Export Import Procedures & Documents

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Export Import Procedures &Documents

Suvarna Sable



Evaluation• Two class test

• Presentation

• Assignment

BOOKS: Kale and Ahmed –Vipul’s BMS series



Trade

Sale of goods by one country purchase of goods by one country purchase of goods by one country &

to another country from another country selling to another country

EXPORTENTREPORT

(re-export)

TRADE

IMPORT



Export:• "Export" means to send or take controlled tangible items, software or information out of the

country in any manner “- shipping, mailed, hand-delivered, shipped by air, shipped by boat,

uploaded to an internet site, or downloaded from an internet site, fax or can be sharedduring a telephone conversation.

• The seller = "exporter" based in the country of export

• The buyer = "importer“ overseas based

• when you trade something out of the country

Import:• To have a product shipped into a country or region.

• opposite of export.

you are faced with barriers

- differing languages, politics, laws, governments and

cultures.

http://www.investorwords.com/3874/product.html

http://www.businessdictionary.com/definition/country.html

http://www.investorwords.com/4120/region.html

http://www.investorwords.com/1852/export.html

http://www.investorwords.com/1852/export.html

http://www.investorwords.com/4120/region.html

http://www.businessdictionary.com/definition/country.html

http://www.investorwords.com/3874/product.html



Modes of import export













East India Company



HISTORY

• From around 1600AD the

British East India Company(EIC) started trading withIndia in goods such asspices, silk and tea.

•

By 1700 the EIC had set-upthree trading posts, inBombay, Madras andCalcutta

•

Till now purpose was Trade• Robert Clive Conquers

India In 1751

• The ‘British Raj’, 1858-1947



TODAY…

• India-born Sanjiv Mehta

• Bought East India Company - 2005

• relaunched East India Company - 2010



Need of Export-Import• No country in world is self sufficient in all respects.

• It has to import some goods/services from abroad.

• Due to geographical factors, inadequate resources & technological

development, huge population, economic backwardness.

• Various organization working towards it.

• Export- Gems & jewellary , cotton, carpet(excl. silk) handmade ,

rice , cashew, tea , tobacco , dairy products , sugar etc

• Import- petroleum, crude & products , gold , organic chemicals ,

coal, coke, fertilizers manufactured , cement etc



Export marketing

• “Marketing of domestic goods and services beyond national borders.”

• Management of various activities and operations since the receipt of an

export order till its execution and receipt of payment for the goods

exported.



• Need for Export marketing:

AT NATIONAL LEVEL:

1. Earning foreign Exchange:

- enables country to earn foreign exchange.(Next Slide)

- Helps to strengthen national Economy

- helps to import needed goods & services in return.

2. Solving balance of payment problem:- deficit balance of trade &payment can be removed through large scale

exports.

3. Promoting economic development:

-Optimum utilization of resources may not be possible within domestic

market.

- Business grows rapidly if it has access to international markets.





4. Raising Production and employment:

- Facilitates large scale production of goods & services.

- Additional demand in overseas market generates new employmentopportunities.

5.Participation in global co-operation:

- Cordial relationship develop among nations.

- helps countries to bring world peace & economic development at global level.

AT BUSINESS/ENTERPRISE LEVEL



AT BUSINESS/ENTERPRISE LEVEL

1. Higher profits:

-Exporter offer quality product they can charge higher prices , thus higher

profits.

Ex: TOYOTA, MERCEDEZ etc.

2.Goodwill & reputation:

- Due to their business contacts

- Participation in international trade fairs and exhibitions. Ex: BKC

3. Improvement in organizational efficiency:- Exporters have to adopt advanced production & Mktg techniques for

survival in global competition.

Ex: Tata Group-exports nano In EU markets.

4. Spreading of marketing risks:

- Risk spread in two parts.

-if one area suffers losses in export market then stable profit is there in

domestic market.

- Ex: TCS



Export marketing Organizations

• Specialized organizations concerned with export trade

•

Look after export of Indian goods & services.• Explore foreign markets

• Make arrangements to send goods to foreign buyers as per the orders

received/collected.

TYPES

1. Manufacturer Exporters

2. Merchant Exporters

3. Star Trading Houses of five categories

4. Canalising Agencies5. State Export Corporations

6. Export Consortia

7. Government(public sector) Trading/Marketing Corporations.

Man fact rer E porters



Manufacturer Exporters

• Used by superior quality products manufacturer called :”Export quality products”

• Undertaken by large & established organization as financial support is needed.

• Export along with production & mktg activities.

• Undertake exports directly along with manufacturing and marketing within the

country.

• Not dependent on intermediaries for exporting their products

With increase in export business companies -

- Export manager is appointed exclusively for export operations.- Create separate export division to look into export marketing.

- Ex :Tata Exports separate organizational structure looks after exports of Tata

Group.

- Establish subsidiary companies for export marketing.

- Ex: HMT(International) Ltd. Export marktg subsidiary company of HMT Ltd. –

assigned the task of exploring ,developing & expanding export markets for the

products of HMT.

Merchant Exporters



Merchant Exporters

• Person or organization whose business is to buy goods made in

his home country, ship them abroad to another country & sell

them there.

• Specialized & concentrates in Exporting Indian goods only.

• They purchase goods from domestic manufacturer & then export

• Operate on commission basis.

• Export wide variety of goods-manufacturing

items,friuts,vegetables flowers etc.

• Ex: Ezzy Exports-leading merchant exporter of Machineries,

Agro based,Garments,household.



Manufacturer-Exporter

• Meaning: basically manufacturer but

also exports his products• Profit: Earns from products

manufactured by him only.

• Capital Requirement: Requires huge

capital as-production & mktg are

also performed by him

• Ex: Tata Group, Kirloskar group

Merchant -Exporter

• Meaning: middleman in export mktg

& looks after exporting goods.• Commission: earns from products

manufactured by domestic

manufacturer.

• Requires little capital as not

concerned with manufacturing onlyexporting of goods.

• EX: Ezzy Exports



Government(public sector) Trading/Marketing Corporations

• Set up by Government of India

• Handle export import transactions.

• Function by maintaining Branches/Offices abroad

• Operate as per guidelines issued by Govt.of India.

EX:

1.The State Trading Corporation of India(STC)- PetroleumProducts, Cement, Rice, Wheat Flour and Liquefied Petroleum

Gas (LPG)

2. The minerals & Metals Trading Corporation(MMTC).

3. Government corporations:-- Jute corporation of India,

- Cotton corporation of India



Star Export Houses(SEHs)

Category/status Performance Value (In Crores)

over a period of 3 years

One star Export House 15

Two star Export House 100

Three star Export House 500

Four star Export House 1500

Five star Export House 5000



• Export of goods of small scale sector

• Help SME’s to introduces product oversees

market

• Assistance in quality improvement as they are

aware of foreign markets

• Supply of imported inputs to clients

• Undertake marketing risks on behalf of small

scale producers.

E I



Export Import

documentation



• Goods are imported in India or exported from India

through sea, air or land. Goods can come through

post parcel or as baggage with passengers.

• Export-import requires special document

depending upon the type of product and

destination to be exported-imported.

• Called as shipping documents.

Ali d D t ti S t (ADS)



Aligned Documentation Systems(ADS)

• In India since 1991 new standardized documents are introduced by Govt.

under A(united) DS based on UN Layout key.

•

Exporters use such standard form while preparing various export documents.Objectives:

- Provide benefit to every party associated with international trade.

- Facilitate easy entry of data and enables quick reading.

- Simplification in export import procedures.

- Simplifies trade documentation on a global level thereby helping all parties

involved in the trade.



Classification of Documents

Documents

Commercial

Documents

Regulatory

Documents



Commercial documents• Help in Import-Export

•

Out of 16 commercial documents,14 documents have been standardized(Excel sheet)

Objectives:

1.To facilitate transfer of title of goods & property from the exporter to

importer.2. To ensure safe transfer of goods from the country of the exporter to country

of the importer.

3. To help the exporters to realize payments without problem and delay.

Documents Include:

1. Certificate of origin

2. Bill of Lading

3. Certification of inspection,etc.



Regulatory Documents• Prescribed by various government departments and bodies covering foreign

exchange regulations, export inspection, custom formalities etc.

• Out of regulatory documents 4 have been standardized.

• Documents Include:

1. Form GR(Goods Receipt)

2. Shipping Bill, etc.



Export Documents

1.Invoice-

- Commercial Invoice

- Consular Invoice

2.Certificate of origin3.Shipping Bill

4.Mate Receipt Transport documents

5.Bill of Lading6.GR form

7.Marine insurance Policies



V W G r o u p

V W G r o u p

Schnelecke A05

TerminalMelník

Bremenhafen JNPTMumbai

SAIPLCP8

1-5 Days 2 Day 3 Days 1 Day 3 Day 21 Days 2 Days 1 Day 2 Day

Sea Travel

U33 A4/A5

Preymesser

B5

40 Days

Mumbai~ A’bad

34



Invoice• An invoice or bill is a commercial document

issued by a seller to the buyer .

• Indicates the products, quantities, and

agreed prices for products or services the seller

has provided the buyer.• An invoice indicates the buyer must pay the

seller, according to the payment terms.

• Sample

Commercial Invoice

http://en.wikipedia.org/wiki/Commerce

http://en.wikipedia.org/wiki/Sales

http://en.wikipedia.org/wiki/Buyer

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Price

http://en.wikipedia.org/wiki/Service_(economics)

http://en.wikipedia.org/wiki/Payment_terms

http://en.wikipedia.org/wiki/Payment_terms

http://en.wikipedia.org/wiki/Service_(economics)

http://en.wikipedia.org/wiki/Price

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Buyer

http://en.wikipedia.org/wiki/Sales

http://en.wikipedia.org/wiki/Commerce



Commercial Invoice• Statement of account sent by the seller to the buyer

• Prepared by on seller‟s letter- head(next slide).

•

Exporter’s bill for the goods shipped. Objective:

Inform buyer about the conditions of sale and final amount payable

Features:

• Detail information of export trade transactions.

• No standard form of document so exporter is free to design his own format.

Importance/Uses:

Exporter:

-for collection of payment from the importer.

-To settle dispute about payment-Useful for accounting purpose

Importer:

-Payment of customs duty

-Indicates Exact amount payable to the exporter

-Useful for accounting purpose.



C l I i



Consular Invoice• Certificate issued by Trade Consulate of the importer‟s country stating that

goods of particular value are being imported from particular country by

particular importer.

Features:

- Submitted by exporter(3 copies)

- Gets it certified by the consulate of the importing country stationed in the

exporting company.

- A small fee is charged by consulate office for this facility.- 1 copy- Consulate office

1 copy- Customs

1 copy- Exporter

Importance/Uses:

Exporter

-Facilitates easy clearance of goods from the customs

-Signed by consulate of the importing country, it is assured to exporter that

goods will enter into buyers country without any difficulty.



Importer:

• Gets quick delivery of goods & that too with out opening containers for

verification purpose.

• Loss of time and repacking of goods is avoided.

•

Importer is assured that banned goods are not sent.



Mate’s Receipt • Evidence that goods are loaded in the vessel.

• Acknowledgement of the goods received on board of the ship.

Contents:

• Name of the ship and shipping company

• Date of shipment

• Description of packages (Quality,quantity,etc)

• Number of packages and marks on them

• Condition of cargo when it was received on board.

• Port of loading and delivery

• Freight(goods) paid or payable

• Signature of issuing authority.



Without Defect With Defect

Mate’s

Receipt

Clean

Receipt

Qualified

Receipt



• Clean Receipt:

- Goods have been properly packed

- There is no defect of any kind in the packing.

• Qualified Receipt:

- Packing is defective

- Shipping company will not be responsible for damage of any

kind.

•

Exporter should get a clean receipt to avoid any complications.



Bill of Lading (B/L) – (Xerox)

• B/L is a document of title to the goods.

•

Issued by shipping company & serves as a receipt from the shippingcompany which undertakes to deliver the goods at agreed destination on

payment of freight.

Functions of B/L :

1. Receipt for goods: serves as receipt by shipping company stating that the

goods have been received for transportation.

2. Proof of contract of carriage: Exporters are required to book shipping

space much in advance. B/L serves as a proof of the terms & conditions

under which goods are carried by shipping company.

3. Document of title to goods: The possession of B/L gives right to the goods

covered by it.

Contents:



Contents: 1. Name & address of the shipper/consignee

2. Name of the shipping company

3. Name of the ship, voyage number and date of

loading goods on the ship

4. Quantity.quality,marks and description of goods

5. Number of originals issued

6. Port of shipment & destination & date of

loading.

7. Number of packages

8. Signature of issuing authority

Types o B L



Types o B L

»

Bill of Lading

Clean B/L

Freight collect

B/L

Claused B/L

Direct B/L

Freight paid B/L

Through B/L

Clean B/L



• A bill of lading issued by a carrier declaring

that the goods have been received in an

appropriate condition, without the presence

of defects.

• The product carrier will issue a clean bill afterthoroughly inspecting the packages for any

damage, missing quantities or deviations in

quality.

Clean B/L

Claused B/L



Claused B/L

• A bill of lading that shows a shortfall or

damage in the delivered goods.

• Some adverse remarks-goods not properly

packed, signs of damage.EX: ”Goods Damage”

• Typically, if the shipped products deviate from

the delivery specifications or expected quality,the receiver may declare a claused bill of

lading.













» Freight paid B/L

- Freight is paid by exporter

» Freight collect B/L

-Freight is not paid by the exporter

» Direct B/L

-same ship carries goods from the port of shipment to the port destination

» Through B/L

- Covers goods being trans-shipped on route-at least two different modes of transport being used.

- B/L issued for containerized door-to-door shipments that have to use

different ships and/or different means of transportation (aircraft, railcars,

ships, trucks, etc.) from origin to destination.

http://www.businessdictionary.com/definition/containerized.html

http://www.businessdictionary.com/definition/shipment.html

http://www.businessdictionary.com/definition/mean.html

http://www.businessdictionary.com/definition/transportation.html

http://www.businessdictionary.com/definition/transportation.html

http://www.businessdictionary.com/definition/mean.html

http://www.businessdictionary.com/definition/shipment.html

http://www.businessdictionary.com/definition/containerized.html



V W G r o u p

V W G r o u p

Schnelecke A05

TerminalMelník

Bremenhafen JNPTMumbai

SAIPLCP8

1-5 Days 2 Day 3 Days 1 Day 3 Day 21 Days 2 Days 1 Day 2 Day

Sea Travel

U33 A4/A5

Preymesser

B5

40 Days

Mumbai~ A’bad

54



Container Docking

Assembly Progress

A A A

Container On Sea Unloading at Port Stacking at port

Receipt of MaterialStoring of MaterialIssue of Material

Physical Issue of Material

Custom Clearance From Mumbai to Aurangabad

Gate Entry at SAIPL

55



Importance / Benefits of B/L :Exporter:

-Legal document-in case of dispute it can be presented in court of law.

-Contract of transportation

-Acknowledgement of the receipt of the goods on board the ship

-It enables the exporter to send a shipment advice to the buyer

-Helps exporter to file claim of compensation, if goods are damaged in transit.

Importer:- Document of title.

- Semi-negotiable document-ownership can be transferred by endorsement

and delivery.

Shipping company:

- Enables shipping company to collect freight either from exporter or

importer.

- Protects the shipping company – goods damaged before loading on the ship

is shown in B/L



Guaranteed receipt Form-Xerox

•Exchange control document

•Submitted to Reserve bank of India after clearance from the customs

Authorities.

•Designed mainly to furnish guarantee to RBI to remit(send) the foreign

exchange earned from the export shipment within 180 days from the date

export.

Features:

-Declaration and assurance as regards foreign exchange receivable out of the

export transaction.

-As per the exchange control regulations, the exporter has to realize export

proceeds within a period of 6 months from the date of shipment from India.- Unless form GR is presented with full particulars, the customs authorities will

not pass the shipping bill.

Guaranteed receipt Form



Guaranteed receipt FormExporter -------- submit GR forms to custom for permission for shipment of

goods

custom authorities(duplicate)----Scrutinize form with reference to exchange regulation

original copy retained by customs

RBI ------- Original copy forwarded by Customs to RBI

Exporter ------- Duplicate copy handed over to exporter by customs authorities

Negotiating bank --- --- payment for export is to be realized. Duplicate copy of Form GR will be retained by the bank till full export proceeds are realized.

RBI ------------- When payment is received the bank will send duplicate copy of form

GR to RBI

Contents of GR



Contents of GR

• Name of Exporter

• Name of negotiating bank

• Currency in which payment will be received

• Name of buyer’s country

• Port of origin

• Port of destination

• Commission or discount payable on export

• Quantity, Quality and value of exports.

Import Documents



Import Documents

• Transport Documents

• Bill of Entry

• Certificate of inspection

•

Certificate of Measurements• Freight Declaration

Import Document



Import DocumentBill of Entry:-When goods enter the dock of the importing country.

Types:

-BoE-in case of goods for home consumption

-BoE for free goods,-imported without paying custom duty.

-BoE – when goods are kept in bonded warehouse

Contents:-Name and address of the importer, Exporter.

-Description of goods

-Value of goods

-Import License number of importer

-Name of the port/dock where goods are to be cleared

-Rate and amount of import duty payable.



Certificate of Inspection



Certificate of Inspection

• Issued by Inspection Authorities in the country of the exporter.

•

Document sent to importer by the exporter through his bank.• Certificate states that

- goods have been inspected under the recognized quality control standards

- Satisfies the specifications provided under quality control and inspection.

This one Certificate of inspection by China National Center for Quality Supervision and Test of

Woodworking Machinery.



g y

provided to a premise that successfully met the conditions for safe food handling on the date of its last



p p y g

inspection.

Certificate of Measurement



Certificate of Measurement• Two ways freight(goods) can be charged:

-Basis of weight

-Measurement

• When freight is charged on the basis of weight, the weight declared by the

exporter is accepted.

• The exporter can obtain certificate of measurement either from the Indian

Chamber of Commerce or any other approved organization.• Submit it to shipping company for calculation of applicable freight.

• Certificate contains details like name of the vessel, port of destination,

description of goods,length,breadth,quantity,depth etc of packages.





www.iso.org

International Organizationfor Standardization

www.iso.org

International Organization

for Standardization



• ISO has developed over 18 000 International Standards on a variety of

subjects and some 1100 new ISO standards are published every year.

•ISO (International Organization for Standardization) is the world's largestdeveloper and publisher of International Standards.

• ISO is a network of the national standards institutes of 163 countries, one

member per country

• Indian Representative- Bureau of Indian Standards(BIS)

• "International Organization for Standardization" would have different

acronyms in different languages ("IOS" in English, "OIN" in French for

Organization internationale de normalization), its founders decided to give

it also a short, all-purpose name.

Why standards matter



y• When products, systems, machinery and devices work well and safely, it is

often because they meet standards. Ex: AGMARK,ISO,NAAC etc.

• Standards ensure desirable characteristics of products and services such asquality, environmental friendliness, safety, reliability, efficiency and

interchangeability - and at an economical cost.

• when standards are absent, we soon notice. We soon care when

products turn out to be of poor quality, do not fit, are incompatible

with equipment that we already have, are unreliable or dangerous.Ex:Garments



• ISO does not certify

• ISO does not carry out ISO 9001 or ISO 14001certification.

• ISO does not issue certificates.

• ISO does not accredit, approve or control the certification bodies.

• ISO develops standards and guides to encourage goodpractice in accreditation and certification.

• It means that an independent, external body has audited anorganization's management system and verified that itconforms to the requirements specified in the standard (ISO

9001 or ISO 14001).



• ISO 9000 family- Quality Management

Standard

• ISO 14000 family- Environment Management standard

The ISO 9000 family



The ISO 9000 family

• ISO 9001 -standard that gives the

requirements for a quality managementsystem.

• ISO 9001:2008 - latest, improved version.

• It is the only standard in the ISO 9000 family

that can be used for certification.

• There are 17 other standards in the family

that can help an organization on specificaspects such as performance improvement,

auditing, training…etc

Objectives of ISO 9000



j

• To facilitate international trade of goods and services

• To achieve competitiveness by obtaining required quality in cost effective

way.

• To help industries improve their quality standards.

• To promote total quality Control Systems

ISO-9000



ISO 9000Series of 5 international standards on

Quality Management

Standards



Standards

ISO 9001 Design,Development,Production,Installation and servicing

ISO 9002 Development,Production,Installation

ISO 9003 Final Inspection and Testing of Laboratories, Warehouse etc

Guidelines

ISO 9000

ISO 9004



VIDEO-1

Advantages of ISO 9000

Wid d Ad i h l i k l b d li d d



• Widespread Adoption: helps to win over markets purely based on quality goods and

services.

• Valuable to Indian Exporters:

- European Union insists on ISO 9000 registration .- Since ISO 9000 is internationally recognized quality standard ,Indian firms gets entry

into EU countries to promote trade.

• Reliability and durability:

– Organization successfully manufacture goods as per established specifications.

–

Performance of the product is highly reliable – Chances of product failure is low.

• Business Links established:

- Indian exporters prefers to buy raw materials and Components from those firms that

they have ISO registration

• Consistency in quality:

-ISO 9000 ensures consistency in quality of goods and services.

- Facilitates early detection of mistakes and timely corrective action.

• Manpower development:

- ISO 9000 encourages management to provide training to all employees

- Improves Ability, Skills and commitment of employees towards organization.

Procedure for ISO 9000 Registration



Procedure for ISO 9000 Registration

Preliminary

investigations

Selection of

Registrar

Pre-assessment

by Auditing body

Negotiate terms

with registrar

Audit of quality

manualSubmission of

Application

Assessment byAudit Team

Issue of Certificate

Preliminary investigations



• Export firm desiring to get ISO 9000 certification should conduct self evaluation –

determine quality control infrastructure.

• Work is assigned to team of specialists working with firm.

Submission of application- Name, location & structure of the company

- Location of plant

-Size of the business

- range of products

- type of manufacturing process

-name of products, etc

Audit of Quality manual (PDF File)

-Existing quality manual is audited

- compares with 20 elements of ISO 9000 standard

- Report is prepared on findings

- if deficiencies occurs – corrected

-manual is resubmitted for approval by auditing body

• Selection of Registrar:



-Registrar is an independent body with knowledge ,skills and experience to evaluate

company‟s quality system.

-Consideration in selection of registrar:

-Cost of registrar‟s service -Reputation of the registrar

- Time required to start and complete registration

-Location of registrar

- familiarity of the registrar with company needs

-auditing by registrar or by the sub-contractors, etc.

• Negotiate terms with registrar

- Before signing the contract, company should establish scope of services and costs

involved.

-time needed to conduct audits

-secrecy of confidential information

-details of contract

-cost and fee structure,etc

• Pre-assessment by Auditing body:



y g y

Auditors may look for 3 things:

-sufficient documents as per standards

-implementation of documented procedure-whether implementation is effective.

• Assessment by Audit Team:

- An audit team from BIS will visit the firm to assess firm‟s compliance to the

procedures

a) Opening meeting:

-presided by the leader of audit team

-Meeting is attended by CEO,HOD and Management Representative.

-Leader will explain scope and area of Audit

b) Conducting assessment:-Each auditor should be accompanied by the guide who is familiar with the

activities of the departments

-The auditors will record the observations which must be signed by the guide

indicating acceptance



• C) closing meeting and presenting report:

i. All members should be present when the audit team present their

finding to the firm

ii. On daily basis, audit team will present to the firm non-conformities

observed for necessary corrective measures.

iii.corrective measures are carried out within fixed period of time.

• Issue of certificate:

-Auditors should ensure whether the company has compiled with the ISO

9000 standard.

-Auditors if satisfied will submit favorable report to the registration board.- If registration board approves the registration, the registrar issues a

certificate which enables the company to use ISO 9000 mark.

Suspension/Cancellation of Registration



p g

• A registrar can suspend or cancel the registration because of:

a) Non payment of fees b) Non communication of changes in the quality system to the registrar

c) Fraud, negligence or improper uses of symbols

d) Non-implementation of corrective actions.





• VIDEO-2

Environmental Management Systems



• Established in 1967

• AIM:

-Provide all industries with a structure for an environmental management system to obtain

environmental objectives of the firm.

• Consist of 20 standards-environmental labeling and evaluating life cycle of

the products.

(BIS 14000)

Th ISO 14000 f il



The ISO 14000 family

• ISO 14001 is the standard that gives the requirements for anenvironmental management system.

• ISO 14001:2004 is the latest, improved version.

• It is the only standard in the ISO 14000 family that can be

used for certification.

• The ISO 14000 family includes about 25 other standards that

can help an organization specific aspects such as auditing,

environmental labelling, life cycle analysis…



• Environmental Management System (EMS):

The part of the overall management system thatincludes organizational structure, planning

activities, responsibilities, practices, procedures,

processes and resources for developing,

implementing, achieving, reviewing and

maintaining the environmental policy

5 principles



5 principles

• Formulate an environmental policy and commit itself to environmental

management system.• To prepare and keep ready a plan to achieve its environmental goal.

• To develop the capabilities, and support mechanism to achieve its

environmental policy and objectives.

• To evaluate a company‟s environmental performance.

• To review environmental management system in order to improve overall

environmental performance



91 11/23/99 Version No. 2

4 .2



92 11/23/99 Version No. 2

E n v i r o n m e n t a l S y s t e m

M a n a g e -m e n t

R e v i e wP la n n in g

E n v ir o n -m e n ta lP o lic y

Im p le -m e n ta tio n

& O p e r a tio n

C h e c k in g& C o rr e c t iv e

A c tio n

4 .3

4 .4

4 .5

4 .6

14000 certification• T A



• Two Areas

-Organizational Evaluation

-Product Evaluation

a) Organizational Evaluation:1. EMS standard:

-Company follows a system to meet environmental goals through a formal

environmental policy.

-Employees are communicated about environmental specifications

-Necessary documents are prepared and workers are given relevant training.

2. Environmental Auditing Standards:

-Prescribes the qualification of auditor

-procedure of audit

- observing all the principals of auditing

3. Environmental Performance Evaluation Standards:

-Company needs to evaluate its EMS to ensure system is in place.

-Evaluation can be in areas such as- reduced consumption of water and energy,

decline in air emission, cutting down generation of hazardous waste etc.

- After evaluation if results are positive it indicates environmental responsibilities

are well performed.



• Product Evaluation:

1. Environmental Labelling Standards:

-Standard is directed towards preventing exaggerated & false advertising-A company using environmental product advertising or making claims for

eco-friendly products must do so under BIS-14000.(next slide)

2. Life cycle Assessment:

-Company need to prepare report - impact of product on environment from

design to disposal stage.- Company will be able to get less hazardous materials or reengineering process

to reduce consumption of energy and water

3. Environmental Aspects in product standards:

- Analyst must know and check composition of product-harmful ingredient is

present in product.





Mar ne Insurance



• Types of Marine Insurance policies:

- Voyage policy

-Time policy-Mixed policy

-Valued policy

-Valued policy

-unvalued policy

-Floating Policy

-Blanket Policy

-Specific Cover policy

-Open cover policy

-Fleet Insurance policy-Port Policy

-Composite Policy

-Currency Policy

-Block Policy

1.Voyage(journey/tr ip) Policy

• One specific Voyage(trip)



• One specific Voyage(trip)

• The cargo is insured for one trip only

• Compensation is also paid for one trip if goods are damaged in that voyage.

• Policy expires after completion of the journey of goods to the destination.

• Time required for voyage is not considered.

2.Time Policy



• Gives Protection/insurance for particular period of time

• Goods are insured for certain period of time e.g.-one year

• Compensation is paid only when the loss is in that particular specified period.

3. M ixed Policy



• Voyage + Time = Mixed Policy

• Ex: Ship may be insured for voyage between Mumbai and London for

period of 6 months.

4.Valued Policy



• The amount of insurance is fixed at the time of issuing the policy.

• Compensation of that amount is paid if the loss occurs.

• Simplicity in the payment of compensation as the value of thesubject matter of insurance is agreed between underwriter and

insurer at time of taking insurance policy .

5.Unvalued Poli cy(open policy):

• The amount and value for insurance is ascertained if and when theloss actually occurs.

• The loss is assessed afterwards and the compensation is paid

accordingly.

• value of the subject matter of insurance is not specif ied at the timeof taking insurance policy.

6.Blanket Policy

Thi li i t k f t i t



• This policy is taken for certain amount .

• Full premium amount is paid right in the beginning.

• Adjustments are made as and when need arises.





Steps in Export Procedure



Registration

Stage

Pre-shipment

Stage Shipment StagePost-shipment

Stage

Export

Procedure

Registration Stage



• Registration with Reserve Bank Of India

– No longer required. Prior to 1.1.1997

– it was compulsory for every exporter to obtain an exporters' code number from the

Reserve Bank of India before engaging in export.

• Registration with Regional Licensing:

– Obtaining IEC(Import Export ) Code Number

– The Customs Authorities will not allow you to import or export goods into or fromIndia unless you hold a valid IEC number.

Ex: 0100000088 Ford Foundation

• Register With Export Promotion Council

- In order to enable you to obtain benefits/concession under the export-import

policy, you are required to register yourself with an appropriate exportpromotion agency by obtaining registration-cum- membership certificate.

Pre-shipment Stage1 R i t f fi d O d



1.Receipt of confirmed Order:

Buyer Sends order to exporter

Exporter accepts order and send confirmation (Indent) to Buyer

Confirmation-Goods will be send as per the order

2. Obtaining a confirmed Letter of Credit:

-The exporter sends formal request to the importer to open LOC in exporter‟s favour.

3.Obtaining Export License, if necessary:

Export license is a government document that authorizes the export of



- Export license is a government document that authorizes the export of

specific goods in specific quantities to a particular destination.

-EX: nuclear materials, controlled substances(medicines) and precursor

chemicals

- only in case of few controlled items.

4. Obtaining Pre shipment Finance:

As soon as exporter receives a confirmed order and LOC he should approach



-As soon as exporter receives a confirmed order and LOC , he should approach

bank for pre shipment finance to meet his working capital requirements

- man , machine, material, Environment, maintenance etc.

5.Production/Procurement of Goods

- Once securing the preshipment advance from the bank, the exporter has to

arrange for production/procurement of goods for shipment

- Merchant Exporter- procure and export-manufacturer Exporter – Manufacture and export

6. Packing

- Packing-proper protection of goods

-Packing material depends on

Mode of transport

distance covered – Perishable and Non perishable items

type of handling of goods-Manual or Automated

7.Preshipment inspections

-Pre-shipment inspections (PSI) are required when mandated by the



Pre shipment inspections (PSI) are required when mandated by the

government of the importing country.

-Export cargo is subject to quality control and pre shipment inspection export

should get inspection certificate.

-5 inspection agency established by government :

Mumbai, Kolkata, cochin, Chennai and Delhi

Methods/Types of pre-shipment Inspection/systems of Quality Control:

1. Self Certification Scheme:

-Reputed Units having proper reputation and adequate testing facility for

product quality, design, development are eligible to get self certification

scheme.

-Unit has to apply to the Director, Export Inspection Council of India, New

Delhi and pay fees.

2. In-process Quality Control:

products such as chemicals and Engineering goods is done at various

stages of manufacturing-raw material and component control, process

control, product control and packing control etc..



3. Consignment Wise Inspection:

- Each individual consignment is inspected by the Export Inspection Agency before

export and inspection certificate is issued.

4. Fumigation of consignment:

-compulsory fumigation is done for – crushed bones, hooves and horns etc

-These commodities are exposed to infection

-ensure commodities reach destination free from infection.











8. Central Excise Clearance



-Excise duty is a tax levied on the event of manufacture but is collected when the

goods are removed from the factory.

-Excise Duty: Tax on a good produced for sale, or sold, within the country

clearance is obtained in two ways:

1.Export Under Bond:

-Exporter need not pay any amount of duty

- export goods under a bond supported by a bank guarantee-sum equivalent to excise duty

-Running bond account-the bond is arranged for a suitably large amount with the

approval of Excise Authorities so that several consignment may be exported under same

bond without frequent renewals.

2. Export under Rebate(Refund):

- The manufacturer /exporter initially pays the duty and then claims the refund after shipment of the goods.



9. ECGC Cover:- The exporter must take appropriate policy to protect himself from credit

risk.

10. Marine Insurance Policy:

- To protect cargo from risk of marine causalities exporter must obtain

marine insurance policy.







C& F Agents• Clearing and forwarding Agents

• Making shipment through the customs is an elaborate and difficult job



• Making shipment through the customs is an elaborate and difficult job.

• C& F Agent is familiar with shipment formalities and is knowledgeable about

customs procedure.

• Works on commission basis

Procedure for appointing C & F Agent:

1.Reference of Agent:

-Advisable that an exporter should appoint C&F Agent through some business

recommendation.-C&F Agent must have branches in the port cities like Mumbai, Kolkata, Chennai

and Cochin.

2. Collection of Information:

- references from Export Council.

-Information about-services provided by this agent, their experience and

reputation in business

3. Discussion with the Agent:

- discussion with agent with regards to the services that he could provide and fees

payable for service.

• Selection and Appointment of Agent:

when the exporter is satisfied with the discussion with C& F agent



-when the exporter is satisfied with the discussion with C& F agent,

Appoint

Sign the Agreement

(so as to protect the interest of both the parties- to avoid disputes )

-preferably the Exporter should prepare the shipping documents himself and entrust C& F

agent to get the documents processed.



•Follow Up-Exporter must remain in touch with C&F agent

-Ensure that shipping of goods takes place as per plan

Shipment Stage



Shipping and customs Formalities:

Goods can be shipped by





•

As most of the export orders are of large volume, shipment by sea is themost preferred mode of transport.

• Exporter should prepare proper documents and handover it to the C& F

Agent in time to avoid any delivery schedule.

• The shipment stage consists of:

Reservation of space in ship



p p

Preparation & Processing of shipping documents

Arrangement of Internal

Transport

• Reservation of space in the ship:-Exporter has to contact the shipping company in advance for booking the

required space in the vessel for shipment of his consignment



q p p g

-He has to provide necessary information as regards-

-Date

- Net weight of each package-Particulars of the Importers and exporter himself

- Arrival & departure date of vessel etc.

-When shipping company excepts the Exporters request the agent or

company issues “Shipping Order”

• Arrangement of internal Transport from Factory/Warehouse to

the port of Shipment:



p p

-The exporter has to make necessary arrangements for the transporting the

goods by road/rail from his own place to the port of shipment

-If railway wagon are to be booked , the shipping order and fees should beplaced with railways Authorities.

- After loading the goods into the wagon , the railway office issues Railway

Receipt.

• Preparation and processing of shipping documents:

-When goods reach the port of shipment, the exporter hands over the



complete set of documents to the forwarding agent which are submitted

to the Custom House.

-Shipping Bill(5 copies)

-Commercial Invoice(duplicate )

-Letter of Credit

-Certificate of Origin

-Guarantee Receipt Form(original & Duplicate)-ARE-1

-Packing List

-Excise Invoice

- Valuation Certificate

-Certificate of Inspection(original)

-Marine Insurance Policy

-Rail Freight Concession Form

-Weightment certificate

Customs Clearance



Excise Duty: Tax on a good produced for sale, or sold, within the country

Customs: Taxes on import







Carting Order

St i th d



Loading of Goods

Storing the goods

in the shed

Let Ship Order

Examination of

Goods

Payment of Port

Dues

Obtaining B/L

Carting Order:• The C& F agent obtains “Carting order” from the Port trust Authorities to cart or carry

the goods inside the Dock.

• The customs appraiser issues carting order after verifying the endorsement on the



• The customs appraiser issues carting order after verifying the endorsement on the

duplicate copy of the shipping bill.

Storing the Goods in the Shed:

• After obtaining the carting order, the cargo can be moved into appropriate

h d i id h d k



shed inside the dock.





Examination of Goods:

• The C&F Agent now approaches the customs Examiner who may physically inspect the



The C&F Agent now approaches the customs Examiner who may physically inspect the

goods

•

The customs Examiner, if satisfied, issues “Let Export Order” • It is clearance from the customs that goods are permitted to export.



Let ship Order:

• The Duplicate copy of shipping Bill which is endorsed by the customs



Examiner is handed over to the Customs Preventive officer who endorses it

with „Let ship Order‟

• It is permission for actual loading of cargo into the ship.

• It is issued by preventive officer of the customs.

Loading of Goods:

• The goods are then loaded on board the ship for which Mate‟s receipt is issued by the

Mate of the ship.









Payment of port Dues:• The C& F Agent pays port dues and collects Mate‟s Receipt from the

superintendent of port Trust.

Obtaining B/L:

• The C&F Agent approaches the shipping company ,surrenders Mate‟s

Receipt and obtains B/L



Customs EDI System





•

Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means.

• It is used to transfer electronic documents or business data from one

computer system to another computer system, i.e. from one trading partner

to another trading partner without human intervention.



• With effect from 15th sept 2004, Govt.of India has introduced computerized

processing of shipping bills under Indian Customs EDI system.



• With the introduction of EDI system India now has the advantage of using

paperless trade.• Now, documents can be exchanged electronically with the customs and

other government departments.

• With this computerized documents processing, the exporters and importers

are the main beneficiaries

• About 20 Ports in India have adopted computerized processing of shipping bills.

Objectives of customs EDI system

• To expedite customs clearance



• To simplify customs laws, regulation and procedures.

•

To cut down interaction of trade with government agencies.• To promptly make available correct information on import/Export statistics

• To maintain uniformity in assessment and valuation.

• To provide information on revenue collection.

• To attend the needs of the trade.

• To monitor incomplete work lying with customs

• To present complete information on goods imported, ex-bond clearance of

warehoused goods and control on customs activities.

• Obtaining common Business Identification Number(BIN)

- Under computerized customs clearance exporter has to obtain PAN based BIN

from Directorate General of Foreign Trade



from Directorate General of Foreign Trade.

- Pan is 10 digit alphanumeric code

- Alphanumeric-identify importers/exporters

• Electronic filing of shipping bill

-Fill shipping Bill consist of:

- Import Export code number

-Bank account number to receive amount-License number

• Exporter has to submit relevant documents

• Computerized shipping Bill is generated from computer

•

Loading of goods and issue of Mate Receipt• Receive B/L

Advantages of Customs EDI system• Ease of Operation:

Th t & I t k t t f i d t i diff t



- The exporters & Importers can know status of various documents in different

departments of customs online.

-makes business operations simple and accurate

• Less running around:

- When exporters were doing manual clearance with customs they need to approach

customs for each & every work that involved running around various departments.

- Now, exporters can send these documents online and meet customs officials only at

the time of physical examination of goods.• Economical:

-saving of time and cost at every stage

-total transparency is maintained with improved communication leading to fairness and

certainty of shipment.

•Improved service: – Less dependency on Agents

– Provides security at all levels of system



• Prompt Service:

-As delays in customs is either removed or minimized carriers of goods benefit

from quick service, lower cost and full use of available equipments

• Benefits Officials:

- The customs officials are also benefitted because they can access documents on

their screens an din order.

-work is done with ease, simplicity and convenience



Post Shipment Stage

Negotiation of Documents and Realization of Export Proceeds• Submission of Documents by the agent to the Exporter:

- The C&F agent submits the necessary documents to the exporter to enable him

to present the same to his bank for the purpose of negotiation.



p p p g

• Shipment Advice to Importer:

-After the shipment of goods, the exporter has to send suitable intimation to theimporter for his information.

- date of shipment,

- name of the vessel

-date on which the goods will reach this destination should be informed to

importer.

• Presentation of Documents to the bank for Negotiations:

-complete set of document is submitted by the exporter to his bank for purpose of

negotiating the same and obtaining export proceeds in time.

-Bank then sends the same documents to the importer.-Documents to be submitted to bank includes:

-Bill of Exchange - Marine Insurance Policy

-Commercial invoice - Certificate of Origin

-B/L - Inspection certificate

• Dispatch of Documents:

-After verifying the documents the bank will dispatch the shipping documents

as specified in L/C to importer

R li ti f E t P d



• Realization of Export Proceeds:

- The importer receives the documentary bill of exchange sent by the

exporter‟s bank.

-in case of usance bill, payment is made on maturity of the bill.

- if the exporter bill are not covered by LOC the bank gives loan against bills

till the payment for export is received by the exporter.

-The negotiating bank has to take follow up action to remind the importers bank to clear the payment at earliest.

-when payment is received by the negotiating bank, post shipment procedure

is completed.



Import Procedures

• Before taking any decision of importing it is necessary to decide under what

category of importers a businessman should like to act



category of importers a businessman should like to act.

• You may be proprietor /partner of a firm , director of private or public limited

company

• You may desire to import a particular commodity either for self use or to sell

in the domestic market or to used in the product that you are manufacturing.

Under Export Import policy, importers are classified under following categories:

•

Importer:A person/firm who imports or intends to import and hold an importer Exporter

code number.

• Actual User:

Importer who may be either Industrial or Non industrial

a) Actual User(Industrial):

-person who utilizes the imported goods for manufacturing in his own

industrial unit or manufacturing for his own use in another unit.

b) Actual user (Non Industrial):

-Person who utilizes the imported goods for his own use in:



•

i) any commercial establishment carrying on any business, trade or profession Ex: Importing of Watches, Mobiles etc

• Ii)Any laboratory, scientific or R& D institution, university or other

educational institution or hospitals

• Iii) Any service Industry





Hospitals constantly seeking new equipment

in Myanmar



• Every single day hospitals use mountains of single-use items such as rubber gloves, bandages, swabs and gowns. And then there is the food, washing powder,

disinfectant and cleaning products that are consumed on a daily basis.

• Other items can be reused many times like bed sheets, pillow cases, scalpels and

surgical instruments.

• Most of the expensive equipment electronic equipment used in Myanmar‟shospitals must be imported because they cannot be made locally.

• For sophisticated products like CT scanners and MRI machines, many hospitals

rely on brands like Siemens.

Pre Import Procedure



•Select right product

• Select right supplier

• Find out creditworthiness of the supplier

• To seek services of supplier’s agents

• To approve sample

Select right product 1.Select the right product:



-Even though import into India are liberalized since 1991 but

the importer cannot import every item.-He must consult negative List of Import decide accordingly-

There are certain items that are prohibited and cannot be

imported.

-Items included under restricted list can be imported againstlicensing.

-Hence importer has to select such a project that is permitted

under the law.

• Bache-de-mer of sizes below 3 inches

• Cattle

• Camel



• Chemical fertilizers, all types, including super-phosphate Micronutrient

fertilizers and mixtures thereof containing NPK, excluding those specifiedDress materials/readymade garments fabrics/textile items with imprints of

excerpts or verses of the Holy Quran Deoiled groundnut cakes containing

more than 1% oil (and groundnut expeller cakes) Fresh and frozen silver

pomfrets of weight less than 300 gms. Fur of domestic animals, excluding

lamb fur skin Fodder, including wheat and rice straw Hides and skins,

namely :-













• Vintage motor cars, parts and components

thereof manufactured prior to 1-1-1950



Vintage motor cycles, parts and components thereof manufacturedprior to 1-1-1940





2. Select the right supplier:

-Indian importers can order their supply from any



Indian importers can order their supply from any

country of the world with which India maintains cordial political relations.

-In order to select dependable and reliable suppliers,

importers can obtain information from various

government Embassies and press advertising

-international trade fairs and exhibitions is another good

source to select a supplier

• Crude and Oil suppliers

Find out creditworthiness of the supplier

• Importers must doubly check the business standing and



• Importers must doubly check the business standing and

creditworthiness of the suppliers.• Bank reference is a dependable source to ascertain creditworthiness

of the suppliers.

• It is safe to place orders through indent houses who are in the

business of import trade and are in the know status of suppliers.

To seek services of supplier’s agents



•

Some multinationals and large suppliers haveappointed their agents in India.

• It is desirable to deal with these agents who are easily

accessible

• In case of any misunderstanding or disputes these

agents can screen the complaint and work out

mutually agreeable solution.

•Two major areas of dispute are: Quality of productsand payment

To Approve Sample

• Major area of dispute: Quality of goods



• Major area of dispute: Quality of goods

• Dispute about quality of the goods will have tosettled between the buyer and the seller.

• Hence, it is advisable to call for sample and

approve the sample.• This will make way for hassle free imports

• Importers must carefully go through the terms

and conditions of the business to know theextent of liability(responsibility) if problems takeplace.

Steps in Import Trade Procedure

• Procurement of License:



-under the imports and Exports control Act,1947 no goods can be imported into

India without a valid import license.

-the importer can import goods either under a general license or a specific or

individual license

-General License – Importer can import goods from any country of the

world-Individual License-an importer can import goods from specific countries

only.

-Every License shall be valid for the period specified in the license

• Documents to submitted by the importer while

applying for import License:

ifi



- Income Tax certificate

- Import License fee receipt

- A certificate from CA

• After going through these documents, the licensing

Authority will issue import license.

• Import License bears Registration number.

Preliminary Negotiations:

-Having procured import License, the importer must enter into preliminary

discussion with overseas suppliers as regards terms and conditions of business

such as price credit period payment terms delivery schedule etc



such as price, credit period, payment terms, delivery schedule etc.

Procurement of Quota:-A certificate indicating the import quota is issued to an established importer.

-it is called Quota certificate

-This certificate enables the importer to import goods up to the value mentioned in

the said certificate.

Obtaining foreign Exchange:

-The importer is required to forward his application through his bank to the

Exchange control Department of RBI

-The exchange control Department scrutinizes the application of the importer

- If found to be in order sanctions necessary foreign Exchange for a particular transaction.

•

Placing Indent:-Form of order sent abroad for goods to be imported.

-The importer can place his indent directly or through the middleman called

Indent House.



• Dispatch of L/C:

-A foreign seller would like to be sure about the creditworthiness of the importer

.

-importer‟s bank issues a L/C in favor of the foreign dealer.

• Appointment of C& F Agent:

-To clear goods from customs C&F agent should be appointed.

- The C&F agent will prepare a Bill of Entry giving details of goods to be

cleared from the customs.

• Receipt of shipment advice:

-Shipment advice is sent by the exporter to importer -shipment advice contains the date on which the goods are loaded on the ship

and the approximate date of arrival of cargo.

-importer receives copy of commercial invoice, packing list and B/L

• Receipt of Documents:- The exporter draws a bill of exchange on the importer for the full invoice value

of goods

Bill f h i l d t i d t lik i l i i



-Bill of exchange includes certain documents like commercial invoice,

certificate of origin, B/L, weight / measurement certificate etc

• Obtaining delivery order:-If any freight is to paid the clearing agent makes the payment to the shipping

company and obtains delivery order.

• Clearing of goods:-The C&F agent has to clear port dues and obtain a certificate to this effect

- The agent then pays the customs duty and clears the goods.

• Payment of C&F agent:

-For the services rendered by the C&F agent the importer has to paycommission to him.

-C&F agent must provide goods services in order to be in goods books of the

importers for future contracts.

• Making the Payment:The importer has to make the payment for the goods as per the agreement



-The importer has to make the payment for the goods as per the agreement .

• Follow-Up:-Having collected the goods from the customs the importer will examine

the shipment

-if any discrepancy or damage to the goods is noticed the importer must

intimate to the exporter.

-Even if in any case discrepancy is not there the importer must intimate tothe exporter.

Legal Dimensions of Import

Procedures



Mexicans arrested after 64kg cocaine importation thwarted

• The criminals attempted to make the shipment appear Lawful by

establishing a front company and concealing the cocaine inside cement



g p y g

cylinders, flower pots and statues, each weighing 210 kilograms.

• A joint international law enforcement investigation led to the arrest in

Melbourne of three Mexican citizens attempting to import 64 kilograms of

cocaine into Australia.

• The international law enforcement investigation ultimately resulted in the

disruption of a transnational drug trafficking syndicate and prevented an

estimated 16 million worth of cocaine from being distributed on Australia's

streets

• To Sign import contract:

-Import trade is known to face many unexpected and unanticipated problems

-Hence, it is in the mutual interest of both importer and supplier to prepare a

contract and signed by both the parties



contract and signed by both the parties

-The contract will outline what each party is allowed /not allowed to do.-Liability (Responsibility) of each party will be known

-Terms and condition of the business should be specific and to the point

-Contract must clarify about

-quality and quantity of goods,

- price, payment terms,

- packaging, delivery schedule,

-ports of departure and destination

-Insurance

-Import License etc.

• To finalize pricing within INCO Terms:

-Inco terms or International Commercial terms are a series of international

sales terms published by International Chamber of Commerce (ICC) and

http://en.wikipedia.org/wiki/International_Chamber_of_Commerce




sales terms, published by International Chamber of Commerce (ICC) and

widely used in international commercial transactions-Number of trade terms used in International trade to indicate the sale price and

corresponding rights and obligations of the seller and buyer

-Main objective of Inco term is to give common interpretation for the different

trade terms used in international trade.

-These terms are defined by International Chamber of Commerce, Paris

-These are accepted by governments, legal authorities and practitioners

worldwide for the interpretation of most commonly used terms in international

trade.

-They are used to divide transaction costs and responsibilities between buyer

and seller

-With these terms the importer and supplier come to know the exact expenses to

be borne by each of them.

• To finalize payment terms:

Importers have choice payment terms which are:

-Letter of credit or advance payment

-The creditworthiness of the importer is an important factor that supplier





p p pp

takes into account before agreeing on the terms of payment.

-Safety of payment is never compromised by any supplier

• To collect IE number:

- Importers and exporters in India have to obtain Importer-Exporter Code

(IEC) number from DGFT without which they cannot import or export.

- To collect IEC number – Number , importer has to submit documents like: photographs, PAN card, DD for fees, any other documents

• To obtain import License:

-importer desires to import items included under restricted list, he has to

apply to the regional licensing , authority for the issue of import license

• To get foreign exchange sanctioned:

-payment for imports are made in foreign exchange which is sanctioned by

the RBI

• To undertake financial planning:

-importers must undertake financial planning that adequate funds are

maintained to get the consignment release on arrival



maintained to get the consignment release on arrival.

-when importers goods remain uncleared importers have to pay hugedemurrages (goods lay in warehouse beyond limited time)which is financial

loss to them

• To obtain L/C from the bank:

- Some suppliers insist that payment has to be done through L/C only

-Under this circumstances importers have to negotiate much in advance with

the bank to open relevant L/C in favour of the supplier

-L/C gives security of payment to the supplier who comes under the

obligation(duty) to execute the shipment as per terms of the business.



Customs Formality for Imports

• Submission of Import General Manifest:

-Under section 30 of the customs Act,1962 the person carrying imported goods

has to submit within 24hours to the proper Authority of the customs a

document called Import General Manifest at the port of destination.



-It is list of items that the carrier is carrying for unloading at the port of

destination

-On receipt of this document, customs transfers imported cargo to the bonded

warehouse maintained at the port

• Preparation of Bill of Entry:

-When goods are imported, importer has to pay necessary import duty.-For this, the information about the goods imported are given to the customs

authorities in a prescribed form called Bill of Entry

-Bill of entry can be filed 30 days in advance to facilitate processing of this

documents.

-This documents states that the goods of the stated value and description in thespecified quantity is going to enter into India

-Following types of Bill of entry

• 1.Bill of Entry for Home Consumption:

-This form is white in color.

-goods are meant for home consumption against payment of duty

• 2.Bill of Entry for Bonded Goods:



2.Bill of Entry for Bonded Goods:

- form is yellow in color - this form is used when no duty is paid on imported goods which are

transferred to bonded warehouse.

3. Bill of Entry for Ex-Bond Clearance:

- When the importer desires to clear imported goods either in full or in part

after paying applicable import duty meant for home consumption this formis used

-Goods are hereafter transferred to bonded warehouse.

Contents of Bill of Entry:a) Name and address of the importer and exporter

b) Description, classification and value of goods

c) Import License number of the importer



c) Import License number of the importer

d) Rate and amount of import duty payable

e) Name of the port/dock where goods are to be cleared

f) Currency, weight, freight and insurance

g) Details of exporter

h) Declaration about the correctness of information

• Services of customs House Agent:

-Customs clearance of imported goods is a complicated process.

-It is advisable that importer utilizes the services of accredited clearing agent who

becomes responsible to prepare and submit Bill of Entry in time

• Noting of Bill of Entry:



– Bill of Entry complete in all respect and duly signed by the importer and his CHA is

submitted to the import Noting Department for noting .

• Bill of Entry presented for Appraisal(assessment):

-Bill of Entry presented to Appraising counters with the following documents:

Commercial invoice

LoC

B/L

Import License

Packing List

Insurance Policy

Importer Exporter code Number

Weight specifications

Custom declaration

• Payment of Duty:

-Importer proceeds to pay import duty with assessed Bill of Entry.

-Original copy of Bill of Entry is removed by the customs and remaining

documents are returned to the importer



• Physical Examination of Goods:

-Loaded with these documents the importer approaches the Dock Appraiser for

physical examination of goods.

-After the physical examination of goods is over the dock Appraiser issues “Out of

charge” order(second check procedure)

•Issue of Release order:In case any dues like demurrage remains unpaid, importer has to clear the payment

When no dues remain outstanding the port manager issues release order against

which he is allowed to take the goods out of customs area

Penal Action:

Importer must take all the precautions not to give wrong/misleading information.

If customs establish that certain tangible facts were hidden or wrong/misleading

information was provided it is authorized to either confiscate(take away) the goods

or charge fine.

Warehousing of Imported Goods



• Warehousing means storage of goods in systematic easy wway to maintain

the quality of goods.

• Specifically constructed building for the storage of goods in a safe and

secured manner.



•

An importer may not always clear the imported goods for homeconsumption

• He may release the goods in installments or may postpone the decision to

collect the consignment

• Under this condition he may avail the facility of bonded warehouse.

• Bonded warehouse are constructed and maintained by the Dock andcustoms Authorities.

• They work under the government license

• Sometimes importer may not like to take immediate delivery of goods or he

may not be in position to pay the full duty on the goods.

• Under this condition he may avail the facility of bonded warehouse for

temporary period of time

• The goods will be released from the bond only when the customs

authorities give necessary permission







• Importers have to file set of yellow colored bill of entry

• Payment of duty is postponed

• After the assessment of goods for the levy of the import duty is completed



After the assessment of goods for the levy of the import duty is completed

the scrutinizing appraiser debits import license• Warehousing bill of entry passes through normal checking by the Assistant

collector of customs.

• In order to get goods cleared from the warehouse the importer is required to

submit Ex-bond bill of entry

• This document is printed in green paper and submitted- Import Bond

Department



Retirement of Import Documents

• Intimation from supplier:

-When are goods are dispatched by the supplier, he will send shipment advice to

the importer informing him about the shipment of goods.

-Some of the details will be : name of the vessel, date of sailing, port of

destination quality and quantity of goods Invoice number description of goods



destination, quality and quantity of goods, Invoice number, description of goods,

B/L etc

• Retirement of import documents:

Overseas supplier makes shipment of goods and makes ready documents as

required under LoC and hands them over to his bank with a request to negotiate

for payment.

The supplier hands over the following documents:

a) Bill of Exchange

b) Commercial Invoice with packing list, if needed

c) B/L

d) Certificate of Origin

e) Inspection Certificate

f) Marine insurance Policy

g) Any other document

The importer is required to submit the following documents to the bank inorder to retire the documents

– A) Remittance in foreign exchange executed under form A1

– B) Exchange control copy of import license , if required

• Preparation of Bill of Exchange:



p g

When bank has received the full set of documents, it prepares bill of exchange as per the instructionsfrom the supplier. Bill of Exchange can be of two types

a) Sight Draft: The importer will be given document only against payment

b) Usance Draft: The importer gets the documents against acceptance or credit. He will

make the payment at the expiry of the credit period

• Scrutiny of Documents:

The importers bank will carefully examine the documents forwarded by the supplier‟s bank.

importer's bank will check if all the documents are in order and there is no discrepancy.

• Services of C&F agent:

As mentioned earlier, import procedure is a complex process. As a practice, the services of

C&F Agent is utilized to ensure smooth completion of import procedure.

-C&F Agents are well acquainted with documentation and customs procedure.-They will ensure importer does not face hardship in getting goods imported in India.

Export Marketing Organizations



1. Manufacturer Exporters2. Merchant Exporters

3. Star Trading Houses of five categories

4. Canalizing Agencies

5. State Export Corporations

6. Export Consortia

7. Government(public sector) Trading/Marketing

Corporations

Registration of Export Firms• Any individual or partnership firm or private firm limited company or

public limited company that desires to enter into export trade must follow

guidelines provided by the foreign Trade (Development and Regulation)

A 1992



Act, 1992.

• Act requires a person or organisation to register itself with the DGFT.

• Registration of export business is compulsory with various authorities

because it will deal in foreign exchange and will also be eligible to enjoy

the benefits and incentives provided by the government.

Registration formalities of ExportTrade

• Any individual partnership firm/ private Ltd /Public Ltd Company desires to do



• Any individual. partnership firm/ private Ltd./Public Ltd. Company desires to do

export trade must follow guidelines provided by Foreign Trade Act,1992.

• Registration of export business is compulsory with various authorities

• Registration will deal in foreign exchange and will also be eligible to enjoy the

benefit and incentives provided by the government.

Registration with Various Authorities:

1.Decide the Nature of Business:

- Decide Nature of Business –

-Sole Proprietary Business

- Partnership



- Joint stock Company

• This will help him to decide seed capital requirements and amount of bank

finance needed.

• Look for suitable office space, print goods letter Heads and Business cards.

Sole proprietary Business• A sole proprietorship, also known as a sole trader

• A business by a single individual which is not formally organized and for which the individual

and the business are indistinguishable in law.

http://www.ehow.com/business/



• Sole proprietorship is a business structure for individuals who work for themselves

• Freelance writers, copy editors, photographers and craftspeople

• A sole proprietorship is a type of business in which one person legally makes up the whole

company.

Partnership









•



•

Steve Jobs+ Steve Wozniak+ Mike Markkula







Joint Stock company

• A joint-stock company (JSC) is a type of corporation or partnership

http://en.wikipedia.org/wiki/Corporation

http://en.wikipedia.org/wiki/Partnership





A joint stock company (JSC) is a type of corporation or partnership

involving two or more individuals that own shares of stock in the company.

• A joint stock company can come into existence only when it has been

registered after completion of all required by the Indian Companies Act,

1956.

Joint Stock company



http://en.wikipedia.org/wiki/Stock

http://en.wikipedia.org/wiki/Stock





• Hero Honda is a joint venture between the Hero Group of India and Honda

of Japan

• Hero” is the brand name used by the Munjal brothers Hero Cycles Ltd

•

http://en.wikipedia.org/wiki/Hero_Cycles_Ltd

http://en.wikipedia.org/wiki/Honda


http://en.wikipedia.org/wiki/Hero_Cycles_Ltd



•

A joint venture between the Hero Group and Honda Motor Company wasestablished in 1984 as the Hero Honda Motors Limited

• Munjal family and Honda group both own 26% stake in the Company

• Hero Group of India would buy out the 26% stake of the Honda in JV Hero

Honda

•Since last 25 years the Hero Group relied on their Japanese partner Hondafor R & D for new bike models.

• Under the joint venture Hero Group could not sell into international

markets and the termination would mean that Hero Group can exploit

global opportunities now.





• Look for suitable office space, print goods letter

Heads and Business cards.









• Selection of Name of the Firm:

-A exporter is free to select the Name of his firm

- The name of business should suggest that the firm is engaged in

export/import business e.g. international, global or overseas are common



words with the name of the exporting firm.









• Approval of Firm’s Name:



-Regional Licensing Authority of DGFT approves name of Export firms

• Opening of Bank Account:

– An exporter has to select a bank which undertakes to fill all banking

formalities connected with negotiation of documents and realization of

proceeds.

– The bank must be authorized to deal in foreign exchange.

Registration with Excise Authorities

-Excise Duty: Tax on a good produced for sale, or sold, within the country

- Customs: Taxes on import



Registration with Export Promotion Council(EPC)• Every Exporter is required to register his firm with the concerned council

meant for his commodity.

• Ex: An exporter of textiles must register with the Textiles Export Promotion

Council.

• The concerned EPC issues the following 3 forms:

- Application for Registration

-Application for Membership

-Application for Registration-cum-Membership certificate (RCMC)

• Fully filled forms along with the Registration fees and necessary



documents such as bank certificate – shows applicants financial soundnessshould be submitted to EPC.

• The council verifies form, documents ,fees and issues Registration-cum-

Membership certificate to the Exporter

Obtaining GIR/PAN no.

• Income from export is exempted from income Tax, for which the exporter

is required to register his firm with Income Tax Authorities.

• Exporter must have General Index Registration(GIR) number

• GIR-temporary number allotted by the income Tax authorities to a new

entrant in field of export trade

•



Registration for code Number from DGFT:Import Export Code Number

Granted by Director General of Foreign Trade



Export Licensing



• Export Licensing:

-Export of goods restricted under Indian Trade Council

-Export Import items will be allowed to trade only in accordance with thelicense/certificate/permission or a public notice issued by the concerned licensingauthority.

-The main Licensing authority is Director General of Foreign Trade, Delhi



-Most of the goods are freely exportable and they do not require license unless theyfall in the negative list of export Import.

Negative List consist of following three categories:

1. Prohibited Items:

-Items included under this list can neither be exported nor imported and include

exotic birds, wild life, wood and wool products in the form of timber ,pulp andcharcoal.

2. Restricted Items:

-Items included under this list can be exported or imported only through licensesand include chemicals,fertilizers,cattles, etc

3. Canalized Items:

-Items included under list can be exported or imported through the canalysedagencies like

STC(state trading corporation of India)

MMTC (Minerals and Metals Trading Corporation of India )

Selection of Export Product• Appropriate selection of the product and its adjustment as per the expectations of

foreign buyers are necessary for large scale exporting.

• The product line to be introduced in the foreign market should be clearly

decided.



• Product Includes- Product+packaging , branding, Labeling, warranties and after

sale service offered.

• Product offered to foreign customers should be unique in terms of quality,

merits, color , brand , package, label and warranties.

•Exporter should select the product on various considerations such as marketdemand, nature of customers for the product, degree of competition,

import/export restrictions, future export potential, government incentives,

domestic production capacity and servicing facilities required by actual users

•



Offering the same product in foreign marketas is marketed in the domestic marketing

• Ex: Eureka forbes



•



Offering the same product but after modifyingthe contents as well as packaging

• Ex: Mcdonald





• Offering completely new product as per the



needs and requirements of customers in

specific foreign market

Guidelines can be suggested while selecting product for exporting/export business

• The selected product should have regular and continuous demand in the target

export market selected



• It should be possible to manufacture/procure the selected product at lower cost

so that it can be offered to foreign buyers at competitive and attractive price

Ex: China

• The selected product should be available in sufficient quantity so that supply

will be maintained regularly. So the exporter needs to have adequate production

capacity for meeting large scale exports.

• Government regulations should be given due consideration while selecting the

product for export.

• The product selected for exporting should adjustable as per market requirement

through quick modification.• The product selected should have regular demand so that continuous and steady

market will be available

Methods of Exporting

• Exporting firm has to decide the method of



entry in the proposed market.

• There are several market entry alternatives

available to enter in target market.

• Direct Exporting

• Indirect Exporting

Direct Exporting• Exporting the products by the manufacturer himself i.e. without using the

services of middleman like merchant exporters, export houses etc.

• A manufacturer exporter can undertake direct exporting of his products in the

t t k t th h hi t d t t/di i i



target market through his export department/division.Ex: Kirloskers‟

Exporter of various engineering products

• S.L. Kirloskar's manufactures products with



minimum imported contents and selling them

through a well trained and equipped sales and

service network.

• Sales Representatives

• A sales representative is often called a manufacturer's representative or a salesagent.

– The term "sales representative" is preferred because the term "agent" has legal

connotations in some countries.

• A sales representative:

–U th ' d t lit t d l t t th d t t



Uses the company's product literature and samples to present the product to potential buyers.

– Works on a commission basis; essentially acting as a broker.

– Assumes no risk or responsibility for servicing the product after the sale.

• A contract with a sales representative should state:

–

The period of the agreement. – The territory where the sales representative may operate.

– Whether a sales representative may operate on an exclusive or a nonexclusive

basis.

– That sales representative may sell complementary products that do not conflict.

–

The method compensation. – Reasons for terminating the agreement.

– Limits on the legal authority of the sales representative to obligate the firm.

Distributors• A foreign distributor is a merchant who purchases goods at a substantial

discount and resells it for a profit.

– Foreign distributors generally provides support and service for the

d t



product.

– Distributors usually carry an inventory of products and a sufficient

supply of spare parts.

– Distributors maintain adequate facilities and personnel for normal

servicing operations.

– Distributors may resell the product to local dealers and retailers.

– Ex: NOKIA

Foreign Retailer• A company may sell directly to a foreign retailer.

– These transactions often involve consumer products.

–

Eff ti i t i th t h l t il h i



Effective in countries that have large retail chains. – EX: RELIANCE FRESH

• Sales to foreign retailers can be achieved through:

– Traveling sales representatives contact foreign retailers.

– Direct mailing of catalogs, brochures, or other literature.

• Which has the advantages of:

– Eliminating commissions

– Reducing travel expenses

– Reaching a broader audience

• But should be supported with other marketing activities.

Selling Via The World Wide Web

• Selling internationally via the World Wide Web offers many advantages.

You sell seven days a week 24 hours a day



– You sell seven days a week, 24 hours a day.

• Time difference is no longer a problem.

– No travel costs.

• Selling internationally via the World Wide Web requires added

considerations.

– Web site should be in the language of the customer.

– International shipping costs and delivery times need to be clearly

stated.









End User

• A company may sell directly to a foreign end



user.

• Selling overseas may incur some added costs.

– Unless other arrangements are made, the seller is

responsible for:

• Shipping

• Payment collection

•Product support and service

• EX: DELL

• Dell Focuses on Selling Products Direct toconsumers

• Direct selling, from manufacturer to consumer,

was a key component of its strategy



was a key component of its strategy.



• With direct exporting the exporter handles every aspect of the

exporting process



exporting process.

- Market research

-Foreign distribution

-Collections

Advantages /Merits of Direct Exporting• High profit Margin:

-High

-as sale price can be kept at a reasonable level because deductions due to

commissions etc are absent



commissions etc are absent.• Intensive use of selected market:

-Intensive use of selected foreign markets is possible as exports are made

directly.

-this gives larger sales and popularity in the market.Ex: DELL

• Benefit of government Incentives:

-secure full and direct benefits of various export incentives and concessions

offered by the government.

• Absence of dependence on middleman:

-The exporting firm is not at mercy of the middleman for exporting

purpose.

-it can export regularly through the marketing network.

• Optimum use of production capacity:

-A manufacturer selling in domestic as well as overseas markets can utilize

his production capacity fully as wide market area is available.

-Excess production can be exported through special measures



Excess production can be exported through special measures-Thus full use of production capacity is possible.

• Spreading of marketing risks:

-A manufacturer exporter may supply his products in many overseas

markets.

-This is in marketing area, the risk in marketing is divided in the wider

area.

-As a result, actual marketing risk is minimized-distribution of risk is in all

markets

EX: NANO

ASIA, AFRICA,LATIN AMERICA, EUROPE







• Meeting export Obligation:

-A manufacturer importing raw materials/machinery on a large scale has to

accept certain export obligation(duty) as per government rules.

-A manufacturer exporter can fulfill such obligation through direct exporting

•

Market goodwill:



Market goodwill:-Due to direct contact with the consumers, the firm can establish close

relationship with the consumers and create goodwill/reputation in the market.

• Effective Control:

-The exporter can exercise effective control over export operations including

the selling price, after sale service and credit policy-no intermediater

• Reliable market information:

-The manufacturer exporter gets first hand and reliable information of the

requirements and expectations of buyers and adjust his product and sales

promotion strategy accordingly.

Summary

• Direct methods of exporting give your firm:

M t l th t



More control over the export process

• Potentially higher profits

•

A closer relationship to the overseas market

Limitations/ Demerits of Direct Marketing

• Huge Investments:

-The exporter needs more capital investment, suitable organization structure ,

more marketing efforts and effective supervision and control as the entire

responsibility of marketing is shared by the exporter himself.



responsibility of marketing is shared by the exporter himself.

• Unsuitable to small firms:

-A small manufacturer with limited exporting capacity may not use such direct

exporting as it is not profitable

-Moreover, it is not possible for small firms to export directly due to financialdifficulties.

• Heavy Business Risk:

-The risk involved in direct exporting is more as the entire risk is undertaken

by the exporter himself.

-Indirect exporting reduces the risks in export marketing• High Overhead:

-A manufacturer exporter has to bear the production overheads as well as

marketing overheads as he is engaged in production as well as marketing



Indirect Exporting

– Exporting through an Export Management Company (EMC)

- A foreign or domestic company that acts as a sales agent for domestic



g p y gexporters in international markets.

– Exporting through an Export Trading Company (ETC)

- A company that supervises the exportation process for clients.

- They operate like an export division for a company that does not

have an export division.

– Franchising Licensing

– Contract manufacturing

• Alternative to direct exporting which may not be possible in the case of all

exporters

• Exporting firm will prefer to export to the target market through marketing

middleman such as merchant exporter, export houses, trading houses or

through cooperative / government agencies.

• All procedural aspects are handled by the export houses on behalf of the



All procedural aspects are handled by the export houses on behalf of the

exporting firm

• Famous or popular with new generation of exporters.

• Small manufacturing companies deals – garments, handicrafts, textiles etc

Prefer such indirect exporting due to limited financial condition, managerial problems

• Manufacturers time and energy is saved as he is free from procedural

aspects of exports, as he concentrates on manufacturing only.

Advantages• Less/Limited Investments:

Indirect exporting facilities exporting with less capital investment as

marketing process comes to an end when goods are supplied to middleman

within home country only• Relief from act al e porting:



y y• Relief from actual exporting:

-Indirect exporting gives relief to the manufacturing firm from the

botheration about actual export marketing.

-the firm concentrates on manufacturing only.

• Benefit of services of middleman:

-the middleman take keen interest in marketing and also in sales promotion

-this gives benefit to the middleman as well as manufacturing firm

• Limited Business Risks:

-shared partly by both middleman and manufacturer -The expenditure on marketing is less as-no need to set up any branch in

foreign location

•Specialization:-A manufacturer specializes on production activities due to indirect

exporting.

- he concentrates his attention on production activities only

• Less overheads:

-share overheads relating to production activities only



share overheads relating to production activities only

-not concerned with marketing

-less burden of overheads

• Suitable to small firms:

-Small firms prefer indirect exporting due to their financial and other difficulties.

-It serves as an easy and economical method of exporting

Limitations/Disadvantages of Indirect Exporting• Non availability of Middleman:

-Merchant exporters or other middleman may not be easily available for exporting

to all foreign markets.

-Manufacturer is at the mercy of middleman for exporting his product.

• Sales target may not be achieved:



• Sales target may not be achieved:

-In indirect exporting, the expected sales results may not be available as the agents

appointed may not take adequate interest in exporting.

-this may bring down the profit of the exporting firm.

• Dependence on middleman :-In indirect exporting .the export operations will be looked after by the middleman

-The export organisation will not have any „say‟ once the product goes in the

hands of the middleman.

-the manufacturer will not have direct control on pricing, packaging and so on

• No benefits of export incentives:

-The exporting firm may not get the benefits of various incentives and the

facilities provided since he is not involved directly in the promotion of exports.

• Non Availability of reliable market information:

-In indirect exporting, information relating to export market will be



p g, g pavailable from the intermediaries.

-such information may not be reliable and complete as it is second hand

information.

-this may effect his product planning and development

Direct Exporting Indirect Exporting

Meaning: Exporting firm exports goods

through its agents ,opening

branches/sales offices in the

target market

Exports its products through

merchant exporter, export

houses or through

cooperative or government

agencies

Export prices: A manufacturer gets higher A manufacturer gets lower



price for his export item as no

commission is paid to

intermediaries

price for his export product as

intermediaries is involved

Risk Involved Risk involved in marketing is

more as manufacturing andmarketing risk are shared by

exporting firm

The risk involved is limited as

marketing risk are shared bythe marketing middleman

Market Information A manufacturer exporter gets

first hand information for his

business

Manufacturer gets

information from

intermediaries- inadequate,

unreliable and supplied late

Control on Market The exporting firm exercises

complete control on export

pricing, packaging and so on

Limited control on export

pricing, packaging etc,

As marketing is given to the

marketing middleman

Direct Exporting Indirect Exporting

Investment required Huge investments Less/Limited Investment



Investment required Huge investments –

manufacturing+ exporting

Less/Limited Investment-

as only manufacturing

activity is involved

Benefit of incentives Claim various incentives

from government

May not be able to claim

incentives from

government

Suitability Used by large exporting

firms

New and small exporters

prefer indirect exporting as

it suits them

Other Means of Entry in exportBusiness

• Licensing

J i t V t



• Joint Venture

• Wholly Owned Foreign Subsidiary

Licensing



• Licensing can be used as a method for initial Entry in the foreign market.

• Manufacturer (Licensor) enters into an agreement with the firm in thei ti t (Li )



importing country(Licensee)

• It gives him the right to use the manufacturing process, a patent design or

trademark or any item of value for a consideration.

• It may be certain fee, royalty or other payment by Licensee to the licensor.

• Manufacturer with developed technology will enter in foreign market

through licensing agreements.

• The producers in foreign markets get the right to use the reputed firm‟s

license in exchange for royalty

• This gives opportunity to the manufacturer to enter in foreign market.

• Licensing is a quick method for entry in the overseas market.

• The licensor gets entry into the foreign market without any expenses

• The licensee gains production expertise or a known brand name for use.



• Franchising is the most popular form of Licensing

• Export companies from developed countries make such licensing

arrangement for entry in foreign markets and earn good profit through fees

and royalty



Advantages of Licensing Method

• It is a simple method for entry in foreign markets

• The licensor gets guaranteed income in the form of feesld id i i h f l b d



• World wide recognition as the owner of popular brand

• The licensee gets profit through marketing the product which is already

popular in the market.

• He also gets the benefits of production expertise.

• Cheaper alternative to direct and indirect exporting

• Trade restriction have no effect on licensing as products are manufactured

and sold in the target market itself.

Disadvantages of Licensing Method

• The licensor may suffer loss on long term basis:

-Licensee may not renew the license after its expiryh hi f i i i d b



-he may even start his own manufacturing activity and become a

competitor of the licensor himself

• The royalties/fees paid by the licensee may be very less because of the

restriction placed by the host country on such payment

• Licensing as a technique for entry in foreign market is available only to

reputed firms possessing something unique as regards technology, brand

name, etc

• Licensor has limited control on the licensee as regards production and

marketing

Joint Venture• One more option available for entry in foreign markets through

manufacturing/marketing activities or both.

• JV involves financial partnership between a foreign company and a local

company.



• Partnership of two or more companies

• Easy for foreign company to enter in the new market.

• The foreign company brings finance and technical know how

•

Domestic company provides marketing facilities.













JV takes place when

• The domestic investor buys a interest in a manufacturing unit situated in a

foreign country• A Domestic investor and an investor of a foreign country jointly start a new



A Domestic investor and an investor of a foreign country jointly start a new

venture in that foreign country.

• JV enables the local firm to get technology ,machinery ,know how,

consultancy services etc from the foreign partner.

• JV gives easy entry to Indian companies in foreign countries/markets for export of goods, machinery, technology and consultant services

• At present Liberal facilities are provided for JV abroad.

• Indian JV abroad are located in the neighboring countries of south and EastAsia followed by UK USA West Asia and Africa Tatas



Asia followed by UK, USA,West Asia and Africa.Tatas

• Indian companies take keen interest in starting JV abroad.

• Considered and approved by RBI

• Indian companies provide – machinery, technology and skilled manpower to

complete the project and handover the same to concerned foreign partner for operation. Software companies. Infosys,Wipro,TCS

Wholly Owned Foreign Subsidiary

• A firm interested in exporting may establish a subsidiary manufacturing

unit in a foreign country. EX: FORD,HYUNDAI• The exporting firm will be the exclusive owner and controller of the



The exporting firm will be the exclusive owner and controller of the

subsidiary

• Result of direct investment in the foreign company

• The subsidiary will manufacture and market the products in the foreign

country but the benefits will be available to the home investors.• Sometimes, the branches/subsidiaries may purchase raw material from the

foreign market and send them to the manufacturer who will manufacture

the products and send back to branches for distribution to consumers.

• Branches are ultimately controlled by head office.

• Subsidiaries could be Greenfield investments

or acquisitions



q

• Advantages:

– No risk of losing technical competence to a

competitor – Tight control of operations.

– Realize learning curve and location economies.

• Disadvantage:

– Bear full cost and risk

Pricing Quotations• Price means expression of value or utility of a commodity in terms of money

• Technique of determing such acceptable price at which the seller is willing to

sell and the buyer is willing to buy the product• Price fixed should be most reasonable



Price fixed should be most reasonable.

• Some people consider price as value for money while others associate it with

quality.

• An exporter must make all such perceptions into consideration while

deciding the price.

•

PRICE

• Price refers to the amount of money that

consumers have to give up to acquire a good or



g p q g

service.

Example:

• If an MP3 player is priced at Rs 2000, it means I

must give up that amount of money to acquire

that product.

COST• Cost refers to the amount paid to produce a good or service. The cost

represents the sum of the value of the inputs in production - land, labour,

capital and enterprise.

• Manufacturing of Chocolate:



• The raw materials === cocoa, sugar, milk, honey, hazelnuts, flavoring and

colour that are used to make the chocolate bar.

• The capital === buildings and factories that make up the Cadbury's

business, the machinery, equipment used in the manufacturing, vehiclesand so on involved in the distribution of the finished product and the

offices and administration buildings that support the business.

• Labour includes not only those who are involved directly in the making of

the bars but all the sales staff, administration staff, management,

marketing teams and so on that are employed by Cadbury.• The profit is the reward for enterprise. It is the amount left over when all

the costs have been paid.

• These represent the costs of production.

Objectives of pricing• To enables Indian exporters to offer competitive price to overseas buyers.

• To earn a specific percentage of profit on the sales turnover.

• To create sound image of Indian goods abroad.

• To survive in the face of stiff competition in overseas markets.



• To use export incentives in such a way that exporters can make attractive

offers to foreign buyers.

• To enable exporters to survive economic recession.

•Prices are charged to cover variable costs and some fixed costs to improvechances of business survival.

• To guide exporters to price the goods and services at a certain level not

only to defend but also to increase the market share.

• To offer to foreign buyers attractive price discounts in order to increase

overall sales.

Factors Affecting Export Pricing



g p g

Competition

• The competition is severe due to differences in costs, levels of technology

and quality of products. Ex: Developed & Developing nations

• Exporters from advanced countries are at an advantage due to available

credit facilities, use of advanced technology, better packaging, etc.• Less developed countries have to face keen competition with advanced



countries.

Demand

• The prices in every market are directly related to the demand for products.

•The demand may be elastic or inelastic.

• Pricing depends on the degree of elasticity of demand



Pricing depends on the degree of elasticity of demand

• highly elastic demand for a product tends to keep its price low, because a

slight change in the price may cause considerable change in demand for a

product. ex: Luxury products

• Products having relatively inelastic demand can be quoted at comparativelyhigher prices. Ex: Food items

Availability of substitutes• Export prices are easily influenced if many substitutes are available in the

foreign market.

• Consumers easily and quickly move to the substitutes when price is raised.

• Thus, when substitutes are available, increase in prices may prove to be

fatal to the exporter



fatal to the exporter.

• Ex: Maruti Suzuki-core competency

Incentives offered by the Government

• Sometimes the government offers incentives and special concessions to

exporters for export promotion.

•

The objective of such incentives is to raise cost competitiveness of domestic manufacturers and exporters.



• As such, an exporter can charge lower price in the foreign market and can

confidently face the competition.

Tax concessions and Exemptions• Export prices are also affected by the taxes and duties imposed by the

government of an importing country.

• It has direct effect on export prices

• Export prices rise as a result of such protective duties levied on imports.



• On the other hand, lower prices can be charged if exemptions and

concessions are available to exports.

• Delivery Schedule:

-Delivery terms and schedules are also counted in price calculation.

-If prompt delivery is desired by the buyer, then the price charged would be

relatively higher.

• Pricing objectives:- Export pricing may have the objective to attain certain level of turnover or



Export pricing may have the objective to attain certain level of turnover or

profitability or capture a particular segment of the market or face market

competition.

-Accordingly the prices for exports are fixed.

-some exporters may have the objective of skimming or penetrating the

market.

• Composition of consumers:

-Exporter has to consider composition of consumers based on income,

education, buying habits etc,

• Purchase considerations:

-Frequent buyers cannot be charged high.



-New customers can be charged high.

Export Pricing/Quotation• Quotation:

- is an offer or proposal made by an exporter in reply to the enquiry froman importer.



- The quotation should clearly state the price and other terms and

conditions.

-it may be in the form of Performa invoice that gives a clear idea to the

importer about the price to be paid by him in case the deal is struck.

Types of Quotations

• FOB Quotation(Free On Board)



• C&F Quotation(Cost and Freight)

• CIF Quotation (Cost, Insurance & Freight)

FOB Quotation(Free On Board)



• FOB Quotation, the seller quotes a price which includes all expenses

incurred till the goods are actually loaded on board.

• Packing charges ,local transport charges and dock dues are covered In the

price quote.

Seller’s Obligations:

- He has to load the goods on board the ship named by the buyer.

- He has to obtain B/L from the shipping company and forward it to the

b t bl hi t t k d li f d



buyer to enable him to take delivery of goods.

- He must inform the buyer certain details like the name of the ship and the

possible date of delivery

- He has to arrange for the necessary space in the vessel- He must inform the buyer without delay that the goods have been delivered

on board the vessel or aircraft.

Buyer’s Obligation:

- He should inform the seller the name of the ship by which the goods are to

be send and also the expected date of delivery.

- He has to bear the risk when the goods are loaded on the ship

- He should make payment to the exporter as per the terms of contract

C&F Quotation(Cost and Freight)- price quoted=total cost of goods, packing, carriage, loading charges and the

payment of freight up to the port of destination.

- Other expenses include =cartage, unloading charges and expenses of carrying

the goods from the port of delivery to the warehouse are to be borne by the

importer

C&F Price = F.O.B Price + Freight



C&F Price F.O.B Price Freight

Seller Obligation:

- Seller must pay freight charges to the shipping company that undertakes to carrythe goods from the port of shipment to the port of destination.

Buyer’s Obligation:

- He has to arrange and pay for insurance

- He has to pay clearing charges, import duties etc.

- He has to make payment as per the commercial invoice

- He has to bear the loss or damage to the goods, if any, from the time and place at

which the seller‟s obligations are over.

CIF Quotation (Cost, Insurance &Freight)

• CIF-cost, Insurance and Freight.

•

It includes FOB price + freight + marine insurance up to the port of destination.



• CIT=price of production and all other expenses till the goods reach the port of

destination in the buyer‟s country.

• CIF price = F.O.B Price + Freight+ Insurance

Seller‟s Obligation:

-pay for freight and insurance cover also.

Buyer‟s Obligation:

-pay clearing charges,

- Make payment as per the commercial invoice

Letter of Credit (L/C)



Letter of Credit (L/C)(A promise to Pay)

• Credit- what comes

• Debit-what goes

• A letter from a bank guaranteeing that a buyer's payment to a seller will be

received on time and for the correct amount.

• In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.



q g p

• Letters of credit are often used in international transactions to ensure that payment

will be received.

• It is basically a mechanism, which allows importers/buyers to offer secure terms of

payment to exporters/sellers in which a bank (or more than one bank) gets

involved.

Exporters/ Sellers

Bank

Importers/Buyers

Bank



Carrier

Exporter/Seller Importer/Buyer

Negotiating Bank Opening Bank

Exporters/ Sellers

Bank

Importers/Buyers

Bank



Beneficiary Applicant

Carrier


A Letter of Credit is an authorization issued by the opening bank to thenegotiation bank that if the exporter presents the relevant set of documents,

make the payment.



Negotiating Bank Opening Bank

Beneficiary Applicant

Exporters/ Sellers

Bank

Importers/Buyers

Bank


Procedure/Operation of Letter of



p

Credit(L/C)

Contract of Sale(1)

Forwards L/C Request to Open L/C

(4) (2)

Importer New York

(Applicant)Exporter Mumbai

(Beneficiary)



opens L/C and sends it to

(3)

SBI Mumbai Citibank

New York

• Contract of Sale:

-The transaction in L/C originates when the exporter and the importer enter

into a contract of sale.

-The contract covers description, value and quality of goods, method of

payment, date of shipment etc.

• Request from the importer:

Th i t ill t hi b k t L/C i f f th



– The importer will request his bank to open a L/C in favour of the

exporter.

– He can get his L/C opened either by depositing cash in advance or by

showing sufficient balance in his current account.• Issue of L/C:

-The issuing bank opens the L/C and forwards it either directly to the

negotiating bank or to the Advising Bank.

• Possession of L/C:

- In case the exporter wants confirmation of L/C, advising bank is authorized bythe issuing bank to add confirmation.

- Now a days exporters prefer confirmed L/C.

- Hereafter, the exporter can take possessions of L/C.

•

Submission of Documents:-After shipment of goods through the customs, the exporter presents relevant set

of documents to the negotiating bank



of documents to the negotiating bank.

• Scrutiny of documents:

-The negotiating bank will minutely scrutinize the documents to ensure that they

are as per the requirements of the importer.-If documents are found to be in order, the negotiating bank will make the

payment to the exporter.

presents documents &

obtain payment (8)

Reimbursement

f t (7) hi d t (5)

Exporter Mumbai

(Beneficiary)SBI Mumbai

(Negotiating Bank)



of payment (7) ships goods to (5)

collects consignment &

instructs the bank (6)

Citibank

New York

(Issuing Bank)

Importer

New York

(Applicant)

• Realization of payment:

-The amount paid by the negotiating bank to the exporter is reimbursed bythe issuing bank.

D t t i t



• Documents to importer:

-The documents sent by the negotiating bank to the issuing bank is now

handed over to the importer.

Importance of Letter of credit

• L/C is the safest method of receiving payment from abroad when the

exporter has irrevocable and sans recourse type of L/C.

• It protects the exporter against failure of the importer to pay.

• The bank hich iss es the credit ens res that the goods co ered b the L/C



• The bank which issues the credit ensures that the goods covered by the L/C

would be permitted to import under the exchange control regulations.

• An exporter gets prompt payment from the bank if his documents are in

order. He need not wait for the payment to come from abroad.• An exporter is free from the problem of bad debt as the payment is

guaranteed by the opening bank.

• The importer is certain to get the goods and documents because only then

his bank will clear payment.

Types of Letter of credit

• Revocable L/C:

- L/C can be revoked, modified or cancelled by the opening bank without

seeking prior permission of the exporter. It can be revoked

-Before procuring the goods-After procuring the goods

B f di t hi th d



-Before dispatching the goods

-After dispatching the goods

-When the goods are in the transit,

-When the goods have reached the destination.

-When L/C is revoked, notice must be given by the issuing bank to the

beneficiary so that he does not dispatch the goods.

-Risky as it can be cancelled any time.

-In case the negotiating bank has already made the payment and thereafter receives the notice of modification or cancellation, such notice remains

inapplicable.

•

Irrevocable L/C:-This L/C is exactly the opposite of revocable L/C.

-Irrevocable L/C cannot be revoked, modified or cancelled by the importer

unless permission is obtained from the exporter.

-Safer type of L/C

-Firm commitment on the part of the opening bank, which once issued

cannot be withdrawn.



• Confirmed L/C:

-A certain issuing bank may not be known in the country of the exporter.

Under the circumstances, the exporter may ask the issuing bank to get the

L/C confirmed by the local bank.

-The confirming bank agrees to honor all the documents presented by the

exporter provided it fits into the terms and conditions of L/C.

-Safest type of

•

Unconfirmed L/C:- L/C to which confirmation is not added by the advising bank.

-Risk of Non payment is high.

Payment Terms



• In export trade, business dealings are carried on

between parties who may be separated by thousandsof miles.



• There must exist clear understanding of how and

when the buyer will pay the exporter for the goods

ordered.

• It is left to the exporter to indicate the way in which

he want the importer to pay him.

• Either for prompt payment or he may allow credit.

Exporters have to realize payments as per the terms and conditions prescribedby RBI

• Under instructions from RBI, Indian exporters are advised to realize

payments within 180 days from the date of making exporters.

• The exporters can realize payment later than six months, in case of deferred

payment terms.



payment terms.

Group Prescribed Methods

Member countries in the Asian Clearing

Union

(Bangladesh, sri lanka, Pakistan,

Myanmar)

Payment in Rupees from the account of a

bank situated in any country in this group

OR

Payment in any permitted currency

All other countries other than the above 5

countries

Payment in permitted currency.(RBI has

recognized about 20 permitted currencies

Methods of Payment for Exports

• Advance Payment

• Open Account



• Payment against Shipment on consignment

• Documentary Bills

Advance Payment

• Buyer needs to pay in advance

• Safety of getting payment

• Works when buyer is completely dominated by the exporter and the buyer is

interested in getting the goods.

• Used under following conditions:

-When there is political stability in buyer‟s country



When there is political stability in buyer s country

-When the buyer‟s country faces economic crises

-When the buyer has poor creditworthiness

-When the exporter is not prepared to bear credit risk

-When the goods are manufactured as per the specifications of foreign buyers

• Not practical:

- may be non execution of the order after receiving the payment, and

-sometimes buyer may not accept the goods

Open Account• When the goods are shipped on open account, the exporter forwards all the shipping

documents to the buyer and frees himself of the contract and payment.

• There is no need to draw a bill of exchange

• If buyer is not given credit facility , he must make payment immediately.

• There is proper understanding between the exporter and the buyer on terms of credit

and the rate of interest in the outstanding amount.

• Following circumstances are favorable for open account method:



-the exporter is confident that the buyer will honor his obligation

-there is a long and established relationship between the exporter and the buyer

-the exporter is absolutely sure about the sound financial position of the buyer.

-the exporter is financially sound to finance the operation.

-there should not be any exchange restriction in the importer‟s country otherwise

payment will be hampered

-importer‟s country should be financially sound and politically stable

Payment against shipment on Consignment• Consignment sale is possible only when the exporter maintains his own

establishment abroad or appoints an agent abroad to sell goods on his

behalf.

•

Exporter must obtain prior permission from RBI• Exporter must enter into legal contract with agent

• The agent sells the goods as per the demand and sends the payment to the



• The agent sells the goods as per the demand and sends the payment to the

exporter.

• The export proceeds are received only when goods are sold.

• The shipment on consignment basis should be made to trustworthy agentonly because:

-consignment exports is full of risks

-due date for the payment cannot be foreseen

-the exporter may face cash flow problem

-price to be realized depends on market conditions.

Documentary Bills• When relevant documents of the title of the goods are also sent along with the

foreign bill of exchange it is called Documentary Bill.

• Two types:

-Documents Against Payment(D/P)-Documents Against Acceptance(D/A)

D t A i t t(D/P)



Documents Against payment(D/P)

-exporter sends the negotiable documents to buyer through bank

-payment is made against documents verification

-Risk-Buyer may refuse to accept the documents and to make payment

-to cover this risk-ECGC policy is advised.

This method is used under following conditions:

-the exporter instructs the bank to retain the documents until payment is made

-the importer can collect documents only when he makes payments

In case, the importer does not collect the documents by making payment, the

exporter has to dispose of the goods in the overseas market.

• Documents Against Acceptance(D/A)

-the importer cannot collect documents unless he gives in writing hisacceptance to make payment as per the terms of export contract

-the documents are released against acceptance of the “Time Draft” .i.e



the documents are released against acceptance of the Time Draft .i.e

credit is allowed for a certain period say for 60,90 or 180 days.

-the buyer gets possession of the documents only after accepting the bill.

D/A is used under following conditions:i) The importer desires to use the goods before making payments

ii) The exporter has dispatched the goods before receiving the payment. He

cannot get the bills discounted.

iii) For the number of days of credit granted, the importer has to pay

interest to the principal sum.

Liberalization of Imports



INDIA TRADE BEFORELIBERLISATION



• 1980s, suggests that the root cause of the crisis was the large and growing

fiscal imbalance.

• Large fiscal deficits emerged as a result of mounting government

expenditures, particularly during the second half of the 80s.

•

These fiscal deficits led to high levels of borrowing by thegovernment from the Reserve Bank of India (RBI),IMF, World Bank.



•Over the 1980s, government expenditure in India grew at a phenomenal rate,

f h h



faster than what government earns as a revenues.

•The subsidies grew at a rate faster than government expenditures.

•Expenditure on subsidies rose from Rs.19.1 billion in 1980-81 to Rs. 107.2

billion in 1990-91.

•Although, a large part of the problem concerning external imbalances in India

could be attributed to extraneous developments, such as two oil-shocks duringthe last decade.

The Indian economy was indeed in deep trouble.

•Lack of foreign reserves . •Gold reserve was empty.

•Before 1991, India was a closed economy.

•The government was close to default and its foreign exchange

reserves had reduced to the point that India could barely finance three weeks‟ worthof imports.

•The Government of India headed by Chandra Shekhar decided to usher in several



The Government of India headed by Chandra Shekhar decided to usher in several

reforms that are collectively termed as liberalization in the Indian media with

Man Mohan Singh whom he appointed as a special economical advisor.

•License Raj was the regulations that were required to set up business in India

between 1947 1990



between 1947-1990.

•where all aspects of the economy are controlled by the state and licenses were given

to a select few.

•The License Raj is considered to have been dismantled in 1990.

•Ended many public monopolies, allowing automatic approval of foreign direct

investment in many sectors

•India still ranks in the bottom quartile of developing nations in terms of the ease of

doing business compared to China

Deputy Chairman of the Planning Commission

http://en.wikipedia.org/wiki/Planning_Commission

http://en.wikipedia.org/wiki/Planning_Commission



Key players in the battle field of

economy reforms



Dr. Man Mohan Singh, a professional economist and an economic administrator,

was appointed Finance Minister.

ManMohan Singh is undoubtedly the architect of the most far reaching reforms inIndia since independence in 1947.

•Government economists such as Dr. Arvind Virmani took upon themselves the

task of clarifying the goals, objectives and methods of the reform package along

with:-•C. Rangarajan,

•Montek Singh Ahluwalia,

•Shankar Acharya and

•Y. Venugopal Reddy.

Chairman of the Prime Minister'sEconomic Advisory Council





Indian economist. He is currently Member Boardof Governors



Economist & Governor of theReserve Bank of India

http://en.wikipedia.org/wiki/Reserve_Bank_of_India

http://en.wikipedia.org/wiki/Reserve_Bank_of_India



The reforms brought changes in three broad areas, collectively known

as liberalization, privatization and globalization.

•Liberalization did away with regulatory hurdles and minimized

licensing requirements.

•Privatization reduced the role of the state and public sector in

business.•Globalization made it easier for the MNCs to operate in India.

•This policy was later continued by Prime minister P V Narasimha



•This policy was later continued by Prime minister P. V. Narasimha

Rao,

and he was fully supported by his finance minister Manmohan Singh

and other officials such as C. Rangarajan, Montek Singh Ahluwalia,

Shankar Acharya and Y. Venugopal Reddy.

INDIA TRADEAFTER

LIBERLISATION



Opening up of the Indian Economy

ChangingEnvironmentAfter 1991



– Before 1991 closed economy and import of certain

goods was restricted.

– After 1991 competition increased tremendously after

the liberalisation.

– Competitors from all over the world enter the Indian

market•Competition from Low Wage Countries

– Low range products are floating into the market

– Low price, low quality

GDP growth at constant prices

6.1

8.2 8



Average for 1993-2003 2003-04 10th Plan

Projection (2002-07

Indian Foreign Exchange Reserves: a steady rise after liberalization

Foreign exchange reserves (US$ billion)

118.



1990-91 1995-96 2001-02 002-03 2003-04

2.217.0

54.1

75.4

Foreign Investments after liberalization

Foreign Investments after liberalization

Total Foreign Investment (US$ million)

15,872



1990-91 1994-95 1997-98 2000-01 2001-02 2002-03 2003-04

103

5,1385,385

6,789

8,152

5,639

Import duty Reductions after liberalization

Reduction in Peak Customs Duties on Manufactured items

150

110



1991 Mar-92 Mar-95 Mar-97 Mar-00 Mar02 Mar-03 w.e.f March2004

50

4238.5 30

2520

Vehicle Exports After Liberalization

Vehicle Exports

4 Wheelers (in Nos) 2 and 3 Wheelers (in Nos)



1992-93 1994-95 1996-97 998-99 2000-01

STEEL Industry after LiberalizationProduction and Export of Finished Steel

Production (in million tonnes) Exports (in '000 tonnes)

33 6736.19



23.82

1991-92 1994-95 998-99 2000-01 2002-03 2003-0

14.33 17.82

29.733.67

• IT & IT ENABLED SERVICES

• OIL & GAS

• POWER



• POWER

• PORTS & ROADS

• AIRPORTS

Categories of Imports• Importer means a person who imports or intends to import and holds an Importer-

Exporter Code Number.

• Importers are classified into two categories viz.

i) Actual user(Industrial)

ii) Actual User (Non Industrial)



Actual user(Industrial):

- it refers to a person who uses the imported goods for manufacturing in his own

industrial unit or manufacturing for his own use in another unit including a jobbingunit.

Actual User (Non-Industrial)

It refers to a person who uses the imported goods for his own use in:

a) Any commercial establishment carrying on any business, trade or profession, or

b) Any laboratory, scientific or R &D institution, university or any other educational

institution or hospital

c) Any service industry

• Non-Actual Users:

-it refers to such users who import but not meant for commercial use and

includes:

a) Personal imports

b) f if



b) Imports of gifts

c) Importers for stock and sale

Negative List For Imports



Free Importable Items:

-Free import of goods is not allowed for items included under the

prohibited list.

-Under Duty Exemption Scheme, certain items of import are allowed free

of duty meant for export production

such item freely imported they do not require import licenses



-such item freely imported , they do not require import licenses

• All second hand goods:

- can be imported only in accordance with provisions of FOREIGN TradePolicy 2009-2014

-second hand personal computers/laptops, photocopier machines, AC,

diesel generating sets will only be allowed against a license.

-Import of re-manufactured goods will be allowed only against License.

-when import of second hand capital goods are made they must have aminimum residual life of five years



Prohibited List• Unprocessed Ivory

• Animal rennet

• Tallow fat

• Wild animal including their parts and products



Unprocessed Ivory











Animal Rennet

• An enzyme which splits milk into curds

• Although rennet can be made from vegetable or microbial sources, most

forms are derived from the stomach linings of animals.

• often used in the production of cheese



• Tallow is a rendered form of beef or mutton

fat, processed from suet (raw beef or muttonfat





Restricted List

• Cannot be imported freely

• Can be imported with special permission / license from DGFT.

• Importers need licenses to import restricted items and only by actual users

• The grounds on which importers are restricted include health, security and

environmental protection or the goods are reserved for production by small



environmental protection or the goods are reserved for production by small

and tiny entrepreneurs.

•

Small and tiny sector in India adopt home based and village based production requiring low skills but making available employment to large

number of people.

Consumer Goods:

Industrial, agricultural, mineral or animal origin are included

which consist of:

i) Cameras

ii) Exports goods/ equipment

iii) Consumer telecommunication equipment

iv) Electronics goods

) Watches Watch cases and dials



v) Watches, Watch cases and dials

vi) Gifts of consumer goods

vii) Concentrates of alcoholic beverages

viii) Wines

ix) Cloves, Woolen silk, man made and blended fabrics

B) Safety and Security Beverages:

i) fire arms

ii) ammunition

iii) explosives

iv) empty/ discharged cartridges of all bores/ sizes



iv) empty/ discharged cartridges of all bores/ sizes

Paper for security printing, currency paper, stamp paper and other special types

of paper C) Electronic Item:

i)Audio magnetic tapes in all forms excluding 35mm and 16mm sprocketed

tapes

ii) Video magnetic tapes in hubs and reels, rolls, pancakes, jumbo rolls-in all

forms

iii) TV, picture tubes

iv) Printed circuit boards

v PC

Consumer Goods:





Safety and security Items





Semi precious and precious stones



Animals & Reptiles



Miscellaneous items



Canalised List



Mineral oil



Niger seeds (Uchellu)



Maize unfit for humanconsumption



EXPORT CREDIT GUARANTEE

CORPORATION OF INDIA LTD.



• Payments for exports are open to risks even at the best of

times.

• The risks have assumed large proportions today due to the far-

reaching political and economic changes that are sweeping theworld.

• An outbreak of war or civil war may block or delay payment



y y p y

for goods exported.

• Economic difficulties or balance of payment problems maylead a country to impose restrictions on either import of certain

goods or on transfer of payments for goods imported.

INTRODUCTION• Export Credit Guarantee Corporation of India

Limited, was established in the year 1957 by the

Government of India• To strengthen the export promotion drive by

covering the risk of exporting on credit.



• ECGC is the fifth largest credit insurer of theworld.

• The present paid up capital of ECGC is Rs. 800

crores

VISION

• To excel in providing credit insurance and trade related services.

MISSION



• To support the Indian Export Industry by providing cost-effective insuranceand trade-related services to meet the growing needs of the Indian export

market through the optimal utilization of available resources.



What does ECGC do?

• Provides a range of credit risk insurance covers to exporters against loss in

export of goods and services• Offers guarantees to banks and financial institutions to enable exporters to

obtain better facilities from them

• Provides Overseas Investment Insurance to Indian companies investing in



p g

joint ventures abroad in the form of loan

•International experience to enhance Indian capabilities

• Provides credit Insurance covers to banks against lending risks of exporters

• An ISO organisation excelling in credit insurance services

ECGC’s role in helping exporters

• Offers insurance protection to exporters against

payment risks

• Provides guidance in export-related activities

• Makes available information on different countries

i h i di i



with its own credit ratings

• Makes it easy to obtain export finance from banks/financial institutions

• Assists exporters in recovering bad debts

•

Provides information on credit-worthiness of overseas buyers

Objectives of ECGC

ECGC is designed to protect exporters

It helps exporters to expand their overseas business.

It enables them to get timely & liberal bank finance.



It provides financial guarantees to banks.

It enables exporters & importers to take calculated risks.



Risks covered by ECGC

COMMERCIAL RISKS:

Insolvency of the buyer.



Buyer’s failure to accept the goods when the

exporters is not at fault.

Buyer’s extended default to pay for the .goods

accepted by him

POLITICAL RISKS:

Imposition of restriction by the Government of the buyer's country or any

Government action, which may block or delay the transfer of payment made

by the buyer.

War, civil war, revolution or civil disturbances in the buyer's country.

New import restrictions or cancellation of a valid import license in the

buyer's country.

Interruption or diversion of trip outside India resulting in payment of



additional freight or insurance charges which can not be recovered from the

buyer. Ex: diversion due to accidents, traffic, security reasons etc

Any other cause of loss occurring outside India not normally insured by

general insurers, and beyond the control of both the exporter and the buyer.

Risks not covered by ECGC

• General or Marine Insurance Risk.

• Failure or negligence on the part of exporter.



• Default or insolvency of Exporter’s agent.

• Mistake committed by the exporter or his

agent.

Products and services

• Credit Insurance Policies

Risk covered for -short-term credit, i.e. credit not exceeding180 days. This policy covers -commercial and political risks

from the date of shipment.

• Guarantees to Banks



• Guarantees to Banks-

- The Guarantees assure the banks that, in the event of anexporter failing to discharge his liabilities to the bank, ECGC

would make good a major portion of the bank's loss.

• Special Schemes

Special Schemes Exchange Fluctuation Risk Cover

• The Exchange Fluctuation Risk Cover is intended to provide a measure of

protection to exporters of capital goods, civil engineering contractors and

consultants• They often receive payments over a period of years for their exports,

construction works or services.

Wh h b i d i f i h