View
44
Download
0
Category
Preview:
Citation preview
SUMMER INTERNSHIP REPORT
ON
“COST REDUCTION STRATEGIES IN IMPORT LOGISTICS”
BY
GEET CHAUHAN
A1808711013
MBA-3C(2011-13)
Under the supervision of
COL.SHARAD KHATTAR
(L ecturer-AIBS)
In Partial Fulfilment of Award of MASTER OF BUSINESS ADMINISTRATION (3 CONTINENT-INTERNATIONAL BUSINESS AND OPERATIONS)
AMITY INTERNTIONAL BUSINESS SCHOOL,AMITY UNIVERSITY,UTTAR PRADESH,SECTOR-125,NOIDA-201301.UTTAR PRADESH,INDIA.2012-13
AMITY UNIVERSITY
UTTAR PRADESH
1
DECLARATION
I so l emly dec l a r e t ha t t h i s r epo r t on “COST REDUCTION STRATEGIES
IN IMPORT-EXPORT LOGISTICS” ha s been compi l ed by me and ha s no t
been cop i ed f rom any s t uden t / r e sea r che r / emp loyee i n any un ive r s i t y /
i n s t i t u t i on / o rgan i za t i on o r any o the r pace o f d i s t ance l e a rn ing unde r my
knowledge . I have du ly acknowledged t he sou rce s o f da t a g iven t o me by
my indus t ry gu ide whe reve r t hey have been u sed i n t he p ro j ec t .
I f u r t he r dec l a r e t ha t t he i n fo rma t ion p r e sen t ed i n t h i s p ro j ec t i s t r ue and
o r i g ina l t o t he be s t o f my knowledge .
DATE: GEET CHAUHAN
A1808711013
MBA-3C
AMITY UNIVERSITY UTTAR PRADESH
AMITY INTERNATIONAL BUSINESS SCHOOL
CERTIFICATE OF APPROVAL
2
This is to certify that GEET CHAUHAN,a student of MBA(3C),Class of 2011,Amity
International Business School,Amity University ( Bearing AUUP Enroll.no A1808711013) has
undertaken the Summer Internship Training at INDIA YAMAHA MOTOR PVT. LTD ,during
14th may’2012 to 29th june’2012 .He has worked under my guidance for the project
titled ,”COST REDUCTION STRATEGIES IN IMPORT LOGISTICS”.
This project report is prepared in partial fulfilment of MBA(3 CONTINENT-
INTERNATIONAL BUSINESS AND OPERATIONS) to be awarded by AMITY
UNIVERSITY,UTTAR PRADESH.
To the bet of my knowledge ,this piece of work is original and no part of this report has been
submitted by the student to any other institute/university earlier.
COL. SHARAD KHATTAR
(Faculty,AIBS)
3
ACKNOWLEDGEMENT
The Summer Internship Program undertaken by me at the SURAJPUR,GR.NOIDA corporate
office of INDIA YAMAHA MOTOR PVT. LTD. ,was an extremely rewarding experience for
me in terms of learning and industry exposure.
I would like to extend my deep gratitude towards my industry guide Mr. Vinay Gupta(Sr.
Manager-IMPORT LOGISTICS) and Ms.Shilpa Tiwari(Astt. Manager) , INDIA YAMAHA
MOTOR PVT. LTD ,who always motivated me and helped me during the internship. I am
extremely thankful to them for giving me their valuable time and guidance in every step of my
process.
I would like to thank my faculty guide COL.SHARAD KHATTAR who gave his valuable inputs
in suggesting and helping me to decided the topic and preparation of the report.He gave valuable
time from his busy schedule to help me in the analysis and interpretation of my findings.
Student’s name and signature
Enroll.no-A1808711013
Program :MBA (3C) 2011-13
4
TABLE OF CONTENTS
CHAPTER CONTENTS PAGE NO.
1 EXECUTIVE SUMMARY 62 IMPORTANCE OF STUDY 7 3 INDUSTRY PROFILE 9 4 COMPANY PROFILE AND HISTORY 135 YAMAHA SWOT ANALYSIS 19 6 FOREIGN TRADE POLICY( 2009-14) 20 7 INCOTERMS 2010 228 FOB-FREE ON BOARD 249 INDIA AND ASEAN-FREE TRADE AGREEMENT 27 10 IMPORT LOGISTICS
REQUIREMENT FOR IMPORT 30 STEP BY STEP PROCESS OF IMPORT LOGISTICS 31 RISK FACTORS IN IMPORT PROCESS 36 IMPORT DOCUMENTATION 38 IMPORT DUTIES 43 COSTS INVOLVED IN IMPORT PROCESS 44 CUSTOM CLEARANCE PROCESS 47 OTHER IMPORT PROCEDURES 49 CONCLUSIONS 52
11 CASE STYDY 5412 BIBLIOGRAPHY 5713 ANNEXURE 58
5
1.EXECUTIVE SUMMARY
This project was undertaken to understand the IMPORT and EXPORT LOGISTICS system of
India Yamaha Motor Pvt.Ltd. The main purpose of this project was to analyze those strategies
which were instrumental in the phenomenal success,and helps in cost reduction in the entire
process of logistics.Yamaha imports various machine parts,autoparts,components,chemicals and
other necessary items that are required for the final assembly and production of the bikes ,usually
from south-east asian countries (so as to take benefits from ASEAN-FREE TRADE
AGREEMENT) like Thailand, Singapore, Malaysia, Indonesia etc.It exports its finished bikes to
various countries like Sri lanka,Phillipinnes,South africa, Maldives alongwith latin american
countries like Brazil,Argentina,Equador etc.
OBJECTIVES:
The primary objective of this project was to see how the logistics department works ,processes
the order ,carries out the entire documentation till final delivery of goods and how it coordinates
with factory ,head-office and C/F agents for the respective functions.
The secondary objective was to find and analyze such strategies that would help the company to
reduce cost in both import as well as export logistics process.
The project would also includes:
Growth of exports in last few years and future scope for the same.
Provisions from FTP(Foreign trade policy,2009-14) used in EXPORT-IMPORT process
Various agreements that benefits the company like ASEAN-FREE TRADE
AGREEMENT
Study of INCOTERMS-2010 that are used by the company
Costs calculation(freight ,insurance and custom duty)
Risk factors in both export and import process
6
2.IMPORTANCE OF STUDY
The importance of the study is to see the flow of goods and documentation till the completion of
import or export by India Yamaha Motor Pvt.Ltd.Managers try to choose the best path,practices
and methods in order to carry out the logistics-process and give best results in terms of time as
well as cost efficiency.
It chooses its best strategy to dispatch final products after manufacturing, for their delivery to
destination on time and also to receive imported goods after custom clearance and delivery of the
consignment at its own factory.Management of successful logistics system requires accurate and
timely information.It requires efficient planning ,implementation and controlling over the entire
procedure whether in import or the export logistics department.Their are many aspects that are
supposed to be considered and given priority during the process execution such as:
Quality inspection ,both before dispatch of consignment for export and custom clearance
in import.
On-time delivery of goods to the importer and also custom clearance on time at the port. .
List of requirements sent by the buyer as well as that sent by Yamaha to the seller.
Filling of details in the ERP system of the company.
Loading and unloading of goods at port and the factory.
Making and receiving the payment (perfect mode and on time).
Selection of the mode of transport and shipping line.
Selection of the best route to be followed for shipment.
Interaction with Clearing and forwarding agents.
Selection of the best supplier for efficient results.
DATA COLLECTION:To serve the purpose mainly secondary data was collected.The
population sample comprised of respondents who were already associated with the import and
export department and the factory.My industry guides were the main source of data collection
who provided me entire information of the process and also made me to learn how
documentation is done and various costs are calculated.
7
8
3.INDUSTRY PROFILE
Two-wheeler segment is one of the most important components of the automobile sector
that has undergone significant changes due to shift in policy environment. The two-
wheeler industry has been in existence in the country since 1955. It consists of three
segments viz. scooters, motorcycles and mopeds. According to the figures published by
SIAM, the share of two-wheelers in automobile sector in terms of units sold was about
80 per cent during 2003-¬04. This high figure itself is suggestive of the importance of the
sector. In the initial years, entry of firms, capacity expansion, choice of products
including capacity mix and technology, all critical areas of functioning of an industry,
were effectively controlled by the State machinery. The lapses in the system had invited
fresh policy options that came into being in late sixties. Amongst these policies,
Monopolies and Restrictive Trade Practices (MRTP) and Foreign Exchange Regulation
Act (FERA) were aimed at regulating monopoly and foreign investment respectively.
This controlling mechanism over the industry resulted in: (a) several firms operating
below minimum scale of efficiency; (b) under-utilisation of capacity; and (c) usage of
outdated technology. Recognition of the damaging effects of licensing and fettering
policies led to initiation of reforms, which ultimately took a more prominent shape with
the introduction of the New Economic Policy (NEP) in 1985.
However, the major set of reforms was launched in the year 1991 in response to the
major macroeconomic crisis faced by the economy. The industrial policies shifted from a
regime of regulation and tight control to a more liberalised and competitive era. Two
major results of policy changes during these years in two-wheeler industry were that the,
weaker players died out giving way to the new entrants and superior products and a
sizeable increase in number of brands entered the market that compelled the firms to
compete on the basis of product attributes. Finally, the two-¬wheeler industry in the
country has been able to witness a proliferation of brands with introduction of new
technology as well as increase in number of players.
9
National Council of Applied Economic Research (NCAER) had forecast two-wheeler
demand during the period 2002¬-03 through 2011-12. The forecasts had been made
using econometric technique along with inputs obtained from a primary survey
conducted at 14 prime cities in the country. Estimations were based on Panel
Regression, which takes into account both time series and cross section variation in data.
A panel data of 16 major states over a period of 5 years ending 1999 was used for the
estimation of parameters. The models considered a large number of macro-economic,
demographic and socio-economic variables to arrive at the best estimations for different
two-wheeler segments. The projections have been made at all India and regional levels.
Different scenarios have been presented based on different assumptions regarding the
demand drivers of the two-wheeler industry. The most likely scenario assumed annual
growth rate of Gross Domestic Product (GDP) to be 5.5 per cent during 2002¬-03 and
was anticipated to increase gradually to 6.5 per cent during 2011¬-12. The all-India and
region-wise projected growth trends for the motorcycles and scooters are presented in
Table 1. The demand for mopeds is not presented in this analysis due to its already
shrinking status compared to' motorcycles and scooters.
It is important to remember that the above-mentioned forecast presents a long-term
growth for a period of 10 years. The high growth rate in motorcycle segment at present
will stabilise after a certain point beyond which a condition of equilibrium will set the
growth path. Another important thing to keep in mind while interpreting these growth
rates is that the forecast could consider the trend till 1999 and the model could not
capture the recent developments that have taken place in last few years. However, this
will not alter the regional distribution to a significant extent.
Following Table suggests two important dimensions for the two-¬wheeler industry. The
region-wise numbers of motorcycle and scooter suggest the future market for these
segments. At the all India level, the demand for motorcycles will be almost 10 times of
that of the scooters. The same in the western region will be almost 20 times. It is also
evident from the table that motorcycle will find its major market in the western region of
10
the country, which will account for more than 40 per cent of its total demand.
Table : Demand Forecast for Motorcycles and Scooters for 2011-12
2-Wheeler Segment Regions
South West North-Central East & North-East All India
Motorcycle2835(12.9)
4327(16.8)
2624(12.5)
883(11.1)
10669(14.0)
Scooter203(2.6)
219(3.5)
602(2.8)
99(2.0)
1124(2.08)
Note: Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented in parenthesisSource: Indian Automobile Industry: Optimism in the Air, Industry Insight, NCAER
The present economic situation of the country makes the scenario brighter for short-term
demand. Real GDP growth was at a high level of 7.4 per cent during the first quarter of
2004. Both industry and the service sectors have shown high growth during this period
at the rates of 8.0 and 9.5 per cent respectively. However, poor rainfall last year will pull
down the GDP growth to some extent. Taking into account all these factors along with
other leading indicators including government spending, foreign investment, inflation
and export growth, NCAER has projected an average growth of GDP at 6.7 per cent
during the tenth five-year plan. Its mid-term forecast suggests an expected growth of 7.4
per cent in GDP during 2004-05 to 2008-09. Very recently, IMF has portrayed a
sustained global recovery in World Economic Outlook. A significant shift has also been
observed in Indian households from the lower income group to the middle income group
in recent years. The finance companies are also more aggressive in their marketing
compared to previous years.Combining all these factors, one may visualise a higher
growth rate in two-wheeler demand than presented in Table 1, particularly for the
motorcycle segment.
11
There is a large untapped market in semi-urban and rural areas of the country. Any
strategic planning for the two¬-wheeler industry needs to identify these markets with the
help of available statistical techniques. Potential markets can be identified as well as
prioritised using these techniques with the help of secondary data on socio-economic
parameters. For the two-wheeler industry, it is also important to identify the target
groups for various categories of motorcycles and scooters. With the formal introduction
of secondhand car market by the reputed car manufacturers and easy loan availability
for new as well as used cars, the two-wheeler industry needs to upgrade its market
information system to capture the new market and to maintain its already existing
markets. Availability of easy credit for two-wheelers in rural and smaller urban areas
also requires more focussed attention. It is also imperative to initiate measures to make
the presence of Indian two-wheeler industry felt in the global market.
The market shares of the segments of the automobile industry
4.COMPANY PROFILE
12
Yamaha's history goes back over a hundred years to 1887 when Torakusu Yamaha founded the
company, which began producing reed organs. The Yamaha Corporation in Japan (then Nippon
Gakki Co., Ltd.) has grown to become the world's largest manufacturer of a full line of musical
instruments, and a leading producer of audio/visual products, semiconductors and other
computer related products, sporting goods, home appliances and furniture, specialty metals,
machine tools, and industrial robots.
The Yamaha Motor Corporation, Ltd., begun on July 1, 1955, is a major part of the entire
Yamaha group, but is a separately managed business entity from the Yamaha Corporation. The
Yamaha Motor Corporation is the second largest manufacturer of motorcycles in the world.
Yamaha Motor Corporation owns its wholly-owned subsidiary in the U.S. called Yamaha Motor
Corporation, USA, that is handling not only motorcycles, but also snow mobiles, golf carts,
outboard engines, and water vehicles, under the brand name of Yamaha as well.
In 1954 production of the first motorcycles began, a simple 125cc single-cylinder two-stroke. It
was a copy of the German DKW design, which the British BSA Company had also copied in the
post-war era and manufactured as the Bantam.
The first Yamaha, the YAI, known to Japanese enthusiasts as Akatombo, the "Red Dragonfly",
established a reputation as a well-built and reliable machine. Racing successes helped boost its
popularity and a second machine, the 175cc YCI was soon in production.
The first Yamaha-designed motorcycle was the twin-cylinder YDI produced in 1957. The
racing version, producing 20bhp, won the Mount Asama race that year. Production was still
modest at 15,811 motorcycles, far less than Honda or Suzuki.
The company grew rapidly over the next three years and in 1959 introduced the first sports
model to be offered by a Japanese factory, the twin-cylinder YDSI with five-speed gearbox.
Owners who wanted to compete in road racing or motocross could buy kits to convert the
machine for both road and motocross racing.
By 1960 production had increased 600% to 138,000 motorcycles. In Japan a period of
recession followed during which Yamaha, and the other major Japanese manufacturers,
increased their exports so that they would not be so dependent on the home market.
13
To help boost export sales, Yamaha sent a team to the European Grand Prix in 1961, but it was
not until the 1963 season that results were achieved.
After the Korean War the American economy was booming and Japanese exports were
increasing. In 1962 Yamaha exported 12,000 motorcycles. The next year it was 36,000 and in
1964 production rose to 87,000.
The first overseas factory was opened in Siam in 1966 to supply Southeast Asia. In 1967
Yamaha production surpassed that of Suzuki by 4,000 at 406,000 units. Yamaha established a
lead with the introduction of the first true trail bike "the 250cc single-cylinder DTI". The
company also developed a two-liter, six-cylinder, double overhead-camshaft sports car unit for
Toyota Motor. This proved helpful when Yamaha produced their own high-performance four-
stroke motorcycles.In 1969 Yamaha built a full size road racing circuit near their main factory at
Iwata.
By 1970 the number of models had expanded to 20 ranging from 50cc to 350cc, with
production up to 574,000 machines, 60% of which were for export. That year Yamaha broke
their two-stroke tradition by launching their first four-stroke motorcycle, the 650cc XSI vertical
twin modeled on the famous Triumph twins.
In 1973 production topped one million (1,000,000) motorcycles per year for the first time,
leaving Suzuki way behind at 642,000 and catching up on Honda's 1,836,000. During the 1970's
Yamaha technicians concentrated on development of four-stroke models that were designed to
pass the ever-increasing exhaust emission laws and to be more economical than the two-strokes
that had made Yamaha's fortune.
About India Yamaha Motor Pvt. Ltd.
14
“Yamaha made its initial foray into India in 1985. Subsequently, it entered into
a 50:50 joint-venture with the Escorts Group in 1996. However, in August 2001,
Yamaha acquired its remaining stake becoming a 100% subsidiary of Yamaha
Motor Co., Ltd, Japan (YMC). In 2008, Mitsui & Co., Ltd. entered into an
agreement with YMC to become a joint investor in the motorcycle
manufacturing company "India Yamaha Motor Private Limited (IYM)".
IYM operates from its state-of-the-art-manufacturing units at Surajpur in Uttar
Pradesh and Faridabad in Haryana and produces motorcycles both for domestic
and export markets. With a strong workforce of more than 2,000 employees,
IYM is highly customer-driven and has a countrywide network of over 400
dealers. Presently, its product portfolio includes VMAX (1,679cc), MT01
(1,670cc), YZF-R1 (998cc), Fazer (153cc), FZ-S (153cc), FZ16 (153cc), YZF-
R15 (150cc), Gladiator Type SS & RS (125cc), Gladiator Graffiti (125cc), G5
(106cc), Alba (106cc) and Crux (106cc). “
VISION----------------------------------------------------------------------:
15
We will establish YAMAHA as the "exclusive & trusted brand" of customers by "creating
Kando" (touching their hearts) - the first time and every time with world class products &
services delivered by people having "passion for customers".
MISSION--------------------------------------------------------------------
We are committed to:
Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of YAMAHA
products, focusing on serving our customer where we can build long term relationships by
raising their lifestyle through performance excellence, proactive design & innovative technology.
Our innovative solutions will always exceed the changing needs of our customers and provide
value added vehicles.
Build the Winning Team with capabilities for success, thriving in a climate for action and
delivering results. Our employees are the most valuable assets and we intend to develop them to
achieve international level of professionalism with progressive career development. As a good
corporate citizen, we will conduct our business ethically and socially in a responsible manner
with concerns for the environment.
Grow through continuously innovating our business processes for creating value and knowledge
across our customers thereby earning the loyalty of our partners & increasing our stakeholder
value.
16
17
CORE COMPETENCIES-----------------------------------------------
Customer #1
We put customers first in everything we do. We take decisions keeping the customer in mind.
Corporate exellence
We strive for excellence in everything we do and in the quality of goods & services we provide.
We work hard to achieve what we commit & achieve results faster than our competitors and we
never give up.
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust, respect,
understanding & mutual co-operation. Everyone's contribution is equally important for our
success.
Frank & Fair Organization
We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen to
others and participate in healthy & frank discussions to achieve the organization's goals.
18
5.YAMAHA SWOT ANALYSIS
1).STRENGTHS
Excellent branding, advertising and global distribution
Yamaha Motor Corporation has over 39,000 employees
One of the major brand in motorsport like MotoGP, World superbike etc
Yamaha produces scooters from 50 to 500 cc, and a range of motorcycles from 50 to
1,900 cc, including cruiser, sport touring, sport, dual-sport, and off-road
Extremely high Size and reach of company.
2).WEAKNESSES
Small showrooms.
Not much emphasis on aggressiveselling.
Weak product diversity
3).OPPORTUNITIES
Growing premium segment.
Global expansion into the Caribbean and Central America.
Expansion of target market
Increasing dispensable income.
1st mover advantage.
4).THREATS
Cut throat competition
Increasing number of players in the Market
Rising raw material costs
Increasing rates of interest on finance
Strong competition from indian and international brands.
Better public transport will affect two wheeler segment.
19
6.FTP - FOREIGN TRADE POLICY (2009-14)The foreign trade policy 2009-14,incorporating provisions relating to export and import of
goods and services came into force from 27th august,2009 and shall remain in force upto
31st march,2014 .Thus it is the sum total of a country’s relationship with internal and
external actors while pursuing its goals and objectives.This five year policy is issued by
Ministry of Commerce for five years .It includes number of policies ,initiatives,frameworks
and regulations to control and regulate exports as well as imports of the country.Some of
them which are used by Indian firms for their imports are as follows:
1).GENERAL PROVISIONS REGARDING EXPORTS AND IMPORTS:The itemwise
export and import policy shall be ,as specified in ITC(HS)notified by DGFT,as amended
from time to time.Every importer or exporter shall comply with the provisions of FT(D&R)
Act,the rules and orders made under FTP. DGFT may specify the procedure to be followed
for an exporter or importer for the purpose of implementing provisions of FT(D&R)
Act.Restricted goods are mentioned in the list of ITC(HS).
2).DUTY EXEMPTION AND REMISSION SCHEMES:These schemes enable duty free
imports of inputs required for export production .Duty exemption schemes consist of (a)Advance
Authorisation scheme and (b) Duty Free Import Authorisation scheme.On other hand Duty
Remission scheme enables post export replenishment/remission of duty on inputs used in export
product.Duty Remission schemes consist of (a)Duty entitlement passbook scheme and (b)Duty
Drawback scheme.
An Advance authorisation is issued to allow duty free import of inputs,which are physically
incorporated in the export products.It can be issued either to a manufacturer exporter or merchant
exporter tied to supporting manufacturer.
DFIA is issued to allow duty free import of inputs,fuel,oil,energy sources and catalyst which are
required for production of export product.
20
DEPB scheme is not in use,but Duty drawback scheme is used in applicable cases.
3).EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME:Concessional 3% duty
EPCG scheme allows import of capital goods for pre production,post production and production
at 3% customs duty,subject to an export obligation equivalent to 8 times of duty on capital goods
imported under EPCG scheme ,to be fulfilled in 8 years reckoned from authorisation issue-date.
7.INCOTERMS
21
The INTERNATIONAL COMMERCIAL TERMS,are the set of rules which defines the
responsibilities of the sellers and buyers for the delivery of goods under sales contracts for
domestic as well as international trade.They are published by the ICC and are widely used in
international commercial transactions.First incoterms were published in 1936 after which
they have been revised time to time.The most latest and recent version of
INCOTERMS,2010 were launched in september,2010 and became effective from january
1,2011.
These terms provide a common set of rules to clarify responsibilities of seller and buyers for
the delivery of goods under sales contracts.They significantly reduces the
misunderstamdings among traders and thereby minimize trade disputes and litigation.
1).FAS-FREE ALONGSIDE SHIP(named port of shipment)
The seller place the goods alongside the ship at the named port.The seller must clear the
goods for export.It is suitable only for the maritime transport but NO for multimodal sea
transport incontainers.It is usually used for heavy-lift or ulk cargo.
2).FOB-FREE ON BOARD(named port of shipment)
The seller must load the goods on board the vessel nominated by the buyer.Cost and risk are
divided when the goods are actually on board of the vessel.The seller must clear the goods for
export.The buyer must instruct the seller the details of the vessel and the port where the goods
are to be loaded.
3).CFR-COST AND FREIGHT(named port of destination)
Seller must pay the cost and freight to bring the goods to the port of destination.However ,risk is
transferred to the buyer once the goods are loaded on the vessel.It is used only for maritime
transport only insurance for goods is not included.
4).CIF-COST ,INSURANCE AND FREIGHT(named port of destination)
It is exactly same as CFR except that the seller must in addition procure and pay for the
insurance maritime transport only.
5).EXW-EX WORKS(named place ofdelivery)
22
The seller makes the goods available at its premises.It places the maximum obligations on the
buyer and minimum obligations on the seller.It means that the seller has the goods ready for the
collection at his premises on the date agreed upon.The buyer pays all transportation costs and
also bears the risks for bringing the goods to their final destination.
6).FCA-FREE CARRIER(named place of delivery)
The seller hands over the goods ,cleared for export ,into the disposal of the first carrier(named by
the buyer),at the named place.The seller pays for carriage to the named point of delivery and risk
passes when goods are handed over to the first carrier.
7).CPT-CARRIAGE PAID TO(named place of destination)
The seller pays for carriage.Risk transfers to buyer upon handling goods over to the first carrier.
8).CIP-CARRIAGE AND INSURANCE PAID TO(named place of destination)
The containerized transport/multimodal equivalent of CIF.Seller pays for carriage and insurance
to the named destination point ,but risk passes when the goods are handed over to the first
carrier.
9).DAT –DELIVERED AT TERMINAL(named terminal at port or place of destination)
Seller pays for change to the terminal,except for costs related to import clearance and assumes all
risks upto to the point that goods are unloaded at the terminal.
10).DAP-DELIVERED AT PLACE(named place of destination)
Seller pays for the carriage to the named place,except for costs related to import clearance,and
assumes all risks prior to the point that good are ready for unloading by the buyer.
11).DDP-DELIVERED DUTY PAID(named place of destination)
Seller is responsible for delivering the goods to the named place in the country of the buyer and
pays all costs in bringing the goods to the destination including import duties and taxes.It places
maximum obligations on the seller and minimum obligations on the buyer.
8.FOB-FREE ON BOARD
23
This term is used usually for the sea or the inland waterway transport.FOB means that seller will
deliver the goods on board the vessel nominated by the buyer at the named port of shipment or
procures the goods already so delivered.The risk of loss or damage to the goods passes when the
goods are on board the vessel ,and buyer bears all costs from that moment onwards.FOB may not
be appropriate where goods are handed over to the carrier before they are on board the vessel,for
example goods in containers,which are typically delivered at the terminal.FOB requires the seller
to clear the goods for export,where applicable.The seller has no obligations to clear the goods for
import ,pay any import duty or carry out any import customs formalities.
THE SELLER’S OBLIGATIONS-The seller must provide the goods and the commercial
invoice in conformity with the contract of sale of contract of sale and any other evidence of
conformity that may be reaquired by the contract.
1).Licences,authorizations,security clearances and other formalities-Where applicable the
seller must obtain at its own risk and expense any export licence or other official authorization
and carry out all customs formalities necessary for the export of goods.
Contract of carriage:The seller has no obligations to the buyer to make a contract of
carriage.
Contract of insurance:The seller has no obligations to the buyer to make a contract of
insurance.
2).Delivery-The seller is suppose to deliver the goods either by placing them on board the vessel
nominated by the buyer at the loading point or by procuring the goods so delivered.In either case
the seller must deliver the goods on agrred date or within the agreed period and in manner
customary at the port.If no specific loading point has been indicated by the buyer,the seller may
select the point within the named port of shipment that best suits its purpose.
24
3).Tranfer of risks-The seller bears all risks of loss or damage to the goods until they have been
delivered in with exception of loss or damage in the circumstances.The seller must pay :
All costs relating to the goods until they have been delivered other than those payable by
the buyer,
The costs of customs formalities necessary for export as well as all duties , taxes and
other charges payable upon export.
4).Notice to buyer-The seller must ,at the buyer’s risk and expense ,give the buyer sufficient
notice either that goods have been delivered or that the vessel has failed to take the goods within
the time agreed.There need to be presence of the usual proof that goods have been delivered.
5).Checking-packaging-marking-The seller must pay :
The costs for checking operations (checking quality,measuring,weighing and counting)
that are necessary for the purpose of delivering the goods
Costs of any pre-shipment inspection mandated by the authority of the country of export.
Costs of packaging the goods appropriately for their transport (marked properly).
THE BUYER’S OBLIGATIONS-The buyer must pay the price of the goods as provided in the
contract of sale.
1).Licenses,authorisations,security clearances and other formalities-It is upto the buyer to
obtain at its own risk and expense,any import license or other official authorisation and carry out
all custom formalities for the import of the goods and for their transport through any countries.
Contract of carriage:The buyer must contract at its own expense for the carriage of the
goods from the named port of shipment.
Contract of insurance:The buyer has no obligation to the seller to make a contact of
insurance.
2).Taking delivery-The buyer must take delivery of the goods when they have been delivered.
25
3).Transfers of risks-The buyer bears all the risks of loss or damage to the goods from time they
have been delivered.The buyer bears all risks of loss of or damage to the goods:
From the agreed date ,or in the absence of an agreed date
From the date notified by the seller within the agreed period ,or ,if no such date has been
notified.
From the expiry date of any agreed period for delivery ,provided that the goods have been
clearly identified as the contract goods.
4).Allocation of costs-The buyer must all of the following costs:
All costs relating to the goods from time they have been delivered
Any additional cost if buyer fails to give appropriate notice or the vessel nominated fails
to arrive on time.
All duties,taxes,charges as well as costs of carrying out customs formalities payable upon
import of the goods and the costs for their transport through any country.
5).Notices to the seller-The buyer must give the seller sufficient notice of the vessel
time ,loading point and where necessary the delivery time within the agreed period.The buyer
must accept the proof of the delivery provided.
6).Inspection of goods-The buyer must pay the costs of any mandatory pre-shipment inspection .
26
9.INDIA AND ASEAN-FREE TRADE AREA
Its now more than 10 years ,the partnership between INDIA and the ASSOCIATION OF
SOUTH EAST ASIAN NATIONS(ASEAN) comprising Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Phillippines, Singapore, Thailand and Vietnam has been developing at quite
a fast pace.
India became a sectoral dialogue partner of ASEAN in 1992.Mutual interest led ASEAN to
invite India to become its full dialouge partner during fifth ASEAN summit in Bangkok in
1995.India also became a member of ASEAN Regional forum (ARF) in 1996.India and ASEAN
have been holding summit level meetings on an annual basis since 2002.
In August 2010,Singapore,Thailand and Malaysia accepted the FTA on goods .The other seven
ASEAN countries are expected to operationalise the FTA by August ,2010.
India and ASEAN are currently negotiating agreements on trade in services and investment .The
services negotiations are taking place on a request offer basis,wherein both sides make request
for the openings they seek and offers are made by the receiving country based on the requests.
The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade
figures. India’s trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07,to
US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09.
At the second ASEAN - India summit in 2003,the ASEAN-India framework agreement on
comprehensive economic cooperation was signed by the leaders of ASEAN and India.The
framework agreement laid a sound basis for the eventual establishment of an ASEAN –India
regional trade and investment area(RTIA),which includes FTA in goods ,services and
investment.
The 7th ASEAN –India summit in CHA-AM HUA HIN,Thailand on 24th october 2009 agreed
to revise the bilateral trade target to 70 billion USD to be achieved in next two years,noting that
the initial target of USD 50 billion set in 2007 may soon be surpassed.
In august 2009,India signed a free trade agreement (FTA) with the ASEAN members in
Thailand.Under the ASEAN – India FTA,ASEAN member countries and INDIA will lift import
27
tariffs on more than 80 percent of traded products between 2013-16.India and ASEAN are
currently negotiating agreements on trade in services and investments.
BENEFITS OF FTA(FREE TRADE AREA) TO INDIA:
The FTA liberalized tariffs on about 4,000 items accounting for nearly 80% of trade
between INDIA and ASEAN.It includes long list of electronics,chemicals,spare and
machine parts.
The agreement became effective from Jan,1 2010, tariffs on products covered will sink to
zero between 2013 and 2016.
Now,its one of the members of large integrated market of ASEAN with low product
cost,high market competion and lowered tariffs.
India’s imported goods worth US$ 26.3 billion in 2008-09 from ASEAN ,during the period april-
december 2009-10,India’s imports from ASEAN totalled US$ 18.09 billion,according to data
released by the minstry of commerce and industry.
SOME MAJOR SUPPLIERSTO INDIA:
SINGAPORE-It continues to be the single largest investor in India among the ASEAN
countries .The total bilateral trade during 2008-09 was US$ 16.1 billion,an increase of 3.86
percent over US$ 15.5 billion in 2007-08.Also, the FDI inflows from Singapore during 2000 and
2010 were US$ 10.2 billion,according to data released by the department of industrial policy and
promotion(DIPP).
MALAYSIA-The bilateral economic relationship between India and Malaysia has been steadily
moving ahead.Bilateral trade among the two countries amounted to US$ 10,604.75 million
during 2008-09,(increase of 23.48%) according to data released by the ministry of commerce.
28
THAILAND- The bilateral trade betweenthe two countries touched US$ 4.6 billion in 2008-
09,registering a growth of 12.9 percent ,according to data released by ministry
ofcommerce.Also,Total FDI inflow during the period april 2000-march2010 from Thailand was
US$ 77.97 million.
INDONESIA-The bilateral trade between Indonesia and India totalled US$ 9.3 billion in 2008-
09 ,an increase of 32.08 percent after 2007-08.They both are targeting bilateral trade worth US$
20 billion by 2020,according to Indonesian ambassador to India.
MYANMAR,VIETNAM,PHILIPPINES AND CAMBODIA-India’s trade with these countries
have also shown progress with time in last few years and is increasing continuously.As far as
imports are considered, there is small list of items that India imports from these countries.
29
10.1.REQUIREMENT FOR IMPORT:Yamaha ,at its Surajpur plant produces only some of the components such as fuel tank,body
cover etc.Most of the components are locally purchased from other states of India such as
Maharashtra,Karnataka,Haryana etc.They constitute the local purchase and rest of the parts
are imported from other countries.
The ratio goes as :
OWM MADE PARTS-5-10%
BOUGHT OUT PARTS(Locally purchased)-70-80%
IMPORTED-5-10%
Major Suppliers:
Thailand
Singapore
China
Japan
Indonesia
Taiwan
Malaysia
Imports mainly includes:
Components- like Ignition Coil, CDI unit, Rotor, Stator, Starting Motor etc.
Hardware- like Nuts, Bolts, Screws, Pins, Circlips etc.
Raw materials- like Paints, Welding Wire, Grease, Hot rolled sheets etc.
Machinery parts- like spare parts of CNCmachine, testing machine etc.
30
10.2.STEP BY STEP PROCESS OF IMPORT LOGISTICS:
PARTICIPANTS IN IMPORT PROCESS:
BUYER
SELLER
FORWARDER
SHIPPER
CUSTOM HOUSE AGENT
CUSTOM OFFICIALS
BANK
1).PLACING OF ORDER:
The final placing of order by the buyer to the supplier involves number of steps:
Buyer would ask for QUOTATION i.e mainly the price details for the required
consignment from the supplier.
It includes: ITEM DESCRIPTION, PRICE, INCOTERMS,PAYMENT TERMS,LEAD
TIME & VALIDITY etc.
Supplier then sends the quotation for consideration to the buyer.
On the basis of Quotation, Buyer finally send PO (Purchase order),alongwith the details
of FORWARDER to the supplier.
2).ROLE OF LOGISTICS Department:
Selection of the forwarding agent.
Selection of CHA(CUSTOM HOUSE AGENT).
Tracking of the entire shipment process on behalf of the company.
Timely payment of custom duty.
ROLE OF FORWARDER:
Arrangement of vessel / flight booking for the consignment.
Arrangement of Transportation from Origin Port to Destination Port
31
Other necessary arrangements for receiving order at port.
Constant coordination with the shipping line,buyer as well as supplier.
Giving timely information to the logistics department regarding shipping process and
proceedings.
3).SUPPLIER DELIVERS THE ORDER:
Supplier then makes all necessary arrangements as per the buyer’s conditions,for the execution
of the order from dispatch of order from its own port to its delivery at the Buyer’s port.
4).SHIPPING DOCUMENTS TO BUYER:
Supplier sends the shipping documents to buyer, which are sent by buyer to their
CHA(CUSTOM HOUSE AGENT),for the purpose of custom clearance.
5).ROLE OF CHA OR C/F AGENTS:
The CHA on receiving the shipping documents and details,file the BILL OF ENTRY as per
details in the documents and then confirm the CUSTOM DUTY to the buyer.CHA may also be
responsible for following activities:
Arrangement of warehousing at the port.
Arrangement of containers at the port.
Arranging the marine/cargo insurance of the shipment.
Arrangement for assessment of damage to the goods to file claim with the insurance
company.
Arrangement for handling goods if rejected by the importer or not collected on time.
Arrangment for transport of goods to the factory after custom clearance.
6).PAYMENT OF CUSTOM DUTY:
The buyer would make the payment for the custom duty ,usually through e-payment and then
send the bank-receipt to the CHA.
32
7).CLEARING OF CONSIGNMENT:
After the bank-receipt is being received , the CHA clears the consignment from the custom and
gives the shipping arrival information to the buyer.CHA will arrange for the domestic transport
of order from the port to the buyer’s location or factory.On final delivery of goods the CHA
sends the original bill of entry to the BUYER.
IMPORT LOGISTICS PROCESS CHART
ACTIVITIES RESPONSIBILITY
DURATION REFERENCE DOCUMENTS
33
1).Buyer ask for quotation to supplier.
2).Supplier sends quotation and forwarder details with full details of item to buyer.
3).Buyer places final order in form of Purchase order.
4).Forwarder regulates entire shipment from origin port to destination port.
5).Supplier sends the shipping documents to buyer.
6).Buyer sends the shipping documents to CHA.
7).CHA files BILL OF ENTRY and sends the B/E number to appraising group.
8).Appraising group carries out examination and verification of the consignment.
9).CHA calculates the custom duty and informs it to buyer.
10).Payment of custom duty by the Buyer.
11).Final clearing of consignment from the port.
BUYER
SUPPLIER
BUYER
FORWARDER
SUPPLIER
BUYER
CHA
CUSTOM OFFICIALS
CHA
BUYER
WITHIN 1 WEEK
AT THE TIME OF SHIPMENT
NEXT DAY OF STEP-6
WITHIN 3 DAYS OF SHIPMENT
WITHIN 5 DAYS (AFTER STEP-9)
QUOTATION
PURCHASE ORDER
INVOICE,PACKING LIST,COA,B/L,AIRWAYBILL
BILL OF ENTRY
34
10.3.RISK FACTORS IN IMPORT PROCESS:There are various kinds of risks involved while importing goods .They are mainly classified under following categories:
1).TRANSPORT RISK:This involves the risk associated with loss of goods during
transportation
First of all the importer need to ensure that the goods supplied by the exporter is insured.
It is always advisable to set out the agreement betwen the parties as to the type of cover
to be obtained in the contract of sale.
Importer preferably wish to obtain insurance cover from their own insurance company
under “open policy” thus taking advantage of bulk billing and other relationships.
2).QUALITY RISK:This involves the quality of the final received goods.
It is important for the importer to ensure that the final products are as good as
sample.importer must take necessary protective measures in advance.
Importer must investigate the reputation and standing of the supplier.
Inspection must be done from the importer side and the exporter side or by the third party
agency.
Importer is able to inspect the goods before payment is made to the supplier at the
maturity date in case of Bill of exchange,with documents released against acceptance.
It is found better that the importer can have the agent in the supplier’s country for closer
supervision to be maintained over the shipments.
35
3).DELIVERY RISK:This is the risk that arises on when goods are not delivered on
time.Delivery on time is the important factor for importer to reach the target market.
Importer must make the import-contract very specific,so that importer always has an
option of refusing the payment if goods are not delivered on time.
The “latest date if shipment” is included by the issuing bank in the terms of credit.
(when payment is through documentary credit)
Also,very import the importer need to collect the consignment from the port on time
other wise charges are ready to be paid.
4).EXCHANGE RATE RISK:This involves the risk that arises due to change in the value of
currency.
The importer must determine the value of the product in domestic currency because
there is always a gap between the time of entering into the contract and actual
payment for the goods is received.
It must enter into foreign exchange contract(HEDGING is most commonly used
where rate of exchange is pre-fixed by both the parties to prevent future risk of high
rate) through bank.
36
10.4.IMPORT DOCUMENTATION
The availability of right documents,the correctness of the information available in the documents
as well as the timeliness in submitting the documents and filling the necessary applications for
the customs clearance determines the efficiency of the customs clearance process.Any delay in
filling or non-availability of documents can delay the process and thereby importers stands not
only to incur demurrage on the imported cargo but also stand to loose business
opportunities.Custom clearance process requires the set of documents to be submitted by the
importer .By the airline,shippingline or the freight forwarder as well as the customs
documentation prepared and submitted by the clearing agent on behalf of the importer.Some
major documents required in import logistics are as follows:
1).COMMERCIAL INVOICE:This document certifies the sales as well as gives the
description of the items as well as reflects the pricing or the value of the cargo.Custom valuation
is based on the value reflected on the commercial invoice.Some major entries in commercial
invoice are as follows:
Customer code
Invoice no.
Date
Shipped by
From to/via
Payment
Currency
Mark and number
No. of packages
37
Description
Quantity
Unit-price
Total
2).PACKING LIST:It is mandatory to put the shipping marks on all the cargo covering each
and every individual piece or parcel.The details of the number of parcels in the
consignment ,their dimension ,the shipping marks,the gross and net weights of each of the
parcels along with the number of units contained in each parcel is catalogued in form of the
packing list.It is used to identify the parcels as belonging to the particular consignment under the
said invoice.Major entries:
Customer code
Invoice no.
Date
Shipped by
From to/via
Payment
Mark and number
No.of packages
Description
Quantity
Gross weight
Net weight
Measurement
3)BILL OF LADING(NON-NEGOTIABLE OCEAN-SEA TRANSPORT):This is issued by
the shipping line certifying carriage of the said cargo under the specific invoice on behalf of the
exporter or importer depending upon terms of sale.In FOB,”ON BOARD BILL OF LADING” is
usually considered to be the apt bil of lading that signifies that the cargo has been loaded on
board.This is also required for negotiations of payment from importer to the exporter.Major
entries:
38
Consignee
Notify party
Pre-carriage by
Place of receipt
Ocean vessel
Port of loading
Port of discharge
Place of delivery
Number of original B/L
Carrier’s receipt
Particulars furnished by shipper – carrier not responsible
Container no./seal no.
Marks and numbers
No. of containers packages
Kinds of packages ,description of goods
Gross weight
Measurements
Total no. containers or packages in words
Freight and charges
Prepaid
Collect(freight collect)
Declared value charges
Declared value of US $
Prepaid at
Payable at
Ex rate
Place of issue
Date
39
4).AIRWAY BILL (IN CASE OF AIR TRANSPORT):This is issued by the airline or a
freight forwarder who consolidates the air freight cargo.It includes:
Shipper’s name and address
Shipper a/c no.
Consignee name and address
Issuing carrier agent name and city
Agent tata code
Account no.
Airport of departure and requested routing
Airport of destination
Flight /date
Accounting information
Amount of insurance
Gross weight
Chargeable weight
Total
Nature and quantity of goods
Charges at destination
Total collect charges
Signature of shiper or his agent
5)CERTIFICATE OF ORIGIN:Certain bilateral agreements and multilateral agreements
would enjoy favorable tariffs for import duties.In such cases when the consignments are exported
from such member countries,the designated export agency issues certificate of origin to the
importer for submission to customs.Based on this the custom department classifies the cargo
under specific schedule.It avoids the third party countries from routing imports through member
countries and effecting third party export to avoid duty ,quantity or license restrictions.It
includes:
Goods consigned from
Goods consigned to
Reference to
40
Means of transport and route-departure date ,vessel’s name/aircraft,port of discharge
For official use:
1.preferential tariff treatment given under ASEAN –India free trade area preferential
tariff.
2.preferential tariff treatment not given.
Item number
Marks and number of packages
Description of goods
Origin criterion
Gross weight or other quantity and value
Number and date of invoices
Declaration of exporter
Certification
6).SOME OTHER IMPORTANT DOCUMENTS:Besides above ,there are various other
documents that are necessary to be filled as per terms and conditions:
Insurance certificate(in case CIF incoterm)
Catalouge(in case of machinery items)
Fumigation(document for wooden palletisation)
Test report/MSDS certificate (in case of chemicals)
Material safety date-sheet(in case of chemicals and hazardous goods)
41
10.5.IMPORT DUTIES
The concept of import duty is applicable to each and every product or item whether its any
equipment ,raw material ,machine or auto parts.Import duties form a significant source of
revenue for the country and are levied on the goods and at the rates specified in the schedules
to the customs tariff act,1975.Territorial water extends upto 12 nautical miles into the sea
from the coast of india and so the liability to pay import duty commences as soon as goods
enter the territorial waters of india.
BASIC DUTY:It is type of duty or tax imposed under the customs act(1962).Basic
custom duties varies for different items from 5% to 40%.The duty rates in the first
schedule of the customs tariff act,1975 and have been amended from time to time
under the finance act.The central government has the power to reduce or exempt any
good from these duties.
COUNTERVAILING DUTY:It is also known as countervailing duty and is equal to
excise duty imposed on a like product manufactured or produced in india.It is
implemented under the section3(1),of the indian custom tariff act.
ADDITIONAL DUTY:This duty is imposed at the rate of 4% in order to provide a
level playing field to indigenous goods which have to bear sales tax.This is to
computed on the aggregate of the: Assessable value+Basic duty of
customs+Surcharge + Additional duty of customs leviable ,under section 3 of the
customs tariff act,1975.
ANTI-DUMPING DUTY:Dumping means exporting goods in a foreign market at a
price which is less than their cost of production or below their “fair”market
value.Thus to counteract this dumping,the indian government has formulated certain
guidelines and policies.Imposing duty on imported goods is also one of them and is
known as anti-dumping duty.
42
10.6.COSTS INVOLVED IN IMPORT LOGISTICS:
1).FREIGHT COST:This is the cost incurred in moving goods.It includes packing , palletizing ,
documentation and loading unloading charges ,carriage costs and marine insurance costs.The
freight rate is a price at which a cerain cargo is delivered from one point to another.It depends
upon:
Mode of transport(ship,air,rail,truck)
Weight of cargo
Distance to delivery
Volumetric weight of the cargo
Calculating freight cost:
FOB(FREE ON BOARD)=PRODUCTION COST+PROFIT+EXPENSES+TRANSPORT TO
THE PORT OF ORIGIN
CIF(COST INSURANCE FREIGHT)=FOB+FREIGHT FROM PORT OF ORIGIN TO THE
PORT OF DESTINY + INSURANCE
It also includes SURCHARGES .
2).CUSTOM DUTY:This is the tax or tariff being imposed on the importation(usually) and
exportation (unusually) of goods.To calculate the final landing cost of the imported goods to the
factory,following method is used for calculation.
Calculation of the custom duty begins after the calculation of the CIF value of the goods i.e
COST+FREIGHT+INSURANCE.
STEP1. CALCULATING ACCESIBLE VALUE:
CIF(VALUE OF GOODS)+ 1%HANDLING CHARGES = ACCESIBLE VALUE
43
STEP2. BASIC CUSTOM DUTY
As per the commodity / item-Decided by the CENTRAL BOARD OF EXCISE AND
CUSTOMS
STEP3: CVD-COUNTER VAILING DUTY
12% on Accessible value as well as Basic duty.
STEP4: EDUCATION CESS-CUSTOM DUTY
3% on Basic duty and CVD.
STEP5: SAD-SPECIAL ADDITIONAL DUTY
4% Accessible as well as all three kinds af duties(BASIC + EDUCATION CESS + CVD).
3).Insurance costs :The incoterm CIF includes all of the freight cost,custom duty as well as cost
of insurance.It first ofall, depends upon the consignment i.e item,type,weight,quantity and
country from which it is imported.Obviously ,critical items such as chemicals and petroleum
products are imposed with high insurance costs.Their are various policies for the purpose of
insurance which are adopted as per the conditions,requirements and their benefits.There are
mainly two kinds of policies:
OPEN POLICY – In this,yearly premium is paid by the company depending upon its
overall turnover.Rates vary as per the output and turnover.
SHIPMENT TO SHIPMENT POLICY-In this ,insurance cost is paid as per the
individual shipment is done depending upon the consignment ,its type and quantity.
4).Port charges:These are the charges that are imposed by the port administration as per their
fixed norms and conditions.These are charged for processing the entire proceedings at the port
for clearance of the imported consignment.
44
5).Custom clearance charges and Inland transport charges:These charges may include costs
for CHA/Forwarding agent and the costs for inland transport to carry the goods from domestic
port to final destination factory.
6).Total landing costs:
CIF + Total custom duty – Recoverable MODVAT(CVD and SAD are recoverable)= Total
landing cost to factory(IMPORTER).
7).Some other irregular costs:
a).Detention costs:This is the costs imposed by the shipping line against per container/per day.
b).Demurrage costs:After 3 free days,it is charged by the custom to the buyer whenthe
consignment is not collected by the time.
45
10.7.CUSTOM CLEARANCE
The custom clearance formalities have to be compiled with by the importer after arrival of the
goods at the other customs station.There could also be cases of transhipment of the goods after
unloading to a port outside INDIA.Latestly followed is the EDI system as follows:
For the goods which are offloaded , importers have the option to clear the goods for home
consumption after payment of the duties leviable or to clear them for warehousing without
immediate discharge of the duties .
STEP 1.BILL OF ENTRY:
In the case of EDI system,no formal Bill of Entry is filed as it is generated in the computer
system ,but the importer is required to file a cargo declaration having prescribed particulars
required for processing of the entry for customs clearance.
STEP 2.TYPES OF BILL OF ENTRY Bill of Entry ,where filed is to be submitted in a set
different copies meant for different purposes and also given different colour scheme ,and on the
body of the bill of entry the purpose for which it will be used is generally mentioned in the non-
EDI system.For the purpose of domestic consumption ,bill of entry has to be filed in 4 copies:
Original for customs
Duplicate for customs
One for importer
Last for bank for making remittances.
STEP 3.THE EDI SYSTEM:
46
Under EDI system,the importer does not submit documents as such for assessment but submits
declarations in the electronic format containing all the relevant information to the service
centre.A checklist is generated for the verification of data by the importer/CHA.After
verification the data is to be submitted to the system by the service centre operator and system
then generates a B/E number ,which is endorsed on the printed checklist and returned to the
importer/CHA.
STEP 4.BILL OF ENTRY NUMBER:
For processing of bill of entry in the EDI system ,the streamer agents get the manifest filed
through EDI or by using the service centre of the custom house which also generates bill of entry
number.
STEP 5.APPRAISING GROUP:
After noting or registration of the bill of entry ,it is forwarded manually or electronically to the
concerned appraising group in the custom house dealing with commodity sought to be cleared.
STEP 6.ASSESSMENT:The basic function of assessing officer in the appraising groups is to
determine the duty liability taking due note of any exemptions or benefits claimed under
different export promotion schemes.They also check that there are any restrictions or
prohibitions on the goods imported and if they require any permission/license/permit etc.Also if
not satisfied then the appeal can be made to appropriate appellate authority within the time limits
and in manner prescribed.
STEP 7.CALCULATION OF DUTY:On the receipt of examination report the appraising
officers in the group assesses the bill of entry .He indicates the final classification and valuation
in the bill of entry indicating separately the various duties such as basic,countervailing,anti-
dumping,safeguard etc.All calculations are done by the system itself.
STEP 8.DUTY PAYMENT:After the assessment and calculation of the duty liability the
importer’s representative has to deposit the duty calculated with the treasury or the nominated
banks,whereafter he can go and seek delivery of the goods from custodians.
47
STEP 9.FINAL DELIVERY:Where the goods have already been examined for finalization of
classification or valuation no further examination/checking by the dock appraising staff is
required at the time of giving delivery and the goods can be taken delivery after taking
appropriate orders and payments of dues to the custodians,if any.
10.8.OTHER IMPORT PROCEDURES
(1).IMPORT OF GOODS BY POST:
When the goods are imported by post parcel,the postal authorities transfer such goods on the
receipt of custom office attached to the foreign post office.A demand-cum-show cause notice is
issued to the importer to file requisite documents,namely:
Commercial invoice
Packing list
Copy of registered post parcel receipt
Certificate of origin
Customs purpose copy of import license in original
An other registeration certificate in support of eligibility of importer to import such
goods.
On the basis of these documents ,goods are examined and assesed for the duties payable in the
presence of importer or agent.Finally,custom duties are paid and goods are received.
This method is used only for small consignments with less quantity/weight/volume.
(2).WAREHOUSING OF IMPORTED GOODS:
48
If the importer faces any problem while clearing the goods or payment of duty,then it can deposit
the goods in private or public bonded wrehouse.It allows the facility of deferring payment of
duty on imported goods,pending actual clearance for home consumption on payment of
duty.Followng are the essential steps to be taken:
The importer are required to file a set of yellow coloured bill of entry commonly known
as warehousing or Into—bond bill of entry if they want facility of warehousing.The
procedure for this bill of entry is same as normal bill of entry except that the payment of
duty is deferred.
After the assesment of goods for the levy of the import duty is completed,the scutinising
appraiser debits the import license where necessary,and the set of warehousing bill of
entry (WR B/E)undergoes usual counterchecks by the assistance collector of customs.
The formalities of calculation,license,registration and its pre-audit are also gone through
as in the case of a home consumption B/E.
The W.R Bill of entry,is thereafter audited by the internal audit department and then sent
to import bond department,where the importer’s file the requisite warehousing
bond,under section 59 of custom act,1962.
The bond after scrutiny is accepted by A.C (bond) and registered in the bond department
and WR number is impressed on all copies of B.E.The original copy is kept in the bond
dpartment ,while the others are handed over to importers/clearing agent.
The goods are thereafter examined by the dock appraising staff on the basis of orders of
scrutinising appraiser on duplicate copy,and if found in order,the same are allowed to be
physically warehoused by the dock appraiser under the escort of a preventive officer.
49
In order to clear the dutiable imported goods from the warehouse,the importer is required
to present an ex-bond bill ofentry,printed on green paper in the imported bond
department.
The importer after getting the ex-bond B/E registered in the import bond department
submits it to the appraising department alongwith triplicate copy of related Into bond B/E
and invoice packing list,for verification of the particulars furnished on the B/E .
The concerned group appraiser classifies and reassesses,if necessary.The assessed B/E is
thereafter handed over to the importer/clearing agents for payment of duty and taking
delivery of the goods after the usual counter check,by concerned group A.C and
calculation of import duty.
50
10.9.CONCLUSIONS:
First of all,selection of mode of transport is the critical issue.Sea tranport results in less
ocean freight and port charges while air transport have high freight charges.However,air
transport is beneficiary in faster delivery,minimised breakage and loss of
consignment.Thus air transport,is used when time constraint is strict and considering the
factors of weight,volume and value. Prominently ,Sea transport is used due to huge
difference in frieght charges as compared to air transport.
Secondly,it is better to have a single insurance company ,preferably on the regular basis
due to inherent advantages and convenience.If insurance is arranged continuously with
the same insurance company ,it would bring in a considerable amount of savings in the
long run which may be in the range of lakhs
It is found better to use Open policy instead of Shipment to Shipment policy for payment
of insurance costs.Shipment to shipment policy results in much more higher costs as it
involves payment of insurance on individual shipments.
In the case,when air transport is used,it could be made more economical by using
Consolidators for which the air freight charges are very less.This involves combining of
various shipments for delivery to the carrier in full container load shipment.
Special attention to be paid to approach and timings for negotiations with the
counterparts with foreign countries.This requires to provide your counterpart with
51
appropriate future business plans and proposals to gain their understanding and full
cooperation.
Selection of optimal mode of payment is the another important aspect to be considered in
terms of cost.EX-WORKS,CFR and CIF results in higher cost while FOB results in less
cost as well as less risk factors,thus most efficient as compared to other incoterms.
Integrating and simpifying the import clearance process with brokers at the port reduces
any kind of delay in the clearance process at the port.It ensures timely delivery of the
consignment with documentation,inspection and payment also on time avoiding any kind
of demurrage or detention charges.Also,their should be maintenance of a complete audit
trail for each shipment.
52
11.CASE STUDY: DEVELOPING BEST LOGISTICS MODEL FOR INDIA YAMAHA MOTORS PVT.LTD.
INDIA YAMAHA MOTORS PVT LTD at its surajpur plant began production initially for
domestic selling to other states of India .After acquiring prominent and major share in Indian
two-wheeler sale and purchase,it started its production for export of bikes to other countries
which went above on graph year by year.Export of bikes began with all south east nations like
Thailand,Singapore,Malaysia,Indonesia and Phillipines and today Yamaha exports to countries
like South Africa and even to Latin American countries like Brazil,Argentina and Equador.
But as far as Imports by Yamaha are concerned,there exists a long history of changes made in the
Import logistics model by the company .In the early 90’s there were very limited logistics chains
and options available to the company,for domestic as well as international transport.But
today,there exists number of Logistics chains for all kind of transports .Yamaha have thus,
choosen best of them in terms of performance,time-efficiency as well as cost efficiency.Also,
developing long term contracts with single logistics company have proven beneficial to the
company because changing them year by year have made losses to far extent.NISSIN ABC
Logistics is the ingoing company that have stayed fixed with Yamaha for last six years due to its
continuous best performance.
Around 5-10%,of the parts are imported by Yamaha,as follows:ignition coil,brakepads,catalic
converter,kickcrank assembly,axlemain,axledrive,nuts,bolts,bears,bearings,rectifier
regulator,valves,rotors,stator,starting motoretc.This are majorly imported from south east asian
countries so as to take advantages from ASEAN free trade area.Apart from these other major
exporters to Yamaha are china,korea and taiwan.
As far the comparison between Air and Sea transport,it is sea transport that have proved more
cost efficient as compared to air transport always.Air transport is used when the consignment is
53
of less size.Usually ,cargo upto five thousand tonnes are preffered to be transported by air.And
the situation where time constraint is a boundation and the cargo is needed within a week or
two,air transport is only the option with no other consideration.Air transport benefits with faster
delivery,minimized breakage and loss of consignment.Use of freight consolidators have proven
beneficial to some extent in case of air.But,Sea freight is also very low as compared to air
freight.Port charges as well as ocean freight are much less. Ratio goes 7:3 for sea to air logistics.
Now comes the most important,critical and crucial part i.e Documentation.With time this part
have grown with complexity to prevent any kind of fraud and negative activity.FTP have been
kept on changing its norms and regulations in every five years as per requirements of the indian
trade.Important documents involved in import process includes Invoice,Packing list,Certificate
of origin and Bill of lading/Airway bill.These are the main shipping docs that are suppose to be
sent by the supplier to buyer .Apart this Bill of entry is another important formality to be fulfilled
as per custom clearance process.Instead of manual bill of entry,now it is processed through EDI
system.
Thus,number of changes have been made through out the model of logistics of the company in
order to ensure efficient and effective imports in terms of quality,time and cost.
First of all, selection of mode of transport is the critical issue. Sea transport results in less ocean
freight and port charges while air transport have high freight charges. However, air transport is
beneficiary in faster delivery, minimized breakage and loss of consignment. Thus air transport ,is
used when time constraint is strict and considering the factors of weight, volume and value.
Prominently ,Sea transport is used due to huge difference in frieght charges as compared to air
transport. Secondly ,it is better to have a single insurance company ,preferably on the regular
basis due to inherent advantages and convenience. If insurance is arranged continuously with the
same insurance company ,it would bring in a considerable amount of savings in the long run
which may be in the range of lacs
54
It is found better to use Open policy instead of Shipment to Shipment policy for payment of
insurance costs. Shipment to shipment policy results in much more higher costs as it involves
payment of insurance on individual shipments. In the case, when air transport is used ,it could be
made more economical by using Consolidators for which the air freight charges are very less.
This involves combining of various shipments for delivery to the carrier in full container load
shipment. Special attention to be paid to approach and timings for negotiations with the
counterparts with foreign countries. This requires to provide your counterpart with appropriate
future business plans and proposals to gain their understanding and full cooperation .Selection of
optimal mode of payment is the another important aspect to be considered in terms of cost. EX-
WORKS,CFR and CIF results in higher cost while FOB results in less cost as well as less risk
factors, thus most efficient as compared to other incoterms. Integrating and simplifying the
import clearance process with brokers at the port reduces any kind of delay in the clearance
process at the port. It ensures timely delivery of the consignment with documentation, inspection
and payment also on time avoiding any kind of demurrage or detention charges. Also, their
should be maintenance of a complete audit trail for each shipment.
55
12.BIBLIOGRAPHY
1).Website links:
http://www.dgft.org/ www.eximguru.com/ indian -customs-duty/Default.asp www. yamaha - motor - india .com/ www. eximpolicy .com pib.nic.in/archieve/ForeignTradePolicy/ForeignTradePolicy.pdf www.iccwbo.org/ incoterms www. aseans ec.org www.india- asean businessfair.com commerce.nic.in/eidb/default.asp www.cybex.in/ Indian -Customs/ India - Imports - Data .asp jp.yamaha.com/about_yamaha/ir/publications/pdf/an-2011e.pdf www. yamaha .com/about_ yamaha /ir/publications/pdf.../an-2010e.pdf www. shippersdocs .com www.cbec.gov.in www. custom-duty .com www. exportimports tatistics.com www.infodrive india .com/ www.eximguru.com/indian-customs-duty/Default.aspx
2).Other sources:
Company’s annual reports Company’s brouchers Company’s catalogues
56
13.ANNEXURE
A-1:INCOTERMS
57
INVOICE
Exporter
ADI SPAREPARTS PVT.LTD
6D-87 STREET,MONG PATHOM
BANGKOK 341109
THAILAND
Invoice No & Date
83670
22/05/2012
Exporter's reference
Buyer's Order No & Date-S6980
Other reference(s) IECNo-59083219
RBI No
Consignee
INDIA YAMAHA MOTORS PVT.LTD
SURAJPUR,GR.NOIDA
UTTAR PRADESH-201301
INDIA
Buyer (if other than Consignee)
Same
Pre-carriage by
Truck
Place of Receipt
Nhava sheva-India
Country of Origin of Goods
Thailand
Country of final
destination-India
Vessel:
IYM-5300
Port of loading-
Laem chabang-Thailand
Payment term-
FOB
Port of discharge- Final destination-
Noida
Marks & Nos
Container No
Mode of
Packing
No of
pkg
Description of
goods
Qty Gross weight Net
weight
Unit
price
IYM-5300
83670
Corrugate
d Box
10
BRAKEPADS 40000 16000kgs 20
tonnes
$5
58
PACKING LIST
Exporter
ADI SPAREPARTS PVT.LTD
6D-87 STREET,MONG PATHOM
BANGKOK 341109
THAILAND
Invoice No & Date-83670
22/05/2012
Exporter's reference
Buyer's Order No & Date-S6980
Other reference(s) IECNo-59083219
RBI No:
Consignee
INDIA YAMAHA MOTORS PVT.LTD
SURAJPUR,GR.NOIDA
UTTAR PRADESH-201301
INDIA
Buyer (if other than Consignee)
Same
Pre-carriage by
Truck
Place of Receipt
Nhava sheva-India
Country of Origin of Goods
Thailand
Country of final destination-
India
Vessel:
IYM-4870
Port of loading-
Laem chabang
Port of
discharge-
Nhavasheva
Final destination-
Noida
Marks & Nos
Container No
Mode of
Packing
No of
pkg
Description of
goods
Qty Size of pkg
LxWxH (inch)
Net wt
in kgs
Gr wt
kgs
IYM-5300
83670
Madein
Thailand
Corrugate
d Box
10
BRAKEPADS 4000
0
ONE 20 FT.
CONTAINER.
16000kg
s
20000kgs
.
59
60
Shipper/exporter (name and address including zip code):
ADI SPAREPARTS PVT.LTD
6D-87 STREET,MONG PATHOM
BANGKOK 341109
THAILAND
NON - NEGOTIABLE BILL OF LADINGSEAWAY BILL:
KKLUJJKT284474
Consignee (name and address):
INDIA YAMAHA MOTORS PVT.LTD
SURAJPUR,GR.NOIDA
UTTAR PRADESH-201301
INDIA
AYUNG NAING LONG SHIPPING LTD.
Pre carriage by:
Truck
Port of loading/export:
Laem chabang
Transportation method:
SEA
Place of discharge:
Nhavasheva
Place of delivery:
New delhi
Container No. / Seal No. / Marks and Numbers: Number of
Packages:Gross weight (kg):
KINDS OF PACKAGES, MEASUREMENT
DESCRIPTION OF GOODS
61
IYM5300
83670
Made in Thailand
10
20000kgs
ONE TWENTY FOOTER CONTAINER ONLY
62
Exporter(name and address)
ADI SPAREPARTS PVT.LTD
6D-87 STREET,MONG PATHOM
BANGKOK 341109
THAILAND
Reference number:
IC2013-0126785
Consignee (name and address):
INDIA YAMAHA MOTORS PVT.LTD
SURAJPUR,GR.NOIDA
UTTAR PRADESH-201301
INDIA
CERTIFICATE OF ORIGIN
MINISTRY OF COMMERCE-THAILAND
Date of shipment: 20/06/2012
Mode of transport: SEA
Country of destination of goods:
INDIA
Supplementary details:
Pre-carriage by:
TRUCK
Place of receipt:
Nhava-sheva
Vessel/flight no:
Jota sabas-3567w
Port of loading/export:
Laem chabang
Place of departure:
Thailand
63
Shipping marks:
Number of Packages:
Description of commodities,
Model/Serial number, harmonized number Gross weight (kg): Invoice no. and date:
IYM-5300
83670
Made in Thailand
10 (Component parts for YAMAHA MOTORCYCLE):
40000 BRAKEPADS
20000 kgs.
83670
22/05/2012
64
Recommended