It is no
denying now that the world is shifting towards digital platform. All the
businesses, companies and oraganisations have their own consumer friendly
websites so that their audience’s experience can be better. This digital transformation
has encouraged every businessman to rapidly change their ways of trade and cope
up with the dynamic environment. It is very well said that “to improve is to
change, to be perfect is to change often.”

Although
this digital transformation came in the picture a few years ago, the global
pandemic has given it an accelerating push and every digitalization is the most
common option people choose to promote out themselves. One thing to learn from
this is that nothing is constant or predictable.

According to
EY Future Consumer Index, 43% of the consumers, post pandemic, prefer to shop
online rather than buying using their previous method of going to the store
themselves. This only represents that geographical location is not as important
as it used to be in an era.

COVID-19 has
had a tremendously negative impact on almost all businesses especially the
retail business since the production of consumer goods was stopped to the
extent where the shops were seen completely empty a lot of times. In such a situation,
many retailers questioned their ability to create a new customer base according
to the new consumption habit. They wondered if their selling method is still
efficient enough to keep their customer’s trust in their brand.

Two of the
great examples of this would be Lululemon and Nike. With the world being put to
lockdown, the demand for athleisure increased remarkably mainly because
athleisure was a great choice for majority of the people to wear during
lockdown. They handled their business during such a crisis because of their
digital expertise and resources. Also, Lululemon diversified its products to
meet people’s changing demands.

A brand that
faced extreme loss due to COVID was Under Armour and Uniqlo. Its majority of
the sales was based on distributing their products amongst other retailers
which faced a drastic drop in its sales due to physical shops being shut.
Uniqlo is basically focused on football which also had to face a sharp downfall
because it couldn’t keep the interest of its consumers online as much as it
could in their physical stores.

The world’s
leading digital platforms have gained the most benefit due to the global
pandemic and majority of these large companies are based in USA and China. It
makes it difficult for some smaller companies or organizations to compete
against them and a make a known place of their own.

In order to
work swiftly with e-commerce, better understanding, skills and collaboration is
required. Post pandemic, more than 30 e-trade companies have partnered together
to acquire more opportunities and gain awareness regarding the risks that
raises due to COVID. Also, to identify the ways in which businesses in less
developed and developing countries can work their way out through these risks.
This step must be taken into consideration by all business men in order to
flaunt their business.

 The selling
of goods outside the national borders is known as the process of exporting. Its
process is an extremely time taking one with a whopping 17 steps involved. Here
it goes.

1.RECEIPT
OF ENQUIRY AND SENDING QUOTATION

The buyer
firstly sends out enquiries to the prospective exporters regarding the goods
that he requires. As the exporter receives it, he replies to it through a
quotation or ‘Performa Invoice’ where all the details asked by the
importer about the goods are mentioned.

2.RECEIPT
OF ORDER

If the
importer is satisfied with all the details and is ready to import goods, he
places an order to the exporter either directly or through a middleman. This
order or indent contains all the information regarding the goods like quality,
quantity, price, date and time, mode of payment, packaging instructions and
more.

3.SECURING
A GUARANTEE FOR PAYMENT

The exporter
needs surety that his payment would be made safely by the importer and that he
is in a good financial position. To ensure this, the exporter demands a ‘Letter
of Credit’ (LOC) which is issued by the importer’s bank that guarantees that
the importer is in a good financial position to meet his payments.

4.EXPORT
LICENSE AND IEC NUMBER

After the
assurance of his payment, he must move on with the formalities of the
procedure. In India, an exporter must have an export license because exporting
is subject to the customs law. Also, he needs to obtain an ‘Import Export
Code’ (IEC) from the ‘Directorate General Foreign Trade’ (DGFT)
since this number is mentioned on almost every document.

5.PRE-SHIPMENT
FINANCE

After the
license has been received, the exporter moves to his banker to obtain
pre-shipment finance which is required for the procurement of raw materials for
the production and processing, packaging materials and transportation of goods.

6.PROCUREMENT
OF GOODS

After the
finance, the exporter either obtains raw materials for the production of the
goods as per demanded by the importer or simply purchase the goods from the
market to export.

7.PRE-SHIPMENT
INSPECTION

In India,
there is an ‘Export Quality Control and Inspection Act, 1963’ according
to which certain goods needs complete inspection before being exported. If the
exporters goods falls under this category then he has to inform the ‘Export
Inspection Agency’ (EIA) which inspects and ensures that the goods are as
per demanded by the importer. After this, they issue a ‘certificate of
inspection’ which has to be sent to the importer along with other
documents.

8.EXCISE
CLEARANCE

According to
the Central Excise Tariff Act, an excise duty must be paid by a manufacturer to
produce goods in the country. The exporter contacts the Excise Commissioner
regarding this and when the Commissioner is satisfied, he issues an excise
clearance. However, this duty is returned to the manufacturer if the goods are
supposed to be exported. This return is known as ‘duty drawback’.

9.CERTIFICATE
OF ORIGIN

There are
some tariff concessions allowed in some countries to export goods. In order to
obtain these benefits, the importer might ask for a ‘certificate of origin’ to
prove sure that the goods have been produced in the country from where they are
being imported.

10.RESERVATION
OF SHIPPING SPACE

The exporter
needs to apply at a shipping company to reserve a ship for the consignment.
After the application has been approved, the company issues a ‘shipping
order’ which is a document containing instructions for the captain of the
ship to deliver the specified goods after the customs clearance at the assigned
port.

11.PACKING
AND FORWARDING

A ‘packing
list’ is a statement that contains the details of the number of packs being
shipped and the number of products in each pack. This list gives information
about the nature of the hoods being exported. After this, the exporter sends
the consignment to the port through road or railway. If railway is chosen as
the medium then, a ‘railway receipt’ (RR) is issued by the railway
authorities which is endorsed in the favor of the exporter’s agent who will
receive the goods from the railway station at the port.

12.INSURANCE
OF GOODS

The exporter
then gets the goods insured by an insurance company to protect them from any
damage or risk of loss due to the calamities of ocean during the
transportation.

13.CUSTOMS
CLEARANCE

For the
customs clearance, the exporter must prepare a ‘shipping bill’. This
bill is the main document on the basis of which the permission to export the
goods is granted by the customs office. After this bill, the port
superintendent is approached for ‘carting order’ which is an instruction
to the staff at the gate of the port to permit an entry of the cargo in the
dock.

14.MATE’S
RECEIPT

The goods
are then loaded on the ship and the captain of the ship or his mate (assistant)
issues a receipt to the port superintendent known as the ‘mate’s receipt’
which contains the information regarding the name of the ship, date of
shipment, description etc.. If the captain is not satisfied with the packaging
of the goods, then he may issue a ‘foul receipt’. The insurance company
may not bear the liability for the loss in case the exporter has received a
foul receipt.

15.ISSUANCE
OF BILL OF LADING

Next, the
exporter hands this receipt to the shipping company which then calculated the
freight charges and issues a ‘bill of lading’ which is a document that
serves as a proof that the shipping company has accepted the goods for carrying
it to the appointed port.

16.INVOICE
PREPARATION

After the
goods are exported, the exporter creates an invoice of the exported goods. This
invoice contains information regarding the quantity of the goods exported and
the amount to be paid by the importer for the delivery.

17.SECURING
PAYMENT

After the
goods are shipped, the importer is informed about it by the exporter. The
importer then needs to get the goods customs cleared in order to claim them for
which he needs various documents. These documents are sent to the importer by
the exporter’s banker only when the importer accepts the ‘bill of exchange’
which secures the payment of the goods.

1.TRADE
ENQUIRY

The first
and foremost step is to enquire and collect all the information about the
countries and the firms that can export the required goods in the importing
nation. The importer comes into contact with the exporter with the help of a
‘trade enquiry’ where he requests for all the details related to the goods need
to be imported.

In response
to the enquiry, the importer receives a ‘Performa Invoice’ which
contains all of the information that he asked for.

2.IMPORT
LICENSE AND IEC NUMBER

Some goods
can be shipped across nations freely without any restrictions. But some goods
need a license to be imported to a certain territory. This list of restricted
goods can be checked through the ‘Export Import Policy’ (EXIM). A
license must be acquired if the required goods falls under this list.

Also, in
India, it is necessary for all the importers to register themselves under the
Directorate General Foreign Trade (DGFT) and get an Import Export Code (IEC)
which must be mentioned on the import documents.

3.FOREIGN
EXCHANGE

Now, the
importer has to arrange for foreign exchange as the payment for the goods must
be made in the currency of the exporting country. For instance, India will have
to pay in US Dollars if the goods are being imported from USA. In India, these
exchanges can be procured by the Exchange Control Department of Reserve Bank of
India.

4.PLACE
ORDER

After the
foreign exchange is procured, the importer has to place an order to the
exporter with all the necessary information such as quantity, quality,
insurance, weight, date and time of delivery, packaging and lot more. This
order can either be directly placed by the importer or could be placed through
a middleman.

5.LETTER
OF CREDIT (LOC)

An exporter
needs to be sure about the financial condition of the importer to secure his
payment. For this reason, he demands for an LOC from the importer which is
issued by the importer’s bank as a guarantee that the importer is financially
stable enough to make the payments. This LOC will only be issued by the bank if
they are sure about his credibility.

6.FINANCE
ARRANGEMENT

The importer
has to pay for the goods when they arrive in order to retrieve them. Therefore,
he must arrange the finance way before the delivery of the goods so that he
won’t be penalized for letting the goods stay at the port due to insufficient
funds.

7.RECEIPT
OF SHIPMENT ADVICE

After the
exporter has loaded the goods on the ship, he prepares a ‘shipment advice’
for the importer which contains information such as description of the goods,
bill of lading, date and time, name of the ship, invoice number and more.

8.IMPORT
DOCUMENTS

After the
shipment of the goods, the exporter hands over the important documents like
bill of lading, packaging list, marine insurance police, certificate of origin
etc. to the banker of the importer to be sent to the importer. These documents
are only delivered to the importer when he accepts the bill of exchange.

9.ARRIVAL
OF GOODS

At the
arrival of the goods, the one in charge of the ship informs the in charge of
the dock and provides him with a ‘general manifest’ which contains all
the information regarding the imported goods. The unloading of the goods in the
importing country takes place on the basis of this document.

10.CUSTOMS
CLEARANCE

In order to
take the delivery, the importer has to clear the customs duty. Firstly, the
importer has to get a delivery order by the shipping company in order to take
the delivery. Then he must pay the dock charges for receiving the goods on the
port. After this, a ‘bill of entry’ has to be filled by the importer for
the assessment of the customs duty. This bill of entry consists of the name and
address of importer and exporter and information about the goods.

Only after
the completion of these process is the importer allowed to take away the
consignment with him.

Custom duty
is a type of indirect tax that is levied on the goods transported across the
borders of a nation. Tax levied on goods imported from foreign countries is
known as import duty and goods exported to the foreign countries is known as export
duty. The value of these duties depends on various factors. Duties levied based
on the value of the goods is known as velorem duties and duties levied
depending on the quantity of the goods is referred to as specific duties.

The main
objective of levying these taxes is to ensure the safety of a country’s
economy, environment, jobs and citizens by managing the transportation of goods
in and out of the country.

In India,
custom duties come under the Customs Act, 1962. According to this, the
government has a right to impose these taxes on both, the import as well as the
export of the goods. Any matters corresponding to these are looked after by the
Central Board of Excise and Custom (CBEC) which is a part of the Department of Revenue
of the Ministry of Finance.

The
government charges the exporter with export duty to send the goods across the
national borders and when any goods are received by a country from outside the
borders then the buyer or the customs broker must pay the pre-decided amount
first in order to retrieve the delivery.

How are
these customs duties imputed? Under the Customs Valuation Rules 2007, there are
various rules laid down to impute the value of these taxes.

Rule 3 and 4
– Comparative Value Method, comparison of transaction value of similar
goods.

Rule 7 – Deducting
Value Method, use of sale price of imported goods in the importing country.

Rule 8 – Computed
Value Method, combines the cost of materials, fabrications and profits in
the production country.

Rule 9 – Fallback
Method, based on the previous methods

On the 1^st
of July 2017, the Goods and Services Tax (GST) was implemented which shook the
entire tax system. It is basically a tax that eliminates all the other indirect
taxes and makes the tax system much easier. There are 3 different categories of
GST – Central Goods and Services Tax (CGST), State Goods and Services Tax
(SGST) and Integrated Goods and Services Tax (IGST). The first two are for
intra-state transactions and the last one is for inter-state transactions.

The customs
duty which are included in GST are the Countervailing Duty (CVD) and Special
Additional Duty (SAD). The Basics Customs Duty (BCD) is still regulated as it is. When any goods are imported in India, IGST is imposed on
them along with BCD. Before IGST, there were several other taxes such as anti-dumping duty, safeguard duty, central excise duty and
service charges which made the whole tax system a lot more complicated whereas
now, only one integrated tax is chargeable.

The introduction of GST made the whole international
logistics process easier and less complicated. Although, this policy adopted by
the government was criticized by many for various factors but all in all, it
has reduced the possibility of loopholes in the taxation system and has made it
more transparent.