EXIM Wiki

Advance Customs Manifest (ACM)

An Advance Customs Manifest (ACM) is a document submitted to customs authorities before a shipment arrives at the port of entry. It includes detailed information about the cargo, shipper, consignee, and transportation route and allows customs to pre-screen shipments, ensuring compliance. The Advance Customs Manifest must be submitted at least

Advanced Shipping Notice(ASN)

An Advanced Shipping Notice (ASN) is an electronic notification sent by a supplier to a buyer, detailing the contents and shipment information of a forthcoming delivery. It typically includes information such as the shipment date, carrier, tracking number, and item details. ASNs helps in: * Streamlining the receiving process, * Improving inventory

Air Waybill (AWB)

An Air Waybill (AWB) is a document issued by an airline or its agent, serving as a contract of carriage between the shipper and the carrier for goods shipped by air. It provides detailed information about the shipment, including the consignor, consignee, description of goods, and flight details and allow

Anti-Boycott Compliance

Anti-Boycott Compliance refers to adhering to U.S. laws that prohibit companies from participating in foreign boycotts not sanctioned by the U.S. government. This includes refusing to do business with blacklisted countries or complying with boycott-related requests in contracts and documents. Violations can lead to significant penalties and loss

Back-to-Back Letter of Credit

A Back-to-Back Letter of Credit is a financial arrangement involving two letters of credit to facilitate international trade. The first letter of credit is issued in favor of an intermediary, who uses it as collateral to obtain a second letter of credit for the actual supplier. This structure enables intermediaries

Bank Draft

A Bank Draft is a payment instrument issued by an issuing bank on behalf of a payer, guaranteeing payment to the payee. Drawn from the bank’s own funds, it provides security that the draft will be honored upon presentation. Commonly used in international trade transactions, it is also known

Bill of Lading (B/L)

A Bill of Lading (B/L) is a legal document issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods being shipped. It serves as a receipt for the shipment, a contract between the carrier and shipper, and a document of title, allowing the

Bill of Materials (BOM)

A Bill of Materials (BOM) is a comprehensive list of raw materials, components, and assemblies required to manufacture a product. It includes quantities, part numbers, and descriptions of each item needed for production. The BOM is essential for production planning, inventory management, and cost estimation, ensuring that all necessary materials

Certificate of Export

A Certificate of Export is a document issued solely by EIC (Export Inspection Council), verifying that goods have been exported from a country. This certificate confirms that the specified goods have left the country of origin and are in compliance with all export regulations. It is often required for claiming

Certificate of inspection

A Certificate of Inspection is a document issued by an independent inspection agency, certifying that the goods have been examined and meet the specified quality, quantity, and condition requirements. This certificate provides assurance to buyers that the goods conform to the agreed-upon standards and are fit for shipment. It is

Certificate of insurance

A Certificate of Insurance is a document provided by an insurance company, confirming that insurance coverage has been secured for the shipment of goods. While it is not mandatory to obtain a certificate of insurance, this provides financial protection against potential losses or damages during transit. An exporter can obtain

Certificate of measurement

A Certificate of Measurement is a document that specifies the dimensions, weight, and volume of cargo. Issued by an authorized surveyor or measurement company, this certificate is used to verify that the shipment meets the required specifications and is essential for freight calculation, customs clearance, and logistical planning. Accurate measurement

Certificate of Origin (COO)

A Certificate of Origin (COO) is a document certifying the country where the goods were manufactured. It is used in international trade to determine the origin of goods for customs purposes, applying tariffs, and ensuring compliance with trade agreements and import regulations. The COO is essential for obtaining preferential duty

CIP (Carriage and Insurance Paid To)

CIP (Carriage and Insurance Paid To) is an Incoterm where the seller pays for the carriage and insurance of goods to a specified destination. The seller is responsible for risk until the goods are handed over to the first carrier, but also covers insurance against the buyer's risk

Compliance Risk Assessment

Compliance Risk Assessment involves identifying and evaluating potential risks associated with non-compliance to laws and regulations. This process helps organizations understand the likelihood and impact of compliance issues, enabling them to implement strategies to mitigate these risks. For example, assessing risks in export activities can prevent legal violations and financial

CPT (Carriage Paid To)

CPT (Carriage Paid To) is an Incoterm where the seller pays for the carriage of goods to a specified destination. However, the risk transfers to the buyer once the goods are handed over to the first carrier. The buyer is responsible for import customs clearance and any subsequent transportation costs

Credit risks

Credit risks refer to the potential for financial loss arising from a borrower's failure to repay a loan or fulfill contractual obligations. This risk impacts lenders, investors, and businesses that extend credit. Effective credit risk management includes assessing borrowers' creditworthiness through tools like CIBIL scores and credit

Custom Clearance

Custom Clearance is the process of passing goods through customs so they can enter or leave a country during exports or imports. This involves submitting necessary documentation, such as invoices, bills of lading, and certificates of origin, and paying any applicable duties, taxes, and fees. Efficient custom clearance ensures that

Customs Entry

Customs Entry is the process of declaring imported goods to customs authorities to ensure compliance with import regulations. It involves submitting necessary documentation, such as the invoice and bill of lading, paying applicable duties and taxes, and obtaining clearance for the goods to enter the country legally and efficiently. This

Customs invoice

A Customs Invoice is a document provided by the exporter detailing the value, quantity, and nature of goods being shipped. It is used by customs authorities to assess duties and taxes, ensuring the accurate declaration of imported goods and compliance with import regulations. This document facilitates the customs clearance process

DAP (Delivered at Place)

DAP (Delivered at Place) is an Incoterm where the seller delivers the goods to a named place of destination, ready for unloading. The seller assumes all risks and costs up to that point, including transportation and export duties. The buyer is responsible for unloading, import duties, and any further transportation

DDP (Delivered Duty Paid)

DDP (Delivered Duty Paid) is an Incoterm where the seller assumes all responsibilities, costs, and risks associated with delivering the goods to the buyer’s specified location, including import duties and taxes. The seller handles all logistics, making DDP the most seller-responsible term, whereas the buyer simply receives the goods

DPU (Delivered at Place Unloaded)

DPU (Delivered at Place Unloaded) is an Incoterm where the seller delivers the goods, unloaded, at a named place of destination. The seller bears all risks and costs associated with transportation and unloading at the destination. The buyer is responsible for import duties, taxes, and any further transportation to the

Duty Drawback

Duty Drawback is a refund of customs duties, taxes, and fees paid on imported goods that are subsequently exported. This incentive encourages exports by reducing the overall cost of production. Exporters can claim duty drawback after fulfilling specific documentation and procedural requirements, ensuring compliance with export regulations and promoting cost-efficient

Export Oriented Units (EOUs)

Export Oriented Units (EOUs) are businesses set up specifically to produce goods for export. They are granted various benefits, such as duty-free import of raw materials, tax exemptions, and simplified customs procedures. EOUs aim to boost export production, attract foreign investment, and contribute to the growth of the export sector

Export promotion councils

Export Promotion Councils (EPCs) are organizations set up by the Indian government to promote and support the export activities of various sectors. EPCs provide guidance, market information, and support for exporters, helping them expand their international market reach and comply with global trade regulations. They also organize trade fairs and

Export Promotion Scheme

Export Promotion Schemes are initiatives by the government to support and enhance the country's export activities. These schemes provide various incentives, such as tax benefits, financial assistance, and infrastructure support, to exporters. The goal is to increase the country's export performance, diversify export markets, and strengthen

Export Subsidy

An Export Subsidy is a financial benefit provided by the government to encourage businesses to export goods and services. Subsidies can take various forms, such as direct cash payments, tax reductions, or support for production costs. The aim is to make exports more competitive in the global market by lowering

Export Violations

Export violations occur when a company or individual fails to comply with export control regulations and laws. These violations can include unauthorized exports, failure to obtain required licenses, providing false information on export documentation, and exporting to prohibited destinations or parties, often resulting in severe penalties, fines, or legal action.

EXW (Ex Works)

EXW (Ex Works) is an Incoterm where the seller makes the goods available at their premises. The buyer is responsible for all transportation costs, risks, and customs clearance from the seller's location to the final destination. EXW places minimal responsibility on the seller, making it favorable for sellers

FAS (Free Alongside Ship)

FAS (Free Alongside Ship) is an Incoterm where the seller delivers the goods alongside the vessel at a named port of shipment. The seller is responsible for export clearance and all costs and risks up to that point. The buyer assumes responsibility for loading the goods onto the ship, ocean

FCA (Free Carrier)

FCA (Free Carrier) is an Incoterm where the seller delivers the goods to a carrier or another party nominated by the buyer at the seller’s premises or another specified location. The seller is responsible for export customs clearance, while the buyer assumes all costs and risks from that point

Financial Assistance

Financial Assistance refers to monetary support provided by the government or financial institutions to businesses to support their export activities. This can include grants, loans, and subsidies to cover expenses related to production, marketing, and shipping of goods to international markets. Financial assistance helps exporters manage their finances better and

FOB (Free On Board)

FOB (Free On Board) is an Incoterm where the seller delivers the goods on board the vessel at the port of shipment. The seller covers costs and risks until the goods are loaded on the ship, including export customs clearance. The buyer assumes responsibility for sea freight, insurance, and all

Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) refers to an investment made by a company or individual from one country into business interests located in another country. It’s a long term investment typically involves significant ownership and control over the foreign business operations. FDI is a key driver of economic growth, providing

Foreign Exchange (Forex) Risk

Foreign Exchange (Forex) Risk, also known as currency risk, refers to the potential financial loss that can occur due to fluctuations in exchange rates. Businesses and investors face Forex risk when they hold assets or conduct transactions in foreign currencies. Effective risk management strategies, (FX hedging), are essential to mitigate

Forms AR4/AR4A

Forms AR4/AR4A are documents used in India for the clearance of excisable goods for export. These forms certify that the goods are being exported without the payment of excise duty, provided they meet specific conditions. The forms ensure compliance with excise regulations, facilitate duty-free export, and are crucial for

Fourth-Party Logistics( 4PL)

Fourth-Party Logistics (4PL) refers to a logistics service provider that manages and integrates the entire supply chain on behalf of a client. A fourth-party logistics provider (4PL) offers a more comprehensive service by overseeing the entire supply chain, which encompasses not just fulfillment and shipping, but also transportation and technological

Green clause letter of credit

A Green Clause Letter of Credit is a type of letter of credit that allows the beneficiary to receive an advance payment before shipping the goods. This arrangement provides the exporter with working capital while ensuring the buyer's interests are protected. From the buyer's perspective, a

Harmonized System (HS) Code

The Harmonized System (HS) Code is an internationally standardized system of names and numbers for classifying traded products. Developed by the World Customs Organization (WCO), the HS Code is used by customs authorities worldwide to identify goods, apply tariffs, and gather trade statistics. It ensures consistency and efficiency in international

Import of capital goods

The Import of Capital Goods refers to bringing in machinery, equipment, and tools necessary for production processes. These imports are often encouraged by governments to boost industrial and economic growth. In India, schemes like the Export Promotion Capital Goods (EPCG) scheme provide duty concessions for importing capital goods, thus helping

Indemnity policy

An Indemnity Policy is an insurance agreement where the insurer agrees to compensate the insured for any losses or damages incurred, up to a specified limit. This policy provides financial protection against specified risks, ensuring that the insured is restored to their financial position prior to the loss.

International Bank Account Number (IBAN)

The International Bank Account Number (IBAN) is a standardized format for identifying bank accounts across international borders. It includes the country code, bank code, and account number, making it easier to process international transactions accurately and efficiently. For example, an IBAN for a bank account in Germany might look like

International Wire Transfer

An International Wire Transfer is an electronic transfer of funds from one bank account to another across international borders. This method of payment is commonly used for sending money quickly and securely. International wire transfers involve intermediary banks (correspondent banking) and may incur fees and exchange rate charges, providing a

Inventory Management

Inventory management is the process of overseeing and controlling the ordering, storage, and use of a company's inventory. This includes raw materials, components, and finished products. Effective inventory management ensures that the right quantity of items is available at the right time, minimizing costs associated with holding excess

Lean Logistics

Lean Logistics is a supply chain management approach focused on minimizing waste and improving efficiency. It involves streamlining processes, reducing inventory levels, and optimizing transportation to enhance productivity, reduce costs, and improve customer satisfaction. For example, Agile, DMAIC and more.

Legalized invoice

A legalized invoice is a commercial invoice that has been authenticated by the embassy or consulate of the importing country. This process verifies the authenticity of the document and its contents, ensuring compliance with the importing country’s regulations. Legalized invoices are often required for customs clearance and to qualify

Letter of credit

A letter of credit is a financial document issued by an importer’s foreign bank guaranteeing a seller's payment from the buyer. It assures the seller that payment will be made once the terms of the letter are fulfilled, typically upon presentation of specified documents. Letters of credit

License Exception

A license exception is a regulatory provision that allows the export or re-export of certain items without the need for an individual export license. These exceptions are granted under specific conditions outlined by export control regulations, facilitating trade while ensuring compliance with national security and foreign policy objectives, thus simplifying

Manifest

A Manifest is a detailed list of a vessel's cargo, passengers, and crew. It is used by customs and port authorities for inspection and clearance purposes, ensuring that all goods and persons on board are accounted for and comply with regulations. Manifests facilitate efficient and legal international trade

Marine Insurance

Marine insurance is a type of insurance specifically designed to cover the loss or damage of ships, cargo, and other movable property during sea transport. It includes various types of coverage, such as hull insurance for the vessel and cargo insurance for the goods being transported. Marine insurance provides financial

Market Access Initiative (MAI)

The Market Access Initiative (MAI) is a scheme by the Government of India aimed at enhancing export opportunities by providing financial assistance to exporters. This assistance is used for market research, product development, promotional activities, and trade delegation participation, helping Indian exporters gain better access to global markets and improve

Master Document

A Master Document is a comprehensive, authoritative document that consolidates and organizes all necessary information and documentation related to a particular process, project, or transaction. In international trade, a master document may include contracts, invoices, certificates, and other critical documents. It serves as a reference point, ensuring consistency and completeness

National Export Insurance Account (NEIA)

The National Export Insurance Account (NEIA), launched in 2006, is a government-backed initiative aimed at providing insurance support to Indian exporters. Managed by the Export Credit Guarantee Corporation (ECGC), NEIA offers credit insurance for high-value projects in risky markets, ensuring that exporters are protected against payment defaults and political risks,

Negotiable document

A Negotiable Document is a financial instrument guaranteeing the payment of a specific amount of money, either on demand or at a set time. It can be transferred by endorsement or delivery, giving the holder the right to collect the payment. For example, Promissory Notes, Bills of Exchange, and Performa

Non-transferable letter of credit

A Non-Transferable Letter of Credit is a type of letter of credit that cannot be assigned or transferred to another beneficiary. Only the named beneficiary can claim payment under this letter of credit, ensuring that the specific exporter receives the funds, thus providing focused financial security and control over transactions

Nostro Account

A Nostro Account is a bank account that a domestic bank holds in a foreign bank in the foreign currency. It is used to facilitate international transactions and manage foreign exchange. For example, SBI opens a USD account in JPMC in New York is an example of Nostro Account. However

Ocean Bill of Lading

An Ocean Bill of Lading is a document issued by a carrier for the shipment of goods by sea. It serves as a contract of carriage, a receipt for the goods, and a document of title, enabling the holder to claim the goods upon arrival at the destination port. It

On-Board Bill of Lading

An On-Board Bill of Lading is a document issued by a carrier confirming that goods have been loaded onto the vessel. It provides proof of shipment, indicating that the goods are on board and the carrier has accepted responsibility. This document is crucial for the transfer of ownership and payment

Outward Remittance

Outward remittance is the process of transferring funds abroad from home country. This includes payments for imports, investments abroad, and personal transfers. Outward remittances are regulated by foreign exchange laws and are processed through banks and authorized dealers to ensure compliance with international and domestic regulations.

Overdue interest

Overdue Interest is the additional interest charged on loan payments or debts that are not paid by the due date. This penalty compensates the lender for the delay in receiving payment and serves as an incentive for borrowers to make timely payments. The rate and calculation method for overdue interest

Packing List

A packing list is mandated by Foreign Trade Policy - Section 2.06 (a), under which a detailed document is to be provided by the shipper that itemizes the contents of a shipment. It includes information such as the description of items, quantities, weights, dimensions, and packaging details. The packing

Payment terms (DA, DP)

Payment terms DA (Documents Against Acceptance) and DP (Documents Against Payment) are methods used in international trade. DA allows the importer to receive shipping documents and goods upon accepting a time draft, agreeing to pay later. DP requires the importer to pay the invoice amount to obtain the shipping documents

Periodic settlement

Periodic settlement refers to the regular reconciliation and payment of outstanding balances between trading partners. Instead of settling each transaction individually, parties agree to a fixed period (e.g., monthly or quarterly) to review and settle all transactions within that period. This approach streamlines financial management and reduces administrative burden.

Pre-shipment Credit

Pre-shipment credit is a short-term loan provided to exporters to finance the procurement, processing, and packing of goods before shipment. This type of credit helps exporters prepare goods for export without facing cash flow issues. It is typically granted against export orders or letters of credit and is repaid once

Rebate of State Levies (RoSL) Scheme

The Rebate of State Levies (RoSL) Scheme aims to rebate all state-level taxes and levies on export goods, particularly in the textiles sector. By reimbursing these costs, the scheme ensures that exported products are competitive in the international market, thus promoting Indian exports by reducing the overall cost burden on

Red Clause Letter of Credit

A Red Clause Letter of Credit is a type of letter of credit that allows the beneficiary to receive an advance payment, typically against a receipt, before shipping the goods. This advance helps the exporter finance the production or purchase of goods, providing liquidity and facilitating smoother international trade transactions,

Risk retention

Risk Retention involves a business or individual keeping or absorbing the financial impact of certain risks rather than transferring them to an insurer or third party. This strategy is often used when the cost of insuring the risk is higher than the potential loss, or when the risks are considered

Risk transfer

Risk Transfer is the process of shifting the financial burden of certain risks from one party to another, typically through insurance or other relevant contractual agreements. By transferring risk, businesses can protect themselves against significant financial losses and ensure more predictable financial outcomes. Examples include purchasing insurance policies or outsourcing

Sanctions

Sanctions are measures imposed by governments or international trade bodies to restrict or prohibit trade and financial transactions with specific countries, entities, or individuals. Sanctions aim to achieve foreign policy and national security objectives by exerting economic pressure to influence behavior and compliance with international norms, often targeting those involved

SEPA (Single Euro Payments Area)

The Single Euro Payments Area (SEPA) is an initiative by the European Union to simplify and standardize electronic payments in euros across member countries. SEPA enables consumers and businesses to make and receive payments under the same conditions, rules, and costs within Europe, enhancing the efficiency and integration of the

Settlement of disputes

Settlement of Disputes refers to the process of resolving disagreements or conflicts between parties, typically through negotiation, mediation, arbitration, or litigation. Effective dispute settlement mechanisms are crucial for maintaining business relationships and ensuring legal and contractual obligations are fulfilled. The chosen method depends on the nature and complexity of the

Special Economic Zones (SEZs)

Special Economic Zones (SEZs) are designated areas within a country that offer special economic regulations and incentives to businesses to attract foreign investment and boost exports. SEZs in India provide tax exemptions, simplified customs procedures, and other benefits to businesses, creating an enabling environment for manufacturing, services, and trade activities,

Statutory Declaration Form (SDF)

A Statutory Declaration Form (SDF) is a legal document used by exporters to declare specific information under oath, typically required for customs and trade compliance. It is submitted to the customs authorities ensuring that the information provided is accurate and truthful, aiding in the legal and regulatory processes of international

Supply Chain Management (SCM)

Supply Chain Management (SCM) involves the planning, coordination, and control of all activities involved in sourcing, procurement, conversion, and logistics. SCM aims to optimize the flow of materials, information, and finances from suppliers to end consumers. Effective SCM enhances efficiency, reduces costs, and improves customer satisfaction by ensuring timely delivery

SWIFT Payment

A SWIFT Payment is an international money transfer conducted through the SWIFT network, which uses unique SWIFT codes to identify banks and ensure secure transactions. For example, if a company in the U.S. needs to pay a supplier in France, their bank might send a SWIFT message with the

Tax Exemption

Tax Exemption refers to the reduction or elimination of taxes granted by the government to encourage specific economic activities or investments. In the context of exports, tax exemptions reduce the tax burden on exporters, thereby lowering costs and increasing the competitiveness of goods and services in international markets, ultimately promoting

Third-Party Logistics(3PL)

Third-Party Logistics (3PL) refers to outsourcing logistics and supply chain management to an external service provider. A third-party logistics provider (3PL) specializes in handling order fulfillment tasks such as storing inventory, selecting and packing items, and dispatching shipments.

Trade Credit

Trade Credit is a financial arrangement where suppliers allow buyers to purchase goods or services on credit, deferring payment to a later date. This arrangement helps businesses manage cash flow and build relationships with suppliers. Trade credit terms vary but typically include a specified period for repayment without interest, providing

Transaction Fee

A Transaction Fee is a charge levied by financial institutions or service providers for processing a transaction. This fee can apply to various types of transactions, including payments, transfers, and currency exchanges. Fees typically range from $1 to $50 and may include a flat fee, a percentage of the transaction

Transport document

A Transport Document is a legal document issued by a carrier or freight forwarder that details the terms and conditions of the transportation of goods. It serves as evidence of the contract of carriage, a receipt for the goods, and a document of title, facilitating the movement and transfer of

Uniform customs & practice for documentary credits (UCP)

The Uniform Customs & Practice for Documentary Credits (UCP), introduced in 1933, is a set of internationally recognized rules published by the International Chamber of Commerce (ICC) to standardize the use of documentary credits in trade finance. Letters of credit are issued and operated based on the rules and regulations

Usance bill of exchange

A Usance Bill of Exchange is a financial document that requires payment at a future date, usually after a specified period from the date of shipment or acceptance. It provides the buyer with a credit period, allowing time to sell the goods before making payment to the exporter, facilitating smoother

Usance Letter of Credit

A Usance Letter of Credit, also known as a Deferred Payment Letter of Credit, is a type of letter of credit that allows the beneficiary to draw payment after a specified period, providing the buyer with a credit period. It facilitates smoother cash flow management in international trade by allowing

Value-Added Tax (VAT)

Value-Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. It is collected by businesses on behalf of the government and is ultimately borne by the end consumer. VAT is a common method of taxation in many

Virtual Account

A Virtual Account is a sub-account created within a main bank account, used to streamline and manage incoming payments. Each virtual account has a unique identifier, allowing businesses to track and reconcile payments more efficiently without needing multiple physical bank accounts. Virtual accounts simplify accounting, improve financial management, and enhance

Vostro Account

A Vostro Account is a local currency account maintained by a domestic bank on behalf of a foreign bank, allowing the foreign bank to conduct transactions and manage funds in the domestic currency. For instance, if the State Bank of India (SBI) has clients who frequently trade with U.S.

Waybill

A waybill is a document issued by a carrier that accompanies a shipment of goods and provides essential details about the shipment. It includes information such as the names of the shipper and consignee, the origin and destination of the goods, a description of the items, and the route. E-Way

With recourse /without recourse letter of credit

A Recourse Letter of Credit allows the financing bank to claim payment from the beneficiary if the applicant defaults, while a Without Recourse Letter of Credit does not. These terms define the risk assumption between the bank and the beneficiary in the event of non-payment. For example, if Company A

Zero Duty Export Promotion Capital Goods (EPCG) Scheme

The Zero Duty Export Promotion Capital Goods (EPCG) Scheme allows Indian exporters to import capital goods at zero customs duty, provided they commit to export an amount equivalent to 6 times the duties, taxes, and cess saved on capital goods, to be fulfilled within 6 years from availing of the

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