else it buys from
the market.
vii. Pre-shipment inspection:
The Government of India has initiated many steps to ensure that only
good quality products are exported from the country. One such step is
compulsory inspection of certain products by a competent agency as
designated by the government. The government has passed Export
Quality Control and Inspection Act, 1963 for this purpose.
If the product to be exported comes under such a category, the exporter
needs to contact the Export Inspection Agency (EIA) or the other
designated agency for obtaining inspection certificate. The pre-shipment
inspection report is required to be submitted along with other export
documents at the time of exports
viii. Excise clearance: