QUALITY CONTROL -INTRODUCTION Quality assumes highest importance in penetrating, capturing and sustaining in International market.

The international market is highly competitive and quality of product is one of the important determinants in export business. One of the important problems faced by many developing countries, including India, in increasing exports is the poor quality of product. Quality improvement is one of the prerequisites in improving the share in export market. Once we hear that the product is made in Japan, the immediate impression we gather, even before testing and using, is that the product would be qualitative. Such a psychological impact, Japan has been able to establish with its incessant efforts on the quality front. Before those efforts, in particular, prior to the introduction of comprehensive export inspection law in 1948, the products of Japan too were of poor quality. In short, quality control and pre-shipment inspection have an important place in improving export performance. DEFINITION AND MEANING OF QUALITY CONTROL Quality control is defined as a deliberate and planned activity having for its object the determination of quality of a product with a view to accepting it as such in case it satisfies the stipulated requirements, or in case it does not satisfy these requirements to take necessary measures to correct the quality appropriately. Control of quality is best exercised during the course of production of an article, actually staring from with the raw materials, going through the various stages and ending up with the final product, paying due attention to packing, storage and transport. Pre-shipment inspection is the process of inspection of a batch of goods, just prior to shipment to determine whether it satisfies the conditions for shipment, which may be concerned either with the quality, weight, packaging, contraband character, etc. To ascertain the level and ensure that the level meets the expected requirements is the main theme of quality control. The level of quality-high, medium or low- depends upon how rich or poor the specifications are. The quality of the product is determined with reference to the requirements of the buyer. It should be understood in the relative sense but not in absolute sense of the term. It is immaterial whether the quality of the product is high or low. What is important, the quality should meet the requirements of the buyer. MECHANISM FOR ENFORCEMENT OF QUALITY In order to promote exports as per international standards, the Government of India has introduced compulsory quality control and pre-shipment inspection for majority of items (around 90%), by enacting the Export (Quality Control and Inspection) Act, 1965. The Government has set up Export Inspection Councils to monitor the quality of goods meant for exports. EIC has a network of offices throughout the country to conduct inspections and issue quality control certificates that are required before shipment of goods. OBJECTIVES OF QUALITY CONTROL The following are some of the objectives of quality control* Promoting and ensuring the image of Indian goods exported to other countries. o C.R. Rama Rao Quality Control for Export 98 Export-Import Procedures, Documentation and Logistics Ensuring goods of assured quality only move into the export market. Sustaining the foreign markets where Indian goods are already favored and developing new markets with qualitative edge. Inspiring confidence in the minds of buyers, with the assurance provided by reputed third party guarantee.

5 Adhering strictly to the technological requirements accepted by the foreign buyers of the product. Ensuring sound and safe performance, without causing any health or safety hazards. Observing conformity of rules and regulations of the importing country. Maintaining proper packing for the safety of product during transit. Eliminating the causes for complaints from the foreign buyers and making every effort to spread quality consciousness in the country to improve overall quality of Indian products. Maximising production and effecting economies by standardisation.

SHIPMENT OF EXPORT CARGO-INTRODUCTION Exporter can send shipment through any one of the modes of transport, dependent on the terms of contract between the exporter and importer. The mode can be shipment by sea, shipment by air, shipment by post and shipment by land (land routes). The term Shipment does not necessarily mean that the goods are shipped by sea alone. It is only an expression of dispatch of goods. However, export of cargo by shipment to the buyer is the more popular method in comparison to dispatch of goods by air. The freight charges for shipping cargo are much less than those of airfreight. Moreover, the physical size of the products, sometimes, constrains the exporter to dispatch them by air, especially when the products are heavy machinery or engineering goods. PROCEDURE FOR SHIPMENT OF EXPORT CARGO The essence of shipment of export cargo is to obtain negotiable copies of Bill of Lading, as many as required in the export contract. Bill of Lading constitutes the document of title to the goods that are to be passed on to the buyer to obtain export proceeds and completion of export contract. The different stages in this process are: 1. Shipping Order The process of shipment of cargo commences even before the goods are ready for shipment. Reserving Shipping Space and obtaining Shipping Order is the primary step involved in shipment of cargo as space may not be available when goods are ready for shipment. Shipping order binds the shipping company to reserve the space on the sailing booked. So, advance planning is essential to meet the delivery schedule. Shipment of cargo involves various stages, once goods are manufactured and ready for dispatch. 2. Clearing and Forwarding Agent Clearing and Forwarding agents are the specialized people with knowledge of procedures and documentation involved in shipment of goods. So, exporter has to appoint clearing and forwarding agents, experienced in the product and country to be exported. Range of services exporter intends to avail determines the choice of the forwarding agent. While all the forwarding agents provide essential services, very few render optional services. Scope of these services has already been discussed in the chapter Clearing and Forwarding Agents in detail. Basically, they guide the exporters in providing information on the various alternative routes of transport to reach the buyers port along with relative cost implication and finally facilitate in the selection of mode as well as route of transport to meet the delivery schedule, at economical cost. They are the competent people to comply with procedural formalities of the customs and port authorities, separately. 3. Shipping Documents As soon as export goods reach the warehouse, exporter arranges for a complete set of shipping documents to be passed on to the forwarding agent, along with detailed instructions.

They comprise: (a) ARE-1 in original, duplicate and sixtuplicate (b) Commercial invoice (in duplicate) (c) GR form (in duplicate) / SDF form (in duplicate) where shipping bills are electronically processed in Customs House (d) Letter of Credit along with export contract or export order (e) Packing list or Packing Note (f) Certificate of Origin (g) Certificate of inspection, wherever necessary (h) Marine Insurance Policy 4. Verification of Documents at Customs House According to prevailing customs regulations, no cargo meant for export is allowed for loading on ship without the customs clearance. So, the cargo must be cleared from the customs before it is loaded on the ship. For this, the above mentioned documents along with 120 Export-Import Procedures, Documentation and Logistics five copies of Shipping Bill are to be submitted to the Customs Appraiser at the Customs House. The Customs House examines compliance of formalities relating to Quality Control, Exchange Control, Pre-Shipment inspection and compliance of requisite Licensing by the exporter to ensure genuineness of transaction. After verification, all documents except the original copy of GR, original copy of Shipping Bill and one copy of Commercial Invoice are returned to the exporter. If satisfied, he issues a Shipping Bill Number to the exporter/C & F agent. After recording the required details of GR-1in their registers, they forward the original GR-1 to RBI. 5. Obtaining Carting Order from the Port Authorities The export cargo lying in the warehouse of the exporter is to be moved into the port premises and kept in the godown at the port till the goods are loaded on board. The C&F agent approaches the superintendent of the concerned port for securing Carting Order for moving the cargo into the port premises. After obtaining the order, the cargo is transported to the port. Later, permission of Gate Inspector is obtained to move the cargo into the port area. The goods are unloaded and kept in the appropriate shed assigned for those goods. 6. Customs Examination of Cargo at Docks The customs examiner physically examines the goods. Physical examination of goods can be arranged at the warehouse/factory premises of the exporter by making a suitable application to the Assistant Collector of Customs. He seals the packages in his presence. The main purpose of examination of goods at the docks is whether the goods packed and kept ready for shipment are the same as mentioned in the Shipping Bill. After all the formalities are over and the Customs Officer is satisfied that the export does not contravene the provisions of any law and all duties and other dues have been paid, a Let Export Order will be made on the back of the shipping bill to permit the export. Where the customs clearance is computerized, clearance is processed through Electronic Data Interchange (EDI) System. 7. Obtaining Let Ship Order from the Customs The C & F agent presents the duplicate copy of the Shipping bill to the Preventive officer of the customs who supplements his endorsement on the back of the Shipping Bill with Let Ship Order, after satisfactory verification. At this stage, the shipping bill contains both the endorsements of Let Export Order and Let Ship Order. The preventive officer supervises the loading of the cargo on board the vessel nominated for its export. 8. Mates Receipt

As soon as the goods are loaded on board the vessel, the Captain or Master of the ship issues a document called Mates Receipt to the Port Superintendent in-charge of the shed. It is a document certifying loading of the cargo on board the vessel. It contains details such as brief description of the cargo, the number of packages, the shipping marks, the name of the vessel and the date of issue. The mates receipt contains a comment by the master on Shipment of Export Cargo 121 the condition of goods at the time of its receipt on the vessel. Any adverse remarks on the mates receipt are important, as the same will be incorporated in Bill of Lading as and when it is issued. 9. Port Trust Dues and Collection of Bill of Lading Exporter has to collect Bill of Lading for the cargo as it is document of title for the goods that is to be, finally, made available to the buyer. Master of the vessel, where the goods have been loaded, gives the mates receipt to port authorities. Exporter can collect the mates receipt only after paying the dues to the port authorities. Routing the mates receipt through port authorities is done to enable the port authorities to collect the dues from the exporter. Exporter surrenders the mates receipt to the shipping company who gives bill of lading in two or three negotiable copies and two or three non-negotiable copies. 10. Documents with Exporter At the end of the process, the forwarding agent returns the following documents to the exporter: (a) A copy of the invoice duly attested by customs authorities. (b) An Export Promotion copy of Shipping Bill. (c) Full sets of clean bill of lading along with the requisite non-negotiable copies of bill of lading. (d) The original letter of credit and export contract/export order and (e) ARE-1 form in original (for claiming excise refund) and sixtuplicate (for claiming export incentives).