Imports and Exports (control) Act 1947 regulates exports of goods from India. The central Government announces rules, policies, procedures and incentives for export from time to time.
The procedure of export of goods from India is guided by these rules and regulations of the Government of India. But in general, an export transaction has to pass through the following stages:
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1. Receiving enquiries and sending quotations:
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The exporter, at first, receives an enquiry from the importer or his agent. By this enquiry the prospective buyer requests the exporter to send him information regarding the price, quality of goods and terms and conditions on which the exporter will be able to supply him the goods.
The reply to the enquiry is sent in the form of a quotation or a proforma invoice. The enquiry as well as quotation both should mention all the necessary details relating to the goods required, their quality, quantity, size and price etc. It should also contain the detailed conditions of sale such as delivery schedule mode of delivery mode of packing and terms of payment.
2. Receipt of order or Indent:
After sending the quotations the next stage in the export trade is receiving the order to indent. It may receive either directly from the importer or though some specialized agency like indent housed. The indent contains instructions regarding goods- their price, their quality, their quantity nature of packing, method of forwarding and mode of setting payments, etc.
The indents are of two kinds (a) Open indents and (b) Close indents. In open indent all the necessary facts are not given by the importer and the exporter has the discretion to complete the formalities with his own skill while a closed indent gives full particulars of the goods required.
3. Credit enquiry or obtaining letter of credit:
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After receiving the confirmed order the exporter verifies the credit worthiness of the Importer. The exporter would like to ensure that there is no risk of non-payment. Usually .the exporter asks the importer to send a letter of credit to him.
A letter of credit, popularly known as ‘L/C’ or ‘C/C’ is an undertaking by its issue (usually importer’s bank) that the bills of exchange drawn by the foreign dealer on the importer will be honoured on presentation upon specified amount L/C is simply a guarantee by the bank to the foreign dealer that their bills upto a specified amount would be honored.