EXPORT

MERCHANDISING
AND EXIM
DOCUMENTATION

Akanksha Dayma
Assistant Professor
INTRODUCTION TO
EXPORT
MERCHANDISING
Meaning & definitions, Export
Merchandising, Concept of Six Rights
in Apparel Export Merchandising
(Right Time, Right Quality, Right
Compliance)
What does
export mean?
Exporting means sending goods and
items from one country to another
country. In the fashion exporting
business, fashion items like apparel,
shoes, home textiles, and fashion
accessories, are manufactured in
one country and shipped to other
countries.
 Good Profits
Why Export Some apparel manufacturing companies
made garments for 100% export purposes.
They are known as garment exporters. It is
considered that there are good profits in the
apparel and fashion export business. You may
be aware of Bangladesh which is known in the
world for exporting millions of garments every
year. In India, we also do a lot of exporting of
garments and other fashion items to the USA,
UK, and other European countries.
 An exporter is a company that manufactures fashion
Who is an exporter? items and ship those manufactured fashion items
outside of the manufacturing country.

Let’s say Shahi Exports, an Indian apparel manufacturer,

makes dresses for the brand GAP, and GAP sells those
imported dresses in their stores in the USA. Here Shahi
Exports is an exporting company (exporter). Garments
export is done from India. The origin of dresses is in India.
On the other hand, GAP is an importer (buyer), and the
Shahi Export USA is a garment importing county.
 A company can also
export apparel items
without manufacturing
them by itself. They take
orders by their name
from the other countries;
they get the garments
manufactured by
garment factories
through job work and
then export to buyers.

WHO ALL CAN BE

Why do other countries import fashion items from
exporting countries?
Like in every business, fashion retailers and brands aim to increase their profit margin. So,
they need their items made at the least price. For this, they source garments and fashion
items from other counties where labor cost is cheaper. When they go outside of their border
for souring, they need to import fashion items.

To keep the manufacturing cost low, garments should be made in volume. For that,
manufacturers need to set up big factories. Setting up big factories and running them is
difficult in many countries. So, the easy way to get apparel in bulk quantities at a lower price
is by importing them.

Every country has some special skills of making fashion items. So, fashion designers and
brands or even retailers prefer to import the best and unique products from the counties
where they get them. India is known for exporting high fashion apparel items.

Source of raw material - eg. Egyptian Cotton

Facilitating developing countries for improving their economic growth and employment by
sourcing millions of garments from developing countries.
 Export merchandising is a method of
Merchandise- means offering retail goods for sale in a
goods bought and sold; foreign consumer market.
and trading of goods.
Many large companies across the
country maintain entire divisions
Merchandising- is an devoted to finding ways to better
activity of selling and enter foreign retail markets through
promoting the goods. export merchandising to increase
profit and sustain growth.
 Concept of Six Rights in
Apparel Export Merchandising

Right Right Right Right Right Right

Product Place Time Quantities Price Manner
 Right Right
Product Time

Right
Place

Right
Price

Right Right
Quantities Manner
Right Product The product range must be merchandise that the customer wants – following current trends or

relevant brands. We expect to go into an Apparel retailer and see the ‘latest look’ for winter

Right Place The location of the product is of prime importance since it decides the accessibility to the customer.

For example you would expect to see a ‘sale’ product on a trestle table near the front entrance

A lot of merchandise is of a seasonal nature and must be on hand when most needed by the
Right Time
customer. Think about going into an electrical retailer on a hot summer day to purchase an air

conditioner only to discover they are out of stock but can offer you many different brands of heaters!

Right Quantity A retailer is always aiming for a profitable balance between the volume of sales and the amount of

inventory in store. This is to make sure that there is always available stock for the customers to buy

(avoiding out of stocks) and the opposite challenge of over stocking which can sometimes lead to

discounting and a loss of profit.

Right Price Having product at the ‘right price’ is a balance between making sure that it is high enough to make a

profit and yet low enough to meet the competition and customers’ expectations.

Right Manner Having Visual Merchandising standards which allow the team in store to deliver a consistent visual
message to the customer. For example, colour blocking of wall units, the use of gondolas, or
handwritten versus printed ticketing.
 Players in Apparel Export
Industry

Manufacturer Merchant Buying Buying Vendors Logistic

Exporter Exporter House Agent /Suppliers Agents
Top 10 Apparel Export Manufacturers In India
Gokaldas Exports Ltd
Gujarat Ambuja Exports Ltd
Hari Krishna Exports Pvt Ltd
KRBL Ltd
Loyal Textile Mills Ltd
M D Overseas Ltd
Rajesh Exports Ltd
Renaissance Global Ltd
Sakuma Exports Ltd
Shahi Exports Pvt Ltd
Merchant Exporters : A merchant exporter is a person who is involved in trading activity
and exporting or intending to export. They do not have a manufacturing unit

Merchant exporter procures the material from a manufacturer and exports in his firm’s
name. Here merchant exporter procures the order from international market. Merchant
exporter does not have own manufacturing unit or processing factory. Merchant Exporter
can export the excisable goods either directly from the premises of the manufacturer,
with or without sealing of the export consignments, or through his premises under claim
for rebate or under bond.

JYOTI IMPEX

https://www.jyotiimpex.co.in
BUYING HOUSE: The buying house procures garments from the manufacturers and then
exports to foreign countries. The buying house is responsible to place and execute the
order according to buyer recommendation.

A buying house is a media between buyer and manufacturer. It can be a buying agency
or a buying office. Both terms contain different meanings. The buying agency is an
independent buyer’s regional office, from where all kinds of necessary approval have
been given. On the other hand, buying office is that, which works at a time with different
buyers and brands. In this case, all the required approvals are come from the buyer, not
from buying a house.

Merchant Exporter
- Has export license
- No production facilities
- Get order from buyers and get it done from manufacturers
Buying house
- Representative office or branch office of the buyer in the country of production
Normally a buying house has to do the following functions

Order collection from the buyer,

Finding good suppliers (local factory) to complete the order,
Order processing from local factories,
Making product development samples for buyers,
Contacting buyers for necessary approvals,
Forwarding all the comments and approvals to the factories,
Follow-up order processing according to buyers demand,
Maintain desired product quality from sample to production,
Should follow inspection terms and conditions according to buyers demand,
Shipping the goods.
 shifting the certain

Vendors/Suppliers To give the highest

operations from apparel
value chain to low cost and
takes competitive
advantage to enhance the
level of quality at
The vendors play a vital role in the clothing profit margin
low production cost.
industry. They are the middlemen between
the manufacturers and the retailers.

Therefore, they are responsible for getting

the first-hand information from the retailers
to the manufacturers.
 Apparel
Merchandising
Merchandise- means
goods bought and sold;
and trading of goods.

Merchandising- is an
activity of selling and
promoting the goods.
What are the 5 types of merchandising?
#1 Product Merchandising
#2 Visual Merchandising
#3 Retail Merchandising
#4 Omnichannel merchandising
#5 Digital merchandising
 PRODUCT VISUAL RETAIL
MERCHANDISING MERCHANDISING MERCHANDISING
Promotional activities Activities used to display Selling merchandise in a
related to product the product physical store
OMNI-CHANNEL DIGITAL
MERCHANDISING EXPORT
MERCHANDISING
Creating unified customers It includes all activities like MERCHANDISING
experience at all the website promotions, digital A method of offering retail
platform products display, email goods for sale in a foreign
marketing, social media consumer market.
marketing
 PRODUCT VISUAL MERCHANDISING
MERCHANDISING A visual merchandising can be defined as
This consists of all promotional activities all activities used to display the product to
related to boosting the sales of a product. highlight its features. The activities used in
visual merchandising can be created by
The definition of product merchandising
making the use of space available, lighting
will remain the same, whether you are
in the store, and using different designing.
selling something online or in-store.

RETAIL MERCHANDISING OMNI-CHANNEL

Retail merchandising strictly refers to
MERCHANDISING
selling merchandise in a physical store or
Omnichannel merchandising or
brick and mortar store. Retailing
omnichannel retailing refers to creating
merchandising includes all marketing and
unified customers experience at all the
promotional activities which are somehow
platform where a retailer sells his products
used to sell products to consumers in brick
and can reach his customers.
and mortar store.
 DIGITAL MERCHANDISING EXPORT MERCHANDISING
Digital merchandising is a term used at the A visual merchandising can be defined as
place of retail merchandising for selling all activities used to display the product to
products at digital platforms. This includes highlight its features. The activities used in
all types of activities used to promote visual merchandising can be created by
products on the internet. It is also referred making the use of space available, lighting
to as online merchandising or e-commerce. in the store, and using different designing.
Garment
Merchandising
 Merchandising is the department which
mediates marketing and production
departments. Sometimes, merchandising
department will have to do costing and
pricing also. In any case, the merchandiser is
the person whose responsibility is to execute
the orders perfectly as per the costing and
pricing.
 Quality Checks
During the process of clothing manufacturing, there is a lot of time wastage and shipping delays. This
is due to the quality check done during the processing time. Therefore, the buyers requested the
quality check to take place at the vendor’s point.

They will check the quality of the products before any purchasing takes place. In case of any problem
regarding the quality of a certain product, the manufacturers will know and rectify immediately. This
improves the delivery promptness, and the manufacturers will produce quality clothes.
Forwarding & Logistic Agents etc.
A freight forwarder, forwarder, or og istics Ltd
1. VRL L
forwarding agent, is a person or
company that organizes shipments for 2. Adani Logistics
individuals or corporations to get goods indra Logistic s
3. Mah
from the manufacturer or producer to a
market, customer or final point of 4. DHL
distribution. BlueDart
5.

6. FedEx
O Logistics In c.
7. XP
12 Steps Involved in the Processing of an Export
Order
1. Having an Export Order
2. Examination and Confirmation of Order
3. Manufacturing or Procuring Goods
4. Clearance from Central Excise
5. Pre-Shipment Inspection
6. Appointment of Clearing and Forwarding Agents
7. Goods to Port of Shipment
8. Port Formalities and Customs Clearance
9. Dispatch of Documents by Forwarding Agent to the Exporter
10. Certificate of Origin
11. Dispatch of Shipment Advice to the Importer
12. Submission of Documents to Bank
 1. Having an Export Order
Processing of an export order starts with the
receipt of an export order. An export order,
simply stated, means that there should be an
agreement in the form of a document, between
the exporter and importer before the exporter
actually starts producing or procuring goods
for shipment.
2. Examination and Confirmation of Order
Having received an export order, the exporter should
examine it with reference to the terms and conditions of the
contract. In fact, this is the most crucial stage as all
subsequent actions and reactions depend on the terms and
conditions of the export order.

The examination of an export order, therefore, includes

items like product description, terms of payment, terms of
shipment, inspection and insurance requirement,
documents realising payment and the last date of
negotiation of documents with the bank. Having being
satisfied with these, the export order is confirmed by the
exporter.
 3. Manufacturing or Procuring Goods
The Reserve Bank of India (RBI), under the export credit
(interest subsidy) scheme, extends pre-shipment credit to
exporter to finance working capital needs for purchase of
raw materials, processing them and converting them into
finished goods for the purpose of exports.

The exporter approaches the bank on the basis of laid

down procedures for the pre-shipment credit. Having
received credit, the exporter starts to manufacture /
procure and pack the goods for shipment overseas.

Under the scheme, large manufacturing and merchant exporters get an interest subsidy of 3% on pre- and post-shipment rupee
credit for the outbound shipment of 416 products (tariff lines). However, manufacturing MSMEs get a 5% subsidy on such
credit to ship out any product.
 4. Clearance from Central Excise
The first scheme is to make
payment of the excise duty at
the time of removing the export
consignment from the factory and

file a claim for rebate of duty

After shipment of goods, the
after exportation of goods.
customs officer endorses AR-4
The second scheme is to remove form, which is taken as evidence
goods from factory/warehouse
by excise authorities for
without payment but under an
appropriate bond with the excise considering rebate in duty or
authorities. The exporter needs cancellation of bond.
to apply on a form known as AR4
or AR4A to the Central Excise
Range Superintendent for
obtaining excise clearance.
 5. Pre-Shipment
Inspection
There are number of-goods whose export
requires quality certification as per
the Government of India’s notification.

The Indian Custom authorities will require the submission

of an inspection certificate issued by the competent and
designated authority before permitting the shipment of
goods takes place
Inspection of export goods may be conducted under-
(i) Consignment-wise Inspection
(ii) In-process Quality Control, and
(iii) Self-Certification.
 To give Clients
Quality Assurance
with a Pre
Shipment
Inspection
Certificate
 To give Clients
Quality Assurance
with a Pre
Shipment
Inspection
Certificate
6. Appointment of Clearing
and Forwarding Agents
The main functions performed by these
agents include packing, marking and
labeling of consignment, arrangement for
transport to the port arrangement for
shipment overseas, customs clearance of
cargo, procurement of transport and other
documents.
 In order to facilitate the exporter in
discharging his duties, the following
documents are submitted to the agent:

(i) Commercial invoice in 8-10 copies

(ii) Customs Declaration Form in triplicate
(iii) Packing list
(iv) Letter of Credit (original)
(v) Inspection Certificate (original)
(vi) G.R. Form (in original and duplicate)
(vii) AR4/ AR4A (in original and duplicate)
(viii) GP-l/GP-2 (original)
(ix) Railway Receipt/Lorry Way Bill
 7. Goods to Port of
Shipment:
Proper marking, labeling and packing help quick and safe
transportation of goods. The export department takes steps to
reserve space on the ship through which goods are to be sent to
the importer.

The shipping space can be reserved either through the clearing and
forwarding agent or freight broker who works on behalf of the
shipping company or directly from the shipping company. Once the
space is reserved, the shipping company issues a document known as
Shipping Order. This order serves as a proof of space reservation.
8. Port Formalities and
Customs Clearance
The Dock Appraiser, after making examination,
makes ‘Let Export’ endorsement on the duplicate
copy of the Shipping Bill and hands over it to
the Forwarding Agent. All these documents are
presented to the Preventive Officer who puts an
endorsement ‘Let Ship’ on the duplicate copy of
the Shipping Bill. The preventive officer
supervises the loading of cargo on board the
vessel.
 9. Dispatch of Documents by
Forwarding Agent to the Exporter

After obtaining the Bill of Lading from

the Shipping Company, the clearing and
forwarding agent dispatches all the
documents to his / her exporter.
 10. Certificate of Origin

On receipt of above documents from the forwarding agent,

the exporter now applies to the Chamber of Commerce
for a Certificate of Origin and obtains it. If the goods are
exported to countries offering GSP concessions, the
exporter needs to procure the GSP Certificate of Origin
from the concerned authority like Export Inspection
Agency.
Generalised Scheme of Preferences is a system of unilateral
trade concessions that reduces/eliminates tariffs on a range
of exports from developing countries.
 12. Submission of Documents to Bank:

At the end of the process, the exporter

presents the following documents to his
bank for realisation of his amount due to
the importer:
(i) Commercial Invoice’ (vi) GR Form
(ii) Certificate of Origin (vii) Bill of Lading
(iii) Packing List (viii) Bill of Exchange
(iv) Letter of Credit (ix) Bank Certification
(v) Marine Insurance Policy (x) Commercial Invoice
GR FORM
GUARANTEED REMITTANCE

GR Form is an exchange control

document required by the Reserve
Bank of India (RBI). As per the
exchange control regulations, an
exporter has to realise export
proceeds within 180 days of the
shipment of goods from India. In order
to ensure this, the RBI has introduced
the GR procedure.
BILL OF LADING
ISSUED BY CARRIER TO
SHIPPER

A bill of lading (BL or BoL) is a legal

document issued by a carrier to a
shipper that details the type, quantity,
and destination of the goods being
carried. A bill of lading also serves as
a shipment receipt when the carrier
delivers the goods at a
predetermined destination.
LETTER OF CREDIT
ISSUED BY CARRIER TO
SHIPPER
Applicant- Issuing Bank -
A bill of lading (BL or BoL) is a legal Advising Bank -
document issued by a carrier to a Beneficiary - Negotiating
shipper that details the type, quantity, Bank
and destination of the goods being
carried. A bill of lading also serves as
a shipment receipt when the carrier
delivers the goods at a
predetermined destination.
 FOB
CIF
Free On Board
Cost Insurance and Freight

Free on Board (FOB) is a
(CIF) is an international shipment term used to
shipping agreement used indicate whether the seller
when freight is shipped via or the buyer is liable for
sea or waterway. Under goods that are damaged or
CIF, the seller is destroyed during shipping.
responsible for covering "FOB shipping point" or
the costs, insurance, and "FOB origin" means the
freight of the buyer's buyer is at risk once the
shipment while in transit. seller ships the product.
Why export is important
for our country?
 MERCHANDISING:
PLANNING AND
PROGRAMMING
03

Master Planning Time and

Action plan. Check list and
alarms. Follow-up and
facilitation role.
TNA is a Time and action calendar plan, is one of the most useful
project management tools which was basically developed for
garments merchandiser and production team.

1. 2. 3. 4.

TNA plan is creating A flawless and Generally, spreadsheet (excel) TNA can be
a time calendar to strictly stick, TNA is used by merchandiser to reviewed and
accomplish whole can prove to be a make TNA, it is like a modified in different
export order from quite aid for the merchandiser work planning meetings like Pre-
starting to closing. manufacturer. sheet. Production meeting,
Pilot Run meeting,
etc.
A detailed and cleared plan with well-defined responsibility is must required in order
to complete each order on time. So with the help of a time and action calendar we
can get the ideal date, time period within which the major activities of an order
should occur.

TNA gives the update of the running order and find out if any problem is there.

Making TNA is just like doing forecasting, which is very useful for the order
execution in future, because of this it makes merchandiser more pro-active in work.

It helps to save lot of time to merchandiser during manufacturing and eliminate

unnecessary activity.

It helps to identify the delay time of different departments of garment industry, and
identify the current status of the product.

When it come to handle two or more project at a time, it may create confusion for
merchandiser but having a well structured Time and Action plan for each order can
reduces the confusion of multiple running order.
 1. SAMPLING
Sampling is the first and most
WHAT ARE THE critical task and hence need to
plan in TNA
KEY
PROCESSES OF 2. FABRIC AND TRIM
SOURCING

TNA? Fabric and trim sourcing is

very important process which
includes desk loom and lab-
dip approvals, trim and art
work approval, FPT approval.

3. PRODUCTION
The most important part of
any TNA is actual production.
 Size-set sample
Proto sample

SAMPLING
GPT sample

Fit sample "Garment

Performance Test"

Top of production
Salesman sample sample
07
 Depending upon buyers enquiry date the submission of proto
Proto sample is done. Any lag in proto submission or approval will
Sample disturb order conformation date, which will subsequently affect
the submission of fabric development, fit sample and
subsequent process, as without proto approval it’s impossible
to proceed further.

Fit Once there is approval of proto sample manufacturer starts

preparing fit sample that needs to submit exactly as planned
Sample date. Normally within 45 days of proto approval fit sample must
be submitted as to get the sample of bulk fabric it takes 20-25
working days to get in-house.
Salesman These samples are normally submitted along with fit sample.
The same time period is allotted for salesman. These samples
Sample mainly used for advertising purpose or for visual merchandising
or by sales man to collect the order from retailers; hence from
buyer’s perspective, submission of this samples on time is very
important.

Size Set These samples are prepared and approved for size set by buyer.
Once the size set approval is done then bulk fabric for
Sample production should be cut in order, so that if any changes is
made by buyer can be accommodated in bulk production. So,
any delay in this sample will directly affect PCD and
subsequently affect the shipment date.
PCD stands for Planned Cut Date. The date at which the bulk fabric cutting is planned to start.
GPT While preparing the TNA, merchandiser must aware that test
results of this sample should get approved from buyer in
Sample advance of PP meeting. For approval of GPT Generally 20 days
are kept in TNA for approval of GPT to deal with any delay in
the process. Generally this sample is sent to either third party
inspection or in-house testing lab.

Once production starts the initial few pieces which come out of
TOP line (TOP sample) need to submit to buyer. If by chance the
Sample samples get rejected by buyer then production end date is going
to be delayed. This will directly affects the shipment date.
 2. Fabric and trim sourcing
Fabric Performance

Fabric Approvals Trims and art work

Test (FPT)

Once the proto Timely approval of

Before the submission
samples get approved, trims and accessories
of fit sample FPT
merchandiser needs is very important. Trim
report must be
to submit lab-dip production and
approved by buyer, as
samples for colour shipment is also time
fit sample submitted
conformation. Lab-dip consuming process,
in similar fabric. Once
approval itself is a hence while preparing
the FPT fabric is
long process and the TNA 25 working
approved, supplier
takes 10-15 working days buffer is kept
can ship the fabric to
days for one attempt. between submission
garment
date.
manufacturer.
 3. Production

Planned Cut Date Productions start Finishing and

and end date packing

It is one of the most

important dates in Once the PCD is As finishing and
TNA. As lead time of achieved the actual packing is also
trims and fabric production should important, so once
production and start. Any deviation in first lot comes out of
availability for this date will production, finishing
garment production is prominently affect the and packing get
controlled by sourcing TOP sample started. This can be
department, so submission date and started along with
sourcing department shipment date. production.
is very important here.
 INSPECTION, TESTING AND
APPROVALS

In order to maintain the required quality in

the product it is necessary to have a well-
defined quality control system to validate
the quality of the various materials
purchased and produced. Quality control is
done through inspections and testing.

Raw material
inspection
INSPECTION
It is the process of visual
identification of defects or
Online or In-
process non-conformity or other
inspection quality parameter which can
be seen or identified by the
Final inspection
eyes.
It is done for the raw materials which
are used in the apparel production like
Raw material
fabric, sewing thread, button and other
inspection
accessories etc. It is also termed as
‘incoming material inspection’.

Online or In-process inspection – This is

done during manufacturing process so that
Online or
if there is any problem in the process that
In-process
will be rectified in that stage itself. This will
inspection
be carried out by the quality controllers
periodically say every two or three hours.
 FINAL
INSPECTION –
This inspection is done after the goods
are manufactured and packed in carton
boxes and which are ready for the
shipment. The goods are inspected and
will be graded as per acceptable quality
level (AQL) which is prescribed by the
buyer. The goods can be shipped after the
final inspection is passed.
Strength TESTING
There are certain quality
parameters which cannot be
Colour visually measured or identified
Fastness
and those things can be
measured or evaluated using
certain instruments or
Shrinkage
equipments. This process is
called as testing.
Objects of Fabrics Testing

To check that the fabric conforms to fabric specification.

To note the effect of changes in structural details.
To note the effect of physical and chemical treatment,
exposure to weather or laundering or washing, etc.
To obtain some identification of probable performance in
use.
To investigate the causes of failure and customers complain.
To help in designing a fabric for a specific purpose.
To study the interaction of fiber, yarn, and fabric properties.
a. Fibre composition.
b. GSM.
c. Dimensional stability or Shrinkage.
d. Color fastness.
i. Washing or Laundry.
ii. Rubbing (Wet and dry). Abrasion resistance,
iii. Light. Stiffness test,
iv. Perspiration or Saliva. Drape test,
e. Pilling test. Crease recovery test,
f. Spirality/Bowing/Skewing
g. Bursting or tearing strength. IMPORTANT
h.
i.
Azo test.
Fabric construction. TESTS
Tests for General Fabric Information

FIBER CONTENT TEST FABRIC WEIGHT TEST

The test is required to know the It’s required to figure out the
content or ingredient of provided weight of fabric.
fabric. Following info is required GSM (We usually count
during this test method. GSM for knitted fabrics; it
Single Fiber (A fiber contains means Grams per Square
one ingredient only) Meter).
Blended Fiber (A fiber consists Oz (We usually use it for
of more than one ingredient) woven fabrics; it means
Ounce per Square Yards).
Tests for General Fabric Information

FIBER CONTENT TEST FABRIC WEIGHT TEST

The test is required to know the It’s required to figure out the
content or ingredient of provided weight of fabric.
fabric. Following info is required GSM (We usually count
during this test method. GSM for knitted fabrics; it
Single Fiber (A fiber contains means Grams per Square
one ingredient only) Meter).
Blended Fiber (A fiber consists Oz (We usually use it for
of more than one ingredient) woven fabrics; it means
Ounce per Square Yards).
Color Fastness to Washing (used to measure color bleeding or
fading after wash)
Color Fastness to Dry Cleaning (used to measure color
bleeding or fading after dry cleaning)
Color Fastness to Ironing (used to measure color bleeding or
fading after ironing)
Color Fastness to Water (used to measure color bleeding or
fading into water)
Color Fastness to Rubbing (used to measure color bleeding or
fading after rubbing)
Color Fastness to Perspiration (used to measure color bleeding
or fading into perspiration)
Color Fastness to Light (used to measure color bleeding or
fading into light)
Color Fastness to Chlorine Bleach (used to measure color
bleeding or fading while chlorine bleaching)
Tensile strength (used to realize the tensility of fabric)
Tearing strength (used to realize the tearing strength of fabric)
Bursting Strength (used to realize the bursting strength of
fabric)
Pilling resistance (used to realize the pilling resistance of
fabric)
Abrasion resistance (used to realize the abrasion resistance of
fabric)
DS to Washing (shrinkage) (needs for checking measurements
of garment after washing)
DS to Dry Cleaning (needs to check measurements of garment
after dry cleaning)
Spirality / Skew / Torque (requires to check twisted
deformation of garments after dry cleaning & washing)
Garments Appearance after Washing / Dry Cleaning (requires
to check shape of garments after wash)
AQL
Acceptance Quality Level (AQL) refers to
the maximum number of defective items
that could be considered accepted during
the random sampling of and inspection.
The defects that are found during
inspection are classified into 3 categories:

1. Critical: Must be 100% accurate.

There is no range.
2. Major: Normally 2.5%
3. Minor : Normally 4%
How to Read AQL Table?
Lot or Batch size: This means total how many pieces inspector is going to check or
inspect.

Sample size Code letter: This code is indicative a range of batch size.

Sample size: It means that how many pieces will be picked up for inspection from the
total offered pieces (Batch).

Ac (Accepted): The number in this column denotes that if the inspector finds up to
that many defective pieces the shipment will be accepted by buyer.

Re (Rejected): On the other hand number in this column denotes that if the inspector
finds that much defective pieces or more than the listed number, the shipment will be
rejected (or asked to the manufacturer for 100% inspection and re-offer for final
inspection) by buyer.
AQL Requirements Based on the Products:
There are three types of sampling plans: i.e. single, double and multiple sampling plans.
Each sampling plan can be performed at three levels, i.e. normal, tightened and reduced,
depending on inspection requirements and quality of the products. The apparel industry
mainly uses single sampling plans for the acceptance decisions.

What AQL is not?

A permit to ship defective goods to the tune of agreed AQL level: AQL 4.0 does not
mean that supplier has a right to send up to 4% defective merchandise to customer
/buyer.

A guarantee that all shipments passed as per AQL plan will definitely contain lower
percent defective than the specified AQL. There is also no guarantee that lots with
higher percentage defective will not pass on AQL inspection.
 ZONE A
Areas of the garment that will draw
attention: front, center of back, upper
side of sleeve, upper side of collar.

Appearance
Zones of the
garment

ZONE B
Areas of the garment that will not draw
attention: sides under arm/sleeve, under
sleeve, under collar, inner legs, inner collar and
lining.
Type of Defects 4 MINOR DEFECTS -> 1 MAJOR DEFECT

Critical Major Minor

A defect that is likely to A defect that is likely to A defect that does not
result in a hazardous or result in failure; reducing reduce the usability of the
unsafe condition for an the usability of the product product but is nevertheless
individual or anyone around and obvious appearance a workmanship defect
him using the product or defects affecting the sale beyond the defined
that contravenes ability or shorten the life specifications or
mandatory regulations. cycle of the product. construction requirements.
Examples of Defects

Critical Major Minor

Style not matching Weaving Faults, Fabric Excess gathering at any
Approval sample, Knitting torn, Oil stain, Glue mark, seam, Wrong accessories,
Faults – (rough yarn), Poor ironing, Broken Printing faults – (printing
Missing care label, stitches, Twisted seam, stain), Label folded by
Unwanted objects in Bubble in collar fall, stitching (embroidered
garment, like needle or Wrong button, Slanted label), Uneven pleats
piece of metal pocket, Wrong size label length
FABRIC COSTING
GARMENT COSTING (COST SHEET - PRE-
COSTING FORMAT & POST-COSTING FORMAT)

COSTING FOR GARMENT

EXPORT ORDERS
Bill of Material Preparation- Preparation of
material requirements and costing for various raw
materials and accessories.
WHAT IS THE COST OF A GARMENT?

In a business, cost is the amount of money that is

spent on the production or creation of a garment.
From a seller’s point of view, cost is the amount of
money spent to produce a product. If sellers sold
their goods at the same price as they cost to
produce, then they would break even. This means
that they would not lose money on their sales, but
their company would not make a profit either.
IN FASHION MANUFACTURING

Costing means the process of estimating and then

determining the total cost of producing a garment or
item. It generally includes raw material cost,
construction of the garment, trims, packaging,
shipping and operating expenses and manpower,
among others.
GARMENTS COSTING FOR EXPORT ORDER

An important part of the management of the textile mill is the

determination of the production costs. Cost involves
numerous variable factors which are often hard to evaluate
accurately and mathematical exactness in difficult to reach.
The yarn market fluctuates, finishing materials and dyestuff,
etc. changes from season to season, and equipment’s are
often replaced by more modern machinery.
GARMENTS COSTING FOR EXPORT ORDER

For fixation of a garment price of export order

followings types of costing should be observed
carefully by-
1. According to relation with production
Direct Cost (Fabric and Accessories cost)
Indirect Cost (Management cost, electricity cost,
transport cost etc.)
2. According to Fixed and Variable System
Fixed Cost (Building cost, Machinery cost)
Variable Cost (Transportation, salary etc.)
GARMENTS COSTING FOR EXPORT ORDER

3. According to Cost Element

Material cost
Labor cost
4. According to Function
Production Cost
Sales and Marketing Cost
Administrative Cost
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KNOW-ABOUT-GARMENT-COSTING-AND-PRICING/

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GARMENT COSTING METHODS AND
TECHNIQUES

Factors include in garment costing is the type of fabric and

trims used, garment testing, cost of logistics, profit of the
organization, and value added services like printing,
embroidery, washing, appliques, etc. There are also other
details that go into calculating the cost of a garment like
unit of measurement, quantity of the order, and type of
dyeing and finishes used. All of these components go into
the Bill of Materials - a part of any Tech Pack, a so-called
“production recipe” for a finished garment or an accessory.
M
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Main Factors that Affect Garment Costing

Fabric type
Trims and notions
Labels and packaging
The cost of making
Shipping and logistics
Profit of the manufacturing organization
Other expenses
 Fabric is generally the most significant factor in the costing of a garment.
Fabric accounts for 60 to 70% of the total cost of basic-styled garments.

The parameters that affect the fabric cost:

UOM: Unit of Measurement (UOM) is a standard measurement that is used.

The UOM for woven fabric is normally in meters or yard.
MOQ: Fabric Minimum Order Quantity (MOQ) is nothing but the smallest
quantity of a product that a fabric manufacturer can supply.
Order quantity: The cost of fabric may depend on the order quantity. This
depends on the type of fabric required and fabric manufacturer capacity
along with negotiation between fabric buyer and supplier.
Incoterm used: This factor makes a huge difference in fabric cost. While
importing the fabric from another country merchandiser needs to deal with
the supplier for delivery of the fabric on the basis of incoterms like FOB,
CIF etc. based on which it will be decided who covers the cost of
transportation and risk.
Other parameters that affect the fabric cost, they are also called the value
added services: Weaving or knitting cost; Dyeing cost.
Introduction to Foreign Trade policy (FTP)

Custom Act
Central Excise Act
EOU- Export Oriented Unit
SEZ- Special Economic Zone
FTZ- Free-Trade Zone
EHTP- Electronics Hardware Technology Park
STP- Software Technology Parks
 The Foreign Trade Policy (FTP) was introduced by the
Government to grow the Indian export of goods and
services, generating employment and increasing value
addition in the country. The Government, through the
implementation of the policy, seeks to develop the
manufacturing and service sectors.

The new FTP (2015-20) came into force w.e.f 01/04/2015.

The export Import Policy (EXIM Policy) is updated every
year on the 31st of March and the modifications,
improvements and new schemes are effective w.e.f. 1st
April of every year.
 The Custom duty derived its value
from the word ―custom‖ under which
whenever a merchant entered a
Kingdom with his merchandise, he had
to give some gift to the king.
Subsequently, this custom formalized
into the levy of custom duty or tax on
goods imported into and exported

Custom Act from the country was organized

through various laws during the
British period.

-1962
 Custom Duty is an indirect tax, imposed under the Customs Act formulated in
1962.

Customs Act, 1962 just like any other tax law is primarily for the levy and
collection of duties but at the same time it has the other and equally important
purposes such as:

(i) regulation of imports and exports;

(ii) protection of domestic industry;
(iii) prevention of smuggling;
(iv) conservation and augmentation of foreign exchange and so on.

There are different rates for different goods. But the general basic rate is 10%.
CENTRAL EXCISE ACT

Central Excise Duty is a form of tax that is indirectly

applicable to goods or products that are manufactured or
produced within India. These goods are specifically created
for the purpose of personal consumption. This tax is also
known as Central Value Added Tax (CENVAT) and is levied on
the manufacture or retail of goods or products.
Central Excise Tax in India is levied in accordance with the
rules, regulations and stipulations contained within the
following Acts
The Central Excise Act 1944
The Central Excise Act 1985
CENTRAL EXCISE ACT

Central Excise Duty is a form of tax that is indirectly

applicable to goods or products that are manufactured or
produced within India. These goods are specifically created
for the purpose of personal consumption. This tax is also
known as Central Value Added Tax (CENVAT) and is levied on
the manufacture or retail of goods or products.
Central Excise Tax in India is levied in accordance with the
rules, regulations and stipulations contained within the
following Acts
The Central Excise Act 1944
The Central Excise Act 1985
CENTRAL EXCISE ACT

The full form of EOU is Export Oriented Units. Introduced in

1981, the scheme aims to increase exports from India, to thereby
increase foreign exchange earnings and create employment.
This scheme also complements other schemes such as Free
Trade Zone (FTZ) and Export Processing Zone EPZ in India.

EOUs were also expected to improve the supply chain starting

with the procurement of raw materials to the supply of finished
products to the DTA. Export also means an eventual upgrade in
the quality and service, so the EOU scheme was also expected
to inspire technological advancements and skill development in
the nation.
BENEFITS OF EXPORT ORIENTED UNITS

They can procure raw materials and capital goods through

domestic sources or import without paying any duty on the
purchase
They can claim reimbursement on GST amounts they pay
In case they have paid duty on the purchase of fuel from
domestic oil companies, they can claim a refund on the
same
EOUs enjoy priority-basis clearance facilities

SOURCE: HTTPS://WWW.DRIPCAPITAL.COM/RESOURCES/BLOG/EXPORT-ORIENTED-UNITS
IMPORTANT FACTS TO REMEMBER WHILE SETTING
UP AN EOU

The application for setting up of an EOU is made to the Board

of Approval, on whose approval, a Letter of Permission for
setting up the EOU is given.

To assume the status of an EOU, an investment of at least one

crore (minimum) must be put into plant and machinery.

The location of an EOU should be at least 25 kilometres from

standard urban area limits unless it is set up in an industrial
area or deals in a non-polluting product or service.
IMPORTANT FACTS TO REMEMBER WHILE SETTING
UP AN EOU

Initially EOUs mostly centered on industries like textiles,

food processing, electronics, chemicals, plastics and
minerals. But over the years EOUs have been set up for
manufacturing, engineering, precious metals, agriculture
and allied sectors, services, software, trading etc. as well.

EOUs are licensed to manufacture goods and export within

a bonded period of five years. This period can be extended
by five more years by the Development Commissioner and
yet another five years if requested by the EOU to the
Commissioner/Chief Commissioner of Customs.
 SEZ
AN INTRODUCTION

A special economic zone (SEZ) is an area

in a country that is subject to different
economic regulations than other regions
within the same country.

The SEZ economic regulations tend to be

conducive to—and attract—foreign
direct investment (FDI). FDI refers to any
investment made by a firm or individual
in one country into business interests
located in another country.
 SEZ
KEY NOTES

Special economic zones (SEZs) are

typically created in order to facilitate
rapid economic growth by leveraging
tax incentives to attract foreign
investment and spark technological
advancement.
While many countries have set up
special economic zones (SEZs), China
has been the most successful in
using SEZs to attract foreign capital.
FTZ
FREE TRADE ZONE OR
FOREIGN TRADE ZONE

A Free-Trade Zone (or Foreign-

Trade zone) allows companies to
land, store, handle and re-export
goods without paying customs
duties.
 EHTP ELECTRONIC HARDWARE TECHNOLOGY PARK

Under EHTP Scheme, a unit can be set up for the purpose of

manufacture and development of electronics hardware, or
electronics hardware and software in an integrated manner
for exports.
For encouraging exports of electronic hardware items
including hard disk drives, computers, television, etc., such
parks have been developed by the Ministry of Information
Technology. An Electronic Hardware Technology Park (EHTP)
may be an individual unit by itself or a unit located in a area
designated as EHTP Complex.
STP SOFTWARE TECHNOLOGY PARKS

Software Technology Parks (STPs) are export

oriented projects catering to the needs of
software development for exports. STPs can
be set up by the Central Government, State
Government, Public or Private Sector
Undertakings or any combination thereof.
 STP HOW DOES STP UNITS WORK IN
INDIA?

Once after deciding to set up a STP or EHTP unit, the

authorized personnel approaches STPI authorities to obtain a
license to operate as an STP unit at the desired location. Once
an STPI unit obtains the Letter of Permission (Lop), signs the
Legal Agreement and Customs Bonding License, the unit is
ready to commence the operation with 100% Export Oriented
Unit (EOU) status under the STP/EHTP Scheme and eligible to
avail the facilities and privileges admissible under the
scheme.