Page 23 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes which are widely used in international trade. The buyer has to be careful in choosing his
payments terms keeping in mind the creditworthiness of the importer. Open Account
Payments are not advisable as the jurisdictions of countries vary and there are no
international conventions protecting exporters through arbitration for obtaining payments
under the Open Accounts Method. Some of the important issues to be looked at by
exporters are:
(a) Letter of credit, which is opened by the importer bank, shall be confirmed by the
Indian bank. Exporters shall also check the creditworthiness of the bank through
world banks almanac.
(b) The exporter can submit the documents as required in the letter of credit at the time
of negotiating these documents with the bank for receiving payments.
(c) Payments under Drafts (bill of exchange) drawn are to be ‘sight’ or ‘usance’ and to be
drawn on the bank of importer or the buyer himself.
(d) The exporter has to see whether the credit validity period is sufficient for the
collection of all relevant documents or not. If not, it is advisable to get it extended by
the buyer in the beginning itself.
(e) What is the exchange control regulation of the buyer country? It is possible that the
buyer may be interested to make payments but due to importer’s country’s balance
of payments problems, the exporter may not receive payment in freely convertible
currency as per Indian regulations.
5. Special Packaging, Labelling and Marking: The exporter shall also look into any kind of
special packaging requested by importer. It is good to decide the packaging specification
of some perishable goods in the export order itself. Certain colours and numbers are
taboo in certain countries or for those importers. Countries like Germany impose a legal
restriction on exporter to get back the packing material. Exporters must cross-check all
such issues and accordingly decide their price involving all such hidden costs.
6. Shipment and Delivery Date: If the exporter is comfortable to supply the goods by that
date; he shall also crosscheck that he has sufficient time to submit his documents for
negotiation/purchase/discounting with the bank for receiving the payments for that
export order.

Note Important issues to be examined are as follows:
(a) Part (partial) shipment allowed.
(b) Transshipment is permissible/not permissible.
(c) Port of shipment/destination is same or modified.

7. Marine Insurance: The exporter shall examine the shipping terms and responsibility of
availing insurance cover for the goods. If it is the exporter’s responsibility than he shall
discuss the insurance policy coverage with the importer and insurance company as obtaining
insurance cover in foreign countries is cheaper than in India and it affects price. That is
why importers are usually sensitive to this issue while signing a trade deal with Indian
exporters.

8. Documents: Export documents are same as per quotation, particularly those documents
that are required with the bill of exchange, like:
(a) Commercial invoice is the usual or there may be any specific notation required
therein, such as it has to be visa-ed. In addition, consular invoice is also required or

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