Page 7 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes comparatively more complex than domestic business transactions. These require a lot of
paperwork and almost nothing is done verbally, while in domestic business, at times, one could
do with certain verbal communications. For example, a lot of orders for domestic business are
placed and received verbally. This is not possible in international business.
Documentation in export business assumes greater significance as many parties/authorities are
involved in a single transaction. There are the buyers and exporters, buying agents, RBI,
authorized dealers in India (where the exporter has his bank account), buyer’s bank (foreign
bank), DGFT, customs and port authorities, VAT and excise authorities, EPCs, insurance companies,
inspection agencies, clearing and forwarding agents, shipping companies/airlines and inland
haulage carriers, etc. This is just an indicative list!
Proper documentation will ensure smooth sailing with the requirements of each of these agencies
and the resulting transaction will be a successful one. Inaccurate or incomplete documentation
will result in serious financial and goodwill losses. Such losses can be completely avoided by
understanding clearly the documentation requirements of all concerned parties and then
meticulously planning to get the right documents in the right numbers, at the right places and
at the right time.

To illustrate the extent of damage that faulty or incorrect documentation can inflict, let us take
a look at the following points:

The exporter may suffer financially in terms of higher interest costs/penalties/fines and
discrepancy charges.
He may have to spend extra money on phone/fax/courier services.

He may suffer heavily due to loss of credit cover from insurance companies.
He might be forced to pay heavy demurrage charges in his own country/offer
compensation to his buyer in the form of discounts if there is delay due to snags in
documents, affecting the buyer’s ability to claim goods at the foreign ports.
The exporter may be forced to airfreight goods at his own expense if the shipment is
delayed unreasonably because of documentation problems.
Last but not the least, the exporter may suffer loss of goodwill with the buyer resulting in
loss of further business.

1.1 The Search for an Overseas Buyer

Perhaps the most daunting challenge any budding exporter faces is to find buyers for his/her
products. Selling in international market has never been simple – with diverse language,
geographical distance, cultural difference and lack of market knowledge posing real challenge
to any manufacturer/exporter.
However, given right homework and planning, selling in overseas market today is easier,
simpler and less expensive than it was a decade ago. There are many silver linings in the forms
of positive Govt Policy, favourable international climate, less tariff and non-tariff barriers and
above all easy and inexpensive access to an incredibly powerful and all-encompassing medium
like Internet. Never before in the history of human civilization so many people from so vastly
different places and societies freely interacted with each other as we witness today in Internet.
So, how do today’s exporters take advantage of this favourable business climate and become
successful? The answer lies in thoughtful planning, effective implementation and perseverance.
In fact, large number of Indian exporters has used these advantages successfully as reflected in
unprecedented export growth witnessed over last 10 years.

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