So to make your understanding a little better, you can also look at the next slide where I will show you all these 11 terms.

And I will show you who is responsible for what portion of the journey so that I will explain.

Maybe that slide will give you an even better idea.

Probably after you have understood this particular slide, it will become easy for you to understand the next slide on the Incoterms 2020, 11 terms that I'm discussing.

So here you can see Incoterms 2020 point of delivery and transfer of risk.

So you can see here, uh, you can see this seller, the first carrier alongside the ship port of loading, carrier, destination port, alongside the ship, agreed Place and the buyer's warehouse so you can see this whole range of the points.

Different points are there on which the possibility of the transfer of the obligation or risk can happen.

So in this particular diagram, you can see on the left column you can see all 11 terms starting from EXW to FCA to FAS to FOB to CFR, CIF, CPT, CIP, DPU, DAP, and DDP.

So all these 11 terms I have already discussed with you and here in this diagram, the very important thing to understand is the seller's obligation is shown by the blue bar. so it indicates up to what point the obligation of the seller is there.

So obligation also means the cost is of the seller.

And this red color star, which is shown in this particular diagram, refers to the transfer of risk from the seller to the importer.

And finally, in the pink shade, you can see here it is the buyer's obligation.

So blue color indicates the seller's obligation.

The pink color indicates the buyer's obligation.

And red star indicates the transfer of risk.

So in this particular diagram, you can copy this diagram one copy of this image I have placed in the resource section of this lecture.

You can download this image and keep it for your record for your future reference.

It will always be handy for you, and you will be able to understand that in different 11 terms that you agree.

What are the points where the transfer of obligation changes from the seller to the buyer?

That is the importer.

And what are the points at which the risk gets transferred?

So this particular image will be very, very helpful always for you until the next version of Incoterms 2020 comes.

That would come in 2030.

So till that time, you will find this diagram that will be applicable.

Welcome to "All Import Documentation and Procedures: Import Anywhere" – an online course designed to equip you with all the know-how and skills you may need to correctly navigate the complicated and complex world of import documentation and procedures in typical import transactions anywhere on the globe.

In today's globalized economic systems of the nations, importing items from foreign countries has become an increasingly usual practice for businesses of all sizes across all nations. However, with every country having its specific guidelines and requirements for importation to align with their own needs and situations, it may be difficult to keep track of the requirements of each country and comply with the requirements of the customs and border control of those countries to successfully import items.

This course is specifically designed to help you navigate these complicated methods and processes without difficulty. You will be able to find out about the significance and operations of various documents that are required for importing different categories of goods using some common and typical commercial documents that are mostly common through the world and may include documents like commercial invoices, packing lists, Bills of lading, and other important so-called commercial principal documents. In this course, you will be able to study the special skills requiring methods and processes, inclusive of customs clearance, freight forwarding, and transportation of goods across borders.

Throughout the course, you may benefit from realistic insights and pointers from skilled experts within the area of worldwide trade and the movement of goods. You may also have the opportunity to work via real-world case studies and practical examples, giving you hands-on knowledge in navigating the complexities of import documentation and procedures.

By the end of this course, you can expect to get all kinds of information on the import documentation and procedure for typical import transactions, such as the important main documentation and approaches to dealing with the intermediaries concerned. You may be equipped with the capabilities and expertise needed to efficiently import goods to any country from any country, giving you a competitive edge within the international marketplace.

So, whether you are an entrepreneur looking to begin importing items, an executive in the international trade enterprise, or someone inquisitive about learning more about all aspects of import documentation and techniques, this course is for you. Enroll now and take the first toward studying the art of carrying out import operations smoothly and successfully.

You can also download the course structure cum consultation plan from the resources of this lecture.

Hello friends.

Welcome to this new course titled Complete Import Documentation and Procedures, which is part of the

VJ Global MBA Knowledge Courses series.

I am Doctor Vijesh Jain. I have very long experience in the area of exports and imports. Uh, having worked with several multinational companies in different countries. With the help of my knowledge as well as my experience, practical experience, and training experience, I have brought this course to help you understand the entire procedures and documentation that are required for carrying out the import activities successfully.

So the idea of this course is to provide you with very practical information and complete information from end to end, from the start to the end.

The useful information, that is not easily available and based on the practical experience, based on the examples and case studies that I will be using in this course.

So in this course, I'll be taking up the topics in such a way that the understanding of the whole concept becomes simple for you and clearer to you.

So that is the main objective of this course. I will be, for example, starting with the different terms that are commonly used in the import business.

These terms understanding these terms may not come immediately, for example, at the start, but as you go through the course, you will learn all these terms when they will be used, when they will be explained, and when they will be defined.

So all these things will come in the course.

So this is the approach I'll be using in this course.

So the idea of this course is to provide you a platform that you can use anytime, anywhere, at your own pace for learning a complete understanding of the entire documentation and procedure for the import.

Whichever country you belong to, wherever you want to import from, wherever you want to import, you will find the knowledge that is provided in this course useful to you.

So in this course, not only I be starting with the common terms that are used in the import business,

I'll be also sharing with you all such topics that you should learn and know before I tell you what documents are required.

What is the procedure, how is the customs clearance done, and what is involved in dealing with the carriers that is the shipping company or the airline that will bring your goods into your country?

How to deal with the local governments?

What are the different local regulations that are there or the overseas government regulations?

What all are involved?

I'll be sharing that.

But before that, I'll be starting with a section that will tell you everything you should know.

Things like how you sign the contract and when you sign the contract, what all terms and conditions you have to negotiate, and what knowledge you require to be able to successfully negotiate the final contract.

So this is also called the trade agreement or whatever you call it.

But you need to know how you negotiate the payment terms.

Delivery terms, commercial terms?

So for example, you have to understand what are the different methods of payment, what options are available, what international commercial terms are to be used and how the delivery is affected, what is involved in understanding those things.

So all those important areas that you must know.

I'll be starting with those areas.

And then subsequently I'll be talking about things like registration and compliances that are required to carry out the import business, the typical guidelines and rules of the different governments, the country where you belong to, what are the typical regulations and rules, those I'll be discussing

Because you have to work in those guidelines and rules.

What are those guidelines and rules and especially and importantly, why these are there?

So that understanding is very, very important.

And I'll be also talking about selecting the overseas suppliers and global sourcing of the goods that you want to import.

So you may be importing those goods either for resale in your country through distributors, or resale in your country through digital platforms, or you may be importing for use in your manufacturing for re-export purposes or manufacturing for selling in your domestic market or the entire shipment that you are importing for re-export purpose for selling to a third country.

So a different situation may be there.

So I'll be taking care of all the different situations when I talk about these areas, including the typical import transaction framework.

So what is the typical import transaction framework I'll be discussing?

What are the different international payment methods?

I just talked about that thing.

So I'll be talking about what options are available for making international payments, and what are the things that you should know about the payments that you have to make for the goods that you are importing?

Also, you should know about international logistics and supply chain management, the basic knowledge.

So I will not go too much into the depth of international logistics and supply chain management.

I'll be discussing those things very basic knowledge that you must have as a successful importer.

Then I'll be also talking about international contracts and commercial terms, these international contracts or trade agreements.

They they require an understanding of the payment terms, the commercial terms, and the delivery terms, which I just talked about.

You should know what are these commercial terms, so-called incoterms.

So I'll be talking about that.

These few things, topics which I'm talking about, are the foundations of your understanding of the import procedures and documentation. Those things I'll be already covering the initial sections so that you are already prepared the understand these topics, and these will work as the ammunition for you to be able to understand the more core areas of import documentation and procedure, which I will be taking up in the subsequent section in this course. I'll be then covering topics like import documentation and procedures, where I'll be talking about the entire set of documents, important documents, so-called commercial documents that are required, very important for you for ensuring the quality of the goods, for meeting the local government requirement and getting the goods cleared from your customs border control in your country.

So all those import documentation and procedures I'll be talking about, then I'll be also talking about what are the import trade governing bodies, typically in different countries. And that kind of institutional framework exists in almost all the countries.

So all those things I'll be talking about in the so-called institutional framework of importation or the import control trade bodies.

So those things I'll be discussing in this particular section. Also, I'll be taking up topics around the understanding of risk management in import transactions, typical import transactions, what are the common risks that are involved, and how to manage those risks.

Those are things I will be discussing.

Then import licensing and classification of the goods, so-called international classification.

Because the goods are coming from the overseas markets.

The origin countries are overseas countries.

So you need the International Trade Classification, the so-called ITC harmonized classification.

So I'll be discussing the ITC HS codes that are used by all the customs and border control in all the countries.

So those are things I'll be discussing. Also about the typical types of restrictions that are there in the form of import licensing. That may be there in some countries that may not be there in some countries, but generally, typically, what are different types of import licensing frameworks are there?

I'll be taking up this particular topic.

Then I'll be also talking about some of the very common categories that are imported, how these are imported, uh, the import of the specialized goods and commodities like, uh, scrap like electronic goods or import of samples.

When we say when we import something.

Especially we start the process by importing the samples to understand the effectiveness and the specifications and the suitability of the goods that you want to import.

So what are the different rules and regulations and the methods that are available for importing samples or even gifts?

So different categories of goods have different treatment by the customs and border control and the import trade regulations as per the foreign trade policies of the different governments.

So those are things I'll be talking about. And also I'll be talking about the understanding of the import tariffs and the different costs that are involved in importation.

So those things I'll be talking about when you talk of your import shipment, what are the costs that you have to factor into, like import duties or the freight cost or the trade transaction cost, so-called TTC that include your customs clearance charges, Port Authority charges, and all those costs that are connected with the transaction trade transaction cost, TTC.

So I'll be talking about all these types of different costs that you have to keep in mind when doing your calculations about the landed cost of your goods in your warehouse.

So all these things I'll be covering and many other topics related to all these core topics I'll be covering in this course.

So this course is a complete set of knowledge and information that you must have to become a very successful importer.

And here in this course, my focus is on the documentation and procedure and things you must know to understand this entire framework of the documentation and procedures.

So this is the approach that I will be using in this course.

I again congratulate you for joining this very exciting and important course for your global business journey.

And invite you to watch all the lectures very intently and at your pace, at your convenience, and with passion.

But before we dive into the course, I want to emphasize that this course is only one piece of the puzzle.

It is part of the VJ Export Mastery Courses series, which has the potential to provide you with a very comprehensive knowledge of global business management.

Completely. Entire knowledge. On my part,

I am committed to helping you access more courses in the series.

On your part, I request that you review the course and place your honest feedback and rating on the course to make the course the best in the world on this topic.

Let's now dive into the course together.

I can't wait to see you inside.

Choose only one that is best

This opening case examines the inspiring tale of an Indian entrepreneur who made a name for himself by successfully importing sporting goods into India and setting up a great business for himself in this direction.

This entrepreneur, Mr. Thomas, started his enterprise with a small amount of capital and a huge dream to succeed within the global market in the area of import. Initially, he confronted many challenges and barriers, such as complex guidelines and documentation requirements for importing sporting goods to India both from the origin country as well as within the Indian customs.

However, Thomas kept patience and overcame those demanding situations by acquiring a deep expertise in import documentation and processes. He had to navigate the complicated techniques and procedures with continuous and fast learning. He also developed relationships with dependable intermediaries and suppliers from overseas places of manufacture, who helped him streamline his operations and helped him to keep away from high-priced mistakes.

Through hard work and continuous efforts, Thomas became able to build a hit import commercial enterprise, importing sports items in India. His tale is a suggestion to everybody looking to start importing goods from foreign countries and demonstrates the significance of having a deep understanding of import operations, documentation, and procedures on the way to becoming triumphant in the international marketplace.

As we delve deeper into this course, we can find out more about the precise documentation and procedures that are essential for importing goods to any country from any country. We will also explore real-world practical case research and examples, supplying you with the sensible abilities and knowledge you need to effectively import goods and overseas services.

So, be a part of my learning journey as we explore the exciting world of import documentation and procedures, and learn how to import goods to any country as a seasoned importer would do!

Hello friends.

Welcome back to the next section of this course.

This section is about one opening case study of this course.

Interesting small piece of case study.

This is based on real events, although the names and the company details are changed in this case study for privacy reasons.

The idea is for education purposes.

So this case study is titled by me as a small retail chain to a big hitter.

So this case study is about a sporting goods importing company, how it became an importer, and how the idea emerged and matured into a big import-hitting business.

That is the idea of this case study that I am going to share with you.

Let's look at this case study.

Let me share with you the starting point where the idea was generated in the mind of one Mr. Thomas, who is the owner of an Indian retail chain for sporting goods.

And at that time it was a small retail chain.

That is when this idea was emerging slowly in the mind of Mr. Thomas to do imports.

The company deals in sporting goods and very especially in the Tackle business.

So fishing equipment and tackle businesses, were very well known in this area.

It was a specialized field and the brand of this company was reasonably well known in the Indian market.

So I'm talking of the Indian market this company was targeting. Mostly the items that were being sold by this company.

Sporting goods and tackles were sourced from Indian vendors, and Indian suppliers and most of these items were imported items.

Most of these items are not manufactured in India. So they were imported from Europe.

They were imported from the US, China, Taiwan, and even Japan.

So the company had its brand that was synonymous with the high quality of such products, sporting goods,

Tackle business. Quality was the buzzword for this company and it was doing reasonably okay.

The growth of the sales was not exponential at that time. Uh, the margins were moderate and reasonable.

But, uh, the main issue was that the growth was not there, sales growth, probably because of price, because there can be many factors, but sales growth was not there.

That probably was the reason why the idea of doing something deeper, some kind of integration, vertical integration, or horizontal integration was coming to the mind of Mr. Thomas.

That was the idea.

I think if we look at any entrepreneur's mind when growth is not as expected, some idea comes to the mind of the entrepreneur about what to do.

So he tries out many things.

So that is what happens. Despite having a good brand, despite having good quality products, having deeper knowledge about the thing that you are doing.

Thomas had been himself the Tackle jobber, so he knew many things about this business.

So that is the reason he was into this business and he was doing quite well in this business.

Now, the first experience Mr. Thomas had with the idea of importing came through POE purchasing.

So what is this POE purchasing?

POE purchasing means Port of Entry purchasing.

So when goods are imported, the moment they enter the port of entry, they are available for sale. at times. Because the money is involved in the importers, they want to square off their investment immediately when the goods come. And the best thing for any importer is to sell immediately after the goods are cleared from customs, maybe at a lower margin, but that is what generally most of the importers think, and they do like that.

So there is at least in the Indian market, there are a lot of activities in the POE purchasing Port of Entry purchasing. The moment goods reach people buy containers or the less than container loads.

So this is very common.

The goods as soon as they are imported and cleared at the Indian customs, were handed over to

Thomas's company in this POE purchasing. And Mr. Thomas found that he was able to get a better price for the goods.

He already knew the brands, he knew the quality.

So it was not difficult for him.

There was no real value that was being provided by the Indian vendors, who were probably buying from the importers and then selling to Thomas earlier.

So in the POE purchasing, the idea of the costing that came and that was very transparent actually in POE purchasing was the CIF cost.

That is the Cost, Insurance, and Freight.

So it means the landed cost at the Port of Entry.

And then added to that other costs like import duties or any taxes, local taxes or incidentals like the Port Authority's fees or the Customs Fees.

Any dummerages charges, clearing charges, those incidentals make it a landed cost.

So landed cost includes the CIF costs, including import duties, taxes, and incidentals, cost plus 5 to 10% importer's profit that keeps on varying depending on the frequency of the goods coming, from where the goods are coming.

What is the quantity of the goods?

So it all depends on that.

Generally, the importer's profit at the POE purchasing was approximately 5 to 10%.

So this is how it was working.

So apart from the importer's profit, there was the CIF price.

That was also not very transparent actually. Uh, the invoice price that was the CIF price was in the written form.

And accordingly, the sale was happening at the POE level.

So there can be some, uh, consideration for the importer, maybe directly with the supplier.

So that was not clear.

But whatever it was, on paper, these were the costs.

And this was the margin that was charged by the importer. Very transparently as such.

So this was the situation. At this point

Mr. Thomas learned about importing. clearing, although he was not doing it, he got certain ideas about how import happens and what could be the benefits of doing direct imports.

So that is what was happening.

High Sea Sales (HSS) refers to a transaction wherein the original importer sells the products to a third interested party even as the goods are in transit i.e on the high seas or before they actually land at the country of destination, or even if they have landed, these are still to undergo clearing at the customs.

The idea of HSS is broadly used in worldwide trade, especially in cases where the importer is unable to take ownership of the products or wishes to sell them to a 3rd interested party earlier than the actual clearing at customs of the import shipment. This can happen for numerous reasons, which include a change in marketplace situations, monetary constraints, or logistical troubles or rather as the regular method of carrying out business by the actual importer.

HSS transactions can be complicated, as they involve multiple receiving parties and various legal and regulatory requirements. As such, it's most important for importers, exporters, and other stakeholders to have a thorough expertise of the policies and techniques connected with typical HSS transactions.

In this course, we will navigate the critical methods and information related to HSS transactions, which includes the legal and regulatory necessities, documentation requirements, and the different situations in which HSS may be used. By the end of the course, you may have a comprehensive expertise of HSS transactions also and be prepared with the understanding to successfully navigate such transactions.

Direct importing made easy using the latest and modern technology is transforming the way businesses import goods from overseas manufacturers from various countries. With advancements in technology, importers can now streamline the entire process of direct importing, from sourcing suppliers to managing logistics and compliance.

In this course, we will explore the latest technologies and tools available for direct importing, including software for managing the procurement process, digital platforms for communication with suppliers, and real-time tracking systems for shipments. We will also provide practical insights and best practices for using these technologies effectively, based on real-world examples and case studies.

By taking advantage of the latest technology, you can simplify the process of direct importing and reduce the time and cost involved in managing the import process. This can give you a competitive edge in the global marketplace and help you to succeed in today's rapidly changing business environment.

Whether you are an experienced importer or new to the world of direct importing, this course will provide you with the knowledge and skills needed to leverage the latest technology for direct importing easily. Join us and learn how to streamline the import process, reduce costs, and succeed in the global marketplace.

The second experience Mr. Thomas had with importing came from another offer, other types of offers that were being given by the agents importing agents, not the importers importing agents.

And that was the High Sea Sales.

So in the high sea sales, the process was that Mr. Thomas was placing orders to an agent.

He was the Indian agent or the overseas agent.

He was representing some of the companies and large sporting goods manufacturers abroad.

Those were being represented by these agents.

And the high sea selling required the orders to be placed through those agents to the companies directly.

So goods are sold actually to the company of Mr. Thomas when goods have been despatched from the port of origin, POO, port of origin, or port of loading, and they are on the sea, they are already on the sea.

So in such cases, cost considerations were like this. The CIF cost, that is, the cost, insurance, and freight.

That means the cost up till the goods reach the Indian port, that is the CIF cost plus import duties or any local taxes and incidental costs including the customs fees, port authorities fees, any clearance fees, or the costs that are associated with goods clearance plus 2% commission that was charged by agent.

So these were the costs.

So again, it was more lucrative to Mr. Thomas to buy goods on high sea sales.

But in this clearance process, all customs clearance or the handling of the goods when they reach the Indian port.

How to get it unloaded and all those costs.

Who are the people?

Including the CNF agents, and clearing and forwarding agents.

All those vendors became connected with Mr. Thomas and he started learning the game of imports through high sea sales.

This was the second experience Mr. Thomas had with importing. As the business started growing further.

The growth of the business was happening because of the POE purchasing and then high sea sales purchasing.

What happened?

The margins and profits were better.

Mr. Thomas was able to promote the goods better. So the growth was quite healthy now.

So at this point, Mr. Thomas thought of and considered the direct importing options.

So what were the advantages of direct importing? Options that might not have been clear to Mr. Thomas, but he realized that he would have a better grip on the manufacturers.

He will be able to get the goods manufactured according to the needs and the uses of the Indian market.

He could probably get some modifications done in the goods in the labels or the packing.

So he thought of various possibilities of the benefits of direct importing.

And those things were already coming to the mind of Thomas, including, uh, some leverage on the actual cost, landed cost, or the purchase cost.

So that is the point, when, uh, the growth was happening, he had better purchasing power.

He was able to buy goods in more quantities.

So that was the point when Mr. Thomas rightly thought of and considered direct importing.

So that is what took him to the first-hand experience with direct importing.

Direct import required someone who had prior knowledge and who could work as the guide for the company Mr. Thomas.

So he had met one import agent at the China Trade Show.

So this import agent, uh, he had already met a couple of times, and he was talking to him and he was having good rapport with this person.

So he involved this import agent to start his direct importing activities. For that import agent suggested the visit to a few countries to do some kind of field research, to have the learning about the manufacturing, the challenges, and the opportunities that exist in the overseas market when you deal directly with the manufacturers.

So it was more of a field research and education trip that was planned.

And import agent and Mr. Thomas went on a business trip to a few countries, including.

They also visited some of the trade shows in different countries.

So this trip was very, very useful.

And, uh, they got a very good response from the manufacturers because the purchasing power of Mr. Thomas was becoming very good now.

Mr. Thomas also committed larger quantities than he could have bought on the strength of having a very good relationship with the other retail chains, similar retail chains who are selling similar goods in India.

So he had already talked to them and shared his idea of importing at better prices.

Many of the people who are members of the association of this industry, were interested in joining hands with Mr. Thomas and being a partner in the import business by importing the goods in a pooled manner.

So a group of other retail chain buyers in India were interested in a combined order to get a better deal from the manufacturers.

So the negotiating power and bargaining power increased for Mr. Thomas.

And in this trip, Mr. Thomas used that strength.

So not only his quantities but the quantities that were committed by his other friends who were in a similar business.

So that is how the things looked brighter.

And import agent was also very keen to work with them because Mr. Thomas had quantities in hand and he was looking at a good commission in this case.

So that is what was happening in this first-hand experience of Mr. Thomas with the importing.

So what was this combined import order shipment?

It was based on the landed price to the warehouse of the other buyers in the group.

So the price that was quoted to the other members of this consortium of importers or the group of importers was based on this landed cost, including all the import duties or taxes incidentals or clearing charges.

Everything paid.

So all in all, landed cost.

That was the combined import offer given to the Indian parties.

And this combined shipment was there in the form of certain containers, maybe five containers, six containers on a fortnightly basis.

However, in these containers, the shipment was divided into different individual lots according to the partners in the group in the consortium.

So suppose there were five consortium members.

So there were five lots in this whole single shipment.

These lots with individual markings as per the requirement of these importers as they had desired, what kind of packing they wanted, what kind of labels they wanted, and what MRP they wanted.

It was accordingly, different lots were created as per the request and the instructions given by Mr.

Thomas to the manufacturer overseas manufactures.

So this is how this combined import order worked.

The cost quoted to retailers included the cost delivered to the warehouse of the individual retailers, plus import duties, taxes, local taxes, and customs and clearing fees including the port charges, port handling charges, CNF agent charges, and cleaning house urgent charges.

All those charges were part of it.

And the cost of moving the goods from the port of entry to the warehouse of the retailers, as well as to the factory of Mr. Thomas himself, or the warehouse of Mr. Thomas.

So these costs included all these break up.

So that was a very important thing not to miss any cost in this.

So this required very careful consideration.

Now everything worked very well.

So this combined offer idea worked very well.

And uh, the growth, sales growth of the company of Mr. Thomas grew exponentially.

The profits and the sales were skyrocketing already.

And with this success, Mr. Thomas added new items to the import also.

So now the advantage of direct import was visible.

Now he was able to increase his portfolio of import items, and these items now included the fishing tackles that were already there.

Now bikes were also there.

Then athletic and ski apparel were there.

So this apparel business was started again with his brand and downhill ski and cross-country equipment were also added and other new sporting goods accessories were included. so a very good range of import items can be now seen in the portfolio, import portfolio of Mr. Thomas.

At this point, Mr. Thomas was regularly visiting trade shows in Germany, China, and Taiwan.

So these were the countries, these were the trade shows where he was able to see new items being introduced in the market, new brands that were becoming trending, and the things that were selling well in other countries and had a lot of potential for sale in India.

So all these things came with direct importing to the notice of Mr. Thomas.

Those things earlier, when he was not into direct importing, those things were not visible to Mr. Thomas.

And probably that was the reason he was not able to grow his sales of the brand and the portfolio of the items to the extent that he was able to do now. His vendors now were there based on his contacts in the trade shows.

And, uh, starting with the smaller quantities to start with, maybe trial orders and then finding the suppliers and the goods of good quality and selling better in the Indian market.

Now he had vendors from Japan, South Korea, Italy, China, and Taiwan.

So all this was the result of direct importing.

At this point now Mr. Thomas was full scale into the import business, a very successful import business that was supporting his strong sales growth, more profits for the brand, and great reputation in the

Indian market.

So that was happening with Mr. Thomas at this stage.

In the next lecture, Dr. Jain explains what immediate benefits Mr. Thomas could derive from direct imports of sporting goods.

At this point, Mr. Thomas also learned new ideas for getting better profits and improving the reputation of the company by learning the margin game.

That was the point when Mr. Thomas started using his past knowledge.

Being a tackle jobber and being in the market for quite some time, he could now play the same margin game that the big boys, the big companies, and the so-called big companies were playing.

So the MRP labels that were being provided by the manufacturer exporters included the maximum retail price on every good that was being imported.

The labels were as per the requirement of the Indian market and the local government and the Indian customs included the cost, price of the goods, import taxes, incidental costs, and very importantly, the 3 to 4 times markup on the landed cost.

So that was already included in the MRP levels.

Based on this, he made great profits, especially giving the example of apparel where he made the maximum profits. In the apparel, the strategy was to leave the goods at the stores for 3 to 4 weeks at the MRP levels, selling at the MRP levels, and then start promoting the lots, the goods that were coming at 25% and then maybe 30% or maybe a little more.

So that was the promotion period and then came after a certain time, the clearance sale of the apparel.

That was the strategy that was used.

So clearance sale at 40% or buy one get one offer, was the strategy that was being used.

And even at this clearance sale, the margins were handsome because the markups were 3 to 4 times already.

So this is the margin game that he never played before when he was not into direct importing, and now he was able to play this game.

So that is what happened with Mr. Thomas.

And that was the new development in his business.

So what are the takeaways from this case study that I want to share with you? Uh, uh, through direct inputting by Mr. Thomas in his company, the company's profits, sales, and reputation soared sky-high.

That would not have happened without direct reporting.

The way he was doing earlier was not able to provide those kinds of results.

So that is one thing that is very, very clear from this case study.

And it is very clear that as a big importer, if you are a big importer or you are part of a big importing company, you have better numbers to import, better quantities to import, and it can help in the start itself.

But as a small and medium importer or a company small company, it is generally not possible.

So the other way is to import by pooling orders that can be worked out like Mr. Thomas did.

So at least in the initial stages.

Once your business is booming, you have very good sales.

Probably you can start avoiding any pooling of the shipments.

So it all depends on the situation.

It depends on the industry.

What type of industry is there?

India is a very, very big market.

So many, many retail chains that are importing similar items, had their cities to sell, so it was possible to afford to have this kind of pooling of similar items from similar sources.

But it depends.

So this call has to be taken by the importer according to the situation.

But if it is possible, then if you do not belong to a big importing company or you are not having very big purchasing power, this route is also available.

So these are some of the interesting lessons and the takeaways from this case study.

In the next assignment which is based on the opening case study, certain questions have been asked. By completing this assignment, you will be able to judge your existing thoughts and knowledge of importing.

Choose only one that is best.

Hi there! I hope you are doing well and making great progress in this course.

I wanted to take this small moment to congratulate you on your remarkable progress in this course.

Your dedication and commitment to learning have truly impressed me.

I have been following you and your journey closely, and I must say, I am delighted with the efforts

you are putting in. As a token of appreciation for your hard work,

I would like to offer you a complimentary copy of my recent book on a similar topic that you are learning in this course, which I believe will further strengthen your learning and your grip on the course.

You can download this PDF copy of this book from the resource section of this lecture.

This course is part of the VJ Export Import Mastery Courses Series, a collection of 25 different courses targeting the area of export management designed to equip you with the knowledge and skills needed to excel in the field of export and international trade.

On my part, I am committed to helping you expand your learning journey by providing access to more similar courses in the series. But at the same time on your part,

I have a small request for you as well.

Your feedback is incredibly valuable in refining this course and ensuring it remains world-class and is refined to its best.

So I kindly ask you to leave a rating for the course along with your feedback if you have not yet done so.

Your input will help me continue to improve and tailor the course to meet your needs and those of future learners.

Thank you once again for your dedication and enthusiasm.

Keep up with the fantastic work that you are doing and remember, I am here to support you every step of the way.

Together, let's continue on the journey of learning and growth.

Hi. So you saw in the last section an interesting case study opening case study.

The idea of this case study was to break the ice.

Break the ice for your learning. In this section, also, I'm going to discuss some of the most common terms that are used in imports.

Again, the idea is to further break the ice.

You need not worry about many of the terms you may not understand in this section.

Just listen to these terms.

The meaning of these terms. Very short meaning I will give you. Again idea is that the learning starts.

With this section, you will start learning the main terminologies that will be using the concepts that we are going to discuss in this course.

Those things will start happening.

That's the idea of this section.

Many of these terms you might have heard about, you might have read about, you might have even used some of these terms.

So you may be aware of some of the terms.

Other terms will have different meanings.

If you do not understand those terms, you need not worry.

When we go further in this course, these terms will be again used, defined, explained and examples will be there in this course using those terms.

So those things will again come at the end of the course.

Many of these terms are not exhaustive listed in this section.

These are selected terms in this section that I have used here.

You will learn many more terms in this course.

So this section is very, very important and necessary at the start. So that the learning takes off.

That's the idea.

So let's have a look at some of these terms and the categories to which they belong.

So let's have a look.

So the major category that starts in this section is the Incoterms.

What are these Incoterms?

Incoterms are international commercial terms.

The latest version is 2020.

I will be talking in very much detail about the entire concept of international commercial terms that are very, very important for signing the international purchase contract for importing the goods, the contracts that you signed, these international commercial terms are very, very important.

There are 11 terms that I'll be talking about and explaining in subsequent lectures, in subsequent sections, but very common terms like FCA, FOB, CIF, and DAP.

These are selected 4 terms out of those 11 terms.

So for example FCA means Free Carrier.

FOB means Free on Board, CIF means Cost Insurance and Freight, and DAP means Delivered at the Port.

Port of destination.

So these different terms 4 terms.

Very common terms out of the many terms, international commercial terms incoterms that are very very commonly used.

And we will be using these terms very often in this course, and further in this learning journey that we are going to have.

Then the second category I'm talking about refers to the shipping terms.

So shipping terms will be very commonly used words like logistics, international logistics, international supply chain management, or the customs broker which in some countries are called CHA.

That is the custom house agents.

For example, in India, they are called custom house agents.

These are the broker's customs brokers who get the goods cleared at the customs or so-called border control.

In some of the countries, the words used for the customs can be different. In many countries, for example, in the US it is called border control.

Then we have the shipping terms like CNF agents.

These are the clearing and forwarding agents.

These different terms are used interchangeably.

Sometimes they are called freight forwarders, and sometimes they are called import clearance agents.

So different names are there, but the very commonly used word for these agents who get the goods cleared are called the CNF agents, clearing and forwarding agents.

Then another word that is very commonly used is the shipping space.

So shipping space is provided by the carrier to the supplier The supplier of your goods that you have ordered that you are importing the goods.

So what shipping space has been given by the carrier to the supplier is called the shipping space.

So all these different terms are used in shipping terms.

There are many, many different terms further.

These are only a few of the selected terms that I have included in this section.

Then another category I will be talking about is called the Shipping Weights and Volumes.

So when we talk of the shipping weights and volumes, the terminologies used are different for Sea shipment. if your goods are coming by sea. If your goods are coming by air, the shipping weights and volume terminologies will be different.

If the goods are coming by road. in many countries, for example, from Canada to the USA, the goods are shipped many times through trucks.

The terminologies for shipping weights and volumes will be different.

So for example, if we use and talk about the terminologies like TL or FTL, those refer to the trailer load and the full trailer load, which means the complete entire load of the trailer.

So when they are coming by lorry, they are coming by trailer, they are coming by truck.

So the common term that is used is TL or FTL.

That refers to the complete full trailer and LTL

LTL means less than the trailer load.

That means the consignment that is coming is less than the full capacity of the trailer.

So that is called LTL.

The idea is why we use these terms LTL or FTL Because the FTL rates per kg, or the LDL rates per kg will be different. After all, the trucker has to consolidate the shipment to make it a full trailer load.

Because less than the trailer load will be very, very expensive for shipment.

So the rates will be different because of the extra efforts made by the truck to consolidate the shipments from different shippers.

Similarly, the same is the method that is used for sea shipment, where the same things are called FCL or LCL.

So FCL means full container load.

So in sea shipment, we use 40ft containers 20ft containers, or sometimes 10-foot containers. If the container load is full, if the shipment is an entire container, that will be FCL.

If the entire shipment is not able to cover the complete space that is available in the container, it is called LCL less than the container load.

Then we have terms used like pallets.

So what are these pallets?

Pallets are part of the standardization and unitization of the export cargo.

And when we use this term pallet terms are used both in the sea shipment and the air shipment.

Pallets are standardized sizes of the cargo.

Standardized units that can be mechanically handled for stuffing inside the containers.

So when we are talking about the sea shipment, we are talking about the sea containers.

And forklifts can pick up and handle these standardized pallets that are usually with wooden bases or plastic base pallets of standard sizes that can be lifted by the forklift and can be stuffed inside the container.

A forklift can go in the container, so these are called pallets.

Pallets have helped in speeding up the loading and unloading process in sea shipments, as well as in air shipments.

So these are very common terms that are used in the shipping and shipping weights and volumes, what we are talking of.

So these are very common clauses that are used in insurance.

And then the sea perils.

What are the sea perils?

Sea perils refer to the different types of perils disasters or things that can damage your cargo.

So, for example, sea perils can be the sea storms.

Sea perils can be the salty sea water that can enter into the container.

The perils can be theft, sea thefts, or sea piracy, or perils can be war or strikes on the way.

So different types of sea perils are covered in the policy.

So these ICC clauses A plus B plus C will have different types of disasters or perils, sea perils that will be covered and that will define the level of protection.

And then you have things like credit insurance.

So what is credit insurance?

You as an importer are opening a letter of credit or you have some kind of payment method and this credit that you have opened or you have committed.

What is the insurance for that In the case of non-delivery of the goods?

So we are talking about commercial risk.

So you pay for something and you don't get the material.

So that risk, that commercial risk is covered through something called credit insurance that is provided by certain organizations.

Whichever country you belong to, you will have some kind of credit insurance company.

For example, in India, we have, uh, the credit insurance that is provided by the commercial banks or the ECGC.

So different organizations are there in different countries that provide for the commercial risk, that is the credit insurance for the import transaction.

And then we have the cargo insurance.

Cargo insurance refers to the insurance of the cargo, the movement of the cargo that can be the main carriage, that is, the sea or air carriage from the country of origin to the country of destination.

So that is the main carriage insurance, cargo insurance.

Or it can be the inland cargo insurance from the factory of the supplier to the port of loading, and from the port of discharge, that is, the port of entry to the warehouse of the importer that is you, is called the other type of inland cargo insurance.

So different types of insurance are there.

Comprehensive warehouse-to-warehouse cargo insurance is also available now.

Integrated cargo insurance is also called.

These are the different terms that are used in the insurance category.

And then we have the category of the international payments that you are making.

So for payment, you are involved with the banks and you are involving yourself with things like

LC is a letter of credit that is opened by the LC issuing bank on your behalf.

So I'll be talking about these different instruments, international trade financing instruments later in this course to apprise you about the different methods of making international payments.

And LC is a very common and popular method.

So LC is a very commonly used term in payments.

Then you have things like a bank draft or the bill of exchange.

That is the document that is given to the bank.

That's a bank document given by the supplier that is the exporter to the bank.

You will hear about this document several times when you are transacting for your import shipment.

Or the bank collection.

That is another method of international trade financing, wherein the documents that will be supplied by the exporter to you, the original documents, including the transport documents, the commercial invoice, the performance invoice, and the certificate of origin.

Without these documents, you cannot get possession of your imported goods.

So these documents will be collected by the bank and sold to you through an instrument that is called bank collection and the bank will hand over these documents, original documents, complete set against payment so you have to pay for it.

This whole process method is called bank collection.

So this is another alternative to the letter of credit.

Then you will be hearing terms like UCP 500, and UCP 600.

That refers to a code for the commercial banks to handle the transactions or the bank collection transactions internationally.

So UCP stands for Uniform Customs and Practices for Documentary Credit or International Trade Financing

Instruments and 500/600 are two different versions.

The latest version is 600, so this UCP 500, and UCP 600 are very common terms that you will be using very commonly in this course.

So as you can see here, slowly we can break the ice further by talking about these terms.

So you are getting into that mode that you can start learning.

You can start your journey in the process of learning the import documentation and procedures.

And this kind of flow will remain in this course.

And step by step you will start learning.

So you need not worry if many of these terms are being found by you to be difficult to understand.

Don't worry about that. Slowly you will understand all these things in this course.

Another category that I have chosen for this section refers to customs activities, customs domain, or border control activities.

So it is the same thing.

Customs or border control as I just mentioned are these same things.

So these customs and border controls, the importer's interest is to get the goods cleared from customs or the border control where terms like IGM

That is the import general manifest that is announced by the shipping company for every vessel that is taking a call at the port of entry.

So this particular announcement import general manifest IGM contains details of all the shipments that are arriving at the port of entry.

So you will know and you need to check whether your shipment is there or not.

So this is the most authentic announcement about the arrival of your import cargo.

So IGM- import general manifest.

Then the other term that is used is called the Bill of Entry.

The name may be different in different countries.

The word that is used is the Bill of Entry which refers to the customs declarations of the arriving shipment.

Import shipment that is arriving.

You need to declare to the local customs at the port of entry that the goods are coming.

That would be cleared by the customs.

So they are pre-informed through this document.

So this document is generally filed online through something called EDI that is an electronic Data interface or AES automated export system or import system.

That is what it is called in the US.

So this bill of entry you will be very commonly hearing about this document, this, uh, step, a very important step for getting the goods cleared. And things like BCD,

That is the basic customs duty. Very, very basic import duty that is called the BCD.

Over and above it there are different surcharges, taxes, and a few other types of customs duties, for example, the CVD or the AD that refers to.

For example, CVD refers to the countervailing duty to account for any subsidies that are given by the exporting country's government to the exporters.

So to counter or to leverage the effect of those subsidies in the imported goods to bring the business to the level playing field for the domestic manufacturers.

This duty is levied in many countries and is called CVD - countervailing duty or anti-dumping duty, that is AD.

So again, anti-dumping duties are levied by the customs or border control in different countries over and above BCD.

That is the basic customs duty to account for any dumping of the goods by the supplier at prices lower than the fair market value of that merchandise.

So if that is the case, if the customs feel it is happening.

So temporarily these duties are levied.

That is called anti-dumping duties - ADs

So so idea of this section talking about the different terms that I have used in this section in different categories, was to make you understand some of the very common terms that are used in import and import transactions.

So with these terms, our learning journey will start in a way that you find understanding much easier and more professional.

So let's go for this journey further in the next section.

Keep watching.

Choose the one that is best.

Cargo insurance is an important aspect of international trade as it covers the risk of loss or damage to the goods during transportation. Here are some important things that an importer should know about cargo insurance:

1. Coverage: Cargo insurance covers loss or damage to the goods during transportation, which can be caused by various factors such as theft, accident, natural calamities, or any other unforeseen circumstances.

2. Cost: The cost of cargo insurance varies depending on the value of the goods, the mode of transportation, the destination, and the level of coverage required. It is usually a small percentage of the total value of the goods being transported.

3. Types of coverage: There are two types of coverage in cargo insurance - all-risk and named-peril. All-risk coverage provides comprehensive coverage for all types of risks during transportation, while named-peril coverage only covers specific risks that are listed in the policy.

4. Claims process: In case of loss or damage to the goods, the importer should file a claim with the insurance company. The claim should include all the necessary documents such as the bill of lading, commercial invoice, and a survey report. The insurance company will then assess the claim and provide compensation if the claim is found to be valid.

5. Importance: Cargo insurance is important for importers as it provides protection against financial losses due to damage or loss of goods during transportation. It also helps importers to mitigate risks and ensure timely delivery of goods.

6. Choosing an insurance provider: It is important to choose a reliable and experienced insurance provider who can provide the necessary coverage and support in case of any claims. The insurance provider should have a good track record and offer competitive rates for cargo insurance.

Welcome back to the course.

So in the last section, we learned and talked about different common terms that are used in the import activities.

Now in this section, I'll be talking about a few things that are very very important.

The concepts that are very, very important for you to know and learn about those. Those concepts should be reasonably clear to you before you can understand an entire import, documentation, and procedure.

So to make the understanding of the procedures and documentation easy, these topics are the foundation prerequisite for this understanding.

So let us look at what are the things that you should know before you learn about the entire step-by-step import procedure and documentation.

So let's see.

So what are those areas that you have to know about?

At least the concept, at least the basic knowledge things like typical import transaction framework.

What is the typical import transaction framework?

The flow of the documents.

The flow of the goods.

The flow of the payment. how it happen, who pays whom?

Who are the intermediaries?

The main intermediaries.

Very basic.

Typical import transaction framework.

I'll be talking about what you should know about.

That's also called the game plan or the rules of the game.

So this typical transaction framework tells you how this game is played.

So this understanding is very very useful and important.

Then the different methods of making international payments.

So before you sign a contract you should know that.

What are the different ways of making international payments?

Why they are required.

How your bargaining power can protect you to avoid any risk, any commercial risk of non-delivery of the goods.

So what are the payment methods?

The options that are available before you sign the purchase order before you sign the international trade contract?

I'll be talking about that.

What are the different methods that are available for making international payments, and which method is more safe for you as an importer?

You should also know about that.

I had talked earlier also about the international commercial terms.

That is the INCOTERMS because this whole game of the foreign trade imports import transaction is based on the delivery, it is based on the risk-taking, it is based on the obligations responsibility.

So in this movement of goods from the country of origin to the country of destination, there are so many different points, including the port of loading, the port of discharge, the first carrier, and Ex factories.

There are so many different points that can be agreed between the buyer and the seller.

That is you as the importer and the supplier.

The point where the responsibility and the cost and the obligations change hands.

What are those points? And are there some commercial terms for this purpose that are understood internationally?

So those things you should know, we'll be talking about those things.

Then you should have a fairly good knowledge of the international movement of goods.

That means the logistics and shipping.

So you should know about what are the different standardized units, Unitization, Palletization containerization for sea shipment, and similar containers and pallets for air shipment.

What are those options that you have and what are the basic tenets of sea transportation and air transportation?

What are all the different types of services that are available by sea and by air?

What different options as an importer do you have in international logistics and shipping? This information, that knowledge, basic knowledge is very important and I will provide you with that knowledge in this section.

So I will tell you all the things in this section, the areas, and the topics that you should know before you embark on your main journey of learning about import documentation and procedures. Then you should have fairly good knowledge about cargo insurance, also called marine insurance for sea shipment. And the general insurance for moving the goods, what are the different options you have?

What different types of insurance are available?

What are the basic principles of international cargo insurance?

Those things you should have a fairly good knowledge of that I'll be discussing in this section.

Then I'll be also giving you the list of the different typical clauses of an import contract.

What are the common clauses that are there in a typical type of international purchase contract?

So as an importer, when you place the order with the supplier, what are the different clauses to negotiate with the supplier like you negotiate for the payment terms, like you negotiate for the commercial terms?

Similarly, you have other clauses also that are there in the contract.

You should know about that.

The purpose of the different clauses.

Only then you will be able to sign a robust and favorable international purchase contract.

Then you should also have a fairly good knowledge, or at least the basic knowledge about the foreign trade policy of the local governments that are involved.

That means the local government of the home country, the country of import, and the local government of the supplying country, that is the exporter's country.

So what are the basic things in a foreign trade policy?

What things to look into this foreign trade policy, the things that you should know to become a successful importer.

So those things will help you understand the import documentation, not the entire importation.

That is not the purpose of this course.

The purpose of this course is to make you understand the procedures and documentation.

And what are the areas of the foreign trade policies that relate to the typical import procedures, importation procedures, and documentation?

So those things I'll be talking about in this particular lecture that is related to the foreign trade policies of the partnering countries.

And then you should know the concept of international classifications of the different types of goods that are traded internationally.

So what is the role of this International trade classification, so-called ITC?

And in a harmonized way, that is the harmonized System HS system.

And what are the codes that denote a particular category?

So how does this happen, how this categorization is there? And how it is connected with the import tariffs?

Especially the import tariffs in your own country, the importing country.

So how these import tariffs are calculated based on these classifications?

Then finally one thing that you should understand is that all this game of foreign trade movement of goods from the supplying country to the port of entry, it is all in alignment with the different types of trade agreements among the countries, among the governments.

So we have two types of international trade agreements among countries.

One category is called the multilateral agreement.

Multilateral trade agreements.

These multilateral trade agreements are mainly under the umbrella of the World Trade Organization, under the aegis of the World Trade Organization.

As the member countries, there are more than 180 countries that are members of the World Trade Organization, and in this umbrella organization, they have multilateral agreements of different types that have a direct or indirect impact on your transaction and even on your landed cost.

You should have this knowledge about these multilateral agreements that impact the overall shape of the trade transactions of this type.

That happens.

So as an importer, you should have this knowledge.

And then you have the bilateral trade agreements.

The bilateral trade agreements refer to the agreements among a few countries.

The countries that have special agreements with each other, so-called maybe free trade agreements or some kind of preferential agreements where the import duties and preferential import duties are there and that have a direct impact on the landed cost.

So the knowledge about these multilateral and bilateral trade agreements will come very handy in the overall knowledge about import procedures and documentation.

So these are some of the areas, the basic understanding I will give you in this section through different lectures related to these topics.

So let's go into this section and let's look at these different areas.

So to start with, let us talk about the typical import transaction framework.

What is this import transaction framework? How is this game played?

So some of the ideas you already must have.

But this particular lecture will help you to recapitulate your knowledge about how this game is played between the supplier and the buyer.

That is the importer, that is you.

So you as an importer, approach the supplier, identify the supplier, a potential supplier who can give you a good offer of the goods, who can meet your conditions, the user's conditions, your needs of the packing, all the things he can provide to you and then you identify such exporters and you zero in on some particular supplier to supply you the goods internationally, and you enter into an export contract. For the exporter, it is the export contract, and for you as an importer, it is an international purchase contract.

So whatever the name is, there is a trade contract between the supplier and you as the importer.

So this particular purchase contract, an international purchase contract that is signed between the supplier and the importer, that is you, serves as a template for the complete transaction.

But this complete transaction is normally of the shape of this typical transaction wherein the exporter that is the supplier, after getting the international purchase order or the export contract, prepares the draft LC conditions.

So we are assuming in this typical import transaction framework that the payment method is the letter of credit.

That is the most balanced method of payment, but little costlier.

But this is the most safe for both parties.

We are assuming that in this framework we are talking about the letter of credit transaction.

So the exporter prepares the draft LC opening instructions based on this international purchase contract that you sign based on your negotiation, based on your knowledge.

These draft LC opening instructions are given to you for further processing with the issuing bank that is going to issue the letter of credit in favor of the supplier.

So what do you do? Based on this draft LC opening instruction, you do the due diligence of this document and prepare your own LC opening instructions, because this opening instruction is a very, very important document that has to be given to your bank, your local bank, that is the importer's bank in your country.

That is also called the issuing bank because it issues the letter of credit based on your opening instructions.

These LC opening instructions are based on the draft LC opening instructions that are drafted by the supplier.

So the letter of credit that is opened by the issuing bank, that is your bank is advised through the supplier's bank in the supplier's country.

So this bank in the supplier's country advises the LC and acts as the advising bank.

The supplier has the option of either accepting the letter of credit or rejecting it.

So if the letter of credit is in alignment with the draft LC opening instructions that were prepared by the exporter that is the supplier, in a majority of the cases, the supplier will not reject the letter of credit.

And the moment the letter of credit is accepted by the supplier, the LC comes into effect.

So the payment is now guaranteed by the LC issuing bank that is going to charge you for this service.

You as the importer, have to pay the services of the issuing bank.

Some LC issuing charges will be paid or any other service that is related to the LC opening by this bank.

All those charges have to be paid by you as an importer, and that is the reason LC is a little expensive proposition for making the initial payment.

I will explain in more detail when I will talk about international payment methods in the next section.

So based on the LC, the exporter will prepare the shipment.

The supplier will prepare the complete shipment either by manufacturing or by procuring from the market and will dispatch the goods either by sea or by air, depending on what has been agreed between you and the supplier. And the moment goods are loaded, for example, in this case, let us assume it is the sea shipment.

The goods, as soon as they are loaded on the ship, the documents will be procured by the exporter.

That is the supplier.

That would include the transport documents.

It has already prepared the commercial invoice, the certificate of origin, the packing list, and the other certificates that have been demanded by you, including the quality certificate or any other mandatory certificates that are required by the customs and the border control of your country at the port of entry.

So what are the prescribed documents that are mandatory and will be prepared by the supplier that is to be supplied by the supplier along with the goods?

So those documents will become part of the LC presentment documents which means the supplier will procure all these documents, original documents, and will present these documents to the negotiating bank in his own country.

So, like advising banks, the negotiating bank is there the local bank of the supplier's country.

And that bank will collect all these documents and will negotiate those documents with your local bank.

That is the LC issuing bank.

And if all the documents are in order and the shipment is already made, the transport documents are also there.

It will make the payment to the supplier, and these documents will be sold to you by your bank.

That is the LC issuing bank.

You have to pay any pending amount, whatever is there against the letter of credit.

And you will collect all these documents and you will use these documents to take possession of the goods that might have already reached the port of entry, that is, the port, the seaport, or whatever. the agreed place is there as per the contract.

At that point you will get the goods cleared from customs, depending on what has been agreed in the contract and what are the international commercial terms, you may have to get the goods cleared at customs and take possession of the goods from the shipping company by providing the original transport documents along with the other commercial principal documents, so-called LC documents.

So these documents you will be using to get possession of the shipment goods.

So as you can see here, in this particular typical import transaction framework, you can see the flow of the goods from the port of loading to the port of discharge via the ship.

So carrier will take the goods at the port of loading and will deliver the goods at the port of discharge.

And the flow of the documents, you can see here from the supplier to the supplier's bank and then to the issuing bank.

Your local bank and your local bank will give this document to you.

And these documents will be further given to the carrier or the local government, that is the customs department and the border control Department.

So to get the goods cleared.

So this is the flow of the documents.

You can also see in this typical import transaction framework, the flow of the payment from the Importer's bank, that is your bank, LC issuing bank to the negotiating bank, and then to the supplier.

So this is the flow of the payment.

And this is the flow of the documents.

And this is the flow of the goods.

So you can see all these different flows in this typical import transaction framework.

And you should focus on very importantly, what is the role of the issuing bank.

That is the LC issuing bank.

That is your bank.

What is the role of the home country customs border control that will prescribe certain documents, very important documents, and mandatory documents without which goods will not be cleared by your customs, your country customs, and border control?

So what is the role of the home country customs and border control, and the role of the shipping company that is going to deliver goods from the port of origin to the port of destination?

That means the port of entry how these goods are going to be shipped by the shipping company, and how these goods are going to be handed over to you using the original documents in this shipment?

So this is the typical import transaction framework that you should be clear about.

To understand further in this course the complete and entire import documentation and procedures.

So this is the first thing you should have fairly good knowledge about to become conversant with the important things that are going to help you in understanding further learnings in this course.

The common methods of international payment can vary depending on the specific circumstances of the transaction and the needs of the parties involved. However, some common methods of payment include:

1. Advance payment: A lump sum payment made by the buyer before delivery of the goods.

2. Letters of Credit: A payment mechanism in which the buyer's bank issues a letter of credit in favor of the seller, guaranteeing payment once certain conditions are met.

3. Documentary Collection: A payment method in which the seller's bank collects payment from the buyer's bank, using shipping documents as collateral.

4. Open Account: A payment method in which the buyer pays for the goods after the delivery, without the need for collateral.

5. Escrow: A payment method in which a neutral third party holds the funds and releases them to the seller only once certain conditions have been met.

6. Installments: A payment method in which the buyer makes periodic payments over time, rather than a single lump sum payment.

The choice of payment method will depend on the specific needs and circumstances of the parties involved, including factors such as the size of the transaction, the creditworthiness of the parties, and the level of trust between the parties. The terms of payment should be clearly defined in the contract to minimize the risk of misunderstandings or disputes.

Welcome back to the course.

So now let us talk about what are the different methods of international payments.

It is very, very useful to know the different methods that are available to the importers for making international payments.

So as you can see here in this particular diagram, there are several methods of making international payments. Starting with the advance payment to the letter of credit, that is the documentary credit to the bank collection against the DP.

That means documents against payment and the bank collection against the DA.

These are the documents against acceptance to the open account and the consignment sale.

So these different payment methods, have their significance, their importance.

Depending on the product, depending on the industry, depending on the practices of a particular country of origin or the country of destination, different payment methods are used and negotiated and bargained depending on the bargaining power of the supplier and the importer.

So, for example, if you have as an importer very weak bargaining power, you may have to agree to the advance payment to the supplier because it is difficult to get the goods.

And there are very few suppliers.

They enjoy very strong bargaining power.

So you may have to go in for the advance payment, which is the least secure method of making a payment because you have already paid money to the supplier.

Now this money can be 100% payment or it can be partial payment.

So it all depends on the negotiations and the situation.

So advance payment is one method, much easier for anyone because there is no involvement of any bank.

And the documentation and everything is much simpler and easier.

But it is a very very insecure method of payment for the importer.

So this is the least secure method of international payment.

And it is just a compromise that you need goods urgently and you have to make the advance payment because the supplier will not give you the goods without the advance payment.

And these advance payments can generally be done through credit cards or wire transfers.

So different methods of bank transfer.

It is there, but the direct involvement of the bank is not there, so the risk of the bank is not there.

Then the second very popular method of making international payments is the letter of credit.

That is the documentary credit.

This is one international trade financing instrument that has been discussed and researched most internationally.

This is supposed to be the best method for both the supplier and the importer, but it is the costliest method.

It is having the level of security for both the parties, that is the supplier, as well as the importer that is balanced.

The risk or the protection for both parties are very similar because of the involvement of the third party that is the bank.

And depending on the reputation of the bank, the payment to the supplier is secure and in the case of any default by the supplier, payment will not be made to the supplier. Depending on the different consequences of the letter of credit, there can be some penalties for the suppliers for the default in supplying the goods or non-delivery of the goods.

So there are different situations and there are a lot of legal implications of the letter of credit because of the involvement of a third intermediary, that is the bank, which ideally should be the first class bank, the first class bank as per the ICC Paris, France. That is the nodal agency that announces the guidelines for the management of these letters of credit, this international trade financing instrument through a document called UCP.

Different versions are available.

The most popular at present times are UCP 500 and 600.

Then the reason why this letter of credit is not that popular is because of the costs that are involved in the letter of credit, because of the risk premium attached to this instrument, the risk premium that is charged by the bank because of the payment risk, the liability of the payment is of the bank.

So this risk premium makes it a very costly instrument.

In such cases, where the cost is not bearable for the importer to make the international payment through a letter of credit, and if the supplier agrees, then the other trade financing instruments that are offered by the international commercial banks, are called the bank collection.

So the bank collection is generally of two types.

One is the documents against payment and the second is the documents against acceptance.

So in the bank collection, the risk of the bank is not there.

So what happens when you agree on these bank collection terms with the supplier, the supplier is supposed to send the original documents for the sea shipment, including the transport documents, the commercial invoice, packing list, certificate of origin, quality certificates, or any other documents that are required by you as an importer.

Those original documents are sent through banking channels. And it comes to your local bank which is the collecting bank.

After you make the payment, only then these documents will be handed over to you as an importer.

So this is the process that is called the bank collection. Herein if the payment has to be made immediately for getting the documents, that is payment at sight.

That kind of situation is called bank collection on the DP terms, that is the documents against payment.

And if there is some usance period involved, the meaning of that is that you get the documents against the acceptance letter, that you accept that payment has to be made, and this payment will be made after a certain Usance Period, maybe ten days, 15 days, 30 days.

Whatever has been agreed between the importer as well as the supplier that usance period, makes it necessary for you as an importer to get the documents against the acceptance letter or acceptance.

So it is called bank collection against DA terms.

So starting from the advance payment method to the letter of credit to the bank collection on DP or DA terms, the protection for the importer that is you is improving.

Advance payment is most nonsecure for you and a letter of credit is more secure.

Bank collection is even more secure for you, and bank collection through DA is even more secure because here you are not paying.

You are simply giving the acceptance letter.

And then you have the other methods.

Those are called the open account and consignment payment.

Now depending on the bargaining power you enjoy, you may make the supplier agree to supply the goods on an open account.

The meaning of that is that goods will be supplied not against the payment, they will be supplied and the documents will be given to you.

The payment will be made as per the open account.

That can be 30 days account. That can be 60 days account. That can be 90 days account or even more. So depending on the period of the open account. you make the payment at certain intervals. 30 days intervals, 60 days intervals, or 90 days intervals.

So that is called the open account.

Then the consignment terms of international payment in the form of an open account, wherein the payment is made after the goods have been received by you from the supplier and have been already delivered to the end user, or sold to the end user, and the payment has been made by the end user to you.

Based on that payment, the payment will be made to the supplier.

So here there is no fixed period of the payment.

The meaning of that is the consignment will come to you.

That consignment has to be sold.

Payment has to be received from the buyer and user customer, your local customer.

And when that payment has been received, you will make the payment to the supplier.

So this is the most secure method for you as an importer.

A consignment sale is the most secure method of international payments.

So these are the different types of international payment methods that are used depending on the different situations and different scenarios of business.

So in the next slide, what I will do instead of discussing in depth all these payment methods, I will focus on the letter of credit which is the documentary credit. If you understand the procedure and the flow of the goods, the flow of the documents, and the payment in the letter of credit, all other methods will be crystal clear to you.

So just by explaining how the letter of credit works, you will understand the complete gamut of the different international payment methods that are used internationally.

In this particular diagram, there are few players in this.

I will explain to you who are the players. In this scheme of things for the process of a letter of credit, you can see here who are the important intermediaries, the first party, the second party that is the importer, and the exporter. The importer is there. Exporter is there. The importer's bank is there. The exporter's bank is there.

So these are the main four players actors of this process of the letter of credit.

So what happens that I had explained also in one of my earlier slides when I was talking about the typical import transaction framework.

So we are building upon whatever we discussed in that particular lecture.

So here is the first step after the contract has been signed between the supplier and the importer.

An international purchase order or international purchase contract has been already signed between the two parties.

First party and the second party, the first party being you as an importer.

The second party is the supplier, the exporter.

So based on that international purchase order, whatever has been agreed or there are any addendums or there are any additional emails, communications that are there, that whole communication in black and white are used by the supplier to draft an LC opening instruction.

So this is the draft LC opening instruction that contains the details of the letter of credit that has to be issued by the Importer's Bank.

So what are the expectations of the supplier from the letter of credit, the documentary conditions, or any other conditions that are there in the letter of credit?

Those details, those instructions are jotted down by the exporter that is the supplier in the draft

LC opening instructions.

This draft is sent to the importer.

Now, importer studies this draft letter of credit opening instruction LC opening instructions. and if he is satisfied that it is in alignment with the communicated agreements between both parties, he will prepare the final LC opening instructions.

As you can see here in step number two, the LC opening instructions are prepared by the importer and given to the importer's bank, that is the local bank of the importer that is you.

So based on this LC opening instruction in step number three, the LC issuing bank, that is the importer's bank issues the letter of credit in favor of the supplier and sends this LC document for acceptance by the supplier not directly to the supplier, but rather in step number four to the advising bank, that is the local bank of the exporter in the exporter's country that acts as the advising bank.

Step number four, advises the letter of credit to the exporter for the decision to be taken by the supplier, whether to accept the LC or not, to accept the LC.

So the exporter also takes the help and the advice of the advising bank to understand the LC, to see all the conditions that are there and match those conditions with the draft LC opening instructions, and if they are in line with the agreed terms and conditions, as per the draft LC opening instructions and the international purchase order that was signed between the first party and the second party, invariably exporter will accept the letter of credit.

So in step number five, as you can see here, the exporter, after accepting the letter of credit, makes the shipment through the sea route from the port of loading to the port of discharge to the importer. So as soon as the goods are loaded, it can secure all the documents that are demanded by the letter of credit.

So the documents that are the requirement, documentary requirement, and documentary conditions of the letter of credit are to be procured in original by the exporter and in step number five. these documents are to be presented to the local bank of the exporter which may be the same bank as the advising bank, or it may be a different bank, but it is a local exporters bank that acts as the negotiating bank.

So the documents are presented to the negotiating bank or the nominated bank.

So there can be different names of these banks.

But I'm just taking the simplistic view and using the very common names.

The names that are by default.

So this negotiating bank accepts the documents if there are no discrepancies, and if he finds any discrepancies, it suggests the exporter to quickly rectify those discrepancies if they can be rectified.

In case this cannot be rectified depending on the agreement between the exporter and the negotiating bank, the negotiating bank will finally send these documents in step number six for negotiation to the issuing bank.

So the complete set of documents that is presented by the exporter to the negotiating bank is sent to the Importer's bank, that is the issuing bank in the importer's country.

So the issuing bank in step number seven, if it finds that the documents that are presented are compliant as per the UCP 500 or 600, whatever has been the agreed version of the UCP of the letter of credit, verifies all the documents.

If the bank finds all the documents compliant in step number seven, the bank that is the issuing bank in the Importer's country, that is the Importer's bank debits the importer's account and releases original documents to the buyer, also debiting all the different LC opening charges or any charges that are payable to the importer's bank and credits the Exporter's bank, that is the negotiating bank for the LC amount, and the Exporter's bank that is the bank.

After the money has been received, hand over or transfer the money to the exporter.

So as you can see from this whole scheme of the letter of credit, and how it works, you will see these are the important steps that are involved in the complete process of the LC.

How it works.

So all other payment methods, the advanced payment or the letter of credit that we just discussed, or the bank collection or the open account or consignment sale, all are derived from this method.

In those methods that are not the international trade financing instruments of the bank, that is the letter of credit and the bank collection, all other methods.

The involvement of the bank is not there.

Therefore those methods, the cost of making the payment is less, but they are either insecure for the importer or they are insecure for the supplier.

So what is secure for the importer is insecure for the supplier.

So this is how it works.

Hello friends.

Welcome back to the course.

So in this particular lecture, I will be talking about the international commercial terms that I had given the introduction about in one of my earlier lectures.

So these international commercial terms are required for signing the international purchase contract, wherein you have to indicate and agree with the supplier.

What are the points where the obligation and the risk, mean the obligation of the cost?

Who bears the cost of the transportation, the loading of the unloading, or any incidentals that are related to the shipment?

What are those points at which the obligation of the seller transfers to the importer, that is you? As well as what are the points where the risk transfers from the seller to the importer.

So these two points can be different.

You will soon start understanding in this whole game that the cost angle and the risk angle are not exactly connected.

So this is the reason why these international commercial terms become a little complicated, the point at which the obligation of the seller changes hands to the importer and the point where risk transfers may be different.

So this is what I will try to help you understand in this particular lecture.

And what are those points?

So as I had mentioned to you, as per the latest international commercial terms that have been announced by ICC Paris, France International Chamber of Commerce, that has already announced the latest international commercial terms that are effected now from January 2020.

So these are Incoterms 2020, those Incoterms 2020 I'll be discussing in this lecture. And there are 11 such terms.

So I will explain to you what are the points where the obligation and what are the points where the risk transfers from the seller to the buyer.

So those things I am going to discuss in this lecture.

So as you can see in this diagram, this diagram explains the movement of the goods from the exporter to the importer.

So from the exporter goods are loaded on the first carrier that may be a truck.

That may be some other kind of carrier.

Generally, it is a truck or lorry.

Then it is brought to the port of loading where the goods are loaded on the ship.

The ship carries the goods to the port of discharge, and at the port of discharge, the goods are unloaded and loaded on the truck or the lorry to reach the agreed place or the importer's warehouse buyer's warehouse.

So this is a very typical understanding that you already have from the earlier lectures in this course.

So you know how the goods move from the exporter to the importer.

Now, if you look at the bottom of this particular diagram, you will find different zones that are there, starting with the exporter's warehouse to the agreed place in the exporter's country, that is the seller's country, supplier's country, the port of loading that also is in the supplier's country and high seas.

When the goods are loaded onto the ship, the ship sails in the international seas.

These are the high seas and cross the border of the Exporter's country to reach the high seas, and then finally to the port of discharge. And at the port of discharge, after that, the zone is the place where the goods are to be delivered.

Agreed place.

So it is not exactly necessary that the goods will be delivered at the agreed place.

The goods may be delivered at the Importer's warehouse also.

So you have to notice these all different zones that are there in this whole process.

So these zones signify the areas where the possibility of the shift of the obligation from the seller to the buyer should happen somewhere.

And the risk also transfers.

An International Purchase Contract is a legally binding agreement between a buyer and a seller for the purchase and sale of goods across international borders. It outlines the terms and conditions of the transaction, including the price, delivery date, payment terms, and responsibilities of each party. The contract also addresses issues such as customs duties, tariffs, and compliance with international trade laws. The purpose of the contract is to minimize the risk of misunderstandings or disputes between the parties and ensure a successful transaction.

So now is the time to understand something about signing international import contracts.

For an importer, it is very, very useful to know the intricacies of signing the international purchase contract, like how it is to be signed, what is the format, what are the different clauses, and the meanings of those clauses.

Or maybe if I show you some examples of the international purchase contract that I will be doing in this lecture, you will get an idea of a real-life international purchase contract. And the significance and importance of every clause, typical clauses that are generally there in the typical international import contract.

So in this lecture, I will first list out the different clauses, typical clauses that are there in international purchase contracts.

And then I will share with you one example, one sample of the international purchase contract between two large companies.

That very similar contract can be used by you as an importer.

Here I want to tell you something about smaller orders, international purchase orders, many times there is no formal international purchase contract sometimes, so it is good to have.

But many times the importers do not sign any formal kind of international purchase contract.

Rather, they rely upon a Proforma Invoice signed Proforma Invoice.

That means the proforma invoice that was raised and sent by the supplier, they simply sign it and confirm the order, maybe on the email also, and some of the terms and conditions they may share on email with the supplier.

So that is also there.

That is a very common practice, but it is always better to know the intricacies of an international purchase contract, and depending on the situation, depending on the product, depending on the size of the order, you may like to have a simple to medium to highly complicated international purchase contract, depending on what is your judgment in a particular situation.

International sales contracts typically contain a variety of clauses that define the terms and conditions of the transaction. Some common clauses that may be included in such contracts are:

1. Description of the goods: This clause provides a detailed description of the goods being sold, including the quantity, quality, specifications, and any applicable standards or regulations.

2. Price and payment terms: This clause outlines the price of the goods and the payment terms, including the currency used, payment method, and payment schedule.

3. Delivery and transportation: This clause specifies the delivery date and location, the method of transportation, and any associated costs or risks.

4. Insurance and risk of loss: This clause describes the insurance coverage and who bears the risk of loss or damage to the goods during transportation.

5. Inspection and acceptance: This clause outlines the procedures for inspection and acceptance of the goods upon delivery, including any applicable deadlines or requirements.

6. Warranties and guarantees: This clause defines the warranties and guarantees offered by the seller regarding the quality, condition, and performance of the goods.

7. Force majeure: This clause addresses unforeseen events or circumstances that may prevent the seller or buyer from fulfilling their obligations under the contract, such as natural disasters, war, or government regulations.

8. Dispute resolution: This clause outlines the procedures for resolving disputes that may arise between the parties, including arbitration or mediation.

9. Governing law and jurisdiction: This clause specifies the governing law and jurisdiction that will apply to any disputes or legal actions arising from the contract.

It is important for both parties to carefully review and negotiate these clauses to ensure that their respective rights and obligations are clearly defined and understood.

So let us now first have a look at the typical clauses in an import contract.

What are the typical clauses in a typical international purchase order?

Or you can also call it the sales contract or sales order, whatever it is.

So there are clauses and mentions of the subject matter in this way, starting with the parties to the contract, which means who are the parties to the contract?

That is the buyer and the seller, the address, the company name, and the essential information.

At times you may include the contact name also of the person in this, but generally, it is the name of the company and the address of both parties, including the country of origin or the country of the headquarters.

So depending on who is buying the goods who is supplying the goods and where they are physically located, generally, it is better to have those addresses here.

So in this subject matter you can include what are the goods those have been purchased.

If they are more than one description, you may list out the details of the material list whatever way.

Depending on the situation, you may have the subject matter which may sometimes run into several pages also. Then about the prices that are being sought for the different goods that are part of this sales contract, and what are the commercial terms, C and F, CIF, FOB.

The next clause refers to the terms of payment.

So what are the terms of payment like advance payment or the letter of credit?

Or maybe the bank collection or maybe the open account consignment sales.

So depending on what are the payment terms that have been agreed with the supplier, those have to be explained and described.

So in my example, which I will be taking up in this lecture, I will show you how it is to be described.

Then the next clause, a very typical clause refers to the packing.

It refers to the technical and scientific requirement of the goods to be packed, depending on the contents, depending on the constituents of that material that is being supplied, as well as depending on the mode of transportation.

If it is being transported by sea, then packing has to be seaworthy.

If it is being transported by air, then the packing has to be airworthy.

So all the scientific and technical wisdom has to be applied in describing threadbare about the packing.

That is very, very important because of the distances involved in international trade.

Then the next clause refers to the warranty that is being given by the supplier for the goods that are being supplied to you as an importer.

So whether it is a limited warranty and if it is unlimited, what are the limitations?

Those things have to be described.

Then in the next typical class, you may require a clause describing the different certifications that are applicable or that may be required, and some of them may be mandatory for importation in your country, your customs, your border control may need certain certifications.

For example, if you're importing medicines, then your local government may have different types of certificates for the merchandise that is being imported, and this certification may also be required for the technical identification of the goods by the local customs or any other local authorities in your country.

These certifications are important.

Another very important role of these certifications is to ensure that the goods that are being supplied are of the quality that is desired by you.

So these are the different purposes of these certifications.

Then in the next clause, you may be typically talking about confidentiality.

So the demand for confidentiality may be absolute.

That may be limited confidentiality.

So with some kind of escape for both the parties because of some government rules and regulations, you may have to disclose some of the contents of the contract.

So with those exceptions in general, confidentiality may be required to be maintained for this contract.

So that has to be described in this particular clause.

So in my example, I will show you how it has been described in a particular case that I'll be taking up.

Then another typical contract clause refers to the arbitration clause.

So in this arbitration clause, the purpose is that what is the jurisdiction of the dispute settlement in case of any conflict that may arise in the course of the execution of this contract and this particular transaction.

So, for example, what is the jurisdiction, what is the country, the law that will apply to this particular contract, and in case of any dispute which authority in a particular country or a group of countries would be responsible for the arbitration?

So those things will be described that I will be showing you with my example, uh, very soon in this lecture.

And the next typical clause refers to the Force Majeure.

So force majeure is a very common and general clause that is invariably there in almost all international purchase contracts and refers to the description of the incidents, events, and happenings that are beyond the control of the parties of this contract.

So if any such kind of event happens, and it may have some kind of impact on the transaction or the physical safety of the goods, that is beyond the control of anyone.

Those things are described in this particular clause to not make any of the parties liable for things that are out of their control.

So that is the purpose.

Then another typical clause, a very common clause in a typical international purchase contract refers to the breach liability.

So what is this Breach liability?

Breach liability refers to the liability of the parties of the contract in case of any breach of the purpose and significance, and the impact of this contract having an impact on the transaction.

So any kind of breach of the contents and the agreed terms and conditions of this international purchase contract, if any of the parties breaches willingly or unwillingly, knowingly or unknowingly, whatever may be the case, what are the liabilities or the punishments or the penalties that are there for any of the parties that is the breaching party?

Another very typical clause that is uh, generally there in international business contracts refers to the contract disclosure.

So it has some relationship with confidentiality, but it specifically mentions that there may be impending reasons and situations that may require any of the parties to mandatorily or summarily disclose the contents of this contract to certain organizations or authorities.

For example, in the importing country, the local government may make it mandatory for certain goods and certain products, the nature of the contract that is being signed to make it open in the eyes of the local government,

So local government may like to know and keep a record of the nature of the contract.

It may be mandatory. And during the negotiations, the supplier might have agreed to such disclosures.

So that kind of disclosures that may be allowed, have to be mentioned in this particular class.

Then another clause that is very, very important and very useful in international practice contracts refers to the Non-Transfer.

So what is the meaning of this nontransfer clause?

It is in the interest of the importer, you as an importer, that the order that has been signed, liabilities, and obligations as per the contract are not transferred to any third party that is not present in the present international purchase contract.

So any of the responsibilities, obligations, and risks without the explicit permission of the importer, are not transferred to a third party.

So to avoid such situations wherein you suddenly realize that you're not dealing with the particular supplier that is part of this contract, and suddenly you find that some other party that is unknown to you is now in the picture, and the goods will be supplied by some other party.

So that situation has to be avoided.

So this particular clause will be very, very important for that purpose.

Then another clause refers to the miscellaneous items.

So any items that may be important and necessary for the subject matter, for the goods in question, for the situation in question, and the type of transaction.

Some of the things that cannot be included in the other typical clauses of an international purchase contract,

those things can be included in this particular clause.

That is the miscellaneous clause.

So in my example, I will show you what kind of matters can be part of this particular clause.

Finally, these are not all the exhaustive list of the clauses that are included in a typical purchase contract, but these are very common.

So the last clause refers to the attachments in this contract.

So I will show you one example.

What kind of attachments may be there?

Common attachments to an International Purchase Contract include:

1. Technical specifications: Detailed information about the goods, including their dimensions, composition, and performance specifications.

2. Samples: Physical samples of the goods being sold, which may be used for inspection and acceptance purposes.

3. Drawings and diagrams: Visual representations of the goods, including schematics and diagrams.

4. Test reports: Documentation of any tests performed on the goods, such as quality control or safety tests.

5. Bill of Lading: A document that serves as a receipt for the goods being shipped, and provides evidence of ownership and delivery.

6. Insurance certificates: Evidence of insurance coverage for the goods during transit.

7. Certificates of Origin: Official documents that certify the origin of the goods and may be required for customs purposes.

8. Inspection certificates: Documentation of any inspections performed on the goods, including results and conclusions.

9. Packing lists: Detailed information about the packaging of the goods, including the number and type of containers, and any special packaging requirements.

The attachments included in an International Purchase Contract may vary depending on the goods being sold, the needs of the parties involved, and the laws and regulations applicable to the transaction.

So here you can see three examples of the attachments to international purchase contracts are given here starting with the material list.

In case the material list is very long and it cannot be covered in the subject matter, or the material list is more exhaustive than the subject matter in the international purchase contract. that list can be put here as an annexure, and generally, it is to be put first because that is the main subject matter of the contract.

And then if the warranty details are very exhaustive and very descriptive, that again can be part of the attachment as annexure II in this case, for example. Or inspection process. How the inspection will be carried out?

That may be very different for different products, and different types of transactions, depending on the size of the order, the inspection process may be very elaborate and this whole process may become an annexure, which may be the third annexure in such kind of contract.

So these are three examples of the attachments that can be there in a typical international purchase contract.

Now in the next lecture, I will take up one sample international purchase contract or sales contract, whatever you may call it.

And I will demonstrate to you what has been included in different clauses.

This particular purchase order that I'm taking as the example in this coming lecture is based on a real contract, a real order, but sensitive and confidential information has been omitted for education purposes.

So let's go to the next lecture.

So friends, let us look at this example of one of the sales contracts that I wanted to share with you.

So this is not the sales contract, that is the original sales contract.

It is the educational copy of one sales contract that is based on the original sales contract with certain information that is sensitive or for confidentiality reasons.

Some information has been suppressed from here. So. But it will give you a fairly good idea about what all different clauses are there, and what kind of contents are there in these clauses.

That is the idea.

So let us have a look at these different clauses in this particular sales contract.

As you can see here, this particular portion starting part of the sales contract, the number of which is given here, it contains the information about the parties. Which are the parties?

So one is the seller and the second is the buyer. The supplier's name, address, and contact details are given there, as well as the official name of the buyer that is going to be in the documents, all the different documents

that has been mentioned here.

So the company name and address, all these things are given here.

This contact number that is not given here is, uh, describing a complete sales contract between the seller and the buyer.

The seller is from China supplier and the importer is from Germany.

So I will just give you a basic idea to start with about this contract.

So you will have a better understanding of what all the different clauses are there and what is the subject matter.

So basically the subject matter is like this.

The supplier from China is selling solar modules to one of the importers from Germany.

This particular contract is about that.

What are the different modules?

Solar modules, different specifications.

What is the price? And what are the terms of payment, terms of delivery, and commercial terms?

All these things are mentioned in this contract.

And that is the idea basically of this contract taking it as an example.

The parties to an International Purchase Contract are the buyer and the seller. The buyer is the party who is purchasing the goods and is responsible for making payment. The seller is the party who is selling the goods and is responsible for delivering the goods to the buyer. Both parties are responsible for complying with the terms and conditions outlined in the contract. In some cases, intermediaries, such as brokers or agents, may also be involved in the transaction and may be parties to the contract. The exact identity of the parties will depend on the specific circumstances of the transaction.

So in this.

This initial clause refers to the parties involved in the sales contract, the supplier and the buyer, that is the importer. And the subject matter is the goods, the prices.

All are described here in the second part of this contract.

Polycrystalline solar modules of different types, the quantities, different subcategories of the subject matter, the different quantities are there, and indicative price CIF Euro.

So CIF Euro is any European port that may be mutually decided between the importer and the supplier.

The concept is that this is CIF Euro so any convenient port will be there.

What is mentioned here is that the prices are according to the nominal power.

What is the power of the modules?

The indicative price is given there based on so and so price in euro or U.S. dollar.

We'll see what is mentioned here.

And it can be any currency whichever has been decided per wattage power.

So whatever the wattage power unit price is given there.

And whatever the nominal power of different modules, the price can be calculated.

Convenience. and for simplification, this particular process has been used to indicate the price per watt.

So this is what has been done here.

And here the average power is given there.

So based on the average power of different modules and the indicative price per watt, it is possible to calculate the total price per quarter amount per quarter is given there in Euro.

So this is how this particular clause contains the subject matter.

That is the material list, which is not very exhaustive here. You will find that the material list is not exhaustive.

The main categories of the different goods have been mentioned there. The average power price is given

there. The indicative price per watt is given there. Quantity is given there and accordingly, this whole table has been created.

You will soon find that in the attachment part of this contract, as I had mentioned in my last lecture, the detailed material list based on these main categories, and subcategories that are listed in the material list in annexure I in the attachment. So that I will explain in this particular context you have a better idea.

So you can see here different categories are there. Quantities and wattage power are given there.

Also here, the expected months of delivery are mentioned for each module because all the modules cannot be supplied in one go.

So that also are mentioned here in this particular subject matter.

So this is how this whole thing is done.

For simplification further, it is possible to make this kind of table also. Even the numbers can be given.

Model numbers can be given here and the pieces, wattage, unit price, and total amount can be rewritten here for clarification or a simple view.

It is possible to do that.

So that is also possible to do so.

This is basically what is being shown in the second clause as per my lecture that I had taken the last lecture.

Payment terms in an international purchase contract describe how and when the buyer is required to pay the seller for the goods that are being purchased. Payment terms are an important part of the contract, as they help to ensure that both parties understand their obligations and can avoid disputes or misunderstandings.

Payment terms typically include details about the currency in which payment will be made, the amount of payment that is due, and the date or dates on which payment is required. The terms may also include details about any deposit or prepayment that is required, as well as any interest or penalties that may be imposed if payment is not made on time. It is important for the payment terms to be clear and unambiguous, so that both parties understand exactly what is required of them under the contract.

Now, in the third clause that I had described, we are talking about the terms of payment.

So here you can see that the terms of payment have been described like this.

The above terms, trade terms shall be subject to the International Rules for Interpretation of Trade

Terms adopted by ICC International Chamber of Commerce, effective January 2000 January 1st.

So basically here, this particular sample has been taken from an old version of the sales contract that is valid today also.

So that time it was in 2000.

But at present, we are using it in 2020.

So accordingly we will have to make the modifications in the present contracts, where we will be mentioning Incoterms 2020, and uh, after mutual consultation between the importer and the supplier, the terms of delivery are CIF Hamburg port.

So incoterms commercial terms are CIF Hamburg port Germany or CIF any other European port.

So depending on the availability of the ships at different times, this particular sales contract is spread over several months in different partial shipments.

So because of that situation, the flexibility has been given.

It is not just CIF Hamburg port that is the preferable port, but the flexibility is given that it can be any other European port also.

So that is why it was mentioned CIF Euro, in the subject matter.

That is the second clause that we were discussing.

This is how it has to be done.

The buyer should effect so much percentage of the payment in advance for each order quantity by telex transfer within three working days after order confirmation and the Proforma Invoice opened from the seller as soon as the Proforma Invoice is raised by the seller, the buyer will make it some percentage of the payment.

It may be 50%, it may be 25%.

Whatever may be the advance payment that will be given.

So this is the description of the terms of payment in this contract.

So it further says that the remaining percentage suppose the advance was 25%.

Then the remaining 75% balance of the payment shall be paid for each shipment to the seller upon receipt of the shipment to the buyer's port, as soon as the module's solar modules reach the buyer's port.

Maybe in Hamburg, maybe in some other European port, wherever it is.

Payment shall be sent to the seller no later than one working day before receipt of the shipment.

So again, this payment is likely to be either through wire transfer or, uh, the credit card or whatever may be.

The different modes are there where the direct involvement of the bank is not there.

So in this particular case, you can see here this business is based on the confidence between the importer and the supplier.

The original bill of lading will be sent out to the buyer by express or by courier by DHL, or the bill of lading will be telex released to the buyer as soon as the seller receives the balance payment for each shipment.

So the 75% balance payment as soon as it is sent by credit card or whatever means within one working day after the receipt of the goods, the supplier will make arrangements to release the bill of lading, either through telex that is also available, that facility is also available, or the original bill will be sent by some fast courier that is maybe DHL or Blue Dart or whatever it may be.

So this is what has been mentioned here.

If requested by either party, the price can only be adjusted 15 days before each quarter.

So here they are talking of the quarter system. Uh, in one way it is like an open account.

So that is also there.

So it is not exactly that way.

It is specific to the shipment.

But uh, there are some elements of the open account terminologies that are used here.

So this is how it has been described here.

Now, if you look at clause number three which deals with the packing of the modules.

So here I will explain to you that when we were discussing the packing clause, how it have to be arranged? Here, is what it mentions as an example.

So this contract is more of an example.

You can modify this contract according to your needs and the copy of this particular contract in a in a, in a PDF file I have placed in the resource section of this lecture.

You can download it for your reference, and probably you can use some of the clauses for your future contract also.

So all goods shall be packed in a way that prevents damage from dampness, rust, moisture, erosion, and shock.

So packaging shall be adequate for transportation on the seaboard.

That is the ocean.

So you can see here that the packing details are given there.

So it further says going deeper into the packing details, the modules are to be packed with 24 pieces per carton downside. 24 pieces per carton with one box with two pieces inside on the top.

Total 700 pieces each in the 40ft container.

These are the details that have been negotiated between the supplier and the buyer.

And the supplier must have given this idea that how many pieces will come?

They must have done the calculations.

Then in clause number four, where we were talking about the warranty part here, what has been included in this particular example?

You will get an idea of what details are there in the warranty clause.

Seller shall warrant that the performance, quality, and specifications of modules are strictly in conformity with its standard production, descriptions, and explanations provided by the seller. that is, the supplier to the importer, as specified in Appendix two.

So there is an entire appendix two that is in the attachment part of this contract that we will be discussing at the end of the contract, where the exact details of the warranty and how it will be provided by the supplier to the importer are described.

So this is how the purpose of the attachment part comes where you put in the different types of annexures.

Then in clause number five which deals with the certifications that I had mentioned in my last lecture, it says in this particular case that the supplier will provide IEC 61215 and IEC 61730 certificates granted by TÃœV Rheinland Germany UL 1703.

The standards are UL standards for the engineering items that are being supplied, that is, the solar modules.

The UL is the engineering standards European standards.

So this particular clause that deals with the certifications will list out all the details that are required by the importer from the supplier, what kind of certificates are to be used, or things like the modules will be marketed as OEM products.

The buyer guarantees that the OEM certificate provided by the seller will not be abused.

For example, the seller's OEM certificate that will be issued as part of the contract will not be used for other manufacturers' products.

So these kinds of things will have to be ordered by the importer and the seller would like such things to be mentioned.

So what are the certificates?

What are the limitations?

What is the use of copyrighted material?

All those things that are connected with the certifications will be coming into this particular clause.

That is the idea.

A force majeure clause is a contractual provision that excuses a party from performing its obligations under the contract in the event of certain unforeseeable circumstances beyond their control. These circumstances may include natural disasters, war, terrorism, strikes, or other events that are considered outside of the control of the parties.

In an international purchase contract, the force majeure clause is included to provide protection for both the buyer and the seller in case of unforeseen circumstances that would make it impossible or impractical for one or both parties to perform their obligations under the contract. The clause typically outlines the specific events that are considered force majeure events and the process that must be followed if one of these events occurs.

If a force majeure event occurs, the party invoking the clause must typically provide written notice to the other party as soon as possible, and they may be excused from performance of their obligations until the force majeure event is resolved. The clause may also provide for the termination of the contract if the force majeure event continues for an extended period of time.

Overall, the force majeure clause is an important provision in an international purchase contract as it can protect both parties from unforeseen circumstances that are beyond their control.

So let us look at clause number six which deals with confidentiality.

What it writes here.

All involved parties shall treat the contents of the agreement and mutual access to the information during cooperation governed by the agreement.

Confidential.

That is a very general statement. In another clause that will come again towards the end of this contract. again, this clause will come, where some more details will be given about this warranty and its limitations.

So there can be two clauses depending on the requirement of the placement of one of the clauses at the start, where a general statement is given and the same clause is repeated in the contract, where a detailed description will be given. on this particular subject of confidentiality. It is possible to do that.

So in clause number seven that deals with the arbitration what it writes here, all disputes arising from the execution or in connection with the contract in question shall be settled through friendly negotiations. If no settlement can be achieved, if that is the case, the parties shall appeal to the International Chamber of Commerce ICC for arbitration. Here instead of the country, generally the countries are involved, and the jurisdiction and jurisdictions-related organizations of different countries are involved.

Maybe some European country, maybe Singapore.

Any of these countries are generally taken as the countries for arbitration purposes, but in this case, it is also possible, and which is also very common, to include the involvement of ICC itself, the International Chamber of Commerce, that also does this kind of arbitration.

It also provides arbitration services.

The decision of ICC is binding for both parties.

So here it should be noted that while the payments are being done in this particular contract, without the involvement of the banks, wherein the role of ICC comes. But in the contract also ICC provides these kinds of services of arbitration because they specialize in this area, because of their being into this particular international trading systems, generation of the ways of methods of doing international trade.

They have been there for almost more than 100 years in this particular field.

So it's a very reputed organization that can also be used and mentioned about the arbitration part.

Then force majeure clauses there.

That is clause number eight.

What it speaks in this particular contract can be seen here: "No party shall be held responsible for the failure or the delay to perform all or any part of the contract due to the force majeure conditions."

So these conditions may include flood, fire, earthquake, drought, war, or any other events that could not be predicted at the time of the conclusion of the contract and could not be controlled, avoided, or overcome by any of the parties to this contract.

However, the parties or the party affected by the event of the force majeure shall inform the other party of its occurrence, so they have to red flag any occurrence of any of these conditions in writing as soon as possible, and thereafter send a certificate of the event issued by the relevant authorities. Some kind of proof of documentary proof has to be provided.

It will be generally the local relevant authority wherever the occurrence has happened, that has to be used to the other party, but no later than 15 days after its occurrence.

Now it is possible depending on the type of condition that has happened, the event has happened.

It may require more than 15 days.

That has to be generally agreed.

So what it writes if the event of force majeure lasts over 90 days, the relevant parties shall negotiate the performance or the termination of the contract.

So if it is very severe, that kind of event that is beyond the control of any of the parties, the number of days that would be involved will be 90 days.

And if no solution is to be seen within these 90 days. the relevant parties shall negotiate further on this contract, for a new contract, for the performance, or maybe the termination of the contract entirely.

So depends on the situation.

Clause number nine that deals with the breach liability.

So what it says here, based on the requirement of the seller's commercial strategy, that is suppliers, the importer buyer warrants that it shall not resell the seller's product into the country of here it is mentioned Israel, it can be any country.

It depends on the context or the subject matter of the contract failing which the buyer shall be fully responsible for all of the losses of the supplier.

So breach liability is mentioning the breach of the contract.

If the conditions are breached, the penalty will be paid by the importer in dealing between the buyer and the seller.

Buyer shall under no circumstances reveal the identity of the buyer's customers or other customers.

So that should not be done by the importer, either internally or to the parties external to the seller's company.

So this has been mentioned here.

So all different types of breach liabilities are mentioned in this particular clause that I had mentioned.

Any kind of breach that can be by any of the parties suppliers or importers.

And uh, the thinking process should be there to formulate this kind of clause.

And a lot of experience is required in framing these kinds of clauses in international purchase orders.

Then another clause, number ten, deals with the contract disclosure.

So what it writes here, the buyer agrees that the seller can disclose the main content of this contract to the State Security Commission of the country, where the supplier is preparing for its listing affairs as legally required.

So in a given situation, because the seller is in the process of listing its company shares, that will be required as per the mandatory requirement of the local authorities, in this case, the State

Security Commission.

So the importer has to agree on such kind of escapes from the contract, as far as the disclosures are concerned, and that is basically against the confidentiality clause.

But, uh, whatever the things that are mentioned in the contract disclosure, that will have to be allowed. And these disclosures may be, uh, in the context of the supplier as well as in the context of the importer also. Another clause, the next clause that we had talked about in my last lecture deals with the subject of nontransfer, where I had mentioned the situation that any of the parties can transfer their liabilities.

So what it writes here, is no right to transfer any right or obligation of this contract by any of the parties without express written approval of the other party.

So that I had already explained this in my last lecture and that has been mentioned here.

So as I was telling you again, this clause has come with confidentiality why it has come.

Because there are certain contract disclosures, there are certain new conditions that have come into the contract.

So that's why this clause has to be repeated in this contract.

What it says here, both parties agree to maintain confidentiality concerning the details of this contract, except if that disclosure is necessary for each of the financial institutions to finance this contract.

So all those escape things that were coming in the different parts of this contract will make it necessary to reframe the confidentiality clause.

So the earlier clause was a very general statement.

Here it is being explained. Then the clause that relates to the miscellaneous inclusions in this contract.

So any of the things that may not fit into the other clauses can come here.

So let us look at what are all those things.

So we'll have a better idea of what can be included.

This agreement contains the complete agreement between the parties concerning the subject matter hereof and supersedes any prior understandings, agreements, or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

So this is one of the things that has been included in the miscellaneous clause of this contract.

The other thing that is included in this miscellaneous clause is that the terms of this agreement may not be amended or waived, except in writing executed by the party against which such amendment or waiver is sought to be enforced.

So different things that do not fit into any other clauses can come here in this particular clause.

Common attachments and annexures to an international sales contract may include:

1. Product specifications and technical drawings: This attachment provides detailed technical specifications of the product being sold and its components.

2. Quality control and inspection procedures: This annexure outlines the quality control and inspection procedures that the buyer and seller will follow to ensure the product meets the required standards.

3. Shipping and delivery schedules: This attachment specifies the shipping and delivery schedules, including the mode of transport, delivery location, and estimated time of arrival.

4. Packing and marking requirements: This annexure specifies the packing and marking requirements, including the type of packing materials to be used, labeling, and documentation required.

5. Warranty terms: This attachment specifies the warranty terms offered by the seller and the conditions under which warranty claims can be made.

6. Certifications and permits: This annexure specifies the certifications and permits required for the product to be imported and sold in the buyer’s country.

7. Pricing and payment terms: This attachment outlines the pricing and payment terms, including the total price, payment schedule, currency, and payment method.

8. Intellectual property rights: This annexure specifies the intellectual property rights related to the product being sold, including trademarks, patents, and copyrights.

And then finally the attachments.

So that is the clause number 14 that deals with the attachments.

So here in Appendix One, the entire list material list has been given there.

In Appendix two, limited warranty details are given there that I had mentioned.

Appendix three contains the inspection process.

What is the inspection process?

So this particular contract is in line with whatever we have discussed.

And it's a very good example of a standard template of international purchase contracts.

Let us again look at the different attachments that I was talking about.

Here you can see Annexure one uh contains the material list of the PV modules.

So this is a very exhaustive list.

Uh, you can include some of the information that could not be brought into the subject matter.

Maybe the model number, maybe some parts number, some technical details, and the certificate number. For each material, what are the different certificates that are applicable?

Those things you do not mention in the subject matter.

So those things can come, even if all the descriptions of all the modules would have been already put into the subject matter at the start of the contract, there are many other pieces of information like the model number or the certificate numbers that you can bring here.

So it may be just repeated also. Appendix two deals with the warranty part.

Again uh mentions for example the limited product warranty, five-year repair replacement, or refund.

And it describes how it will work.

So these things are mentioned here.

It also talks about the limited peak power warranty or limited remedy uh several years, so that has to be negotiated upon.

These kinds of information will come here or any other limitations or exclusions in the warranty.

Those can come here. Like A., B.

These kinds of different uh, subheadings may be there some categories may be there where you can mention these limitations.

It may also include the transferability of the warranty obtaining warranty performance or any disputes concerning the warranty and how they will be settled.

So all these kinds of sub-clauses are there in annexure number two in the attachment, including the force majeure for the warranty.

So there is a separate force majeure clause for the warranty in this action.

Then last finally annexure three in the attachment deals with the inspection process which is very, very exhaustive.

As you can see here.

It is a very exhaustive inspection process because of the need for the goods.

The goods are technical and different types of modules require different types of scientific inspection processes.

So all these things are mentioned in a very scientific manner, in a very detailed manner.

All these things have been described.

So this was the example that I wanted to share with you of a typical international purchase order that will contain all these clauses and attachments or any miscellaneous clauses.

So I hope this particular example will give you a very good idea about the types of international purchase orders that are signed between the importer and the supplier.

You can download this sample copy from the resource section.

Downloadable section.

You can take this copy.

You can use this copy.

An importer should be aware of the following key aspects of international logistics and supply chain management:

1. Incoterms: Understanding Incoterms, which are standard trade terms used to clearly define the responsibilities of the buyer and seller in international trade transactions, is critical.

2. Freight Forwarding: Hiring a reliable freight forwarder can help simplify the logistics process for an importer.

3. Customs regulations: Familiarizing oneself with the customs regulations of the importing country as well as the country of origin can help ensure a smooth customs clearance process.

4. Insurance: Ensuring that adequate insurance coverage is in place for the shipment can provide peace of mind and protection against potential losses.

5. Lead time: Understanding the lead time for delivery of the shipment, including any potential delays, can help the importer plan accordingly.

6. Cost calculation: Knowing the various cost components involved in the import process, including freight, duties, and taxes, can help the importer accurately budget for their shipments.

7. Documentation: Understanding the necessary documentation required for the import process, such as bills of lading, commercial invoices, and packing lists, can help ensure a smooth transaction.

In addition, an importer should know about and choose the right mode of international transportation. Cost, speed, and security of the goods would help decide which mode of transportation should be chosen.

Now, let us understand what an importer should know about moving the goods from the supplier to the point of entry, that is, international logistics, and supply chain management.

What are the areas that are required to be understood clearly by an importer to understand the procedures and documentation? Main The first thing is to understand all the documents that are required for moving the goods, for bringing the goods.

These documents are mainly related to customs declarations or commercial documents, LC documents like Proforma invoices, packing lists or certificates of origin, and quality-related documents. the documents that would, uh, ensure that the goods that are being imported are of the right quality of the quality that has been ordered for.

So all these documents are related to the core areas related to customs clearance, related to quality inspection, related to identification of the shipment, or some more documents that will relate to the bank.

This documentation will be discussed in the later sections of this course. Then another focus area for successful import logistics and supply chain management relates to choosing the right mode of transport.

So what is the right mode of transportation?

That will depend on factors like the security, the time, and the cost.

So these three factors will dictate the choice of the mode of transport.

The common modes of transport are sea transportation, air transportation, and road transportation.

Depending on the availability of the right mode in a particular country of origin and for the country of destination, what are the available modes?

What are the costs that are involved by sea, by air?

How much time it takes for goods to move from the country of origin to the country of destination?

All these factors will have to be clubbed together and a decision has to be taken.

Depending on all these facts that are related to a particular shipment, to decide on the right choice of the mode of transportation, and that is going to be the critical factor in the overall cost of the shipment, the landed cost, these things with experience, the importer will learn, and all the procedures and documentation will be focused on bringing down the overall cost, as well as the other considerations like protection of the goods that are coming.

They should come in the presentable form and in the form that they are useful, and they can give the best performance when they reach the destination.

So all those things are very, very important.

Then choose the freight forwarder and the customs broker.

These intermediaries play a very, very important role in getting the goods cleared smoothly and in time, and making sure that the cost of clearance of the goods is the best possible cost that provides the best value to the importer, as well as the import duties and taxes are calculated correctly and accurately.

So these freight forwarders and the customs brokers provide all this guidance and support in making sure that the shipment reaches the destination, the warehouse of the importer, in a manner that the price, the landed price at the warehouse is profitable to the importer.

Then further insurance.

That means the insurance of the cargo.

What kind of insurance is required?

I'll be taking up this topic in the next lecture, where I'll be explaining what are the factors to consider for an importer in understanding cargo insurance.

What is involved in cargo insurance?

What are the areas to focus on when protecting the goods through cargo insurance?

These are some of the major focus areas for successful import logistics and supply chain management.

Not to forget about the Incoterms international commercial terms that I had discussed in this particular section earlier, the international commercial terms.

So depending on the choice of the Incoterms, the obligations and responsibilities will be spread over the buyer and the seller, and those responsibilities and costs can be divided among the supplier and the importer.

So a lot of headaches can be reduced by the importer by choosing the right Incoterm also it has a direct impact on the landed cost.

Then inventory management is another area that an importer has to consider and be very, very wise in managing the inventory, both in the port of entry, in the warehouse of the importer as well as the overseas locations.

So depending on the size of the shipment, depending on the need of the goods, for example, if you take the example of the perishable items.

So if the perishable items have been purchased in the country of origin on Ex-works or the FCA basis, the responsibility of the management of the movement of those goods from the country of origin, the place of delivery to the place of destination, and the warehouse of the importer.

There is a long distance and in between the right inventory, the right conditions that are required for inventory management have to be planned and considered by the importer.

Then the lead time management.

The importer has to be very aware of the several lead times at different stages of the movement of cargo from the country of origin to the country of destination at the point of entry.

So these lead times, include the clearance of the goods in the country of origin as well as the clearance of the goods through customs and the port authorities.

What are the different formalities involved?

What time does it take to get the goods cleared?

That is useful for managing the overall time it takes for the goods to reach the warehouse of the importer.

So these are the core focus areas for successful import logistics and supply chain management for the importer.

If we look at some more areas that are also very critical in this pursuit of getting the goods in the presentable and useful form when they land up at the warehouse of the importer.

So the other consideration for the international logistics and supply chain management for importers for the imports is packaging. Packaging protects the goods. Packaging has a direct bearing on the cost of the shipment. So a proper trade-off is required between the cost and the overall protection required for the goods that are being shipped, whether they are being shipped by sea or they are being shipped by air. different types of packaging may be required.

So various other factors relate to packaging, including the standardization, containerization, and unitization of the export shipment.

So these concepts have made the overall transportation of goods mechanized.

So the mechanized methods of movement through containers require the packaging to align with the standardization and palletization of the shipment. So this information and knowledge have to be gathered by the importer, either through self-understanding or through the freight forwarders the clearance agents, and customs

brokers.

They can help you understand also about the packaging requirements.

What are the standard packages?

What is the pallet size?

Accordingly, the exporter should discuss with the supplier what kind of packaging is required and what are the costs that are involved in such packaging.

So if anything can be done by the importer, it is in the interest of the importer because ultimately, whatever the cost of packaging, those have to be paid by the importer only. Then there are several local laws and regulations, including the environment-related laws internationally.

So due to the impact adverse impact of the movement of goods from one country to another country on the environment, there is a lot of impact, uh, that is resulting in climate change.

So there are several environment-related laws, local laws, as well as international regulations that have to be clearly understood.

In the absence of that understanding, the goods can get delayed, the cost overrun can be there.

So it is very, very important to plan out the shipment according to these laws and compliance with these laws.

Then the customs clearance and the procedures that are there for getting the goods cleared have to be clearly understood by the importer also. Although this whole job has to be done by the brokers, customs brokers, or freight forwarders, but still, importers should be very much conversant with these customs clearance procedures and processes.

It will help in negotiating the costs of the freight forwarder and the customs brokers.

Then the role of the latest technologies.

What new developments are happening in international logistics and supply chain management?

The understanding of these new concepts should help the importer to be prepared for the new requirements of the new digital and high-tech environment that is now emerging in the area of international logistics and supply chain management.

So the role of the Internet, the role of the Internet of things, the role of smart sensors, smart contracts, or even the metaverse.

So all these new technologies that are emerging are being tried out, and these have covered many, many areas of the movement of goods from one country to another country.

So this understanding is also very useful for the importers.

And then finally the considerations related to risk management, the risk management of the things like the political risk that may be there in a particular transaction or the foreign exchange fluctuation risk.

So these are the different risks apart from the commercial risk that is the non-delivery or the substandard goods.

So those kinds of commercial risks.

How to cover all these risks, to have a trouble-free import transaction for the importer will be very useful.

You're talking about different focus areas for an importer concerning cargo insurance.

So talking of cargo insurance, certain areas are very, very important for an importer, starting with the the understanding of the importance of cargo insurance. What role the cargo insurance play in the overall import transaction?

If this importance is clear and the long-term vision is there for the importer, the right decisions can be taken by the importer concerning the nature of the cargo insurance that is chosen by an importer,

So the overall trade-off has to be made by the importer concerning the costs and the protection of the cargo during the movement from one country to another country.

So depending on what is the country of origin, what is the country of destination what is the mode of transportation, and what are the different perils that may emerge?

Experience and an understanding of the importance of cargo insurance will help an importer to make the right decisions.

Then secondly, it is very useful to know all about the coverages of the different types of cargo insurance that are available to the importers.

So starting from the minimum risk coverage to the maximum risk coverage, so-called ICC clause A, clause B, clause C, and the additional clauses that can be purchased through the cargo insurance, an importer should be aware of all these clauses, as well as what are the different perils that are covered through these provisions?

Then choose the right insurer, a reputed insurance company that can honor the commitment that will take less time for the claim process.

Intermediaries like freight forwarders or banks can also help you to guide you to the right insurance companies.

So you have to talk to all these intermediaries and make your own decision about the choice of the company, the insurance company that is providing you with the cargo insurance.

So this becomes very, very useful. and a critical area for an importer to choose the right insurer.

Then what is the documentation that is involved in the purchase of the cargo insurance policy, and what documents may be required for the claim process in case the goods are damaged or there are claims?

What is the process?

How to reduce the time taken to process the claims?

How can you manage it well will require the right, correct, and accurate documentation. And the knowledge of the process.

What is the claim process?

That knowledge is useful for an importer.

So what are the deliverables?

What are the things that have to be done by the importer in case of any disaster or peril?

This understanding should be very clear to the importer.

And finally, what are the exclusions in a particular cargo insurance policy?

The importer should be aware of the things that are not covered.

What are the perils that are not covered in a particular insurance policy that is important for an importer to know about?

Also, the importer should keep reviewing cargo insurance policies for the different transactions, import transactions. To make corrections in the next purchase of the cargo insurance, or if anything can be done in the current insurance policy, if any changes are required with the changing time of changing needs of the, uh, of the importer.

For example, if a particular transaction becomes critical at a certain time, then some changes may be required through a cargo insurance policy.

So this review should be continuous and should be considered very important.

So these are some of the things that an importer should focus on while considering the cargo insurance protection of the shipment.

In the next lecture, I will show you one sample copy of the cargo insurance policy, and I will give you some explanation how what it looks like.

What are the different clauses that are there in the cargo insurance policy?

Hi. Congratulations on reaching so far in this course.

And in this section where I'm talking about the different concepts you need to understand.

The topics I'm taking in this section, are the topics that are to be understood before we go into the actual import procedure and documentation.

In this section, I have discussed many things.

Now I'm talking about the cargo insurance policy. And in the last lecture, I told you about the important aspects of the cargo insurance policy.

It's a good progress you are making.

And, uh, as I had promised in the last lecture, I am taking up one cargo insurance policy sample here so you can see that sample here.

I will just show you this sample.

Have a look at what the cargo insurance policy looks like.

So as an importer, you have to understand at least what it looks like.

What are the different aspects of the cargo insurance policy paper?

That means the document.

So I will just show you this document, and I will show you the different parts of this document, what is given there in the document how to read it, and how to understand it.

As you can see here, this is a sample of the cargo insurance policy.

And this has been issued by the insurer, that is the insurance company that is based out of Vietnam.

The name of the company is BaoViet Insurance Company. BaoViet Insurance Company which is based in Vietnam has been chosen by the exporter that is the supplier because the supplier is located in Vietnam.

So generally it is very common that uh, the suppliers from the different countries and if they have to buy the cargo insurance policy, generally, they buy it from a company they know about.

Normally these are local companies.

These companies are based in the supplier's country.

So this is very, very common.

So here you can see that the company has its logo name telephone number, and fax number.

And uh here the policy number is very important.

At the top, the policy number is given in the actual policy that I am showing you.

This sample copy is the actual copy of one of the cargo insurance policies.

Let us see what is given in this particular policy document.

The policy of insurance.

It says witnesses that in consideration of a premium that has been charged by the insurance company, the premium has been charged for this policy as agreed, being paid to BaoViet Insurance by the assured for own account or the assignee or the others.

So there can be different parties and the policy can be taken on account of the different parties.

Normally, depending on the Incoterms, the supplier will buy the insurance policy, maybe on account of the importer.

So it all depends on what the incoterms and who is responsible for buying the cargo insurance policy and who is responsible for paying the cost.

It further says that the insurer makes insurance on the following goods.

So the goods the subject matter to the general conditions of marine cargo insurance for the following goods subject to the general conditions of marine cargo insurance as printed overleaf and the condition and or clauses as specified hereunder.

So this policy has different clauses. Or the annexed hereto or written here on.

So this policy document, if it has certain annexures, those will be there, those will be part of the policy document.

So here I will not show you any annexures.

There are lectures on this policy, but they are private.

Information is sensitive.

So for education purposes, I am just showing you the main policy document.

So here the first clause talks about the name of the assured. Here the second party which is the company that has issued this policy is already there.

So here only the name of the assured will come.

And the name of the assured in this case is not the supplier.

That is not the company in Vietnam.

It is rather the importer.

The name of the importer is given there, so it is not very clearly visible.

But what is written here is Importado S.r.l. Valencia.

So this place is based in Spain.

So this company is from Spain.

The name of the company is given there.

The name of the or the number of the vessel is mentioned here. Nanfang Chen 4620E.

This is mentioned here. The LC number,

This business is on the letter of credit documentary credit.

It is also called the letter of credit.

The number is given here with the reference number.

You can see it here.

These details are specific to the shipment.

So whatever is the LC number?

What is the documentary credit number?

Same thing. LC and documentary credit are the same thing.

Documentary credit word is used technically by the bank. In a very popular terminology, the document is called the letter of Credit LC.

So you already know these things that I had already discussed in the earlier lectures. Here, the bill of lading number is also given.

This is very interesting to see because the bill of lading number has to be mentioned in the policy to connect it with the shipment with a definitive link.

So this definitive link is established of the policy with the shipment through the BL number. And the contact number if it is available. And here the port of loading is given there that is based in Vietnam.

So port of loading is Haiphong Port in Vietnam.

And the port of destination or the port of discharge is Valencia, Spain.

So these are the initial clauses that are given in this policy.

An importer should be aware of the foreign trade policies of both the home country and host country because they directly impact the import business. These policies include tariffs, quotas, regulations, and trade agreements that can affect the cost, availability, and legal requirements of imported goods. By understanding these policies, an importer can make informed decisions about which goods to import, how to import them, and how to comply with the relevant regulations. Additionally, knowledge of foreign trade policies can help an importer identify potential risks and opportunities in the import business and develop strategies to manage them effectively.

Welcome back, friends.

So in this lecture, I will be sharing with you one example, and I will show you with this example that for imports, what are the impacts of the foreign trade policies of the partnering countries?

That means the local governments of the supplier's country and the local government of the importer.

How do these policies impact?

What are the areas? How do these influence the cost the market access or the landed cost?

So how do these things matter and how they are accounted for these things?

So the classification of the goods also will be demonstrated in this particular example that I'm going to take up, the role of the harmonized system, that is the HS code.

What is the role of that?

And also the SPS TBT barriers, that is the sanitary, phytosanitary and technical barriers to trade.

How do you check in your own country?

Because SPS TBT barriers have to be seen in the country of imports at the port of entry where the goods are entering.

So what are the government policies, foreign trade policies, and import policies of that particular government?

So in this example, which I'm going to take up, I cannot take the examples of all the countries of the world.

In this example, I will be taking the example of one country that is India.

So importer is based in India.

And I will explain to you, I will show you how you find out the impact of these foreign trade policies, and how do you account for the International Trade Classification of the Goods and Tariff System.

How does it work? And what are the impact of the SPS TBT provisions, and international trade agreements that are there?

What are these technical barriers in the country of import?

In addition, in this particular example, I will also demonstrate to you the impact of the bilateral and multilateral agreements among the countries.

So these multilateral agreements and the bilateral agreements will have an impact on the landed cost.

On the import duties that will be charged in the country of import. As well as the market access, what are the limitations?

What are the barriers or the compliances that are required or not required based on the multilateral and bilateral agreements?

So this particular example that I'm going to take up will demonstrate to you all these things.

So in this particular example, I'll be talking about the importer in India.

But a similar method is to be used for the importation into other countries.

This example is about a case related to Jimmy Shah, who is an exporter of Toners.

And now for certain models of photocopiers and laser printers, he wants to import the toners and the related chemicals into India to sell in the Indian market.

So in this example, we will see how Jimmy Shah researches what countries import from the toners to get a better price to get some benefit, some policy benefit of the Indian government as well as whether are there any restrictions or any market access issues or any ban on certain items from the supplier's country.

So in this case, probably he will choose another country where such bans are not there.

These things will be covered in this particular example.

By this example, you will understand the complete impact of the foreign trade policies.

You will also understand the HS code system. also. You will also understand the impact of the SPS TBT measures as well as the multilateral and bilateral agreements.

So all these things will be covered and automatically you will understand the role of all these aspects in the import business.

So let us understand this, how Jimmy Shah went to the Indian trade portal, which is the repository of all the information you can carry out based on the HS system, which is the harmonized system of classification of the import goods and by getting the HS code, how Jimmy Shah was able to find out the different SBS TBT measures, as well as the import tariffs, as well as any provisions of the import policy of India or the foreign trade policy of the supplier's country.

So let us look at how Jimmy Shah went about finding all this information using the Indian trade portal.

So if we go on the Indian trade portal here, what we see here that, uh, on Indian trade portal where we can write over here the HS code, that is the Harmonized System code if you already have about the product which you want to explore.

So for example, in this case, I do not have the HS code.

So I will try to find out what is the HS code.

That is the Harmonized system code.

What are the goods that you want to import into India?

What is the HS code?

So let's look at how he does it.

So he types out the description of the goods toners for photocopiers.

So let us see if he can find some information.

So he changes the words, different words, and let us see if anything else comes here.

So here the, uh, description is coming.

Compatible black toners for laser printers and photocopiers.

So he can find the six-digit HS code which is in this case 370790.

This code is available for six digits, but it is always better to have such a code at least for eight digits that you already know.

We had discussed this point earlier.

Also, you will have a good idea.

So you press the import because you want to import this item.

So you need to press the import button on Indian Trade Portal.

A similar method is to be used by the importers in other countries.

In all the countries, the local governments will have such kinds of trade portals and very similar systems will be there available for them to explore the import products they want to bring into their own country.

Here what we see is that there are two different eight-digit HS codes, uh, that are related to the black ink toner for the laser printers and photocopiers.

So what we see here is that the 37079010 is the most suitable description of the item, which Jimmy Shah wants to import because he is looking for the finished retail packing of the toners

This is ready.

Uh, an item for retail sale.

As it is written here.

You can see it here.

He clicks this particular HS code which is the eight-digit HS code 37079010.

This uh, code, he can click and uh, able to find, uh, from this portal to explore about all the different information that is related with foreign trade policies, SPS TBT measures, as well as the impact of the multilateral and the bilateral agreements.

So we'll see to it, uh, these, uh, the impact of all these, uh, different types of trade agreements,

it will be very much visible in this example.

So when we press next here, what we see is that this portal provides the top 25 countries as the source of the importation of black toner into India. based on the data that is available from the Indian Statistics and Customs Department. So this data that is available based on that, the government can provide the list of the top 25 countries.

There are listings of other countries also beyond the 25, but we are more interested in the top 25 countries and we are trying to find out the foreign trade policies of the supplying country. Uh, so in this particular cycle, one you can choose to start with, out of these 25 countries, you can choose five countries to compare.

So you do this cycle for five countries.

And if you are not satisfied, then you can do one more cycle of the process that I'm doing. for another five countries. You can cover almost all the countries.

So in this example, I will only show you the comparison of the first five countries that Jimmy Shah knows from his knowledge that these are good sources of black toner. compatible toner for the laser and the photocopier machines.

So he starts with the choice of China and, uh, based on his already existing knowledge, uh, UAE, that is uh, Dubai especially is targeting Dubai and the US, uh, then Japan.

Japan is a possible source.

And Switzerland.

So, based on his knowledge, he started with this first cycle of five countries.

You can see here that on the right side column, you can see the list of the different multilateral and bilateral agreements that are there with these countries of the importing country, that is in this case, India.

So India has different types of multilateral and bilateral agreements.

These are mentioned here.

The impact of the bilateral agreement will be greater because it will have a direct bearing on the import duties.

So it will have a very direct impact on the landed cost.

What we find here is that the MFN agreements, that is the most favored nations agreements that are there among almost all the countries are under the aegis of the World Trade Organization.

That is the WTO.

So these are multilateral agreements.

The impact of MFN, that is, the multilateral agreement will not be much because it will apply to all the countries.

So what will happen is that the price advantage may not be there. But agreements like CEPA, that is the

Comprehensive Economic Partnership Agreement that would be between the two countries.

That is the bilateral agreement.

These will have a significant reduction in import duties for the importer, that is Jimmy Shah, who is importing the black ink into India.

Because of these agreements, the Indian government will be leaving less import duties because of the existence of these bilateral agreements.

Here you can see the agreements like CEPA, India has with Japan. Or with China. also, they have one agreement APTA, we will see to it what is the impact of this agreement?

And with UAE also India has uh CEPA agreement. And with other countries, whatever the agreements we can see here, we will explore what is the idea.

So let us look at these agreements and the impact on the import duties that will be levied by the Indian government for Jimmy Shah's import of the black toner ink.

After choosing these five countries, if you want to make some corrections, you can do that also.

So for example, Switzerland is likely to be a costly source of toners for the Indian market.

So maybe you can change it to Singapore.

So interestingly what we see here is that we have more agreements with Singapore.

That means India has more agreements, bilateral agreements as well as multilateral agreements with Singapore than any other country.

So the possibility of importing from Singapore becomes very prospective, very potential.

So chances of getting better import duty rates are very high for Singapore.

So we can do that also like uh. These things these juggleries, we will be doing in different cycles of choosing five countries at one go, then choosing another five countries at another go.

So those things will be done.

So then we press here next in this and what we find that we get, uh, a lot of information about the Indian government import policy, about the other measures SPS TBT measures.

That means the technical trade barriers when you are importing goods into India.

So we will see to this information also. Here we find that, uh, uh, the toners are freely importable, so there are no restrictions.

So it is not a restricted item like many items could be.

And their GST rates, everything we can find out from this page we can do.

But very importantly, we have to compare and see this eight-digit code which is 37079010.

That is the International Trade Classification ITC HS code for compatible black ink for photocopiers and laser printers.

What we see here is that in China because of the APTA agreement, we have the possibility of getting 6% import duty levied by the Indian government.

But if we look at other countries like Japan, with which India has the CEPA agreement, that is the Comprehensive Economic Partnership Agreement and the preferential tariff levied by the Indian government on this item is 0%.

So there is a zero import duty if you import toner from Japan.

So you must shortlist this country. Japan.

Let us see the other countries.

What we find here with Singapore also the bilateral agreement is there of India.

That is the CEC agreement.

That is the Comprehensive Economic Cooperation Agreement. and under that agreement, the import duty is levied on the goods coming from Singapore.

This particular item coming from Singapore attracts only 0% duty.

So again you can list this particular country.

So here you can shortlist Japan and Singapore.

With UAE also India has a comprehensive economic partnership agreement and the import duty on this item is 0%.

So again you can choose Uh, UAE also. So out of these five countries that is China, Japan, Singapore, UAE, and the United States, where in the case of the US, the import duty levied on this item is 10%.

What you find from this exercise to start with is that, out of these five countries, the importation that will attract just 0% import duty are countries like Japan, Singapore, and UAE.

So you have shortlisted these countries.

Now you can further research any market access issues or any provisions that are generally given there in the form of a PDF file.

So when you click this PDF file here you will find the rules of origin for the ASEAN-India Free Trade Agreement.

Depending on what agreement is applicable and under what agreement, you want to import the goods to benefit from the import duty concessions, there will be certain attachments.

So in this particular case, our case of Jimmy Shah for the CEC agreement with Singapore.

There are no, uh, any addendum or any attachment, but if it would have been there, it would have helped you to understand any import policy provisions of India.

And similarly, uh, with Japan also, we do not have any, uh, additional provisions, any additional compliances.

It is not there. With UAE also under the CPA agreement, there are no additional obligations or compliances that are required.

So from this particular part, we are free.

So we need not bother about uh, any uh, compliances from the point of view of the supplier's country.

If we choose these three countries and shortlist these three countries.

But here we are concerned with the Indian government's policy, and import policy on this product in terms of any technical barriers that will be reflected in the SPS measure, that is the Sanitary Phytosanitary Measures or TBT, that is the technical barriers of trade.

So when we press on this, what we find here is that this HS code that we have chosen indicates the compatible black ink toner, that is the ink for the laser printer and the photocopiers, what we see here, is that all the technical barriers or any compliances that are required to be carried out are available here.

So when you click any of these links you will be able to find any provisions that are there in terms of, for example, the Export Quality Control Act or any other act that may apply to this particular item.

So you can go through and research to find out what are the different applicable compliances for the importation of this item.

Is it easy to carry out or not?

So if it is easy to carry out, you will have no problem in getting this item imported, even though this particular HS code item is freely importable, there could be some SPS TBT compliances.

That is, the technical trade barriers could be there, but they will come under the international agreement.

That is the SPS TBT agreement that limits the ability of the local governments to levy undue or unreasonable technical barriers on the importation of the goods.

So that benefit you will get from this.

You can do this kind of research based on the eight-digit code HS code of the item that, for example, in this case, Jimmy Shah wants to import.

So Jimmy is now able to understand the complete information concerning the impact of the multilateral agreement concerning the impact of the bilateral agreement.

And he can find out the, uh, the HS code of the item he wants to import.

He also understands the import policy of India.

He also understood the impact of the multilateral and bilateral agreements and the impact it has on the import duties that are levied by the local government.

So all this information he has been able to find out.

That was the idea of this example.

I hope with this example, it will be now very clear to you that why for an importer, it is very important to understand the foreign trade policies or the import policies or the export policies of the partnering countries, that is the country of origin and the country of destination, that is the country of the importer, the port of entry. And also the other related matters like SBS TBT provisions.

What are the provisions and the impact of any policy issues that is there concerning importation?

So in this section, you have already learned all these skills and techniques that are required to understand the complete import procedure and documentation.

So now you are equipped with all such things that will be needed.

Foundations, all the topics that are of the nature of the prerequisite of understanding the import procedures and documentation.

You have already completed that and I wish to congratulate you on that.

So in the next section, we will be jumping over to the actual import procedures and documentation.

So let's go there.

Choose only one answer that is best.

Welcome.

In this section, we will be starting with the import procedures.

So I will be sharing with you the different steps that are involved in import procedures.

You are now ready with all the ammunition that you need to understand all the concepts that are there in the importation, you will find it very, very easy and comfortable to know about all the things that you have to do in successful importing concerning the procedures and documentation.

So the purpose of this particular course is not to go into the commercial part of the transaction, not to talk about that how do you identify the product for importation?

How do you identify the country of origin?

That is not the purpose, but the main purpose of this course is to understand the procedures and documentation.

We will be focusing on that.

In this course,

our focus will be especially on the procedures and documentation.

So in this section, I will be discussing the procedures.

So let's start with this section.

Let us first talk about the basic steps that are there in importation.

So as you can see here there are typically eight basic steps that are there in import procedures.

So starting with the market research and product selection, finding a supplier for your product that you want to import obtaining the necessary licenses and permits, and preparing the purchase order.

So these are the first four steps.

Basic steps that are there for the complete procedures that are involved in importation.

Then the fifth step in the basic import procedure refers to the shipping arrangement that you have to make and the customs clearance.

So these two steps are very, very important.

We'll be going into more details about the customs clearance in this particular section itself, and then the payment to the supplier and the delivery and inspection.

So these are the eight basic steps.

So if you look at the first step, that is the market research and product selection.

We have to primarily focus on identifying the product.

Now how do you identify the product?

It all depends on the purpose of the import.

What is the purpose that you have envisaged for importation?

You may be importing to sell in the domestic market.

You may be importing to sell in the domestic market through digital channels or you are importing something for your use for production, or manufacturing, or you are importing for re-export.

So depends on what is the purpose and accordingly, you have to identify the product.

So this is a very, very important aspect of the market research. And market research has to be done in alignment with your requirements.

So what is your requirement?

How do you want to use the imported product?

What overall import strategy do you have? That is going to be the deciding factor in framing the market research strategy and the product selection.

Also, you need to identify the country of origin.

So how do you identify the country of origin?

What are the factors to identify the country of origin?

The landed price.

What is the cost until the goods reach your warehouse?

That is very, very important.

And that also includes the import duties and the taxes that are levied by the local government, that is, the local government of the Importer's country, that is your country.

What are the import duties that are levied from a particular country?

Depending on the country of origin, the import duties may vary.

As we had discussed in our earlier lecture,

I have shown you by giving the example of the importer from India wherein when we went to Indian Trade

Portal, we found that the import duties that are levied by the Indian government for the import of the same item depend on the country of origin.

What are the duties that are levied?

How much is the price that is offered by the suppliers from a particular country?

All those calculations will give you the landed price and if it is favorable, that is how you identify the country of origin.

So there are many, many factors, including the arrangement, shipping arrangements, the ease of getting the goods, and the variety of the available products.

Quality of the product.

Many, many factors are there that will help you to identify the country of origin.

Depending on all those factors and the availability of the transport methods.

If it is a country where the mode of transport has to be fair, that will be a costly affair.

So it may make your goods costlier when they land in your country.

So there are such kinds of several factors that will help you, or that will be needed to be considered while finalizing the country of origin.

You identify the product, you identify the country of origin based on so many factors.

And this is how you carry out this particular step of market research and product selection.

Once you have identified the product, depending on how you are going to use it, what is the purpose of the import?

And you have identified the country of origin.

Now you have to find a suitable supplier.

That is the tricky part because the supplier has to be reliable.

The supplier has to be trustworthy.

The supplier has to be punctual in making shipments.

How do you identify the supplier?

You have to communicate with them.

You have to probably talk to them through digital methods, and video conferencing.

You talk to the suppliers, you do the due diligence or the supplier.

Ask the people about their experiences with those suppliers.

Look at the ratings of the suppliers.

So you have to be very, very sure about the supplier and its record in supplying those goods, whether it is a manufacturer, whether it is a trader, and what are the advantages of a manufacturer?

What are the advantages of the trader? If it is a trader or the supplier, what is the value you get from a particular supplier in terms of the price, in terms of the quality of the goods, in terms of the delivery schedules? What kind of value do you get?

So there are so many factors that will help you in deciding and identifying the suppliers.

And then you have to negotiate with the supplier.

So how do you negotiate?

In one of the case studies that we had taken up in this particular course, we talked about pooled orders.

So the person in that particular case study pulled the orders from the local markets by the other retailers.

By pooling the orders, he was able to place large orders to the supplier, and he was able to get better prices.

So you have to identify and use different strategies for negotiating the terms of payment, the price, terms of delivery, the delivery schedule, commercial terms, and all the different terms.

And you have to also discuss with the supplier about the protection of the cargo.

Your risk management, the part of your risk management, the packaging, the cargo insurance, all this risk management of the goods when they are moving from the country of origin to the country of destination.

How do you manage the risk of transportation?

That can only happen if the supplier is willing to cooperate with you.

If the supplier is willing to give you the support that you require.

These different factors that are there will help you in locating and finding the right suppliers.

Again, you can notice that all these decisions require a lot of experience and a lot of knowledge and understanding of the business and the business sense.

So it depends on your understanding of the product that you are importing, your understanding of the market, where you are going to sell it, and your understanding of the country of origin of the goods.

So maybe you have to visit the supplier, physically visit the supplier, you have to visit the market that supplies those goods and understand the manufacturing practices and any other aspects, any other challenges that are there in the movement of the goods from the country of origin to the country of destination.

So all these skills, techniques, and knowledge will help you in identifying the right supplier, and the shipment from whom will be successful for you. The goods reach your warehouse as per the strategy, as per the expectations of the cost, quality, and schedule.

This is a very critical part of the import procedure.

Then the other important step, the next step in the typical import procedure, refers to the need for the licenses and permits in your country of import, so you don't need to be requiring the import licenses or permits.

It depends.

You have to understand the import policy concerning that particular product of your government.

So the country where you are importing the goods, you have to learn about and study the import policy of the local government.

And how do you do that?

One of the methods I had explained in one of my earlier lectures, where I had taken the example of the importer in India, and how they used the Indian Trade Portal to find out what the import policies of a particular product that they want to import of the Government of India.

So similar methods can be used by the importers in any of the countries of the world.

They are generally available in physical mode in the offline mode, and in the Handbooks of import procedures.

So Handbook of Import Procedures for example is available in India and explains the procedures involving both exports as well as imports.

So there are separate sections for the procedures involved for the imports based on the HSN code, that is the Harmonized System code, you can identify what are the government policies concerning the item you want to import using the Handbook of Import procedure.

These publications are available in all countries at very affordable prices.

You can use this Handbook of Import procedures to identify and understand all the compliances, all the licenses, or the permits if they are required using the HSN code.

And you have to also identify in case you need any licenses or permits, what is the issuing authority for that particular license or permit, and what is the procedure involved?

You can also use many online resources.

As I had taken the example of the Indian Trade portal, similar online resources are available in many of the countries. In this step, what is very important is that if the item is restricted for import if it is not freely importable, then you have to do all this exercise to find out what licenses and permits are required.

Then the next step involves preparing the purchase order.

In one of my earlier lectures, I discussed in great detail the international purchase order, and what it looks like. An international purchase order should be very professional, depending on the situation, depending on the item, depending on the industry practices that are there, and depending on the country of origin.

So how do they generally supply those goods?

What kind of purchase order do normally they ask for?

Generally, it should be very professional, and it should be a balanced purchase order as we had discussed in one of my earlier lectures.

And it should include all necessary clauses that are necessary.

So these clauses we have already discussed and the significance of those clauses, how they work, what are the implications of those clauses that we have already discussed?

And that was the purpose of the earlier section to make you aware of these basic topics, foundational topics, to understand the import procedure.

So you have to look into all such clauses and make sure that all these clauses are there in the final international purchase order.

The original copy generally is to be sent to the supplier because the supplier needs the original copy many times to deal with the banks, to deal with the local authorities in the country of origin, obtain the necessary documents, and shipping documents to be able to move the goods from the country of origin to the country of destination till the point of entry.

So those documents the supplier can only obtain at many times using the international purchase order the original copy.

So that's why the original copy has to be sent to the supplier. Many times, depending on what are the

Incoterms that are negotiated with the supplier, the importer has to carry out the shipping arrangements.

Now, these shipping arrangements include deciding the mode of transport, because, uh, the decision of selecting the mode of transport depends on the cost, on the security of the goods that are being brought from the country of origin to the country of destination, and the time available.

What kind of schedules are there?

What timing is there?

So these three factors will decide about the mode of transport.

So you have to find the trade-off between all these factors and decide what is the mode of transport.

And you need to negotiate the freight rates with the main carrier as well as the supporting carriers.

So there are generally two kinds of carriers, the carriers or the transporter or the truckers for the inland transportation, that is, from the warehouse of the supplier to the wet port and the main carrier that are generally shipped and from the point of entry to the warehouse of the importer.

These are different transport companies or carriers.

Those have to be approached with the right shipping documents. And the freight rates have to be negotiated.

So again, that would require a lot of experience and ingenuity.

Also, the guidance of intermediaries like freight forwarders can be very, very helpful in this.

So in all these activities, the transport risk management strategy has to be created, in association with the supplier. Without the support of the supplier, the transport risk management cannot happen.

So that would start with the right packing. seaworthy packing or airworthy packing and making the right labels on the packages.

So depending on the goods that are being transported, what are the requirements?

What is the nature of the material that you are bringing in, will decide the overall transport risk management.

A very important step that invariably is required to be done by the importer is the customs clearance at the port of entry.

So this customs clearance at the port of entry requires documentation, a declaration by the importer, dealing with the customs authorities or the border control, or many other local authorities, also dealing with the port authorities for handling the goods.

So the process invariably and generally starts with the customs declaration. Right customs declaration. Whether the goods are being used to sell in the local market for actual use, or re-exports, that status has to be declared to the local customs, and the expected date of arrival of the goods also has to be declared.

So generally the document that is used I'll be discussing in the next section when I'll talk about the documentation that is required for the import procedures.

So what documents are required?

I'll be talking about that for the declaration also and for the overall customs clearance.

What documents are required?

Those things I'll be discussing later in the next section.

Then there is something called Import General Manifest (IGM) that is announced by the main carrier, generally the shipping company that uh announces the arrival of a ship at the port of call.

And, uh, this import general manifest contains details of all the shipments that are there in that particular ship.

So you need to check whether your shipment is there.

This has to be conveyed to the customs authorities also to make sure that there is proof that the goods are actually arriving or already have arrived.

So this import general manifest is a very, very important document that is issued or announced by the main carrier.

Then the other documents that are required by the customs for the customs clearance, I'll be discussing in the next section what all documents are required by the customs generally.

So those documents I'll be discussing in the next section.

And you have to also understand, calculate, and make the payment of the import duties and local taxes that are levied by the local authorities, especially the customs.

So what are those import duties?

What are the surcharges?

What are the different types of import duties?

Those calculations have to be done.

Generally, the calculation of the import duties and taxes includes the basic customs duties that are there and that are easily available through online resources.

You will be able to find out what are the basic customs duties. And then there will be the countervailing duties that we have discussed in one of my earlier lectures also. The anti-dumping duty and other surcharges.

So the final import duty and taxes will be a little bit of a complicated and complex method of calculation.

But these calculations can be done by checking all the guidelines and circulars that are available in the public domain, and that are announced by the local customs and border control.

So you have to be aware of all such new, updated circulars that will tell you exactly how much total import duties and taxes have to be paid, and those calculations have to be done.

Your clearing and forwarding agent or the freight forwarder can be very, very helpful in helping you to calculate the import duties and taxes.

Then the next step refers to the payment to the supplier as per the agreed terms.

So what were the agreed terms?

Whether the payment was through a letter of credit, whether the payment was through bank collection or the payment was on some other payment method.

So whatever payment method had been agreed with the supplier as per the international purchase order, you have to make the international payment.

Another very important thing to consider while paying to the supplier is the compliance required by the local governments.

Some of the governments local governments, to control the flow of foreign exchange for import purposes, have certain rules and guidelines.

You should be aware of those rules and guidelines.

They vary from country to country.

Different countries have different rules and guidelines.

You have to comply with those rules and guidelines, including the payment through banks.

So those rules and guidelines have to be followed. Therein the role of the bank is very important.

The bank can help you in making you understand all these local rules and guidelines.

And what are the timelines for payments?

All such matters can be discussed with the commercial bank that is involved in the international payment.

So these can be the different methods of making a successful payment to the supplier.

That may be the payment that is already done before the shipment arrives, or it may be the payment to be made after the shipment arrives at the port of entry.

And then finally, the last step refers to the delivery and inspection.

So in the delivery and inspection, you have to check the goods, whether are as per the specifications and the sample that was agreed.

And they conform to all the standards that were discussed.

These are as per the certificates that were issued by the supplier, and there are no problems with the shipment.

If there are any problems, you have to immediately alert the supplier in case you face any issues with the shipment.

The shipment is a short shipment or some of the parts of the goods that reach you are damaged.

Even though you might have already made the payment.

If you alert the supplier in time To maintain a good relationship, the suppliers generally agree to compensate you for the damages in some form or the other. So you have to find out the methods of compensation depending on the country of origin.

What are the rules and regulations of the local government of the country of origin?

So the supplier will be able to help you if he is willing to do that. In case the compensation cannot help.

And if you need the replacement, you should at least try to get the replacement of the goods. If it is very necessary, if there is any mistake that is made by the supplier in sending the goods, you can ask for a replacement.

Whether you get the replacement or not will depend on the situation, but at least you can try to get the replacement.

So this is the last step that you have to carry out in the typical import procedures.

Hi. In the last section, I discussed import procedures.

I hope now you have a fairly good idea about the typical import procedure.

It is now very easy for you to understand the import documentation.

So let us go into this section and try to find out the world of different documentation that is required.

What different documentation is required?

At what stage and what is the purpose?

What is the significance of those documents?  In this course, the details that are given are very accurate.

They are researched and based on my very long experience with the practical world of importation.

So all the information that is given there, all aspects that are taken up in this section are purely based on practical experience, and much of the information you will not find anywhere.

I will not go into very big detail about every document, because in that case, this course will become very bulky.

So to avoid that situation, I will be taking the highlights of the documents, the features of the documents, the purpose, and significance of the documents, and many of these documents. you will find it very easy to understand because you have gone through certain sections in this course that were related to the things you were supposed to know before we go into the core area of the procedures and documentation. And that I had alerted you that you get used to those topics, you get used to those concepts, and learn about the things that you should know before. That you have already done.

And I wish to congratulate you for doing that now.

It will become very smooth work for you in this section.

So let's go into this section and try to understand all the import documentation, typical documents that are required at different stages for different purposes.

So let us first talk about the common documents that are required, starting with the commercial invoice that we have talked about many times in this course.

A commercial invoice is the main document.

It is the summary of the contract, the international purchase contract that we had discussed in this course.

Whatever the terms and conditions that have been agreed with the supplier, all those agreed terms in summary form will be reflected in the commercial invoice.

So I'll be giving you more details about the commercial invoice and then the packing list that contains the physical description of the goods that are coming in the import shipment.

So it will contain all the details about the packages, about the boxes that contain the goods and the marks and the numbers.

So I'll explain more about it.

Packing list in the subsequent slides and the insurance policy or certificate.

So insurance policy is required for the single shipment.

So if you are periodically importing regularly spread over the complete year if you are getting the shipments same shipments many times, you may go for a comprehensive insurance policy against which the insurance company will issue you policy certificates for every shipment.

So if it is a single isolated shipment, then you can go for the insurance policy.

If there is a set of shipments, import shipments that are coming, or the same types of shipments of similar value spread over time, then you should go for the insurance policy supported by the certificates for each shipment.

So that is the difference between the policy and the certificate.

So I will give you a little more details about this particular document that signifies that the shipment is indeed insured, at least the transportation.

So insurance policy deals with transportation risks.

So other types of risks have other treatments.

Then the certificate of origin. A certificate of origin is required by the local customs at the point of entry.

When goods come to your country, they will be entering your country, Your customs department will require this certificate of origin to ascertain the actual origin of the goods, so that the customs can ascertain what is the import duty.

Because import duty depends not only on the HS code number, not only on the description of the goods, and what goods are there, but also on the origin of those goods.

So the customs duties vary from country to country, with different countries of origin.

Then the quality certificate.

Quality certificate is required mostly by you because there are distances that are involved and you want to make sure that the goods that are being imported are of the right quality and as per the agreed samples or the specifications that you had ordered for.

So quality certificate is a third-party inspection certificate, kind.

I will discuss about it a little bit more.

Then you will have a better idea about this particular document.

Then the documents that would be required under the SPS TBT measures.

So SPS TBT measures I had discussed in the earlier section also when I was giving you the example of the Indian trade portal. When you go to the Indian trade portal, I have taken one example, one case study I had explained to you the different SPS TBT measures, that is the sanitary, phytosanitary, and technical barriers to trade.

So these requirements of the local government in the importing country require certain documents.

So I will give you more explanation of what kind of documents are required and what could be the requirements.

I will give you more details in subsequent slides.

Then the custom declaration.

The customs declaration is mandatory for getting the goods into your country at the port of entry, to get the goods cleared from customs. You have to make the advance customs declaration.

So this part I had discussed earlier also in the procedures.

Then when I had explained to you that, uh, the goods are to be cleared through the Customs Department or the border control.

And that document that is a communication between you and the customs Department is called the Customs

Declaration.

And the exact name of this document would be different in different countries.

Very commonly it is called the Bill of Entry.

Like if you take the example of Indian customs, the Indian customs require customs declaration, which is called the Bill of entry for Importation.

Generally, this document is filed electronically.

So I'll give you a little bit idea about how it is done in India.

A very similar way is used in many of the countries where the electronic data interface, that is the

EDI system is there.

So I will explain to you how this custom declaration is done.

What are the steps involved?

So I'll give you more details about it. And the import licenses or permits.

So why are these required?

What are the significance of these import licenses?

What is the impact of these licenses on the shipment?

I will give you some explanation in the subsequent slide.

And finally the transport documents.

Transport documents are the most important documents to take possession of the shipment. Because when goods are cleared, they are still in the possession of the shipping company or the carrier if it is by sea.

The shipping company.

Shipping line.

If it is by air, then it has the airline.

So these transport documents are useful to get this possession.

That is what your aim is.

That is the ultimate aim of any important to get the goods.

So these documents will be required.

I will give you more details about this set of documents.

So let us first talk about the common documents that are required, starting with the commercial invoice that we have talked about many times in this course.

A commercial invoice is the main document.

It is the summary of the contract, the international purchase contract that we had discussed in this course.

Whatever the terms and conditions that have been agreed with the supplier, all those agreed terms in summary form will be reflected in the commercial invoice.

So I'll be giving you more details about the commercial invoice and then the packing list that contains the physical description of the goods that are coming in the import shipment.

So it will contain all the details about the packages, about the boxes that contain the goods and the marks and the numbers.

So I'll explain more about it.

Packing list in the subsequent slides and the insurance policy or certificate.

So insurance policy is required for the single shipment.

So if you are periodically importing regularly spread over the complete year if you are getting the shipments same shipments many times, you may go for a comprehensive insurance policy against which the insurance company will issue you policy certificates for every shipment.

So if it is a single isolated shipment, then you can go for the insurance policy.

If there is a set of shipments, import shipments that are coming, or the same types of shipments of similar value spread over time, then you should go for the insurance policy supported by the certificates for each shipment.

So that is the difference between the policy and the certificate.

So I will give you a little more details about this particular document that signifies that the shipment is indeed insured, at least the transportation.

So insurance policy deals with transportation risks.

So other types of risks have other treatments.

Then the certificate of origin. A certificate of origin is required by the local customs at the point of entry.

When goods come to your country, they will be entering your country, Your customs department will require this certificate of origin to ascertain the actual origin of the goods, so that the customs can ascertain what is the import duty.

Because import duty depends not only on the HS code number, not only on the description of the goods, and what goods are there, but also on the origin of those goods.

So the customs duties vary from country to country, with different countries of origin.

Then the quality certificate.

Quality certificate is required mostly by you because there are distances that are involved and you want to make sure that the goods that are being imported are of the right quality and as per the agreed samples or the specifications that you had ordered for.

So quality certificate is a third-party inspection certificate, kind.

I will discuss about it a little bit more.

Then you will have a better idea about this particular document.

Then the documents that would be required under the SPS TBT measures.

So SPS TBT measures I had discussed in the earlier section also when I was giving you the example of the Indian trade portal. When you go to the Indian trade portal, I have taken one example, one case study I had explained to you the different SPS TBT measures, that is the sanitary, phytosanitary, and technical trade barriers.

So these requirements of the local government in the importing country require certain documents.

So I will give you more explanation of what kind of documents are required and what could be the requirements.

I will give you more details in subsequent slides.

Then the custom declaration.

The customs declaration is mandatory for getting the goods into your country at the port of entry, to get the goods cleared from customs. You have to make the advance customs declaration.

So this part I had discussed earlier also in the procedures.

Then when I had explained to you that, uh, the goods are to be cleared through the Customs Department or the border control.

And that document that is a communication between you and the customs Department is called the Customs Declaration.

And the exact name of this document would be different in different countries.

Very commonly it is called the Bill of Entry.

Like if you take the example of Indian customs, the Indian customs require customs declaration, which is called the Bill of Entry for Importation.

Generally, this document is filed electronically.

So I'll give you a little bit idea about how it is done in India.

A very similar way is used in many of the countries where the electronic data interface, that is the

EDI system is there.

So I will explain to you how this custom declaration is done.

What are the steps involved?

So I'll give you more details about it. And the import licenses or permits.

So why are these required?

What are the significance of these import licenses?

What is the impact of these licenses on the shipment?

I will give you some explanation in the subsequent slide.

And finally the transport documents.

Transport documents are the most important documents to take possession of the shipment. Because when goods are cleared, they are still in the possession of the shipping company or the carrier if it is by sea.

The shipping company.

Shipping line.

If it is by air, then it has the airline.

So these transport documents are useful to get this possession.

That is what your aim is.

That is the ultimate aim of any important to get the goods.

So these documents will be required.

I will give you more details about this set of documents.

A commercial invoice is a crucial document used in international trade transactions, including the importation of goods. It is a document prepared by the exporter or the seller and provides a detailed description of the goods being shipped, including their quantity, value, and other relevant details. The commercial invoice serves as proof of sale and is used by customs officials to determine the value of the goods and calculate applicable taxes and duties.

A typical commercial invoice for the importation of goods will include details such as:

1. Description of the goods: A detailed description of the goods being shipped, including their quantity, weight, and any other relevant specifications.

2. Unit price: The price per unit of the goods being shipped.

3. Total value: The total value of the goods being shipped, calculated by multiplying the unit price by the quantity of goods.

4. Shipping details: The name and address of the buyer and seller, as well as the shipping details, including the date of shipment, the mode of transport, and the destination port.

5. Payment terms: The terms of payment, including the method of payment, the due date, and any other relevant details.

6. Incoterms: The international commercial terms (INCOTERMS) used to define the responsibilities and obligations of the buyer and seller in the transaction.

The commercial invoice is a critical document that must be accurate and complete to ensure smooth customs clearance and avoid any delays or penalties.

Now let us talk about the commercial invoice.

A commercial invoice generally contains the information that is the summary of the international purchase contracts.

So it is a complete summary.

And this is the reason this is the most important document.

And it is required at every stage.

This commercial invoice is required by the customs.

It is required by the port authorities.

It is required by the banks.

It is required by the carrier whether it is a shipping company or the airline.

They will be asking for the commercial invoice.

Because this commercial invoice identifies the shipment. It is the identity of the shipment.

It is the identity of the transaction that is being done.

So it identifies what import shipment is there, what is the deal?

It talks about that.

So therefore it contains all the information that is required like contact details of the exporter or the consignee.

Consignee means the person who is going to receive the goods.

Invariably it is the buyer, but if it is not the buyer, then it will also have the name and address of the buyer separately.

So there is a separate column.

Just after this particular lecture, I will show you one sample of the commercial invoice, and I will show you how these details are given there.

The format that I will be sharing with you in this sample is based on the aligned document system.

That is the ADS. The aligned Document System is used by more than 180 countries that are members of the WTO,

World Trade Organization.

So for standardizing the documents, the format, the size, everything, it is uh the very common practice to use this ADS system Aligned Document System.

And I will show you this format, this sample, in ADS how it looks like a commercial invoice.

I will show you. Other details in the commercial invoice include details of the goods.

What is the description of the goods in a very summary form?

So it will give you an idea of the items that are there in the shipment the quantity and the HS code.

Very important, because the HS code is the code that is understood by the controlling authorities.

Border controls customs at the port of loading as well as at the port of discharge.

So at every stage, wherever there is an intervention required by the intermediaries, especially the customs department in different countries, they would need this ITC HS code that I had discussed in my earlier lecture also. And details on the Incoterms.

International commercial terms, delivery schedule, and the mode of transport, whether it is by sea or by air.

All this information will be there. Not to forget about the details, very important details.

That is part of the international purchase order, the price per unit, whatever the unit.

So you mentioned the unit also, what is the unit measure?

How do you measure the unit, whether it is the decent prices per dozen per piece, or set, what is the measure of the unit?

So you have to mention that also. And the total amount as well as the currency of the contract and the payment terms that have been agreed upon with the supplier.

Then it also contains the bill of lading number or the Airway Bill number, transport document number. Because this shipment has to be connected with that particular shipment.

And the best way to connect with the shipment is the transport document number and the bill of lading number is the best.

And you can also add, if it is available, the contract number, whatever is the contract with the supplier's international purchase order number.

You can write it here or the letter of credit number.

If it is available.

Then the commercial invoice will also have details concerning the country of origin, port of loading, and port of discharge.

So what is the port of origin?

Country of origin?

Which is the port where the loading of the ship, if it is by sea, will take place.

If it is an airport, then the name of the airport first airport where the goods will be loaded, the first point of loading and the final destination of the discharge, the port of discharge, and also details about the insurance policy.

If you have the details like the insurance policy number, if it is already available, then you should have it and whenever it is available you have to put it.

So in the final documents, you should have the insurance policy number also, to make sure that the goods are properly protected and the customs department and the border control will see to it that the goods are protected, because in many countries it is the regulatory requirement.

And then import license details and any declaration by the supplier. If any declaration is required by the supplier, that the declared country of origin is what has been, uh, authentic information or about any other detail that is mentioned in the Commercial Invoice.

The declaration by the supplier may be required by the local customs of the Importer's country.

Those have to be incorporated in the commercial invoice.

This commercial invoice has to be prepared by the supplier when the LC is received and accepted by the supplier, and when he is preparing the shipment, he has to start working on the commercial invoice and load the goods.

This commercial invoice has to be in the final form and it should be ready for dispatch to the importer.

So insurance policy details, import license details, any declaration, all these information are there in the commercial world.

In the next video, I will show you one sample of the commercial invoice so you will have a better idea.

Hi. Let me now share with you one sample of the commercial invoice. You can see it here.

This is the commercial invoice from an Indian party.

The importer is based in France.

This party from India has prepared this commercial invoice for the export of the readymade garments.

So you can see here Malhotra exports from India.

That is exporting the ladies' skirts and blouse sets.

As you can see here. To set Lauren company in France.

And the consignee and the buyer are the same.

There is no difference.

So you can put the names of both the parties here.

And the usual details are there like the bill of lading number, the buyer's reference number, and any reference number that is the exporter's, supplier's reference number, invoice number, and date method of dispatch. type of shipment, country of origin of goods, country of final destination, and the vessel name.

Vessel details are given there. A voyage number is given there. Terms and methods of payment are also mentioned here.

Confirmed irrevocable letter of credit. And the port of loading is Mumbai.

The port of final destination is Paris, France. And product code is given there, description of the goods is given there. HS code is mentioned here as I had explained to you. The unit quantity is given here at 700 and the unit type is set.

Price is given here and the total amount for each product code is given there.

So this is a very typical kind of commercial invoice.

The total amount is mentioned here.

Any special packing charges you can include if it is beyond the unit price.

If it is in addition to the normal charges, you can have special packing charges. And the total amount you can mention here. Incoterm is mentioned here in FOB Mumbai and the currency is Euro as it is mentioned here.

A signatory company is given there. The name of the authorized person and the signature are given there.

Then additional information can be put here.

Any kind of licensing requirement of the importer, that is the French party.

If they want anything to be written on this commercial invoice, you can put it here and the bank details are given there.

LC from the first class international bank advised through the International Bank of India Mumbai branch.

So anything in these two columns that is uh, required and makes logical sense for the supplier as well as for the importer.

The importer can request the supplier to put those things here.

So this is the typical example of a commercial invoice.

You can get a copy of this commercial invoice from the resource section of this lecture, and this

copy you can use for your reference.

These are simple things you are learning in this course.

What is the information?

Logical information is there.

There is nothing in these documents that has no logic.

This logic I have explained in this course.

So I'm very sure that you are getting the heck of it.

A packing list is an important document in importation as it provides details about the contents of the shipment, including the type of goods, their quantities, and their packaging. It helps the importer to verify that the goods received match what was ordered and invoiced by the exporter.

The packing list may also include information on the weight and dimensions of the shipment, the number of packages, and any special markings or handling instructions. This information is useful for customs clearance and for arranging transportation and storage of the goods.

Overall, the packing list plays a crucial role in facilitating smooth and efficient importation by ensuring that the goods are properly identified, tracked, and handled throughout the supply chain.

Then the packing list is a very, very important document.

It will be required at different stages, not only at the stage of the goods being loaded by the supplier at the port of entry.

When goods come to your country, they are being cleared by the customs.

They are being handled by the port authorities.

The only way to identify the shipment and to understand the shipment is a packing list because the packing list contains the physical details, dimensions, and types of the packages.

So it identifies the physical nature of the shipment. To identify.

It also tells you what the marks and numbers that are there on the boxes.

What kind of labels are there?

If the goods are hazardous, it will indicate that the goods are hazardous, so it will give a lot of necessary information before anyone would like to physically check it, because in international trade it is very, very difficult for every shipment to be physically monitored by the authorities.

It is not possible.

So the only way to understand the shipment is the packing list.

So it has to be very authentic and very accurate.

It would contain details very similar to the commercial invoice, but not the details, not financial details, but rather a physical description of the shipment.

So contact details of the supplier. The consignee and the buyer will be there.

Details and descriptions of the good's quantity and unit weight, volume, and HS code will be there.

Because the focus here is the physical description of the shipment. And the international commercial terms.

Delivery schedule.

Mode of transport that is by sea or air. It is important because the packing list must tell how the goods are coming, to check whether the packing is seaworthy or not, or airworthy or not.

So those details are required.

Then packing details, type of packing, number of packages and what are the dimensions?

Net weight, gross weight?

All those details will be there.

Bill of lading number, contract number, or LC number.

Like in the commercial invoice, it will be there in the packing list also. The country of origin, port of loading, and port of discharge.

The same information in the same place in a similar format like a commercial invoice will be there minus the financial details, unit price, or total amount.

Those things will not be there. In place of that in the Packing list, details containing the information on physical features of the shipment, physical details of the shipment will be there. And about its nature, hazardous nature, or brittle nature.

Whatever information, those things will be there. And shipping mark numbers, as I have already told you, logically have to be there.

Then import license details.

Any declaration by the supplier also will be there.

So some very important information will be repeated from the commercial invoice to the packing list.

And packing list is the best companion to any commercial invoice.

And it uh, actually identifies, along with the commercial invoice, the complete details of the shipment.

Now let us look at the sample of the packing list.

Very interesting document. it is.

It is the companion of the commercial invoice that I had described it as.

And I'm using the same example that I used in the commercial invoice here.

The exporter is from India and the importer is from France.

So this company, Saint Laurent, based in France, is importing readymade garments from India.

The supplier is based in India.

All other information, as you can see here in the packing list is very similar to the commercial invoice, except that you do not see in this, uh, packing list any reference to the unit price or the total price.

Those things are not there.

The rest of the things are very similar.

Product code, description of the goods unit quantity. Here details of the shipment are given there.

Here you can see the differences are coming the kind and number of packages net weight gross weight and measurement.

So by measurement, you will be able to indicate the volume.

So the purpose of this packing list is to describe the shipment that I explained to you.

And here packing information, in general, you can write any marks and numbers you can mention here. Cartons in five pallets.

Any information that is the highlight of the shipment, you can write it here.

So this is a very good example of the packing list.

And in the bottom portion of the packing list, you can mention here any additional information.

Maybe you want to write that the goods are hazardous, or they are described as a particular schedule number as per the International Classification of the Hazardous Goods, which in this sample case is not there, but there can be a possibility.

So additional information can contain a lot of different things depending on the situation and the product that is being supplied to the importer.

This is a very good illustration of the packing list.

You can see here that this portion is very, very important and indicates the shipment, like when we say 700 quantity units that are set.

So they are in cartons.

Each carton contains, as you can see here seven pieces.

So there are 100 cartons.

So the total will come to 700.

What is the meaning of this?

Each product code has 100 cartons. And the total number of cartons, as you can see here.

So 500 cartons are there in this shipment.

So this is a very interesting thing to see here.

Gross weight net weight measurement.

Total measurement.

You can right here cubic meter.

So measurement you can write in terms of the volume also.

So it depends on the product to product.

You can make some tweaking on these columns depending on what is the commodity that is being exported.

Maybe these commodities are in liquid form.

So you may have a different type of packing details that are to be mentioned here.

So this is the thing to be highlighted and noted.

You can just have a look at this packing list.

You'll have a fairly good idea.

The details in the header are very very similar to what was there in the commercial invoice.

There is nothing that has changed except for the packing information.

So here country of origin was there in the commercial invoice also and country of final destination. same thing.

You have to write it here.

And the consignee and buyer are not different.

So you can put the same name there or you can leave this particular column blank also.

That is also possible.

In importation, an insurance policy is a formal written contract between the insurance company and the policyholder, outlining the terms and conditions of the insurance coverage. It is a legal document that details the type of coverage, premium amount, and other important information related to the insurance policy. The policy is usually issued by the insurance company and is used as evidence of insurance coverage.

On the other hand, an insurance certificate is a document that is issued by the insurance company or its agent as proof of insurance coverage for the shipment. It contains details such as the name of the insured, the insurance company, the type of coverage, and the insured value of the shipment. The insurance certificate is usually issued in addition to the insurance policy and serves as proof of insurance coverage for the cargo during transit.

In summary, the insurance policy is the legal contract that outlines the terms and conditions of the insurance coverage, while the insurance certificate is a document that serves as proof of insurance coverage for the shipment.

The insurance policy and or certificate.

I explained to you the difference between an insurance policy and a certificate.

So depending on the situation, whether it is policy or certificate will contain details that I had discussed with you in one of my earlier lectures.

I have also shown you one insurance policy sample.

So there I showed you an insurance policy issued by a Vietnam-based insurance company.

So similar details, same information.

It will contain like name and address of the insured as well as the insurer.

It all depends on the international commercial terms and the needs of the situation.

What details of the person has to come there or the company has to come there?

And definitely, it has to be insured.

But whether the name of the insurer will come or not is a question mark, because in the sample, which

I had shown you, that only the name and address of the insured were there, and the insurance company, not the insurer.

The actual insurer in many of the international commercial terms, the exporter is the insurer, but the insured is the importer.

So it depends what is the international commercial terms that are agreed upon between the supplier and the importer, the policy number, and the period of coverage.

What is the period of coverage?

Description of the goods, type, quantity, and value that is required.

The description is required. In this sample

I have shown you that also. Nature of the risks that are covered in the policy, as I had shown you in that example. ICC clauses A, B, C, minimum or maximum risk or all risks plus clauses when you include plus clauses like SRCC.

So when you add that you get the maximum cover, you cover all the risks.

So different types of risks can be covered.

Then the sum that is insured is the sum.

Generally, it is 110% of the CIF value.

I had discussed that.

You must remember that and the premium details.

That is not mandatory if, uh, the insurer or the insured request it should be there, then it will be there then.

Terms and conditions.

What are there?

It could be in the form of some addendums or annexures also to the policy. And the applicable laws and the jurisdiction in case of any claim process.

It will also tell you in the annexure what is the claim process and whom to contact.

So in the example that I had taken up in this course earlier, there was a section in the policy to contact the surveyor and the representative of the company in Spain, in that example.

So those details will be there.

So it depends on the situation.

It depends on the goods.

It depends on the country of issue, and the company that is issuing.

So the format can vary.

But I'm just giving you the typical information that is given in the insurance policy.

So I'll not take any sample example of the insurance policy that we have already discussed.

We'll go to the next slide.

A certificate of origin (CO) is a document that identifies the origin of goods being exported. It is an important document required by customs authorities to determine the tariff and other duties that will be applied to the imported goods. The certificate of origin provides information about the country of origin of the goods, the exporter, the importer, the shipping method, and other details about the shipment.

The certificate of origin is typically issued by a Chamber of Commerce or a similar organization in the exporting country. It may also be issued by the exporter or the freight forwarder, but the issuing entity must be authorized by the relevant government agency in the exporting country.

Another very important document that I had talked about, uh, in my earlier lecture is the Certificate of Origin.

And I told you a certificate of origin is very important to calculate the import duty.

And it is a mandatory requirement of the customs and local customs of the importer at the port of entry.

So, a certificate of origin, ascertains what is the origin of the goods.

So whatever is declared in the commercial invoice or the packing list, wherever you are mentioning, what is the country of origin?

This certificate of origin is the legal document that confirms the actual country of origin, and it contains details like the contact details of the supplier and the buyer, details of the goods, quantity, units, value, HS code, and country of origin of the goods. Exporter's Declaration about the declared country of origin, what is the country of origin?

And sometimes it also requires mentioning the name of the manufacturer, if it is mandatory in the port of entry customs, that is the importer's country.

If the customs want the manufacturer's name also to be there, in case the exporter is not the manufacturer, then it may be required.

So any details that may be required by the importing country, or local authorities. As I give you the example of the manufacturer, there may be some more information that may be required to be included in the certificate of origin, in which case it has to be incorporated by the supplier.

All these documents are to be prepared by the suppliers, except the customs declaration, which I will discuss with you in more detail about it.

All other documents that we are discussing are the responsibility of the supplier to be obtained, and in original, to be given to the buyer, either directly or through banks, whatever is the payment terms.

So these things we had discussed earlier also in this course.

So you already know about these things.

Now also the endorsement, very important, certificate of origin endorsement or legalization by the requisite authority, depending on the type of the certificate of origin, it is issued by some local chamber of commerce of the supplier's country or by any government agency, depending on what is the use of the certified origin. If it is an ordinary certificate of origin, for the simple ascertaining of the country of origin, in case there is no bilateral agreement between the supplier's country and the Importer's country, then an ordinary certificate of origin can work.

But in case certain bilateral agreements have a significant impact on the actual import duty, that may be significantly different because of the bilateral agreement, then a special type of certificate origin may be required, wherein the issuing authority will be a specialized or special uh authority that will be specified by the buyer.

That means the importer.

Now let us look at the sample of the certificate of origin with the same example.

So the exporter is from India and the importer is in France, based in France, Uh, in Paris. The name of the importer is Saint Laurent.

And you can see that in the certificate of origin also the details are very similar.

Method of dispatch, type of shipment, voyage number and vessel name, port of loading, date of departure.

All the information is very similar except here the marks numbers and details in this particular main column differ.

Here you are not explaining all the shipments, it is not required.

You are generally giving the summary of the shipment.

So as I had explained in the packing list, also there are 500 cartons.

So you write it here 500 cartons of cardboard.

And what are the marks? JAI HIIND was given there and a description of the goods.

So here you are not describing.

You are simply saying ladies' garment two-piece sets.

So that is okay.

But here you give the HS code like in the commercial invoice and the gross weight.

So here you are not giving the measurements.

The idea of a certificate of origin is not to describe the physical nature of the shipment.

That is not the purpose.

The certificate of origin focuses on these columns, these two columns. Declaration by the exporter about the country of origin and the declaration by the chamber authenticating legalizing this particular certificate of origin.

So who is the authorizing person from the Chamber of Commerce, whatever whatever may be the Chamber of Commerce?

The signature and details are given here.

And the declaration of the exporter.

These two things are the most important part of the certificate of origin.

This has to be focused upon.

You can get some good ideas with the samples that I'm showing you.

You will have a first-hand knowledge of what they look like.

You can download this sample of Certificate of Origin from the download section resource section of this lecture for your reference.

A GSP certificate of origin is a document that certifies that a particular product is eligible for preferential treatment under the Generalized System of Preferences (GSP) program. The GSP program is a trade preference program that provides reduced or zero tariff rates on imports of certain products from developing countries.

The GSP certificate of origin is issued by the exporting country's government authorities or authorized agencies. It confirms that the exported goods meet the origin criteria specified by the importing country's GSP program. The certificate of origin must be presented to the importing country's customs officials to claim the preferential tariff treatment.

The specific requirements for the GSP certificate of origin may vary depending on the importing country and the product being exported. However, typically the certificate contains information such as the exporter's name and address, the importer's name and address, a description of the goods, the HS code of the product, and a statement certifying that the product meets the origin criteria for the GSP program.

Now, this is one very interesting certificate of origin.

It is one variant of the certificate of origin, which is very, very interesting for the importers. Why?

Because it significantly reduced the import duties.

So it is a direct benefit to the importers.

It is called the GSP certificate of origin.

This GSP certificate of origin is a special type of certificate of origin that applies to the imports of goods in developed countries from a developing or underdeveloped country.

So this certificate of origin is part of the multilateral agreements, international agreements under UNCTAD, that is United Nations Council for Trade and Development.

So under UNCTAD, this GSP, the meaning of which is the generalized system of Preferences.

So this system of preferences is there internationally to boost the trade of the developing countries.

So this GSP certificate is issued by specialized GSP agencies that are located in all the countries.

So you need to find out which are these agencies that can provide this certificate to your supplier. Because this certificate has to be obtained by the supplier.

So you have to discuss with the supplier and uh, demand this GSP certificate if it is applicable in your imports, in which case you are going to get the direct cost benefit of the imported items.

So this GSP certificate also contains similar information like contact details of the supplier and buyer, details of the goods quantity, units, value, HS code, country of origin of the goods, and exporter's declaration about country of origin.

Reduced rates of import tariffs, any details required by the importing countries, and endorsement legalization by the authorized agency authorized for GSP.

So this is a very useful document for the importers.

And if it is applicable, no importer should miss this document.

They should ask for this document.

If it is the payment by letter of credit through banks, then it should be part of the documentary conditions in the letter of credit.

Now this is the sample of the GSP certificate of origin.

This format is given there.

This particular document you can download from the resource section of this lecture.

So it's very similar to the ordinary certificate of origin.

The most important thing is that uh it has to be legalized and authenticated by an authorized agency that can issue a GSP certificate of origin because a GSP certificate of origin can have a significant impact on the import duties that will be levied in the port of import, that is, the port of entry for the importer.

Depending on what is the situation, the import duties may be highly subsidized.

Because of this certificate.

This is not an ordinary certificate of origin, so it has to be authorized and legalized by the specialized agency that you have to find out, depending on which country you are importing your goods from.

An importer may require a quality certificate for importation to ensure that the goods being imported meet certain quality standards and specifications. Quality certificates are typically issued by third-party inspection and testing agencies or organizations that specialize in certifying the quality of specific products or goods.

Importers may require quality certificates to comply with regulations and standards set by the importing country or to ensure that the goods meet the specifications required by the importer or their customers. Quality certificates can provide assurance that the goods being imported are of a certain quality, free from defects or damages, and meet specific safety or environmental standards.

In some cases, quality certificates may be mandatory for certain types of goods or for imports from specific countries. For example, certain products such as food, pharmaceuticals, and chemicals may require quality certificates to ensure safety and compliance with regulations.

Overall, quality certificates are an important tool for importers to ensure that the goods being imported meet their expectations and comply with regulatory and safety requirements.

Then the next document of great use to the importers refers to the quality or the inspection certificate.

If you are importing something you are importing from a foreign nation, you are not sure what quality will be supplied by the exporter.

So it is very, very critical for you to get the third-party quality test or inspection.

So this certificate will be issued by a reputed third party, something like an organization that is, uh, called, uh, SGS.

It's a Swiss company that has operations in almost all the countries in the world.

Even at the very remote locations in those countries. Branches of these organizations, carry out the quality and the inspection of the export cargo in those countries and, uh, assist the importers in making sure that the goods that are being imported are of the right quality and conform to the industry standards, conform to the certificates that are issued by the supplier and based on the agreed terms of the quality of the goods.

So this certificate can make the life of the importers very comfortable by its significance.

And of course, it costs money.

Quality certificates will cost money and ultimately the cost has to be paid by the importer only.

So all these documents, all the compliances that are done by the supplier ultimately will cost something.

And all those costs have to be paid by the importer only.

So this quality inspection certificate typically contains information like contact details of the supplier and the buyer, details of the goods, quantity, and technical specifications that are very, very important.

The results of any inspection or tests.

Statement of conformity with the industry standards, product certification, or approvals.

Any details required by the importing country.

That means the local authorities like border control, customs, and the document, this certificate has to be endorsed, and legalized by a third party, typically a reputed third party, that is neutral for both the exporters as well as the importer.

So this is how this certificate has to be obtained by the supplier and supplied in original to the importer.

So here you can see the sample of one of the quality certificates issued by SGS.

It's a Swiss company and very popular quality inspection agency that is very reputed and widely referred to, widely mentioned in the letter of credit by the importers for the supplier to get the quality certificate or do the inspection.

There is no standard quality certificate format for such kind of inspection certificate or quality certificate. It depends on the item.

You can see here some item is given there sample description is given there. Thermal bonding, non-woven, color is white, fiber contents are given there. The applicant's name is given there.

In this case, the applicant will be the supplier only.

Sample receiving date.

Test performance period.

Test performed.

What kind of tests were performed?

Those are mentioned here.

You can see the test results are also given here.

So here you can see the test results.

The test results are put as the addendum to the certificate.

They are very detailed so they will be attached to the certificate.

The remarks are given.

Their test results have been taken from report number so-and-so.

This report date is given there and it will be attached.

This test report supersedes the test report number of anything that is there, because it may be the revised report.

And the authorized person from SGS has signed it, and the name and designation are given there.

And it is a normal certificate that is given there.

The main important thing here is the Annexures that are in the form of test results.

That is, in the form of any more details about the product that is being tested.

What types of tests have been carried out?

If any detailed information has to be attached, it will be there in the annexure.

So for privacy reasons, I am not showing you the annexures to this report, but this sample gives

you a fairly good idea of what type of quality inspection certificate it can be.

SPS (Sanitary and Phytosanitary) and TBT (Technical Barriers to Trade) measures are two types of regulations used in international trade to protect human, animal, and plant health and safety as well as to ensure fair competition. Here are some examples of documents related to SPS-TBT measures:

1. Sanitary and Phytosanitary Measures (SPS) notification: This document is required under the World Trade Organization (WTO) SPS Agreement and notifies other countries of any new or changed regulations related to food safety, animal health, and plant health.

2. Technical Barriers to Trade (TBT) notification: This document is required under the WTO TBT Agreement and notifies other countries of any new or changed regulations related to technical standards, labeling, and certification procedures.

3. Import permit: This document is required by many countries to regulate the import of certain products, such as animals, plants, and their products. Import permits often include requirements related to SPS-TBT measures, such as certification, testing, and inspection.

4. Certificate of origin: This document indicates the country where the goods were produced or manufactured and may be required by the importing country to verify compliance with SPS-TBT measures.

5. Health and safety certificates: These certificates are issued by regulatory agencies to certify that products comply with SPS-TBT measures related to health and safety, such as food safety, animal health, and plant health.

6. Product labeling and packaging requirements: These requirements specify how products should be labeled and packaged to comply with SPS-TBT measures related to technical standards and consumer information. Examples include nutrition labeling requirements for food products and warning labels for hazardous substances.

Then comes the SPS-TBT-related documents.

Sanitary phytosanitary measures by the importing countries, and technical barriers for trade that are generally in place in the importing countries.

What are the reasons why these SPS-TBT barriers are there? So-called trade barriers because of health and safety reasons.

So it may ask for the health and safety certificates or for the product testing and analysis report to ensure that the goods that are coming into the country are of quality and serve the right purpose to the society and the consumers, and ask for the technical documentation for ascertaining the technical description of the goods.

They might not be used for any dual use, some use that is prohibited in the country of import.

So technical documentation may be asked by the local government through the Customs Department or the border control.

They will ask for the technical documentation to make sure everything is on the board, so there is nothing that is being hidden regarding the use of the goods that are being imported and requiring the standards, the quality, and the health and safety of the society and the consumers in the country.

So this technical documentation will be invariably asked for by the Customs Department in case a physical examination happens.

Even if the physical examination is not there, you may be required to submit these documents which are connected with the SPS-TBT matters. Then, phytosanitary certificates that are to be used to secure the nation for any animal or living things or the plants, uh, the safety of these plants, any kind of insects or bacterias or any kind of germs that may enter through the shipment to the country.

So phytosanitary certificates may be required for certain goods.

So what are these goods?

How it is to be obtained?

What kind of certificate is required varies from country to country.

So you as an importer need to find out the SPS-TBT policy of the country.

Find out what kind of phytosanitary certificates are required, if they are required, and what are the things that have to be done about SPS-TBT measures in that country.

So that policy has to be checked. The import licenses also may be there, which may have a direct or indirect relationship with the SPS-TBT matters because the import licenses may be also based on similar themes.

What are the themes of the SPS-TBT?