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Category: Exports

Every government looks to boost exports, because of the economic growth it offers. The current government has taken several initiatives. GST is one of the biggest transitions for India. There have been many debates on it. Our intention is to help exporters understand ‘How to make GST work better for exporters’.

Importer Exporter Code (IEC):

PAN acts as IEC in the GST era commenced on 1st July 2017. GSTIN is the identifier at the transaction level for every import and export. GSTIN would be used for credit flow of IGST paid on import of goods.


Export procedure:

The supply of goods or services or both can be made under bond or Letter of Undertaking (LUT), with or without payment of integrated tax. The exporters can claim the refund of unutilized input tax credit. The exporter must file an application for claiming input tax credit directly through the common electronic portal or through a facilitation center notified by the GST commissioner.

The registered person need not file any application for refund of IGST, paid for the supply of goods. The shipping bill with GST invoice details shall be deemed as the application for refund of IGST. The details of the relevant export invoices contained in FORM GSTR-1 get transmitted through the common portal to customs system and a confirmation of the export get transmitted back to the system, electronically.

The customs system processes the claim for refund, upon receiving the details of export manifest furnished in the return FORM GSTR 3. The amount equal to IGST paid in respect of each shipping bill gets credited to the bank account of the applicant mentioned in the registration.

The existing shipping bill formats are modified to comply with the IGST law. ARE-1 procedure is followed only for the commodities of applied central excise act.

Sealing of containers:

Central Board of Excise and Customs (CBEC), revised the procedure of sealing of the containers to be effective from 01.09.2017. Containers arrive at the port under three categories: containers stuffed at factory/warehouse under self-sealing, stuffed under the supervision of central excise officer, stuffed and sealed at the Inland Container Depot. For ease of doing business and uniformity, the board has decided to do away with the sealing by the CBEC officers. The procedure of self- sealing is simplified as follows:

The exporter should inform the jurisdictional customs officer about the details of the premises (factory or warehouse or any other place) where container stuffing is to be carried out.

Status holders recognized by Directorate General of Foreign Trade (DGFT) can use self-sealing procedure even if they are not registered under GST law. Other exporters are required to register under GST law and will be filing GSTR1 and GSTR2 to use self-sealing procedures. Otherwise, the exports goods are to be stuffed and sealed at ICD.

The exporter, desirous of using this procedure should inform the superintendent ranked customs officer or appraiser of customs at least 15 days before the first consignment from the premise. The officer will inspect the premise regarding the viability of stuffing the container. The officer will submit a report to the Deputy or Assistant Commissioner of Customs within 48 hours, who in turn shall forward the report to the Principal Commissioner of customs. The Commissioner grants permission for self-sealing at the premises.

Every time the self-sealing is carried out at the approved premises, the exporter should furnish details of address, description of export goods and incentives to be claimed at the customs.

In the case of a non-favourable report by the customs officer, the exporter should bring the goods to the ICD for sealing purpose.

Self-sealing permission obtained is valid for exports at all customs station. The Customs Bureau will circulate the permission along with the exporter’s GSTIN to all customs house.

The exporter uses a tamper-proof electronic seal of standard specification, fed with details of the exporter, exports goods, invoice number, authorized signatory name (for affixing the e-seal) and shipping bill, to seal the container before shipment.

The exporter planning to clear export goods without a customs broker can do so, by filing the shipping bill under digital signature.

In transit between approved premises and port of export, arises a possibility of replacing electronic seals with new details. At the port of export, customs officer might verify the integrity of electronic seals and inspect the consignments in self-sealed containers for risk standards using random or intelligent sampling methods.

Export order

Impact on Exports:

Drawback scheme will continue with the options of All Industry Rate (AIR) and Brand Rate. On goods imported for re-export purpose, drawback will continue to compensate customs duties as well as integrated tax and compensation cess. On the other hand, for imported goods and services used as inputs, the drawback is limited to customs duties on imported inputs and central excise duty on items specified in the Fourth Schedule to Central Excise Act 1944, instead of central excise duty, customs duty and service taxes combined.

Since there are limitations in Drawback scheme under GST, the existing duty drawback scheme will continue for a period of 90 days to allow a smooth transition. Exporters planning to claim a higher rate of duty drawback (composite AIR) during this period, should submit a declaration that no input tax credit or refund of IGST paid is claimed and CENVAT credit is not carried forward, along with a certificate from jurisdictional GST officer. This will prevent neutralization of input taxes twice. The exporter can claim brand rate for customs, central excise duties, and service tax during this period.

Exporters also have the option of claiming only the customs portion of AIR and claim refund under GST laws.

MEIS and SEIS are being continued, providing the exporters with duty scrips for the exemption of duties paid for the import of raw materials. The amount of exemption is expressed as a percentage of the total turnover of the exporter.

Concerns of exporters:

During initial days of GST implementation, the non-availing of credit certificate from GST officer may not be available for higher rate duty drawback claims. This prevents shipping bill moving to LEO stage and requires revision of bill to claim lower rate, to avoid delay in exports. Once the certificate is available, an additional claim needs to be filed for balance refund.

Another major concern for exporters is the imposition of five per cent GST on ocean freight which was exempted earlier. This will lock up working capital. Therefore, Refund will be processed within a week for 90% of the duties. Remaining 10 % will be refunded after the verification of accounts by tax authorities.

FIEO organized an Open house session on June 2017 to answer the concerns of exporters and to discuss on measures for FTP. Exporters from various sectors expressed their dissent on the announcement that deemed exports benefits may get discontinued under GST. They insisted on the continuation of all schemes for Indian products to remain competitive in global market and outcry over the method of paying tax and claiming the refund, demanding direct exemptions. Also, exporters were concerned about the regular break down in the icegate server of customs.


The current GST structure has certain negative effects on the exports. It will be reviewed and the council will ensure the smooth transition to the GST regime.

Exports are one of the lucrative business. It can be a part of your business or you are entirely prepared to sell your products/services to international market. It helps in mitigating the risk of economic crisis and cash flow. There are certain things you can do before commencing the legal procedures. There are two types of exporters viz merchant exporter and manufacturer exporter. Following are the chronological steps to get an export order for the merchant exporter.  The manufacturer export will already have their product chosen. So, they can skip the step 1

Step 1: Choosing a product/service:

First of all, Choosing a product is obviously vital to export. The best strategy to choose a product is to do a STEEP analysis based on your SWOT analysis. You are more likely to get success if you choose a product you can emotionally get attached to or the product you love the most. There are various tools and formula to identify the most profitable product to try for exports. Developing your niche will increase your chance of dominating the international market. Value addition is another key to success to find a better market for your product. If you are keen to have list of items exported from India, choose from, http://dgft.gov.in/exim/2000/itchs2017/ITCHS2017.html

Step 2: Choosing the market:

Most of the exporters are keen about selling their products to developed countries like U.S.A, Europe, U.K., Australia, Canada. But there are perks in exporting to other countries. There are more than hundreds of countries actively importing products and goods from other countries. Choose your market using the 7 market analysis tools provided in legacy.intracen.org/marketanalysis/.  Construct your ideal buyer persona before choosing the market. There are buyers of different ranges from small businesses to giant enterprises. The exporter should clearly understand whom can they sell to depending on their capacity. Start with small quantities to get enough experience to achieve big orders.

choose market

Step 3: Constructing a business plan:

Developing a business plan is skipped by most of the entrepreneurs. But this is fundamental if you are keen to grow and establish your business. Business planning helps you to set in the right direction based on factual and not on mere intuition. Intuitions can be tested and justified through your detailed business plan.

The most crucial part of business planning is financial projection and marketing strategy. But if you get these right, you can avoid major pitfalls and mistakes at the early stage. The entrepreneur need not be a business graduate to get it done but requires a common sense and logical understanding. There are free courses available online. The best one I would recommend is Startup India learning program.

Step 4: Learn about export market/Incoterms/FTP/export documents:

Once you have chosen your product and market, it is time to plan and prepare for your export business. The export market works slightly different from the domestic market. It’s important to study both the export trend of the product and import trend of the product to your chosen market. You are competing with 3 types of competitors. Exporters of your product from your country, Exporters of your product from other countries and Other importers/suppliers of the same product in the chosen market.

The market analysis tools are essential to be used in studying the trends. Highlights of FTP 2015-2020 can be accessed through http://dgft.gov.in/exim/2000/highlight2015.pdf. The exporters choose to become a member of various B2B portals. There are about 23 such portals. New portals are exhibited almost on daily basis. It is better to become a free member of these portals to gain some understanding. Knowing Incoterms is extremely important to do exports. The export documents are proforma invoice, packing list, commercial invoice, certificate of origin, shipping bill/bill of entry, ARE-1 form, Mate’s receipt, Exchange declaration form (GR/SDF form), Bill of exchange, sight draft, Inspection Certificate, Bill of Lading, Airway Bill, Insurance certificate, consular invoice,

Step 5: Developing a marketing strategy:

This is a crucial step next to constructing a business plan. The business plan is best suitable for your overall business operation. A detailed marketing strategy will help you get a better result in a comparatively shorter span of time. We are living in the era of Information technology. Almost the whole world is acquainted with the WORLDWIDEWEB. Inbound marketing strategy has taken its important seat in the assembly of marketing strategy. We get information at the snap of our fingertip. Having a solid marketing strategy is very important to earn your buyers trust and increase your visibility in the internet search.

Step 6: Getting your license:

This is the easiest step in the export business procedure. Those interested in EXIM business need to apply to the regional office of the Director General of Foreign Trade (DGFT) for getting Importer-Exporter Code (IEC) Number. IEC number is not mandatory in the case of imports for personal use. Now, IEC can be applied through online just by uploading the necessary documents. Check http://dgft.gov.in/exim/2000/iec_anf/ieconlnapplform.htm.  This step is applicable in the case of first-time exporters. Under GST regime, changes are made to accept PAN card as the license to do exports.

Step 7: Get in touch with EPC/other government initiatives:

Export promotion councils, Federation of Indian Export Organisations are key government bodies to promote export activities from India. The exporters must be a member of these councils to avail the benefits to doing exports from India. http://www.indiantradeportal.in/vs.jsp?lang=1&id=0,31,223,225 lists the Export promotion councils in India.  The exporter has to register with the concerned export promotion council. For example, in the case of garments, it is essential to obtain a registration-cum-membership Certificate (RCMC) from the Apparel Export Promotion Council (AEPC).

Step 8: Contacting CHA or freight forwarding agents:

Custom house agents/Freight forwarders help you with export documentation and freight procedures. The difference between them is very thin. Logistic is itself an ocean to discuss. The important thing is to have CHA/freight forwarder who will take care of your cargo needs to be shipped safely to your buyer doing the necessary documents.

Export order

Step 9: Pricing strategy:

Pricing has to be done properly to get profit from the sales. There should be a pricing strategy in place to be able to successfully obtain an export order. A merchant exporter should get product and package cost from the manufacturer/trader, freight and related costs from their CHA/freight forwarder. The exporter should also determine their minimum order quantity and product specification to have a good pricing practice.

Step 10: Listing the buyers:

By now, the exporter will have a list of potential importers through various sources such as social media profiles, inquiries through their own website, B2B portals, other government websites, trade opportunities from Indian government e-magazines, importers list from Indian embassies, buyers list from EPCs, importers contacts from trade shows and exhibitions.

Contact buyers

Step 11: Contacting buyers:

The exporters now begin to contact their buyers through emails, Skype calls, WhatsApp, social media, and make your first impression best by providing necessary information. Importers/import agents are usually well-aware of the markets. Your in-depth homework and preparation will give enough confidence to gain their trust. The best practice is, to be honest, tell the truth or else the importer can find out through the missing links. Timely replies and responses will put you ahead of your competitors. Provide your best offer to your buyer on proforma invoice.

Step 12: Sending samples:

Sending samples is not a necessary step unless the buyer asks for one. The best practice is not to assume but be open to ask needed information or provide needed information before committing to sending the samples.

Step 13: Confirming the export order:

You have worked hard/smart enough to get to this point. You deserve a sweet and pat on your shoulder. But before, confirm your order by getting sales contract, purchase order depending on the mutual understanding.  Therefore, both exporter and importer will have to agree to the terms and conditions of the contract such as pricing, documents, freight charges, currency and so on. Finally, the importer sends a purchase order.

Step 14: Executing the export order:

With the export order in hand, the exporter starts manufacturing goods or buying them from other manufacturers. The exporter makes arrangements for quality control and obtains from the inspector of quality control, a certificate confirming the quality of goods, depending upon the requirement.  Exportable goods are then dispatched to ports/airports for transit. After the completion of these formalities, the exporter contacts the clearing and forwarding agent (C&F agent) for storing the goods in warehouses.  The exporter can also store the goods personally.  The forwarding agent presents a document called the Shipping Bill, which is required for allowing shipment by the Customs Authority.

 Step 15: Receiving payment:

After loading the goods into the ship, the captain of the ship issues a receipt known as ‘Mate’s Receipt’ to the ship superintendent of the port.  The superintendent calculates the port charges and gives it to the exporter/C&F agent. When the port payments are made, the C&F agent or exporter gets the Bills of Lading or Airway Bill from the official agent of the shipping company or the airline. The exporter applies to the relevant Chamber of Commerce for obtaining Certificates of Origin, stating that the goods originated from India. This is not a mandatory document in all cases.

The exporter also sends a set of documents to the importer, stating the date of shipment, the name of vessel, etc. Moreover, it is desirable to send certain documents like the Bills of Lading, Custom Invoice, and Packing List to their foreign counterparts.The exporter now presents all the important documents at his bank. This must be done within 21 days after the shipment.The exporter’s bank sends these documents to the importer’s bank.  The importer’s bank should make the payment on or before the due date. In the case of advance payment, the exporter will receive the payment after receiving the purchase order.

Step 16: Follow up with the buyer:

It is essential to keep your buyer/importer informed at each stage. It will help you to build a rapport with the buyer and makes it easy for further orders. Once the buyer receives the goods, ask for the feedback to provide any after sales service if required.

These are only basic steps for doing export business. It is one among 7 segments of Exports and Imports business. If you are looking for a one to one mentoring on exports training, email us to consultkriba@gmail.com or WhatsApp +917550302005.