Page 17 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Other preferential systems exist under the SAARC Preferential Trade Agreement
(SAPTA), Bilateral Preferential Trading Agreement with Afghanistan, Indo-Sri
Lankan Free Trade Agreement etc.
Shipping Order: This document is the reservation slip issued by the shipping company against
the exporter’s or his agent’s request for booking of ship space for a shipment. In case of air
transport of cargo, this document is known as Carting Order.

Mate’s Receipt: Once the goods are received on board the ship, the master of the ship issues a
document called mate’s receipt to the port authorities for every shipment. The exporter must
then collect this receipt either himself or through his authorized agent from the port authorities
by paying all charges due to them. The shipping company issues the bill of lading to the
exporter only against the mate’s receipt. This document is not a document of title. It is merely a
receipt of goods. However, it is a very important document as without it, the exporter will not
be able to obtain the title document to the goods, that is, the bill of lading. Therefore, the
exporter is best advised to obtain the mate’s receipt from the port authorities soon after the
goods have been placed on board. Any delay here may further result in greater delays leading
to unwanted losses.
Bill of Exchange: Also known as a Draft, this is an instrument for payment realization. By
definition, it is a written unconditional order for payment from a drawer to a drawee, directing
the drawee to pay a specified amount of money in a given currency to the drawer or a named
payee at a fixed or determinable future date.

The exporter is the drawer and he draws (prepares and signs) this unconditional order in writing
upon the importer (drawee), asking him to pay a certain sum of money either to himself or to his
nominee (endorsee). This order could be made for payment on demand, called a bill of exchange
at sight or payment at a future date, called a usance bill of exchange. Usually, sight bills of
exchange are used with Documents against Payments (D/P) method of receiving payment and
usance bills of exchange are used for Documents against Acceptance (D/A) system. Since both
these systems do not provide any security to the exporter regarding payment realization, these
bills, in actual practice, are drawn under a letter of credit to ensure guarantee of payment.
Usance bills of exchange are drawn for periods ranging from one to six months. These are
negotiable and are usually discounted by the exporter.
Shipment Advice: The exporter sends this document, called shipment advice, to the buyer soon
after the shipment is made to provide him all the shipment details. This serves as advance
intimation of the shipment and allows the importer to arrange for the delivery of the same.

Letter to Bank for Negotiation/Collection of Documents: This is a standard letter covering
various instructions that an exporter must give to his bank at the time of submitting shipment
documents concerning the negotiation/collection of documents.
Let us understand the regulatory documents now:
Exchange Control Declaration Forms: As per the Foreign Exchange Management (Export of
Goods and Services) Act, 2000, all exporters from India excepting those exporting to Nepal and
Bhutan, are required to submit an exchange control declaration form in the prescribed format.
The purpose behind this declaration is to ensure timely realization of export proceeds by the
exporters and to track the defaulters.
FEMA requires the submission of export documents to the Authorised Dealer by the exporter
within 21 days from the date of shipment. The time allowed for full export value realisation is
six months from the date of shipment.

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