The international trade of a country with other countries is referred to as import and export. The word import refers to international trade where a country buys goods and services from another country, whereas the word export refers to international trade where a country sells goods and services to other countries.
The process of import and export is important for countries to exist as there is no country which has all the resources that it needs to survive. Hence, countries need to depend on other countries for the goods and services that they lack.
For example, the United States of America rely on countries like Iran, Kuwait, and United Arabia Emirates, etc. and the major exports of USA are Computers, Mineral fuels, and electrical equipment, etc.
In this article, you will learn about both Import and export and key differences between both of them.
Table of Contents
What is import?
Import stands for the purchase of goods and services that a country lacks from other countries to use in the domestic country. The goods and services bought from foreign countries are either used by the government for public welfare or is resold in the domestic market.
The import of goods and services put a direct impact on the economy of the country. Higher the import trade means weaker the economy. With the high import of things, high money flows out of the country.
For example, many countries, including the United States of America, rely on middle east countries for crude oil and fuel, and these countries are becoming rich because of the high rate of exports.
Selling oil to other countries bring more money to the economy. Because of this reason, countries want to achieve a balance between import and export so that there will be less burden on the economy. However, it is hard for countries to achieve.
A country usually avoids to import goods and services and try to produce as much as possible at home. However, only the goods which are either impossible to produce in the home country (such as crude oil) or prove to be expensive when produced at home are imported from other countries.
The process of importing goods in the country:
1) Making an inquiry in the global market for the goods:
The process of importing begins with inquiry in the global market. The information can be obtained from Trade associations and trade directories, etc. finally the inquiry is made with the companies which export the goods you need to export about the rate and delivery terms and conditions, etc.
2) Getting Import license:
In the next step, the importer needs to obtain an import license. There are a few goods which require importing license while others don’t need any license. One needs to have information about whether the license is needed or not and how to obtain it.
3) Obtaining Foreign currency:
Next, you need to obtain currency of the country they want to import goods from.
4) Order Placement:
Place an order with the exporters. Your order must contain detailed information about the color, design, quantity, etc. about the product.
5) Letter of credit:
It is an important step in the process of import. It saves you from problems at a later stage. You obtain a letter of credit from the bank, which shows your credibility. The letter of credit proves your authenticity and terms and conditions for the order.
6) A receipt containing information related to shipment:
Your exporter will send you a receipt containing the information about the shipment such as vessel name, invoice number, description of goods dispatched, etc.
7) Documents for the retirement of import:
Import document is sent to the bank to take further action according to the delivery of goods.
8) Receiving the delivery:
The export documents are received from the delivery officer.
9) Customs clearance and release:
Last and the most tiring process of import is to the customs clearance process. You need to fulfill a large number of legal formalities to get a hold on the goods imported.
What is the export?
Export stands for selling goods and service which are produced in the home country to other countries. A country usually exports those things to other countries which are in abundance in it. The export trade is healthy for a country. It helps the economy and makes it stronger.
The country which exports more and import less has a good economy. The countries need to share their resources to able to acquire things which cannot be produced in those countries. For example, India is known for export IT manpower all around the world.
Many countries like the USA import services of India in the IT sector. The export of services helps the economy of the country.
Countries try to export more than the things they import so that more money flow in the country rather than flowing out of the country. The country which exports more than importing has a healthy economy.
The process of exporting goods:
1) Receiving inquiry and sending quotation:
Buyers send inquiry request to all potential seller. The seller is required to send the quotation for the order, and the buyer accepts the proposal of the seller that suits him or with least market price.
2) Receipt of order:
In case, buyer likes your order; he will send you the order receipt. The receipt contains information related to order.
3) Making an inquiry about the credibility of the buyer:
In this step, the seller enquires about the credibility of the buyer and ask the buyer to send a letter of credit to start processing order.
4) Obtaining an export license:
An exporter is required to have a license to be able to export goods.
5) Obtaining pre-shipment finance:
Exporter request for pre-shipment finance from the bank or financial institution in order to carry out the production activities.
6) Production:
The goods are being produced as per the requirement of the importer.
7) Inspection of the goods produced:
Once the first batch of the goods produced, the inspection of goods is made in order to make sure the good quality of products. If there is any fault, the production process is changed.
8) Certificate of origin:
A certificate of origin is sent to the importer to certify that the goods are actually produced in the country.
9) Making a reservation of shipping space with the exporting firm:
You need to take service of a shipping company in order to deliver goods to your seller. You need to make a reservation in advance with the shipping company and also tell them the what kind of goods you want to export, the number of goods, the date of shipment and the destination of delivery, etc.
10) Preparing your order and packing them to forward to the shipment company:
Once your order is ready. You need to pack the goods so that they don’t get damaged in the process of shipment and don’t forget to mention the destination address and nature of goods on the packaging.
11) get insurance:
You can be sure of the natural calamities or accidents when your goods are in transit. Therefore, you must get insurance for the goods in order to avoid future loss.
12) Custom clearance:
Get your goods cleared from the customers so that they can be delivered to the buyer without any interruption in the transit.
13) get mates receipt:
A mate’s receipt is generated by the port superintendent when he loads goods.
14) generate invoice:
Once the goods are sent. The next immediate step you need to follow is to prepare an invoice to send to the buyer.
15) Receiving payment:
Once the goods are delivered to the buyer. Next, you are required to receive all related documents such as invoice, bill of lading, certificate of origin, and letter of credit, etc. these documents are delivered to the seller in exchange of bill.
The Key differences between Import and Export
| Import | Export |
|---|---|
| The meaning of import is when a country buys goods and services from other countries for domestic use or to sell in the domestic market. | The meaning of export is when a country sells goods and services to other countries. |
| The Import of Goods and services is done to meet the demands in the country. | The export of goods and services is done to participate in the global market and to make a global presence. |
| High import is detrimental to the economy of a country. | High export is beneficial for the economy of a country. |
| High import indicates a high demand in the country. | High export indicates trade surplus in a country. |
Conclusion
Import and export processes are important processes of all countries. Countries need to export goods that they can’t produce and import products to help the economy. However, every country makes sure that they export more than importing in order to have an upward economy.
There are two ways to carrying out importing and exporting processes one is direct, and the other is indirect. Indirect process, both importing and exporting firms participate and carry out the whole process on their own and in-direct process intermediate firms carrying out the whole process with no or little interaction between the participating firms.
From the above article, you learned about the import and export processes.
FAQs
What is the difference between and import and an export? ›
Exports describe selling products and solutions created in the home country to other markets. Imports are stemmed from the theoretical meaning of bringing in goods and services into the port of a country. An import in the obtaining country is an export to the sending nation.
What is the difference between imports and imports? ›In simple terms, imports mean movement of goods from a foreign country to the domestic country. Re-imports means import of domestic goods which already exported from the domestic country to a foreign country.
What does it mean to export and import? ›Imports lead to an outflow of funds from the country since import transactions involve payments to sellers residing in another country. Exports are goods and services that are produced domestically, but then sold to customers residing in other countries.
Why is it important to know the difference between exports and imports? ›A country's importing and exporting activity can influence its GDP, its exchange rate, and its level of inflation and interest rates. A rising level of imports and a growing trade deficit can have a negative effect on a country's exchange rate.
What is the difference between import and trade? ›...
Comparison Chart.
| Basis for Comparison | Import | Export |
|---|---|---|
| Represents | High level of import is an indicator of robust domestic demand. | High level of export is an indicator of trade surplus. |
1 : to bring from a foreign or external source: such as. a : to bring (something, such as merchandise) into a place or country from another country. b : to transfer (files or data) from one format to another usually within a new file. 2a : to bear or convey as meaning or portent : signify.
What are the types of import and export? ›1) Free Importation: Goods traded in the international market are not regulated or prohibited. 2) Regulated Importation: Government regulatory agencies regulate the goods imported and exported in the country. 3) Restricted Importation: Goods are only allowed in the particular condition instructed by the CMTA.
What do you mean by export? ›Export refers to a product or service produced in one country but sold to a buyer abroad. Exports are one of the oldest forms of economic transfer and occur on a large scale between nations.
What are the types of import? ›- One-time import. This handles importing most profile information for both people and organizations. ...
- Recurring import. A list or filter shared by another nation can be imported using the recurring import. ...
- Voter file import. ...
- Ballot import. ...
- Scanned survey import. ...
- Donation import. ...
- Membership import.
Exports are the goods and services that a country produces domestically, or within the borders of its own country, and sells to buyers in a foreign country. The opposite of exports are imports, which are goods and services that buyers in a country purchase from sellers in a foreign country.
What is import and export examples? ›
An export is the sale of goods to a foreign country, while an import is the purchase of foreign manufactured goods in the buyer's domestic market. Ellen's country has successfully exported its tablets all over the world, including Canada, Mexico, the European Union, Australia and several countries in Asia.
What are the types of export? ›- Indirect Exporting.
- Direct Exporting.
An import is any product that's produced abroad and then brought into another country. For example, if a Belgian company produces chocolate and then sells it in the United States, that would be an import from an American perspective.
Which is best import or export? ›Exporting can bring profits to a country or money into a country, helping stimulate its economic growth. Because imports may represent goods that another country cannot make, the exporting country often has a comparative advantage. The exporters may produce the goods at a lower opportunity or financial cost.
What is import export cycle? ›Typically, the procedure for import and export activities involves ensuring licensing and compliance before the shipping of goods, arranging for transport and warehousing after the unloading of goods, and getting customs clearance as well as paying taxes before the release of goods.
What is the difference between import trade and export trade? ›Import trade refers to the purchase of goods and services by one country from another. Export trade refers to the sale of goods and services by one country to another.
What is export goods? ›Exports of goods and services consist of transactions in goods and services (sales, barter, and gifts) from residents to non-residents. Exports of goods occur when economic ownership of goods changes between residents and non-residents.
What is the difference between import and export on a computer? ›Difference between export and import? As seen in the image, when you are exporting, you are taking information from a program and putting it into a file. For example, you may export a Microsoft Excel spreadsheet to a CSV file. When you import, you are bringing in information from a file into a program.
What is import policy? ›Basics of Import
Custom Duty - Introduction: Export and Import trade is regulated by Directorate General of Foreign Trade (DGFT), it is a body functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. DGFT is the regulator, promotor and facilitator of Import and Export.
Imports are important for the economy because they allow a country to supply nonexistent, scarce, high cost, or low-quality certain products or services, to its market with products from other countries.
How does import work? ›
An import is any product or service transported into one country from a different country according to trade law regulations. The purpose of importing is to trade various commodities and services between countries.
What is an example of an import? ›An import is any product that's produced abroad and then brought into another country. For example, if a Belgian company produces chocolate and then sells it in the United States, that would be an import from an American perspective.
What is the difference between import trade and export trade? ›Import trade refers to the purchase of goods and services by one country from another. Export trade refers to the sale of goods and services by one country to another.
What is the difference between import and export on a computer? ›Difference between export and import? As seen in the image, when you are exporting, you are taking information from a program and putting it into a file. For example, you may export a Microsoft Excel spreadsheet to a CSV file. When you import, you are bringing in information from a file into a program.
What is the difference between importing and exporting businesses? ›Exporting is the sale of products and services in foreign countries that are sourced or made in the home country. Importing refers to buying goods and services from foreign sources and bringing them back into the home country.