MARKETING

DECISION
EXPORTS
PAYMENTS
PROCEDURE
&
DOCUMENTS
INTRODUCTION
EXPORT
PROMOTION
INTERNATIONAL TRADE
UNIT ONE:
Scope of International Marketing International Marketing Vs Domestic
Marketing Motivation to Export Special difficulties in International
Marketing International Marketing Environment Features of
Globalization Essential onditions !ros and ons"
UNIT TWO:
Marketing Selection and Entr# Decision $verseas Marketing %esearc&
ompetitive Intelligence Standard lauses of Sales ontract
International 'rade policies 'ariffs( Subsidies and )uotas"
UNIT THREE:
ounter 'rade *orld ommodit# Markets *orld 'rade in Services+
G,'' *'$ Institutional Infrastructure for Export promotion in India
E-IM .ank EG"
UNIT FOUR:
!rocedure for execution of Export order Export of Goods Export b# ,ir
and Sea Export Documents /)ualit# control and !res&ipment Inspection0
Marine Insurance"
UNIT FIVE;
'erms of !a#ments 1etter of redit t#pes process advantages
overvie2 of E-IM !olic#" Foreign Exc&ange Exc&ange %ate
Determination Exc&ange %ate S#stem Fixed and Flexible Exc&ange
,dvantages and Dis advantages"
REFERENCE BOOKS:
I3'E%3,'I$3,1 .4SI3ESS E3VI%$3ME3' F%,3IS 5E%43I1,M
I3'E%3,'I$3,1 .4SI3ESS !" S4.., %,$
E-!$%' M,%6E'I3G %,'5$%E
I3'E%3,'I$3,1 M,%6E'I3G M,3,GEME3' %1" V,%S53E7 ,3D
M,5ES*,%I"
INTERNATIONAL TRADE
UNIT ONE
DEFINITION OF INTERNATIONAL MARKETING:
Kotler defines maretin! as "#$man a%ti&it' dire%ted at satisf'in! needs and (ants
t#ro$!# e)%#an!e *ro%ess+" International maretin! %an ,e defined as -maretin! %arried
on a%ross national ,o$ndaries-+
International maretin! #as also ,een defined as " t#e *erforman%e of ,$siness
a%ti&ities t#at dire%t t#e flo( of !oods and ser&i%es to %ons$mers or $sers in more t#an in
one nation"+ It is different from domesti% maretin! in as m$%# as t#e e)%#an!e taes
*la%e ,e'ond t#e frontiers. t#ere,' in&ol&in! different marets and %ons$mers (#o mi!#t
#a&e different needs. (ants and ,e#a&ioral attri,$tes+
Scope of International Marketing:
T#o$!# international maretin! is in essen%e e)*ort maretin!. it #as a ,roader
%onnotation in maretin! literat$re+ It also means entr' into international marets ,'/
O*enin! a ,ran%#0 s$,sidiar' a,road for *ro%essin!. *a%a!in!. assem,l' or e&en
%om*lete man$fa%t$rin! t#ro$!# dire%t in&estment+
Ne!otiatin! li%ensin!0 fran%#in! arran!ements (#ere,' forei!n enter*rises are
!ranted t#e ri!#t to $se t#e e)*ortin! %om*an'"s no(1#o("s. &i2+. *atents.
*ro%esses or trademars (it# or (it#o$t finan%ial in&estment+
Esta,lis#in! 3oint &ent$res in forei!n %o$ntries for man$fa%t$rin! and or
maretin! and
Offerin! %ons$ltan%' ser&i%es and $ndertain! t$rne' *ro3e%ts ,road+
De*endin! $*on t#e de!ree of firm4s in&ol&ement. t#ere ma' ,e se&eral &ariations of
t#ese arran!ements+
International Marketing vs Do!estic Marketing:
T#ere are a n$m,er of similarities and differen%es ,et(een international and
domesti% maretin!+
5+ 6ot# in domesti% maretin! and international maretin! s$%%ess de*end $*on
satisf'in! t#e ,asi% re7$irements of %ons$mers+ T#is ne%essaril' in&ol&es findin!
o$t (#at t#e ,$'ers (ant and meetin! t#eir needs a%%ordin!l'+
8+ It is ne%essar' to ,$ild !ood(ill ,ot# in t#e domesti% maret and international
maret+ If a firm is a,le to de&elo* !ood(ill of %ons$mers or %$stomers. its tass
(ill ,e sim*ler t#an t#e one. (#i%# #as not ,een a,le to do so+
9+ Resear%# and de&elo*ment for *rod$%t de&elo*ment and modifi%ation is
ne%essar' ,ot# for international maretin! and domesti% maretin!+
:o(e&er. t#ere are some salient feat$res of differen%e ,et(een international
maretin! and domesti% maretin!+ T#e' are as follo(s/
1. Sovereign Political Entities: Ea%# %o$ntr' #as is a so&erei!n *oliti%al entit' and !oods and
ser&i%es #ad to mo&e a%ross national ,o$ndaries+ S a res$lt. t#e' ma' #a&e to fa%e a
n$m,er of restri%tions+ T#is m' fall in an' of t#e follo(in! %ate!ories;
Tariffs and %$stoms d$ties
<$antitati&e restri%tions
E)%#an!e %ontrols
=o%al Ta)es+
2. Different Legal Systems: Ea%# %o$ntr' #as its o(n le!al s'stem and it differs from
%o$ntr' to %o$ntr'+ T#e e)isten%e of different le!al s'stems maes t#e tas of
,$sinessmen more diffi%$lt as t#e' are not s$re as to (#i%# *arti%$lar s'stem (ill a**l'
to t#eir transa%tions+ In t#e %ase of domesti% maretin! t#e ,$'ers are a(are of t#e le!al
s'stems in t#eir %o$ntr'+
3. Cultural Differences/ In domesti% maretin! t#ere is onl' one nation. same lan!$a!e and
%$lt$re (#ere as at international maretin! man' lan!$a!es and different %$lt$res+
4. Different Monetary Systems: Ea%# %o$ntr' #as its o(n monetar' s'stem and t#e e)%#an!e
&al$e of ea%# %o$ntr'"s %$rren%' is different from t#at of t#e ot#er+ T#e e)%#an!e rates
,et(een %$rren%ies fl$%t$ate e&er' da'+ In %ase of domesti% maretin! t#ere is onl' one
%$rren%' *re&ailin! in t#e %o$ntr'+
5. Differences in the Marketing infrastructure: T#e a&aila,ilit' of t#e maretin! fa%ilities
a&aila,le in different %o$ntries ma' &ar' (idel'+ >or e)am*le. an ad&ertisement medi$m
&er' effe%ti&e in one maret ma' not ,e a&aila,le or ma' ,e $nder de&elo*ed in anot#er
maret+
6. Trade Restrictions: Trade restri%tions. *arti%$larl' im*ort %ontrols are a &er' im*ortant
*ro,lem (#i%# an international mareter fa%es+
7. Transport Cost: In International trade. trans*ort %ost is a ma3or maretin! e)*ense (#ere
as in domesti% trade trans*ort %ost infl$en%es onl' to %ertain e)tent+
8. Procedures and Documentations: Ea%# %o$ntr' #as its o(n *ro%ed$res and do%$mentar'
re7$irements and traders #a&e to %om*l' (it# t#ese re!$lations if t#e' (ant to e)*ort or
im*ort !oods from forei!n %o$ntries+
9. Degree of Risk: T#ere is a !reater de!ree of ris in&ol&ed in international maretin! t#an
in domesti% maretin! d$e to
8 =ar!e &ol$me of transa%tions
8 :i!#er &al$e of transa%tion
8 =on!er time *eriod
8 More time of transit
8 =on!er %redit *eriod
8 Com*arati&el' less no(led!e
8 E)%#an!e fl$%t$ations+
10. Stability in Business Environment: In domesti% maretin! t#ere is relati&el' sta,le
,$siness en&ironment+ At international maretin! m$lti*le en&ironments. man' of (#i%#
are liel' insta,le+
TRANSITION FROM DOMESTI" TO INTERNATIONAL MARKET
T#e De%ision to enter forei!n marets m$st ,e ,ased on stron! e%onomi% fa%tors+
Tem*eramental de%ision to e)*ort is transient in %#ara%ter and totall' $ns$ita,le for
e)*ort maretin!+ S$%%ess in e)*ortin! re7$ires total in&ol&ement and determination.
(#i%# %an %ome onl' o$t of ,asi% e%onomi% ne%essit' as *er%ei&ed ,' t#e %or*orate $nit+
T#e' !ro$*ed as Pre1e)*ort ,e#a&io$r and Moti&ation to E)*ort+
# $re%E&port 'e(avio)r:
E&er' firm at some *oint of time starts as a non1e)*orter+ T#e *oint to ,e st$died
is (#at made some of t#ese firms !et in&ol&ed in e)*ort ,$siness+ T#is m$st !i&e a %l$e
to t#e 7$estion as to (#et#er a *resent non1e)*orter (ill ,e%ome an e)*orter and if so
(#' and (#en+ T#e fa%tors. (#i%# infl$en%e a non1e)*ortin! firm"s de%ision to !o in for
e)*ort ,$siness. %an ,e %lassified $nder t#e follo(in! %ate!ories/
?a@ >irm %#ara%teristi%s/ >irm %#ara%teristi%s in%l$de *rod$%t %#ara%teristi%s; si2e
and !ro(t# of t#e domesti% maret. o*tim$m s%ale of *rod$%tion. and
*otential e)*ort marets+ If t#e firm is man$fa%t$rin! a *rod$%t. (#i%# is
internationall' mareta,le. and t#e *resent and f$t$re maret *ros*e%ts in t#e
domesti% maret are not m$%# en%o$ra!in!. t#e moti&ation of t#e firm to !et
in&ol&ed in e)*ort ,$siness (ill ,e %onsidera,le+
?,@ Per%ei&ed E)ternal E)*ort Stim$li/ T#is (ill in%l$de fort$ito$s order. maret
o**ort$nit' and !o&ernment"s stim$lation in t#e form of in%enti&es and
assistan%e+
?%@ Per%ei&ed Internal E)*ort Stim$li/ T#is refer to t#e mana!ement"s
e)*e%tations a,o$t t#e effe%ts of e)*orts on t#e firm"s ,$siness+ T#is %o&ers
t#e le&el of %a*a%it' $tili2ation. t#e #i!#er le&el of *rofits and t#e !ro(t#
o,3e%ti&es of t#e firm+
?d@ =e&el of Or!ani2ational %ommitment/ T#e de%ision maers m$st a!ree on t#e
le&el of %ommitment+ T#is is %r$%ial ,e%a$se it (ill determine (#et#er
ade7$ate reso$r%es (ill ,e made a&aila,le for em,arin! on international
maretin!+ Reso$r%es (ill ,e re7$ired for #irin! ne( staff s*e%iali2ed in
international maretin!. #irin! of %ons$ltants for %arr'in! o$t o&erseas maret
*otential st$dies et%+.
*Motivation to E&port: +Econo!ic reasons,
T#ere are some ,asi% e%onomi% reasons (#i%# mi!#t infl$en%e a firm de%ision
re!ardin! e)*ort ,$siness/ T#ese are $nder/
8 Relati&e Profita,ilit'/ T#e rate of *rofit to ,e earned from e)*ort ,$siness ma' ,e
#i!#er t#an t#e %orres*ondin! rate on t#e domesti% sales+
8 Ins$ffi%ien%' of Domesti% Demand/ T#e le&el of domesti% demand ma' ,e
ins$ffi%ient for $tili2in! t#e installed %a*a%it' in f$ll+ E)*ort ,$siness offers a
s$ita,le me%#anism for $tili2in! t#e $n$sed %a*a%it'+ T#is (ill red$%e %osts and
im*ro&e t#e o&erall *rofita,ilit' of t#e firm+ Re%ession in t#e domesti% maret
often ser&es as a stim$l$s to e)*ort &ent$res+
8 Red$%in! ,$siness riss/ A#en a firm is sellin! in a n$m,er of marets. t#e
do(n(ard fl$%t$ations in sales in one maret. (#i%# ma' ,e t#e domesti% maret.
ma' ,e f$ll' or *artl' %o$nter ,alan%ed ,' a rise in t#e sales in ot#er marets+
Se%ondl'. !eo!ra*#i% di&ersifi%ation also *ro&ides t#e moment$m to !ro(t# in as
m$%# as a sin!le or fe( marets (ill #a&e onl' limited a,sorti&e %a*a%it'+
8 =e!al restri%tions/ Go&ernments ma' im*ose %ertain restri%tions on f$rt#er
!ro(t# and %a*a%it' e)*ansion of some firms (it#in t#e domesti% maret in order
to a%#ie&e %ertain so%ial o,3e%ti&es+ 6$t t#ere ma' not ,e an' s$%# restri%tions. if
t#e additional %a*a%it' is $tili2ed for e)*orts+ T#en t#e firm ma' ,e tem*ted to
e)*ort its *rod$%ts a,road+
8 O,tainin! im*orted in*$ts/ Nations #a&e to *a' for im*orts of materials.
te%#nolo!' or *ro%esses not a&aila,le (it#in t#eir national ,o$ndaries+
Go&ernments. t#erefore. ma' ,e %om*elled to im*ose e)*ort o,li!ations on t#e
firms. es*e%iall' t#ose in need of im*orted in*$ts+ In ot#er (ords. in order to
im*ort. t#e firms (ill #a&e to e)*ort+
8 So%ial res*onsi,ilit'/ Sometimes ,$sinessmen t#emsel&es feel a sense of
res*onsi,ilit' and %ontri,$te to(ards t#e national e)%#e7$er ,' in%reasin! t#eir
e)*orts+ T#e' also ,$ild $* t#eir ima!e in domesti% maretin! ,' t#eir e)*ort
a%ti&ities+ T#e' also loo at e)*ortin! to attain stat$s and *resti!e+
8 In%reased *rod$%ti&it'/ In%reased *rod$%ti&it' is ne%essar' for $ltimate s$r&i&al
of a firm+ T#is (ill lead t#e firm to in%rease *rod$%tion and t#en mo&e to e)*ort
,$siness+ To meet t#e in%reased %osts of Resear%# and De&elo*ment. lar!er
marets ,e%ome a ne%essit' and e)*orts ,e%ome $na&oida,le+
8 Te%#nolo!i%al im*ro&ement/ Entr' to e)*ort maret ma' ena,le a firm to *i% $*
ne( *rod$%e ideas and to add to *rod$%t line. im*ro&e its *rod$%t. red$%e %osts
and dis%o&er ne( a**li%ations for its *rod$%t+
SPECIAL DIFFICULTIES IN INTERNATIONAL MARKETING
T#ere are a n$m,er of diffi%$lties in $ndertain! international ,$siness+ Some of
t#em t#e s*e%ial diffi%$lties are as follo(s/
8 <$antitati&e restri%tions to *rote%t lo%al ind$stries+
8 Go&ernment re!$lations restri%tin! im*orts ,' (a' of im*ort li%enses. et%+
8 E)%#an!e %ontrols+
8 =o%al ta)es lie sales ta)es on im*orted !oods+
8 Different monetar' s'stems lie Dollars in USA. Sterlin! in UK. YEN in
Ba*an+
8 Different le!al s'stem re!ardin! im*ort and e)*ort of !oods+
8 Differen%es in *ro%ed$res and do%$mentation+
8 Differen%es in maret %#ara%teristi%s+
8 =o(er mo,ilit' of fa%tors of *rod$%tion+
8 C$lt$ral dimensions of international maretin!+
8 E%onomi% Unions+
8 Trade ,arriers 1 Tariff and non tariff ,arriers+
8 =a% of e)*ort in%enti&es to e)*orters+
8 =a% of ade7$ate e)*ort finan%in! es*e%iall' for small s%ale ind$stries+
8 Com*li%ations of E)*ortin!+
8 Pa*er (or is more in e)*ort ,$siness+
8 Com*etition from lo%al e)*orters. %om*etition from e)*orters from ot#er
%o$ntries and %om*etition from *rod$%ers of !oods in t#e im*ortin!
%o$ntries+
8 S#i**in! and frei!#t *ro,lems+
8 Non1a&aila,ilit' of latest information a,o$t t#e maret %onditions. et%+
INTERNATIONAL MARKETING ENVIRONMENT
It is ne%essar' to no( t#e %on%e*ts of -%ontrolla,le- and -$n%ontrolla,le fa%tors-
in international maretin!+ T#ere are some fa%tors (#i%# %an ,e %ontrolled ,' t#e
mana!ement ma' not ,e a,le to #a&es an' %ontrol o&er t#em+ No( let $s dis%$ss t#ese
fa%tors as follo(s/
"ontrolla-le Factors:
Control (ill #a&e to ,e defined (it# referen%e to a %om*an'"s mana!ement+ T#e
%om*an' is in a *osition to %ontrol and desi!n maretin! mi) elements i+e+ *rod$%t. *ri%e.
e)*ort to an' *la%e ,' %#oosin! an' distri,$tion %#annels and follo( an' *romotional
met#ods+
.ncontrolla-le Factors:
T#ere are some fa%tors on (#i%# t#e %om*an' %an not #a&e an' %ontrol+ S$%#
$n%ontrolla,le fa%tors in international maretin! are des%ri,ed #ere+
SO"IAL FA"TORS:
T#e so%ial0%$lt$ral en&ironment of a nation0maret ma' *rofo$ndl' infl$en%e
,$siness in different (a's and dimensions+ T#e attit$de of (orers. la, o$r1mana!ement
relations. !o&ernment1,$siness relations. entre*rene$rial nat$re and attit$de. *oliti%al
*#iloso*#ies and s'stems. le!al en&ironment. ,$siness et#i%s. !o&ernan%e. !o&ernment
*oli%ies et%+ %o$ld #a&e a so%ial infl$en%e of t#em Mana!ement ma' $nder!o a so%ial
transformation. for e)am*le . a n$m,er of famil' o(ned ,$siness !ro$*s in India #a&e
$s#ered in *rofessional mana!ement+ T#e need for !ood %or*orate !o&ernan%e is !ettin!
more and more re%o!nition+
In s#ort. t#e t'*e of *rod$%ts to ,e man$fa%t$red and mareted. t#e maretin!
strate!ies to ,e em*lo'ed. t#e (a' t#e ,$siness s#o$ld ,e or!ani2ed and !o&erned. t#e
&al$es and norms it s#o$ld ad#ere to. are all infl$en%ed ,' so%ial str$%t$re and t#e %$lt$re
of a so%iet'+ T#e tastes and *referen%es. *$r*ose of %ons$m*tion. met#od of
%ons$m*tion. o%%asion of %ons$m*tion. 7$antit' of %ons$m*tion. &al$es asso%iated (it#
%ons$m*tion. et% of a *rod$%t ma' s#o( (ide &ariations ,et(een %$lt$res+
6e%a$se of %$lt$ral differen%es. a *romotion strate!' t#at is &er' effe%ti&e in one
maret ma' $tterl' fail in anot#er. or ma' e&en res$lt in so%ial or le!al re*risals+
Eti7$ettes differ from %$lt$re to %$lt$re+ T#e (a's of meetin! and !reetin! *eo*le.
e)*ression of a**re%iation or disa**ro&al. met#ods of s#o(in! res*e%t. (a's of
%ond$%tin! meetin!s and f$n%tions. ta,le manners et%+ &ar' 7$ite (idel' ,et(een
%$lt$res+ So familiarit' (it# %$lt$ral is ne%essar' for s$%%ess+
T#e ot#er so%ial fa%tors (#i%# infl$en%es t#e international maretin! in%l$si&e of
8 National le!al re!ime
8 Politi%al and >inan%ial s'stem
8 Maretin! infrastr$%t$re
8 =an!$a!e. Reli!ion and Climate
8
$OLITI"AL an/ GO0ERNMENT FA"TORS:
T#e follo(in! *oliti%al and !o&ernment fa%tors m$st ,e taen into %onsideration
,' an international mareter (#ile *lannin! to entr' an' maret a,road/
8 Consisten%' of !o&ernment *oli%ies+
8 T#e nat$re of *oliti%al relations#i* ,et(een t#e tar!et %o$ntr' and e)*orter"s
%o$ntr'+
8 T#e *resen%e or a,sen%e of %ontrols on forei!n e)%#an!e. im*orts. *ri%es.et%+.
in t#e tar!et %o$ntr'+
8 =e!al restri%tions on forei!n in&estments and t#e *atent a,ilit' of t#e *rod$%t
in t#e tar!et maret+
T#e %om*an' #as no %ontrol o&er all t#e a,o&e fa%tors mentioned and #en%e t#e
e)*orter #as to ad3$st #im to t#ese fa%tors+
E"ONOMI" FA"TORS:
I+ Commer%ial *oli%' &aria,les e+!+ tariffs. 7$otas. li%ensin! or an' ot#er
non1tariff ,arriers+
II+ C$rren%' restri%tions 1 de*endin! on t#e *oli%' of t#e %entral ,an of t#e
%o$ntr'+
III+ Internal demand mana!ement *oli%ies and instr$ments follo(ed ,' t#e
%o$ntr'+
T#e e)*orters #a&e to ,e t#oro$!# (it# t#e a,o&e *oli%ies and ad3$st t#em a%%ordin!l'+
DEMOGRA$1I" FA"TORS:
Demo!ra*#i% fa%tors s$%# as si2e of t#e *o*$lation. *o*$lation !ro(t# rates. a!e
%om*osition. et#i% %om*osition. famil' si2e. famil' life %'%le. in%ome le&els. #a&e &er'
si!nifi%ant im*li%ations for ,$siness+ T#e demo!ra*#i% en&ironment differs from %o$ntr'
to %o$ntr' and from *la%e to *la%e (it#in t#e same %o$ntr' or re!ion+ >$rt#er. it ma'
%#an!e si!nifi%antl' o&er time+ 6e%a$se of t#e di&ersit' of t#e demo!ra*#i% en&ironment
%om*anies are sometimes %om*elled to ado*t different strate!ies (it#in t#e same maret
"OM$ETITON:
Com*etition (ill also infl$en%e t#e international maretin!+ As lie domesti% maretin!
t#e trader al(a's a(are of #is %om*etitors+ 6$t t#e 7$ant$m of %om*etitors is more in
international maretin! t#an domesti% maretin!+ Normall' ,' t#e follo(in! (a's t#e
international mer%#ant (ill fa%e t#e %om*etitors+
8 Com*etition &is1C1&is *rod$%ers in t#e im*ortin! %o$ntr'+
8 Com*etition &is1C1&is e)*orter from t#e %om*etin! %o$ntries+
8 Com*etition &is1C1&is ot#er e)*orters from one"s o(n %o$ntr'+
T#e e)*orters #a&e no %ontrol o&er t#ese t'*es of %om*etition and #en%e t#e' #a&e to
%om*ete (it# all t#e t#ree t'*es of %om*etitions+
LOGISTI"S:
=o!isti%s is t#at *art of t#e s$**l' %#ain *ro%ess t#at *lans. im*lements. and
%ontrols t#e effi%ient. effe%ti&e for(ard and re&erses flo( and stora!e of !oods. ser&i%es.
and related information ,et(een t#e *oint of ori!in and t#e *oint of %ons$m*tion in order
to meet %$stomers" re7$irements+ T#e %on%e*t of lo!isti%s *la' &ital role in international
maretin! ,' t#e (a's sense+
8 T#e mer%#ant #as to see t#e a&aila,ilit' of re7$ired t'*e of trans*ort s$%#
as sea. air free2er s*a%e. et%+
8 Cost of trans*ortation+
Unless t#e e)*orters are in a *osition to meet t#e a,o&e re7$irements of trans*ort
fa%ilities and %osts t#e' %annot e)*ort t#eir *rod$%ts to t#e tar!et marets+
RISKS:
T#ere is a !reater de!ree of ris in&ol&ed in international maretin! t#an in
domesti% maretin! d$e to
8 =ar!e &ol$me of transa%tions
8 :i!#er &al$e of transa%tion
8 =on!er time *eriod
8 More time of transit
8 =on!er %redit *eriod
8 Com*arati&el' less no(led!e
8 E)%#an!e fl$%t$ations+
8 Politi%al riss
8 Commer%ial riss
8 A%t of nat$re
8 A%t of enemies
T#e e)*orters #a&e to fa%e t#ese riss in t#e international marets+ T#ese riss %an ,e
%o&ered ,' tain! ins$ran%e *oli%ies from t#e ECGC and General Ins$ran%e+
"ON"E$T OF GLO'ALI2ATION
-Glo,ali2ation means t#e *rod$%tion and distri,$tion of *rod$%ts and ser&i%es of a
#omo!eneo$s t'*e and 7$alit' on a (orld (ide ,asisD+ Glo,ali2ation also means
!lo,ali2in! t#e maretin!. *rod$%tion. in&estment. te%#nolo!' and ot#er a%ti&ities+ :o(
do t#ese #a**enE Glo,ali2ation does not tae *la%e in sin!l' instan%e+ It taes *la%e
!rad$all' t#ro$!# and e&ol$tionar' a**roa%#+
FEAT.RES OF GLO'ALI2ATION
8 O*eratin! and *lannin! to e)*and ,$siness t#ro$!#o$t t#e (orld+
8 Erasin! t#e differen%es ,et(een domesti% maret and forei!n maret+
8 6$'in! and sellin! !oods and ser&i%es from0to an' %o$ntr' in t#e (orld+
8 Esta,lis#in! man$fa%t$rin! and distri,$tion fa%ilities in an' *art of t#e (orld
,ased on t#e feasi,ilit' and &ia,ilit' rat#er t#an national %onsideration+
8 Prod$%t *lannin! and de&elo*ment are ,ased on maret %onsideration of t#e entire
(orld+
8 So$r%in! of fa%tors of *rod$%tion and in*$ts lie ra( materials. ma%#iner'.
finan%e. te%#nolo!'. #$man reso$r%es. mana!erial sills from t#e entire !lo,e+
8 Glo,al orientation in strate!ies. or!ani2ational str$%t$re. or!ani2ational %$lt$re
and mana!erial e)*ertise+
8 Settin! t#e mind and attit$de to &ie( t#e entire !lo,e as a sin!le maret+
ESSENTIAL "ONDITIONS FOR GLO'LAI2ATION
'.SINESS FREEDOM:
T#ere s#o$ld not ,e $nne%essar' !o&ernment restri%tions (#i%# %ome in t#e (a' of
!lo,ali2ation. lie im*ort restri%tion restri%tions on so$r%in! finan%e or ot#er fa%tors fro
,road forei!n in&estments et%+
FA"ILITIES:
T#e e)tent to (#i%# an enter*rise %an de&elo* !lo,all' from #ome %o$ntr' ,ase de*ends
on t#e fa%ilities a&aila,le lie t#e infrastr$%t$ral fa%ilities+
GO0ERNMENT S.$$ORT:
Alt#o$!# $nne%essar' !o&ernment interferen%e is a #indran%e to !lo,ali2ation.
!o&ernment s$**ort %an en%o$ra!e !lo,ali2ation+ Go&ernment s$**ort ma' tae t#e
form of *oli%' and *ro%ed$ral reforms. de&elo*ment of %ommon fa%ilities lie
infrastr$%t$ral fa%ilities. R and D s$**ort. finan%ial maret reforms and so on+
RESO.R"ES:
Reso$r%es is one of t#e im*ortant fa%tors (#i%# often de%ides t#e a,ilit' of a firm to
!lo,ali2e+ Reso$r%ef$l %om*anies ma' find it easier to t#r$st a#ead in t#e !lo,al maret+
"OM$ETITI0ENESS:
T#e %om*etiti&e ad&anta!e of t#e %om*an' is a &er' im*ortant determinant of s$%%ess in
!lo,al ,$siness+ A firm ma' deri&e %om*etiti&e ad&anta!e from an' one or more of t#e
fa%tors s$%# as lo( %osts and *ri%e. *rod$%t 7$alit' *rod$%t. *rod$%t differentiation.
te%#nolo!i%al s$*eriorit'. after sales ser&i%e. maretin! stren!t# et%+
ORIENTATION:
A !lo,al orientation on t#e *art of t#e ,$siness firms and s$ita,le !lo,ali2ation strate!ies
are essential for !lo,ali2ation+
$ROS AND "ONS OF GLO'ALI2ATION
AD0ANTAGES:
>ree >lo( of Ca*ital/ Glo,ali2ation #el*s for free t#e flo( of %a*ital from one %o$ntr' to
t#e ot#er+ It #el*s t#e in&estors to !et a fair interest rate or di&idend and t#e !lo,al
%om*anies to a%7$ire finan%e at lo(er %ost of %a*ital+ >$rt#er Glo,ali2ation in%reases
%a*ital flo(s from s$r*l$s %o$ntries to t#e need' %o$ntries. (#i%# in t$rn in%reases t#e
!lo,al in&estment+
>ree flo( of Te%#nolo!'/ Glo,ali2ation #el*s for t#e flo( of te%#nolo!' from ad&an%ed
%o$ntries to t#e de&elo*in! %o$ntries+ It #el*s t#e de&elo*in! %o$ntries to im*lement
ne( te%#nolo!'+
In%rease in Ind$striali2ation/ >ree flo( of %a*ital alon! (it# t#e te%#nolo!' ena,les t#e
de&elo*in! %o$ntries to ,oost1$* ind$striali2ation in t#eir %o$ntries+
S*read $* Prod$%tion fa%ilities t#ro$!#o$t t#e Glo,e/ Glo,ali2ation of *rod$%tion. leads
to s*read $* man$fa%t$rin! fa%ilities in all t#e !lo,al %o$ntries de*endin! $*on t#e
lo%ational &ario$s fa&ora,le *rod$%tion fa%tors+
6alan%ed de&elo*ment of (orld e%onomies/ Ait# t#e flo( of %a*ital. te%#nolo!' and
lo%atin! man$fa%t$rin! fa%ilities in de&elo*in! %o$ntries. t#e de&elo*in! %o$ntries
ind$striali2e t#eir e%onomies+ T#is in t$rn leads to t#e ,alan%ed de&elo*ment of all t#e
%o$ntries+
In%rease in Prod$%tion and Cons$m*tion/ In%reased ind$striali2ation in t#e !lo,e leads
in%rease in *rod$%tion and t#$s res$lts in ,alan%ed ind$strial de&elo*ment alon! (it#
in%rease in in%ome (#i%# en#an%es t#e le&els of %ons$m*tion+
=o(er *ri%es (it# #i!# 7$alit'/ Indian %ons$mers #a&e alread' ,een !ettin! t#e *rod$%ts
of #i!# 7$alit' at lo(er *ri%es+ In%reased ind$striali2ation s*read $* of te%#nolo!'.
in%reased *rod$%tion and %ons$m*tion le&el ena,le t#e %om*anies to *rod$%e and sell t#e
*rod$%ts of #i!# 7$alit' t lo(er *ri%es+
C$lt$ral e)%#an!e and demand for &ariet' of *rod$%ts/ Glo,ali2ation red$%es t#e
*#'si%al distan%e amon! t#e %o$ntries and ena,les *eo*le of different %o$ntries to a%7$ire
t#e %$lt$re of ot#er %o$ntries+ T#e %$lt$ral e)%#an!e. in t$rn maes t#e *eo*le to demand
for a &ariet' of *rod$%ts (#i%# are ,ein! %ons$med in ot#er %o$ntries+ >or e)am*le.
demand for Ameri%an Pi22a in India and Masala dosa and :'dera,ad 6ri'ani and Indian
st'led !arments in USA and E$ro*e+
In%rease in Em*lo'ment and In%ome/ Glo,ali2ation res$lts in s#ift of man$fa%t$rin!
fa%ilities to t#e lo( (a!e de&elo*in! %o$ntries+ As s$%#. it red$%es 3o, o**ort$nities in
ad&an%ed %o$ntries and alternati&el' %reates 3o, o**ort$nities in de&elo*in! %o$ntries+
:i!#er Standards of =i&in!/ >$rt#er. !lo,ali2ation red$%es *ri%es and t#ere,' en#an%es
%ons$m*tion and li&in! standards of *eo*le in all t#e %o$ntries of t#e (orld+
6alan%ed :$man De&elo*ment/ In%rease in ind$striali2ation on ,alan%ed lines in t#e
!lo,e. im*ro&es t#e sills of t#e *eo*le of de&elo*in! %o$ntries+ >$rt#er. t#e in%reased
e%onomi% de&elo*ment of t#e %o$ntr' ena,les t#e !o&ernment to *ro&ide (elfare
fa%ilities lie #os*itals ed$%ational instit$tes et%+ (#i%# in t$rn %ontri,$tes for t#e
,alan%ed #$man de&elo*ment a%ross t#e !lo,e+
In%rease in t#e Aelfare and Pros*erit'/ T#e ,alan%ed ind$strial. so%ial and e%onomi%
de&elo*ment of t#e (orld nations %onse7$ent $*on t#e !lo,ali2ation alon! (it# t#e
(elfare meas$res *ro&ided ,' t#e !o&ernments lead to in%rease in t#e (elfare of t#e
*eo*le and *ros*erit' of t#e (orld %o$ntries+
DISAD0ANTAGES:
Glo,ali2ation ills Domesti% 6$siness/ T#e MNCs from ad&an%ed %o$ntries $tili2e t#e
o**ort$nities %reated ,' !lo,ali2ation. esta,lis# man$fa%t$rin! and maretin! fa%ilities in
de&elo*in! %o$ntries+ T#e domesti% ,$siness of t#e de&elo*in! %o$ntries fails to %om*ete
(it# t#e MNCs on t#e te%#nolo!' and 7$alit' front+
E)*loits :$man Reso$r%es/ T#e forei!n %om*anies (#i%# are lo%ated in de&elo*in!
%o$ntries in&aria,l' &iolate t#e la,or and en&ironmental la(s in order to #a&e t#e %ost
ad&anta!e+ T#ese %om*anies em*lo' %#ild la,or. *oll$te en&ironment. and i!nore
(or*la%e safet' and #ealt# iss$es+ :o(e&er. it is &ie(ed t#at. !lo,ali2ation ena,les t#e
de&elo*in! %o$ntries to ,e%ome ri%# and enfor%e t#e la,or and en&ironmental re!$lations+
=eads to Unem*lo'ment and Underem*lo'ment/
MNCs *rod$%e t#e *rod$%ts in t#eir #ome %o$ntries or in some ot#er forei!n %o$ntries
and maret in de&elo*in! %o$ntries+ T#erefore. t#e domesti% %o$ntr'4s o*erations are to
,e red$%ed+ T#is in term leads to red$%tion in em*lo'ment o**ort$nities *arti%$larl' in
less de&elo*ed %o$ntries+
De%line in demand for domesti% *rod$%ts/ Sellin! of #i!# 7$alit' forei!n *rod$%ts at lo(
*ri%es ,' MNCs red$%es t#e demand for t#e domesti% *rod$%ts+
De%line in In%ome/ Unem*lo'ment and de%line in demand for domesti% *rod$%ts of ,ot#
ind$strial a!ri%$lt$ral !oods leads to red$%tion in in%ome of t#e *eo*le+
Aidenin! !a* ,et(een ri%# and *oor/ Glo,ali2ation not onl' res$lts in de%line in in%ome
,$t (idens t#e !a* ,et(een ri%# and *oor+ T#is is ,e%a$se. %om*etent *eo*le. *eo*le
(it# inno&ati&e sills. effi%ien%' et%+. !et a,normal in%ome. (#ile ot#er a&era!e *eo*le
#a&e to stri&e for e&en a minim$m (a!e+ T#is res$lts in (idenin! t#e !a* ,et(een #a&e
and t#e #a&e1nots.
Transfer of nat$ral reso$r%es/ MNCs esta,lis# t#eir man$fa%t$rin! fa%ilities in
de&elo*in! %o$ntries e)*loit t#eir nat$ral reso$r%es and sell t#e *rod$%ts in ot#er
%o$ntries+ T#ro$!# t#ese means. t#e nat$ral reso$r%es of de&elo*in! %o$ntries are
transferred to ot#er %o$ntries+
UNIT TWO
INTERNATIONAL MARKETING DECISION
In de&elo*in! a forei!n o*eration. t#e mareter #as to tae fo$r de%isions+ T#ese are/
8 Maretin! De%ision
8 Maretin! sele%tion de%ision
8 Maret entr' de%ision
8 Maretin! Mi) De%ision
Maretin! De%ision/
All t#e ,$siness in&ol&es ris+ One of t#e ris element is s$dden fall in demand+ In s$%#
%ir%$mstan%es t#e firm (#i%# %on%entratin! onl' domesti% maret (ill find t#read a,o$t
its s$r&i&al+ At t#e same time if t#e %om*an' is doin! international trade t#e' %an
%on%entrate for international maret to ,alan%e t#e fall in demand in domesti% maret+
A#en a firm t#ins of enterin! into an international maret. it s#o$ld de&elo* a
maretin! strate!' to ,e $sed for ,ot# domesti% and forei!n ,$siness+ 6efore tain! t#e
maretin! de%ision of enterin! into international maret it s#o$ld satisf' itself for t#e
follo(in! 7$estions+
5+ Are t#ere an' o**ort$nit' o*en to firm and its *rod$%t in a,roadE+
8+ A#et#er it %an meet t#e demand in domesti% as (ell as in international
maretE
9+ A#et#er it %an ada*t t#e *rod$%t a%%ordin! to t#e needs of t#e %ons$mersE
F+ A#et#er it %an form$late and im*lement a *oli%' and re!$lations *ertainin! to
e)*orts and im*ortsE
E&en if t#e o**ort$nities a**ear fa&ora,le. t#e firm m$st #a&e t#e reso$r%es in men.
mone' and materials to %a*itali2e t#em+
MARKET SE=ECTION DECISION
To ,e s$%%essf$l in initial e)*orts. t#e first ste* is to %#oose t#e ri!#t *la%e for t#e
initial e)*ort &ent$re. so t#at t#e ret$rns ma' ,e 7$i%er and %ertain. and t#e riss ma' ,e
minim$m+ No firm #as $nlimited reso$r%es+ A *ro*er sele%tion of marets (o$ld ens$re
t#at time and efforts are not (asted+
A#ile sele%tin! initial marets for e)*orts. t#e trader s#o$ld %onsider t#e
follo(in! *oints %aref$ll'/
8 Sele%t one or t(o marets initiall' so t#at is t#e a%ti&it' ma' ,e (it#in
mana!ea,le $nits/
8 Smaller less o,&io$s marets s#o$ld not ,e o&erlooed+ It (o$ld ,e $n(ise to sell
in t#e more %om*etiti&e E$ro*ean maret. (#en a less %om*etiti&e Ara, or
Afri%an maret is a&aila,le;
8 It is ad&isa,le to s*end some time and mone' on &isitin! t#e o&erseas maret+
T#is (ill ena,le t#e mareter to sol&e man' *ra%ti%al *ro,lems+
8 Enter t#e e)*ort ,$siness onl' (#en t#e mareter is s$re of its *rofita,ilit'+
8 Do not enter t#ose marets (#ere t#ere are a lot of im*ort restri%tions;
8 Tae !$idan%e from !o&ernment and non1!o&ernment instit$tions+
8 Colle%t t#e latest data on e)*ort s$r&e's and %ommer%ial intelli!en%e from India"s
Commer%ial Re*resentati&es a,road;
8 Colle%t t#e address of *otential %$stomers a,road and start %orres*onden%e (it#
t#em; a&oid an' trade dis*$tes; ,$t if s$%# dis*$tes arise. settle t#em ami%a,l'+
8 Mae %ertain at t#e start t#at 'o$r e)*ort ,$siness is !oin! to ,e *rofita,le+
8 >ind a need and fill it. t#is (ill ens$re s$%%ess+
SELECTION OF MARKET:
T#e %om*an' in t#is %onne%tion #as to tae t#e follo(in! ste*s so t#at it %an
$ltimatel' %#oose one or t(o marets of its %#oi%e/1
5@ T#e %om*an' s#o$ld e)amine e)*ort statisti%s of t#e *rod$%t from its %o$ntr'+
T#e %om*an' %an loo into t#ese statisti%s and find o$t (#ere t#e *rod$%ts are
e)*orted+ T#e %on%erned e)*ort *romotion %o$n%il also *$,lis#es s$%# statisti%s+
8@ It s#o$ld e)amine im*ort statisti%s of t#e *rod$%t in t#e tar!et marets+
9@ T#e %om*an' %an also &isit some Go&ernment offi%es. li,raries. trade asso%iations
to find o$t t#e *oli%'. names of im*orters et%+
F@ T#e %om*an' also #as dis%$ssion (it# some s$%%essf$l e)*orters+
G@ It %an also #a&e dis%$ssions (it# Commodit' ,oards. ECGC. et%
H@ It ma' also %onta%t o$r Trade re*resentati&e lo%ated in o$r Em,assies and :i!#
%ommissions a,road+
I@ It ma' also %onta%t >orei!n Em,assies and :i!# Commissions lo%ated in India+
J@ T#e %om*an' %an also send some offi%ers to t#e tar!et marets to find o$t t#e
maret %onditions t#ere+
K@ It %an tae *art in trade fairs and e)#i,itions %ond$%ted ,' ITPO and ot#er
a!en%ies+
5L@ It m$st also find o$t e%onomi%. so%ial and %$lt$ral fa%tors in t#e tar!et marets+
55@ It m$st also de%ide (#et#er it s#o$ld %#oose one maret or a fe( marets+
After e)aminin! &ario$s details as a,o&e t#e e)*orters #a&e to a&oid a maret in t#e
follo(in! %ases/
5@ If s#i**in! %osts (ill ,e far too #i!#
8@ If t#e in&estment re7$ired is more
9@ T#ose marets (#ere t#ere are a lot of im*ort restri%tions;
CRITERIA >OR SE=ECTION O> MARKET/
T#e maretin! firm s#o$ld #a&e a set of de%ision %riteria for sele%tin! t#e tar!et
marets+ A#ile t#e %om*lete set (ill #a&e to tae into a%%o$nt t#e *rod$%t and maretin!
%#ara%teristi%s of s*e%ifi% *rod$%ts. some of t#e %ommon elements are/
?i@Si2e of t#e Maret/
T#e tar!et territor' s#o$ld ,e one (#i%# is or #as t#e *otential to ,e a si2a,le maret+ It
is easier to %a*t$re a G *er %ent of a ,i! maret t#an to %a*t$re a 8G *er %ent s#are of
smaller maret+
?ii@Gro(t#/
It is eno$!# t#at t#e maret is e)istin! ,$t it s#o$ld also ,e in t#e !ro(t# sta!e+ :i!#er
s%ales o&er time ,e%ome easier (#en t#e o&erall demand is in%reasin!+ It is not eno$!# if
additional sales %ome at t#e %ost of t#e %om*etitions+
?iii@ =o!isti%s/
Dis*at%#in! t#e !oods to t#e ri!#t *la%e at t#e ri!#t time is t#e essen%e of all maretin!.
in%l$din! international maretin!+ Inade7$ate lo!isti% s$**ort %an *la' #a&o% in t#e
*lannin! of e)*ort s#i*ments. (#i%# (ill 3eo*ardi2e an' maretin! efforts+ >$rt#er . in
t#e %ase f %ertain *rod$%ts. s*e%ial t'*es of lo!isti% infrastr$%t$re is ne%essar'+
?i&@ Distan%e/
T#e trans*ort %ost and distan%e are intimatel' %orrelated+ >or lo(1&al$ed items. t#e
in%iden%e of #i!#er trans*ort %ost ma' red$%e e)*ort %om*etiti&eness 7$ite a**re%ia,l'+
T#e sele%tion *ro%ess of t#e tar!et maret (ill #a&e to tae t#is fa%tor into a%%o$nt+
?&@ Com*etition/
T#e nat$re and e)tent of %om*etition is a &er' %r$%ial fa%tor to re%on (it#+ A t#oro$!#
st$d' (ill #a&e to ,e made to determine #o( t#e firm"s *rod$%t *rofile %om*ares (it#
t#at of t#e %om*etiti&e *rod$%t line+ T#e firm (ill #a&e to e&al$ate (#et#er it is in a
*osition to mat%# s$%# %om*etition onsla$!#t+
?&i@ Distri,$tion S'stem/
T#e a&aila,ilit' of a %a*a,le a!ent or distri,$tor is a &er' im*ortant %onsideration.
es*e%iall' for *rod$%ts re7$irin! *re1sellin!. s$%# as demonstration and *ost1sellin!. s$%#
as after1 sales ser&i%es+ A !ood distri,$tor is essential+ E&en if a maret is ot#er(ise
*romisin!. if no !ood distri,$tor or a!ent is a&aila,le. t#e %om*an' s#o$ld t#in t(i%e
,efore de%idin! to enter t#at maret. $nless it is in *osition to set $* its o(n offi%e t#ere+
THE MARKET ENRTY DECISION:
On%e t#e tar!et maret #as ,een identified. t#e ne)t ste* relates to t#e de%isions
re!ardin! t#e alternati&e met#ods of entr'+ T#e &ario$s met#ods of maret entr' o*en to
firm in a !i&en %o$ntr' are/
8 Indire%t e)*ortin!
8 Dire%t E)*ortin!
8 =i%ensin!
8 >ran%#isin!
8 Boint Ment$re
8 >orei!n s$,sidiaries
8 S*e%ial Modes
INDIRECT EXPORTING/
T#e indire%t (a' of e)*ortin! is almost e7$i&alent to domesti% sales+ T#e firm
sells its *rod$%ts in its %o$ntr' to anot#er *art'. (#o taes t#e res*onsi,ilit' of a%t$al
e)*ort+ T#is %an ,e done ,'/
a@ Sellin! to Mer%#ant E)*orter :o$se in India and
,@ Sellin! to &isitin!0resident ,$'ers
Sellin! to Mer%#ant E)*orter or E)*ort :o$ses in India/
T#ere are man' mer%#ant e)*orters and or re%o!ni2ed e)*ort #o$ses in India.
(#i%# are (illin! to ,$' !oods from t#e Indian man$fa%t$rers and sell t#em a,road+
Mer%#ant e)*orters or e)*ort #o$ses sell and ,$' on t#eir a%%o$nt and t#$s ass$me t#e
riss in&ol&ed in e)*ortin!+ A mer%#ant e)*orter is free to de%ided (#at #e (ill ,$'.
(#ere #e (ill ,$' and at (#at *ri%e+ Mer%#ant e)*orters are $s$all' (ell finan%ed and
maintain t#eir ,ran%#es at *ort to(ns and in im*ortant %enters a,road+ T#e' $s$all' #a&e
a s'stem of !at#erin! maret information and ee* a %lose (at%# on maret trends+ T#is
met#od of e)*ortation is $sef$l (#en t#e %om*an' is small and. t#erefore. not in *osition
to start an e)*ort de*artment to lie after e)*orts sales+
Sellin! to Misitin!0Resident 6$'ers/
Man' ,i! forei!n %om*anies #a&e t#eir resident ,$'in! re*resentati&es in India
and ot#er %o$ntries (#o are entr$sted (it# t#e 3o, of *ro%$rement+ Some ot#er
%om*anies re!$larl' send ,$'in! teams for t#e same *$r*ose+ T#e amo$nt of ,$siness
t#at is %ond$%ted ,' s$%# ,$'in! o*erations is s$,stantial+ T#e ad&anta!e of sellin! in
t#is (a' is similar to (#at #ad ,een mentioned for e)*ortin! t#ro$!# e)*ort #o$ses+
Ad&anta!es of Indire%t E)*ortin!/
It in&ol&es little time or effort ,e%a$se t#e mer%#ant e)*orter taes %are of all t#e
diffi%$lties in&ol&ed and ass$mes all t#e sales and %redit riss;
It re7$ires less in&estment and t#e firm"s %a*ital is not tied $*;
It %arries less ris. and t#e firm does not #a&e to s*end mone' on maret resear%#
or on settin! $* ,ran%#es a,road;
It maes *ossi,le t#e $tili2ation of t#e no(1#o( and e)*erien%e of middlemen;
T#e man$fa%t$rin! firm is free to %on%entrate on *rod$%tion+
Disad&anta!es of Indire%t E)*ortin!/
>or *ra%ti%al *$r*oses. t#e man$fa%t$rer %annot ,e %alled an e)*orter. and #e
%annot %laim or a&ail of e)*ort in%enti&es !i&en on a fairl' li,eral s%ale;
Indire%t e)*ortin! *ro&ides little %ontrol o&er t#e o*erations of middlemen+
E)*ort mer%#ants ma' %on%entrate on t#e *rod$%ts. (#i%# offer t#em t#e !reatest
*rofit+ T#e small man$fa%t$rer"s *rod$%ts ma' ,e i!nored+
T#e middleman. *arti%$larl' t#e a!ent on %ommission ,asis. ma' not ,e
a!!ressi&e. (it# t#e res$lt t#at sales ma' s$ffer;
E)*ort mer%#ants middlemen ma' not ,e a&aila,le for all t#e marets+
DIRECT EXPORTING/
In %ase t#e firm de%ides not to o*erate t#ro$!# an' of t#e intermediaries des%ri,ed
in t#e earlier *ara!ra*#s. and o*ts for dire%t e)*ortin!. it (ill #a&e to %#oose most
%aref$ll' ,et(een one and or t#e ot#er ind of e)*ort sales or!ani2ation to ,e %reated+ If
its e)*ort *lans are am,itio$s and t#e *ros*e%ts of sellin! in a n$m,er of marets are
*romisin!. it ma' mae a modest start1 a**oint an e)*ort mana!er *l$s a %ler+
De*endin! $*on t#e firm"s e)*ort sales t$rno&er. e)istin! and *otential. it ma' %reate0set
$* a se*arate e)*ort de*artment or e&en a se*arate e)*ort %om*an'+ Dire%t E)*ortin!
ma' also ,e $ndertaen ,'/
8 Settin! $* a sales ,ran%# or a s$,sidiar' sales or!ani2ation in a forei!n %o$ntr'.
(#i%# ma' ,e a s$,stit$te for. or a s$**lement to t#e #ome or!ani2ation;
8 A**ointin! #ome1,ased sales re*resentati&es. (#o (o$ld tra&el a,road and ,oo
orders;
8 Sele%tin! s$ita,le distri,$tors in a forei!n %o$ntr' (#o (o$ld ,$' #is *rod$%t and
sell it t#ere. or s$ita,le a!ents in t#at %o$ntr' (#o (o$ld sell it on %ommission
,asis (it#o$t tain! an' title to it+
Ad&anta!es of Dire%t E)*ortin!/
8 T#e man$fa%t$rer (ill #a&e ,etter no(led!e of %$stomers" re7$irements
and maret %onditions+
8 :e (ill #a&e dire%t %ontrol o&er t#e maretin! o*erations+
8 :e %an en3o' t#e f$ll ret$rns on e)*orts+ :is *rofits (ill ,e more t#an
sellin! t#e !oods t#ro$!# middlemen+
8 Dire%t e)*ortin! is t#e onl' %#oi%e for %ertain *rod$%ts and not alternati&e
to !et s$%%ess. es*e%iall' in t#e follo(in! %ases/
1 If t#e *rod$%t is te%#ni%all' $ni7$e
1 If middlemen de%line
1 If im*orters (ants onl' dire%t e)*ort
1 If %osts in%rease ,e%a$se of tariffs
1 If after sales ser&i%e is a m$st
Disad&anta!es of Dire%t E)*ortin!/
8 =ar!e finan%ial reso$r%es needed
8 Mana!erial a,ilit' is essential and more staff is re7$ired
8 In%reased distri,$tion %ost
8 More ris
8 Greater initial o$tla' ,efore *rofit ,e!ins to flo( in+
=ICENSING/
Under t#is met#od. t#e man$fa%t$rer enters into an a!reement (it# a li%ensee in
t#e forei!n %o$ntr' and t#is !i&es #im t#e ri!#t to $se t#e man$fa%t$rin! *ro%ess. a *atent
desi!n or a trademar. te%#ni%al information or some fa%ilit' in ret$rn for some fee or
ro'alt'+ It is often t#e 7$i%est (a' of enterin! o&erseas marets 1 sometimes t#e onl'
*ossi,le (a' as in %entrall' *lanned e%onomies+ It is %learl' a met#od t#at in&ol&es little
e)*ense. and a&oids all distri,$tion %osts+
A/vantages an/ Disa/vantages of Licensing
Ad&anta!es Disad&anta!es
=i%ensin! mode %arries lo( in&estment on
t#e *art of t#e li%ensor+
=i%ensin! a!reements red$%e t#e maret
o**ort$nities for ,ot# li%ensor and
li%ensee+
=i%ensin! mode %arries lo( finan%ial ris
to t#e li%ensor+
6ot# t#e *arties #a&e t#e res*onsi,ilities to
maintain t#e *rod$%t 7$alit' and *romotin!
t#e *rod$%t+ T#erefore one *art' %an affe%t
t#e ot#er t#ro$!# t#eir im*ro*er a%ts+
=i%ensor %an in&esti!ate t#e forei!n maret Costl' and tedio$s liti!ation ma' %ro* $*
(it#o$t m$%# effort on #is *art+ and #$rt ,ot# t#e *arties and t#e maret+
=i%ensin! !ets t#e ,enefits (it# less
in&estment on resear%# and de&elo*ment+
T#ere is s%o*e for mis$nderstandin!
,et(een t#e *arties des*ite t#e
effe%ti&eness of t#e a!reement+
=i%ense es%a*es #imself from t#e ris of
*rod$%t fail$re+
T#ere is a *ro,lem of leaa!e of t#e trade
se%rets of t#e li%ensor+
T#e li%ensee ma' sell t#e *rod$%t o$tside
t#e a!reed territor' and after t#e e)*ir' of
t#e %ontra%t+
>RANC:ISING/
>ran%#isin! is also a form of li%ensin!+ T#e fran%#isor %an e)er%ise more %ontrol
o&er t#e fran%#ise %om*ared to t#at in li%ensin!+ Under fran%#isin!. an inde*endent
or!ani2ation %alled t#e fran%#ise o*erates t#e ,$siness $nder t#e name of anot#er
%om*an' %alled fran%#isor+ T#e fran%#isor *ro&ides t#e follo(in! ser&i%es to t#e
fran%#isee/
8 Trade mars
8 O*eratin! s'stem
8 Prod$%t re*$tations
Contin$o$s s$**ort s'stems lie ad&ertisin!. em*lo'ee trainin!. reser&ation ser&i%e. and
7$alit' ass$ran%e *ro!ramme et%+
Ad&anta!es and Disad&anta!es of >ran%#isin!
Ad&anta!es Disad&anta!es
>ran%#isor %an enter !lo,al marets (it#
lo( in&estment and lo( riss+
International fran%#isin! ma' ,e more
%om*li%ated t#an domesti% maretin!+
>ran%#isor %an !et t#e information
re!ardin! t#e marets. %$lt$re. %$stomers
and en&ironment of t#e #ost %o$ntr'+
It is diffi%$lt to %ontrol t#e international
fran%#isee+
>ran%#isor learns more lessons from t#e
e)*erien%es of t#e fran%#isees. (#i%# #e
%o$ld not e)*erien%e from t#e #ome
>ran%#isin! a!ents red$%e t#e maret
o**ort$nities for ,ot# t#e fran%#isor and
fran%#isee+
%o$ntr'4s maret+
>ran%#isee %an earl' start a ,$siness (it#
lo( ris as #e sele%ts an esta,lis#ed and
*ro&en *rod$%t and o*eratin! s'stem+
6ot# t#e *arties #a&e t#e res*onsi,ilities to
maintain *rod$%t 7$alit' and *rod$%t
*romotion+
>ran%#ise !ets t#e ,enefit of R & D (it#
lo( %ost+
T#ere is a *ro,lem of leaa!e of trade
se%rets+
>ran%#ise es%a*es from t#e ris of *rod$%t
fail$re+
BOINT MENTURE/
A 3oint &ent$re in&ol&es a %a*ital *artners#i* and ma' ,e arran!ed for
man$fa%t$rin! a%ti&ities. maretin! a%ti&ities. or ,ot#+ T#is taes *la%e (#en/
8 T#e domesti% in&estor ,$'s an interest in a man$fa%t$rin! $nit sit$ated in
a forei!n %o$ntr';
8 An' in&estor of a forei!n %o$ntr' ,$'s an interest in a man$fa%t$rin! $nit
of t#e domesti% in&estor alread' e)istin! in t#at %o$ntr'; or
8 A domesti% in&estor and an in&estor in a forei!n %o$ntr' to!et#er start a
ne( &ent$re in t#at forei!n %o$ntr'+
>OREIGN SU6SIDIARIES/
T#e mareter esta,lis#es a s$,sidiar' man$fa%t$rin! $nit in a forei!n %o$ntr'+ :e
is its e)%l$si&e o(ner and %ontroller. t#e monar%# of all t#at it %ontains+ T#is is t#e
%$lmination of international maretin!+ It is international *rod$%tion1%$m maretin!+
A#en a %om*an' en!a!es in s$%# *rod$%tion in a n$m,er of %o$ntries. it is %alled
m$ltinational %om*an'+
SPECIA= MODES O> ENTRY/
A+ Contra%t Man$fa%t$rin!/
Some %om*anies o$tso$r%e t#eir *art of or entire *rod$%tion and %on%entrate on
maretin! o*erations+ T#is *ra%ti%e is %alled t#e %ontra%t of man$fa%t$rin! or
o$tso$r%in!+
6+ Mana!ement Contra%ts/
T#e %om*anies (it# lo( le&el te%#nolo!' and mana!erial e)*ertise ma' see t#e
assistan%e of a forei!n %om*an'+ T#en t#e forei!n %om*an' ma' a!ree to *ro&ide
te%#ni%al assistan%e and mana!erial e)*ertise+ T#is a!reement ,et(een t#ese t(o
%om*anies is %alled t#e mana!ement %ontra%t+
C+ T$rne' *ro3e%ts/
A t$rne' *ro3e%t is a %ontra%t $nder (#i%# firms a!rees to f$ll' desi!n. %onstr$%t and
e7$it' a man$fa%t$rin!0,$siness0ser&i%e fa%ilit' and t$rn t#e *ro3e%t o&er to t#e *$r%#aser
(#en it is read' for o*erations for a rem$neration+ International t$rne' *ro3e%ts in%l$de
n$%lear *o(er *lants. air *orts. oil refiner'. national #i!#(a's. rail(a' lines et%+
INTERNATIONAL MARKETING RESEARCH
MARKET RESEARCH & MARKETING RESEARCH
Maret resear%# is a %om*lete anal'sis of t#e maret+ Information re!ardin! t#e
nat$re. si2e. or!ani2ation. *rofita,ilit' of different marets. %#an!es in marets and
&ario$s fa%tors. s$%# as e%onomi%. so%ial and *oliti%al. affe%tin! t#ose %#an!es are st$dies
&i!oro$sl'+ T#e main *$r*ose of maret resear%# is to no( a,o$t t#e %ons$mers and
marets of t#e e)*orter"s *rod$%ts and ser&i%es+ T#e resear%# is mainl' %on%erned (it#
details re!ardin! %ons$mers+ T#e resear%# is mainl' %on%erned (it# details re!ardin!
%ons$mers+
Maretin! resear%# %o&ers all as*e%ts of t#e maretin! a%ti&ities s$%# s marets.
*rod$%ts. %ons$mers. ad&ertisements. sales *romotion te%#ni7$es. %#annels of
distri,$tion. (are#o$sin!. trans*ort. *a%in! *ro,lems et% relatin! to firm"s *rod$%t (#ile
on t#e ot#er #and maret resear%# em*#asis resear%# on t#e maret and maret se!ments
and %ons$mers and t#eir ,e#a&io$r+ T#$s t#e maret resear%# is onl' a *art of maretin!+
NEED >OR OMERSEAS MARKET RESEARC: /? Uses@
8 Maret resear%# is re7$ired to identif' (#i%# marets s#o$ld ,e sele%ted as t#e
tar!et. ,ased on t#e maret si2e. !ro(t#. a%%essi,ilit' and %om*etiti&e fa%tors+
8 Identifi%ation of s$ita,le *rod$%ts is also de*endent $*on resear%#+ Detailed field
resear%# in&esti!ations are re7$ired to determine t#e e)tent of *rod$%t ada*tation
re7$ired to mae t#e *rod$%t a%%e*ta,le in a !i&en maret+
8 Resear%# %an #el* *re&ent t#e $se of ina**ro*riate maret entr' met#od+
8 Resear%# %an #el* to determine t#e *ositionin! of t#e *rod$%t. tain! into a%%o$nt
t#e so%io1%$lt$ral fa%tors+
8 Promotional %am*ai!ns s#o$ld ,e de%ided onl' (#en *ro*er resear%# #as ,een
%arried o$t re!ardin! t#eir a%%e*ta,ilit' in a !i&en en&ironment+
8 Resear%# also #el*s in tain! a**ro*riate *a%a!in! de%isions+
8 Considera,le amo$nt of data %olle%tion and anal'sis are re7$ired to arri&e at
*ri%in! de%isions+ Pri%in! is %r$%ial for s$%%ess in international maretin! and a
,l$nder %an mar all *ros*e%ts+
8 It is $sef$l in %on&ertin! $n%ertaint' into %ertaint'+ Maretin! resear%# ,'
*ro&idin! information on maret information on maret en&ironment. red$%es
$n%ertaint' in it and maes t#e en&ironment no(n+ T#e $n%ertaint' is miti!ated+
8 T#e resear%# ,e%omes ine&ita,le (#en t#e in%ome. fas#ion. #a,its and
*referen%es are %#an!in! &er' fast+
8 T#e needs for resear%# also arise (#en t#e sale of t#e *rod$%t is s#o(in! a
do(n(ard trend and t#e reason for t#e fall %o$ld not ,e esta,lis#ed+
MET:ODO=OGY >OR MARKET RESEARC:/
Maret resear%# in almost all %ases is %arried o$t into t(o *#ases/ &i2+. Des
resear%# and field resear%#+ Ste*(ise form$lation of a resear%# *lan %om*risin! ,ot#
des and field resear%# (ill ,e as follo(s/
8 Identif' t#e *ro,lem+
8 Identif' t#e information re7$irements to find o$t a sol$tion to t#e *ro,lem+
8 Identif' t#e so$r%es ?*rimar' and se%ondar'@ from (#ere s$%# information
%an ,e o,tained+
8 Colle%t and anal'se t#e se%ondar' so$r%e materials+
8 Identif' t#e !a*s in information still remainin!+
8 Pre*are a resear%# ,rief for field resear%# to %olle%t information on t#e !a*s+
8 Desi!n a 7$estionnaire+
8 Pre*are t#e sam*le of res*ondents+
8 Inter&ie( t#e res*ondents+
8 Anal'se and e&al$ate t#e res$lts+
DESK RESEARC:/
Des resear%# is t#e first *#ase of t#e maretin! resear%#+ It in&ol&es %olle%tion of all
rele&ant information from no(n *$,lis#ed and $n*$,lis#ed do%$mentations a&aila,le
(it#in and o$tside t#e or!ani2ation+
Inside or Internal so$r%e of information/
T#is information %an ,e !at#ered from t#e follo(in!/
1 *ast sales re%ord
1 en7$ires re%ei&ed from a,road
1 re*orts from its ,ran%#es and a!ents a,road and its offi%ers dealin!
in e)*ort trade+
1 Com*laints re%ei&ed from forei!n %$stomers et%+
E)ternal So$r%e of Information/
T#is information %an ,e #ad from an' *$,lis#ed do%$ments (#i%# ma' *ro&ide data on
t#e *ro,lems to ,e anal'sed+ :o(e&er ,efore rel'in! on an' *$,lis#ed do%$ments t#e
resear%#er s#o$ld %onsider t#e follo(in! *oints/
o E)a%tl' (#at *rod$%ts are in%l$ded in t#e statisti%al %lassifi%ation
o A#o ori!inall' %olle%ted t#e data for (#at *$r*ose. and (#et#er t#ee
mi!#t an' moti&e for misre*resentation;
o >rom (#om t#e data (ere %olle%ted. and #o( relia,le t#e met#odolo!'
mi!#t #a&e ,een and
o :o( %onsistent t#e data are (it# ot#er lo%al or international statisti%s+
T#e follo(in! ta,le s#o(s t#e a!en%ies (#i%# %an f$rnis# t#e re7$ired information for
des resear%#+
IN>ORMATIONS EXAMP=ES O> SOURCES
Im*ort statisti%s UN.OECD. national trade statisti%s
Prod$%tion statisti%s UN. Offi%ial statisti%al so$r%es
Tariffs and 7$otas Em,assies. C#am,er of Commer%e
C$rren%' restri%tions 6ans and Em,assies
:ealt# restri%tions Em,assies and %#am,er of %ommer%e
Politi%al sit$ation 6an re*orts. *ress re*orts and IM> 'ear ,oo
Domesti% %ons$m*tion Offi%ial statisti%s of %#am,er of %ommer%e and
%ommodit' ,oards+
Identifi%ation of a!ents Dire%tories. Re*orts of em,assies and Bo$rnals
Credit and *a'ment terms 6ans
Trans*ort %ost >rei!#t for(arders and %learin! a!en%ies
Pri%es Pre&io$s maret s$r&e' re*orts. %om*an'
%atalo!$es. dail' e%onomi% ne(s*a*ers on
%ommodit' *ri%es+
>IE=D RESEARC:/
An anal'sis of data %olle%ted from des resear%# (o$ld re&eal t#e !a*s in
information t#at still remain+ Generall' s*eain! *rod$%t s*e%ifi% maretin! in
formations are not a&aila,le from se%ondar' ?des@ so$r%es+ Goin! dire%tl' to t#e maret
ma' %o&er t#e !a*s in information+ T#ere are t(o s*e%ifi% im*ortant ste*s ,efore field
resear%# %an ,e $ndertaen &i2+. desi!n and testin! of a 7$estionnaire and *re*aration of a
sam*le of res*ondents+ In order to se%$re t#e ,est *ossi,le ret$rn on t#e limited time t#at
%an ,e s*ent on e)*ort maret resear%#+
>ield resear%# %an ,e %ond$%ted t#ro$!# *ersonal inter&ie(s. tele*#one
inter&ie(s and stores %#e%s+ Of t#e t#ree met#ods. *ersonal inter&ie( is t#e most
de*enda,le if relia,le data are to ,e re7$ired+ Unfort$natel'. #o(e&er. in man'
de&elo*in! %o$ntries. t#e *ersonal inter&ie( *resents s*e%ial *ro,lems for t(o main
reasons+ >irst t#e re%r$itment of inter&ie( is diffi%$lt and ins some %$lt$res it is
im*ossi,le to re%r$it female inter&ie(ers at all+
Te%#ni7$es of >ield Resear%#/ Inter&ie( met#ods. <$estionnaire and O,ser&ation
met#od
?Refer Resear%# met#odolo!' ,oo for f$rt#er details for t#e a,o&e said te%#ni7$es@
COMPETITIVE INTELLIGENCE:
Modern maretin! is &er' %om*etiti&e+ Modern ,$siness is a man' sided !ame in
(#i%# ri&als and o**onents %ontin$o$sl' tr' to form$late strate!ies to !ain ad&anta!e
o&er one anot#er+ Predi%tin! t#e ,e#a&io$r of one"s %om*etitors and o$t!$essin! of t#e
%om*etitor (ill need t#e ser&i%es of maretin! intelli!en%e+ A mareter %annot s$r&i&e
$nder een %om*etitions (it#o$t $* to date maret information *arti%$larl' re!ardin! t#e
nat$re. %#ara%ter and si2e of %om*etition to ,e met+ It is t#erefore. ne%essar' for t#e
e)*orter to o,tain %om*etiti&e intelli!en%e and mae a st$d' a,o$t %om*etitions for #is
*rod$%ts+ Re!ardin! t#at t#e trader s#o$ld #a&e ans(er for t#e follo(in! 7$estions a,o$t
#is %om*etitors/
6asi% >a%tors/
A#at are t#e %om*etiti&e *rod$%ts are sold in t#at *arti%$lar %o$ntr'E
A#o are t#e %om*etitorsE
A#at fa%ilities do t#e' #a&e and (#ere are t#e' lo%atedE
A#o are t#eir lo%al offi%ers. and #o( !ood are t#e'E
A#at *ro,lems do t#e fa%e. and #o( are t#e' tr'in! to sol&e t#emE
Are t#e' in&ol&ed in liti!ationE A#at indE
A#at relation do t#e' #a&e (it# !o&ernmentE
Do t#e' en3o' in%enti&es or fa&o$rsE
>inan%e/
A#at is t#e %$rrent finan%ial *osition of t#e %om*etitorsE
A#at are t#eir in&estment *ro!rammesE
A#at fees and ro'alties do t#e' $seE
A#at are t#eir finan%ial reso$r%es and #o( do t#e' finan%e e)*ansionE
A#at di&idend *oli%ies do t#e' *$rs$eE
Are t#e' sa%rifi%in! lon!1term ad&anta!e for s#ort term !ainsE
Prod$%tion/
A#at *lans do t#e %om*etitors #a&eE
A#at *rod$%tion te%#nolo!ies are $sedE
:o( effi%ient are t#e *lantsE
A#at %a*a%it' of e)istin! *lant is ,ein! $sedE
Do t#e' #a&e an' la,o$r *ro,lemsE
A#at"s t#eir so$r%e of man*o(erE
A#at is t#eir man$fa%t$rin! %ostE
:o("s t#eir *rod$%t 7$alit'E
Maretin!/
A#at maretin! %#annels t#e' #a&eE
T#eir *ri%in! strate!'+
T#eir *romotional strate!ies+
A#at"s t#eir maret s#areE
:o( (as it %#an!ed o&er t#e *eriod of timeE
A#at are t#eir ad&ertisin! mediaE :o( m$%# %ost is in%$rred re!ardin! t#atE
S$**l'in! t#e maret/
:o( do t#e %om*etiti&e *rod$%ts !et to t#e maretE
A#o are t#e im*orters and #o( do t#e' o*erateE
A#at %redit. *ri%in!. and ot#er terms are e)tended ,' forei!n s$**liersE
STANDARD CLAUSES OF INTRNATIONAL SALES CONTACT
One of t#e distin%ti&e feat$res of international maretin! is t#at e)*orters #a&e to
deal (it# different le!al s'stems+ An Indian e)*orter sellin! #is *rod$%t to an im*orter.
sa' in t#e USA. m$st %ontend (it# t#e fa%t t#at US la(s ma' (ell #a&e some infl$en%e
eit#er on t#e %ontra%t$al terms to ,e a!reed $*on ,et(een #im and t#e im*orter. or on t#e
settlement of dis*$tes. if an' arisin! o$t of t#e %ontra%t+ T#e f$n%tion of a sales %ontra%t
is to set fort# in (ritin! (#at one *art' a!rees to do for t#e ot#er and (#at ea%# ma'
e)*e%t of t#e ot#er+
T#e elements or t#e %la$ses of an e)*ort %ontra%t &ar' de*endin! $*on t#e nat$re
of *rod$%t ,ein! e)*orted+ T#ere are. #o(e&er. some elements t#at are almost $ni&ersal
in t#eir a**li%ation+ T#ese elements are as follo(s/
8 Names and addresses of t#e *arties 1 e)*orters and im*orters
8 T#e des%ri*tion of t#e *rod$%t+
8 <$alit' of t#e *rod$%t+
8 Pri%e *er $nit+
8 Total &al$e+
8 C$rren%'
8 Ta) and %#ar!es
8 Pa%in! s*e%ifi%ations
8 Mode of trans*ort
8 Deli&er'/ Pla%e and s%#ed$le
8 Marin! and la,elin!+
8 Ins$ran%e+
8 Ins*e%tion+
8 Do%$mentations+
8 Mode of *a'ment+
8 Credit *eriod. if an'
8 Aarranties 1 ass$rin! re*airs o&er a *eriod+
8 Passin! of ris+
8 Passin! of *ro*ert'+
8 A&aila,ilit'0 non1a&aila,ilit' of e)*ort and im*ort li%enses+
8 Settlement of dis*$tes+
8 Pro*er la( of %ontra%t+
8 B$risdi%tion+
INTERNATIONAL TRADE POLICIES
TRADE BARRIERS (METHODS OF PROTECTION)
Mana!in! an' ,$siness strate!i%all' needs an $nderstandin! of t#e ,$siness *oli%ies+ 6$t
in %ase of !lo,al %om*anies. an $nderstandin! of trade *oli%ies is more essential+
International trade *oli%ies deal (it# t#e *oli%ies of t#e national !o&ernments relatin! to
e)*orts of &ario$s !oods and ser&i%es to &ario$s %o$ntries eit#er on e7$al terms and
%onditions or on dis%riminator' terms and %onditions+
Go&ernment anno$n%es t#eir trade *oli%ies (it# re!ard to t#e follo(in! from time
to time+ T#e' are also %alled t#e instr$ments of trade *oli%'+ T#e' are/ Tariffs. S$,sidies
and Im*ort 7$otas+
TARIFFS
Tariff refers to t#e ta) im*osed on im*orts+ It is a d$t' or ta) im*osed on internationall'
traded %ommodities (#en t#e' %ross t#e national ,orders+ T#e o,3e%ti&es of Tariffs are
8 To *rote%t domesti% ind$stries from forei!n %om*etition
8 To !$ard a!ainst d$m*in!
8 To *romote indi!eno$s resear%# and de&elo*ment
8 To %onser&e forei!n e)%#an!e reso$r%es of t#e %o$ntr'
8 To mae t#e ,alan%e of *a'ments *osition more fa&ora,le and
8 To dis%riminate a!ainst %ertain %o$ntries+
IMPACT OF TARIFFS
Tariff affe%t on e%onom' in different (a's+ An im*ort d$t' !enerall' #as t#e follo(in!
effe%ts/
Protective effect:
An im*ort d$t' is liel' to in%rease t#e *ri%e of im*orted !oods+ T#is in%rease in t#e
*ri%e of im*orts is liel' to red$%e im*orts and in%rease t#e demand for domesti% !oods+
Im*ort d$ties ma' also ena,le domesti% ind$stries to a,sor, #i!#er *rod$%tion %osts+
T#$s. as a res$lt of t#e *rote%tion ,' tariffs. domesti% ind$stries are a,le to e)*and t#eir
o$t*$t+
Consumption Effect:
T#e in%rease in *ri%es res$ltin! from t#e le&' of im*ort d$t' $s$all' red$%es t#e
%ons$m*tion %a*a%it' of t#e *eo*le+
Redistribution Effect;
If t#e im*ort d$t' %a$ses an in%rease in t#e *ri%e of domesti%all' *rod$%ed !oods. it
amo$nts to redistri,$tion of in%ome ,et(een t#e %ons$mers and *rod$%ers in fa&or of t#e
*rod$%ers+ >$rt#er a *art of t#e %ons$mer in%ome is transferred to t#e e)%#e7$er ,'
means of t#e tariff+
Revenue Effect:
As mentioned a,o&e. a tariff means in%reased re&en$e for t#e !o&ernment+
Income and Employment Effect;
T#e tariff ma' %a$se a s(it%# o&er from s*endin! on forei!n !oods to s*endin! on
domesti% !oods+ T#is #i!#er s*endin! (it#in t#e %o$ntr' a' %a$se an e)*ansion in
domesti% in%ome and em*lo'ment+
Competitive Effect:
T#e %om*etiti&e effe%t on t#e tariff is. in fa%t. an anti1%om*etiti&e effe%t in t#e sense t#at
t#e *rote%tion of domesti% ind$stries a!ainst forei!n %om*etition ma' ena,le t#e
domesti% ind$stries to o,tain mono*ol' *o(er (it# all its asso%iated e&ils+
Terms of trade effect:
In a ,id to maintain t#e *re%io$s le&el of im*orts to t#e tariff im*osin! %o$ntr'. if t#e
e)*orter red$%es #is *ri%es. t#e tariff im*ortin! %o$ntr' is a,le to !et im*orts to a lo(er
*ri%e+
QUOTAS
<$ota is dire%t restri%tion on t#e 7$antit' of !oods (#i%# are im*orted into a %o$ntr'+
T#ese restri%tions are im*osed ,' iss$in! im*ort li%enses to %ertain firms and indi&id$als
to im*ort %ertain 7$antit' of t#e !oods+ India #ad 7$otas of im*orts of &ario$s !oods lie
%ars. motor %'%les. mil et%+ $* to 95st mar%# 8LL5+ Im*ort 7$otas *ro&ide t#e *rote%tion
to t#e domesti% firms from t#e forei!n %o$ntries+
IMPACT OF QUOTAS
Balance of Payment Effect:
As 7$otas ena,le a %o$ntr' to restri%t t#e a!!re!ate im*orts (it#in s*e%ified limits.
7$otas are #el*f$l in im*ro&in! its ,alan%e of *a'ments *osition+
Price Effect:
As 7$otas limit t#e total s$**l'. t#e' ma' %a$se an in%rease in domesti% *ri%es+
Consumption Effect:
If 7$otas lead to an in%rease in *ri%es. *eo*le ma' ,e %onstrained to red$%e t#eir
%ons$m*tion of t#e %ommodit' s$,3e%t to 7$otas or some ot#er %ommodities+
Protective Effect:
6' !$ardin! domesti% ind$stries a!ainst forei!n %om*etition to some e)tent. 7$otas
en%o$ra!e t#e e)*ansion of domesti% ind$stries+
Redistributive Effect:
<$otas also #a&e a redistri,$ti&e effe%t if t#e fall in s$**l' d$e to im*ortant restri%tions
ena,les t#e domesti% *rod$%ers to raise *ri%es+ T#e rise in *ri%es (ill res$lt in t#e
redistri,$tion of in%ome ,et(een t#e *rod$%ers and %ons$mers in fa&o$r of t#e
*rod$%ers+
Revenue Effect:
<$otas ma' also #a&e a re&en$e effe%t+ As 7$otas are administered ,' means of li%en%es.
t#e !o&ernment ma' o,tain some re&en$e ,' %#ar!in! a li%en%e fee+
Terms of Trade Effect;
<$otas ma' affe%t t#e terms of trade of t#e %o$ntr' im*osin! t#em+ T#e effe%t of 7$otas
on t#e terms of trade de*ends $*on t#e elasti%it' of t#e forei!n offer %$r&es+
TARIFFS Vs QUOTAS
T#e differen%es ,et(een tariffs and 7$otas (ill ,e %lear ,' t#e follo(in! (a' of
%om*arison/
Let us first examine the superiority of quotas to tariffs:
8 As a *rote%ti&e meas$re. a 7$ota is more effe%ti&e t#an t#e tariff+ A tariff sees to
dis%o$ra!e im*orts ,' raisin! t#e *ri%e of im*orted arti%les+ It #o(e&er fails to
restri%t im*orts (#en t#e demand for im*orts is *ri%e inelasti%+
8 A#en %om*ared to tariffs. 7$otas are m$%# *re%ise and t#eir effe%ts m$%# more
%ertain+ T#e rea%tions or res*onses to tariffs are not %lear and a%%$ratel'
*redi%ta,le; ,$t t#e effe%t of 7$otas on im*orts is %ertain+
8 It #as ,een ar!$ed t#at 7$otas tend to ,e more fle)i,le; more easil' im*osed and
more easil' remo&ed instr$ments of %ommer%ial *oli%' t#an tariffs+ Tariffs are
often re!arded as relati&el' *ermanent meas$res and ra*idl' ,$ild *o(erf$l
&ested interests. (#i%# mae t#em all t#e more diffi%$lt to remo&e+ <$otas #a&e
man' %#ara%teristi%s of a more tem*orar' meas$re. are desi!ned to deal onl' (it#
a %$rrent *ro,lem. and remo&a,le as soon as %ir%$mstan%es (arrant+
<$otas. #o(e&er. s$ffer from %ertain effe%ts+ Tariffs in some res*e%ts are s$*erior to
7$otas+
8 T#e effe%ts of 7$otas are more ri!oro$s and ar,itrar' and t#e' tend to distort
international trade m$%# more t#an t#e tariffs+ T#at is (#' GATT %ondemns
7$otas and *refers tariffs to 7$otas for %ontrollin! im*orts+
8 <$otas tend to restri%t %om*etition m$%# more t#an tariffs ,' #el*in! im*orters
and e)*orters to a%7$ire mono*ol' *o(er+ If im*ort 7$otas are allo%ated onl' to a
fe( im*orters. t#e' ma' ena,le t#em to amass fort$nes ,' e)*loitin! t#e maret+
Similarl'. 7$otas tend to *romote t#e %on%entration of e%onomi% *o(er amon!
forei!n e)*orters+
8 <$otas ma' s$**ort inflationar' *ress$res (it#in t#e %o$ntr' ,' restri%tin!
s$**l'+ Tariffs also s$ffer from t#e same defe%t+
8 <$otas offer !reater s%o*e for %orr$*tion t#an tariffs+
SUBSIDIES
In order to en%o$ra!e domesti% *rod$%tion or to *rote%t t#e domesti% *rod$%er from t#e
forei!n %om*etitors. !o&ernment *a's to a domesti% *rod$%ers red$%in! o*erations %ost+
S$%# *a'ments are %alled s$,sidies+ S$,sidies are in different forms+ T#e' are/ Cas#
!rants. loans and ad&an%es at lo( rate of interest. ta) #olida's. !o&ernment *ro%$rement
of o$t *$t at a #i!#er rate. e7$it' *arti%i*ation and s$**l' of in*$ts at lo(er *ri%es+
INTERNATIONAL TRADE - UNIT III
"O.NTER TRADE
Co$nter Trade refers to an' one of se&eral different arran!ements ,' (#i%# !oods and
ser&i%es re traded for ea%# ot#er. on eit#er ,ilateral or m$ltilateral ,asis+ T#ere are a
&ariet' of forms of %o$nter trade+ 6asi%all' it is a ,arter ?e)%#an!e of one t'*e of !oods
for anot#er t'*e of !oods@ or 7$asi1,arter a!reement. (#ere %as# ma' not in&ol&e ,$t
t#ere is al(a's a lin ,et(een t#e im*orts and e)*orts transa%tions+ In ot#er (ords
im*orts are *aid o$t of e)*orts in %o$nter trade+ >or e)am*le India e)*orts iron and steel
a!ainst im*ort of #ea&' ma%#iner' $nder a %ontra%t it is %alled a %o$nter trade
transa%tion+
FORMS OF COUNTER TRADE:
T#ere are a n$m,er of forms of %o$nter trade+ Ae ma' e)amine t#em in detail in
detail as in t#e follo(in! *ara!ra*#s+
'arter/ In t#e ,arter a!reement. t#e e)*orter sells s*e%ified !oods to t#e im*orter in
e)%#an!e for s*e%ified !oods+ In ot#er (ords ,arter in&ol&es tradin! !oods for !oods+ In
t#is %ase no %as# in in&ol&ed+ P$re ,arter of t#is t'*e is rare in no( a da's+
"o!pensation co)nter tra/e/ Under %om*ensation arran!ement t#e e)*orter a!rees to
a%%e*t a *art of %onsideration in %as# and t#e ,alan%e in inds. ,$t t#e e)*orter transfers
t#e *$r%#asin! %ommitment to a t#ird *art' (#o ma' ,e an end $ser of *rod$%ts or a
tradin! #o$se+ T#is t'*e of %o$nter trade is not &er' %ommon as it taes %onsidera,le
time to find a s$ita,le t#ird *art' to (#om t#e e)*orter %an transfers t#e *$r%#asin!
a!reement+
')3 -ack arrange!ent: T#is t'*e of arran!ement sis t#e most *o*$lar arran!ement
in&ol&in! a relati&el' lar!e &ol$me of trade+ Under t#is arran!ement. t#e e)*orter.
$s$all' an ind$strial firm. *ro&ide *lant. e7$i*ment or te%#nolo!' to an im*orter and
a!rees to a%%e*t. in f$ll or *art %onsiderations. t#e !oods to ,e *rod$%ed ,' t#e im*orter
(it# t#e e)*orter s" e7$i*ment or te%#nolo!'+ T#e %ontra%t *eriod of ,$' ,a%
arran!ements is. ,' ne%essit'. %onsidera,l' lon!er t#an t#at of %o$nter *$r%#ase
arran!ements+
"o)nter p)rc(ase arrange!ent: T#is t'*e of %o$nter trade arran!ement is also
%ommon ,$t it is %om*li%ated+ Under t#is arran!ement. t#e e)*orter sells t#e !oods.
ser&i%es or te%#nolo!' to a forei!n im*orter a!ainst t#e *$r%#ase of a s*e%ified total &al$e
of !oods sele%ted from a list t#at e)%l$des t#ose !oods *rod$%ed ,' t#e te%#nolo!' ,ein!
e)*orted. (it#in a s*e%ified *eriod+ T#e !oods *$r%#ased (ill not ,e $sed ,' t#e
e)*orter #imself and #e (ill #a&e to arran!e for t#eir sale (it# a t#ird *art' (#o ma'
maret t#em+
S4ap: In a s(a* %ontra%t t(o %o$ntries a!ree to trade. *rod$%ts from different lo%ations
(it# a &ie( to sa&e trans*ortation %ost+ T#is is ideall' s$ited for %ommodities s$%# as
s$!ar. %#emi%als and oils+ In s(a* transa%tions differen%es in 7$alit' of t#e !oods ,ein!
s$,stit$ted are (ored o$t in s(a* %ontra%t+
S4itc(: T#is met#od of %o$nter trade is $sef$l (#en international %$rren%' flo( is
sl$!!is# or $ne&en+ One %o$ntr' t#at is a *art' to a ,ilateral trade a!reement (ill transfer
its im,alan%e to a t#ird *art' or nation+ One e)am*le of s(it%# is (estern firm t#at sold
a *lasti% man$fa%t$rin! *lant to t#e t#en USSR (#i%# #ad no %as# to *a'+ :o(e&er.
R$ssia #ad a %learin! a!reement (it# A$stralia (#i%# (as ,$'in! nat$ral !as to R$ssia.
it *aid to t#e (estern firm dire%t t#e amo$nt e7$al to t#e *ri%e of t#e *lant sold to R$ssia+
T#$s in a s(it%# a!reement. t#e amo$nt is *aid or a%%e*ted t#ro$!# a t#ird %o$ntr' or
*art'+ T#is met#od of %o$nter trade is $sef$l (#en international %$rren%' flo( is
sl$!!is# or $ne&en+
Evi/ence Acco)nts: Under e&iden%e a%%o$nts. t#e %om*an' sells its *rod$%ts or ser&i%es
to a lo%al forei!n trade or!ani2ation and *$r%#ases !oods and ser&i%es of its re7$irements
form anot#er lo%al forei!n trade or!ani2ation of t#e e7$al amo$nt+ T#ese inds of
transa%tions are set to o%%$r o&er a s*e%ified *eriod. !enerall' one 'ear+ S$%# a%%o$nts
are monitored ,' t#e %o$ntr'"s ,an of forei!n trade t#at deals in forei!n e)%#an!e and
(#ere t#e %om*an' maintains its a%%o$nts+
REASONS FOR T1E GRO5T1 OF "O.NTER TRADE
T#e reasons to en!a!e in %o$nter trade in%l$de t#ose ,asi% to ,$siness; t o enter
ne( marets. sell *rod$%ts and !ain an ed!e o&er %om*etition+ Co$nter trade is
%onsidered a (a' of o&er%omin! of $n%ertaint' of domesti% *rod$%tion *lans and. at t#e
same time. of a%#ie&in! ,ilateral ,alan%in! of trade1an im*ortant o,3e%ti&e of forei!n
trade *oli%' in t#e %entrall' *lanned East E$ro*ean %o$ntries+ s#orta!e of forei!n
e)%#an!e and t#e desire to stim$late forei!n te%#nolo!' inflo(s moti&ated East
E$ro*ean %o$ntries to enter into %o$nter trade arran!ements+ T#e de&elo*in! %o$ntries.
*arti%$larl' t#ose maintainin! o&er&al$ed e)%#an!e rates. #a&e resorted to %o$nter trade
for t#e reasons s$%# as ,alan%e of *a'ments diffi%$lties. %reation of o&er%a*a%it' et%+
Some ot#er reasons for t#e !ro(t# of %o$nter trade are as follo(s/
1 T#e desire to %on%eal from t#e domesti% *$,li% t#e fa%t t#at t#e sale is ,ein!
made ,elo( its %osts+ T#is moti&e for %o$nter trade is im*ortant for man' de&elo*in!
%o$ntries and also for a n$m,er of %omm$nist %o$ntries+
1 A %o$nter trade transa%tion ma' *ro&ide some sli!#t additional %ertaint' in an
$n%ertain (orld+
1 A %o$nter trade transa%tion *ermits %on%ealed dis%o$ntin! in a *eriod of (ea
marets+ In ot#er (orlds %o$nter trade *ermits *ri%e dis%rimination amon! %$stomers+
1De&elo*in! %o$ntries (ill #a&e %onfident to e)*ort t#eir *rod$%ts to ot#er
%o$ntries+
DRA5'A"KS OF T1E "O.NTER TRADE
Co$nter trade transa%tions are often e)tremel' %om*le) and diffi%$lt as %om*ared (it#
strai!#tfor(ard trade+ T#is re7$ires *lannin! and %ommitment+
8 It ,e%omes %ostl' as t#e man$fa%t$rin! firms (ill #a&e to set $*
s$,sidiaries to #andle %o$nter trade arran!ements or em*lo' t#e ser&i%es
of tradin! %om*anies s*e%iali2in! in s$%# a%ti&ities+
8 It is f$ll of riss and $n%ertainties+ Riss in%rease as %o$nter trade
arran!ements e)tend o&er se&eral 'ears+
8 It is time %ons$min! to %on%l$de t#e arran!ements+ >or e&er' 5L to 8L
deals t#at are taled a,o$t. *er#a*s one !ets done+
"O.NTER TRADE IN INDIA: T#e State Tradin! Cor*oration of India (as in&ol&ed
sin%e 5KH5 in one for or ot#er of %o$nter trade me%#anism ,' (a' of trade *romotion
a!reements. ,arter deals. s*e%ial tradin! arran!ements. et%+ India #ad lon! a lon!er
#istor' in t#e $se of ,$'1,a% arran!ements+ T#is te%#ni7$e is ,ein! in%reasin!l' a**lied
for im*ortin! te%#nolo!'. es*e%iall' for e)*ort1oriented *ro3e%ts+
GENERAL AGREEMENT ON TARIFFS AND TRADE +GATT,
T#e General A!reement on Tariff and Trade is a m$ltilateral treat' t#at la's do(n a!reed
r$les for %ond$%tin! international trade+ It %ame into for%e in Ban$ar' 5KFJ+ 55K
!o&ernments (#i%# to!et#er a%%o$nt for KL *er %ent of t#e (orld mer%#andise trade
s$,s%ri,e it to+ Its ,asi% aim is to li,erali2e trade and for t#e last FG 'ears it #as ,een
%on%erned (it# ne!otiatin! t#e red$%tion of trade ,arriers and (it# international trade
relations+ T#e ra*id and $ninterr$*ted !ro(t# in t#e &ol$me of international trade till
5KK8 *ro&ides a !ood testimon' for t#e s$%%ess of t#e GATT+
'asic $rinciples of GATT:
# Tra/e 4it(o)t /iscri!ination: Trade m$st ,e %ond$%ted on t#e ,asis of
nondis%rimination+
All %ontra%tin! *arties are ,o$nd to !rant to ea%# ot#er treatment
as fa&o$ra,le as t#e' (o$ld to an' %o$ntr' ?most fa&o$red nation@ in t#e
a**li%ation and administration of im*ort and e)*ort d$ties and %#ar!es+
E)*e%tations to t#is ,asi% r$le are allo(ed onl' in t#e %ase of re!ional tradin!
arran!ements and t#e de&elo*in! %o$ntries+
* $rotection onl3 t(ro)g( tariff: Prote%tion s#o$ld ,e !i&en to domesti%
ind$stries onl' t#ro$!# %$stoms tariffs and not t#ro$!# ot#er %ommer%ial
meas$res+ T#e aim of t#is r$le is to mae t#e e)tent of *rote%tion %lear and to
Mae %om*etition *ossi,le+ E)%e*tion is. #o(e&er. made in t#e %ase of
de&elo*in! %o$ntries (#ere t#e demand for im*orts ,' de&elo*ment ma' re7$ire
t#em to maintain 7$antitati&e restri%tions in order to *re&ent an e)%essi&e drain on
t#eir forei!n e)%#an!e reso$r%es+
6 A Sta-le -asis of tra/e: T#e ,indin! of t#e tariff le&els ne!otiated amon! t#e
%ontra%tin! %o$ntries *ro&ides a sta,le *redi%ta,le ,asis for trade+ 6indin! of
tariffs means t#at t#ese %annot ,e in%reased $nilaterall'+ Alt#o$!# *ro&ision is
made for t#e rene!otiation of ,o$nd tariffs. a ret$rn tariffs is dis%o$ra!ed ,' t#e
re7$irement t#at an' in%rease ,e %om*ensated for+
7 "ons)ltation: A ,asi% *rin%i*le of GATT is t#at mem,er1%o$ntries s#o$ld
%ons$lt one anot#er on trade matters and *ro,lems+ T#e' %an %all on GATT for a
fair settlement of %ases in (#i%# t#e' feel t#at t#eir ri!#ts $nder t#e GATT are
,ein! (it##eld or %om*romised ,' ot#er mem,ers+
T#e a!reement %onsists of fo$r *arts/
Part I/ Main o,li!ations of t#e %ontra%tin! *arties;
Part II/ A %ode of fait trade *ra%ti%es to !$ide mem,ers in t#eir %ommer%ial *oli%ies;
Part III/ Conditions for mem,ers#i* and (it#dra(al; and
Part IM/ E)*ansion of trade of de&elo*in! %o$ntries t#ro$!# s*e%ial %on%essions+
Tra/e Negotiations )n/er GATT:
Ei!#t ma3or trade ne!otiations too *la%e $nder t#e GATT a$s*i%e as follo(s/
5+ T#e first ro$nd in 5KFI ?Gene&a@ sa( %reation of t#e GATT+
8+ T#e se%ond ro$nd in 5KFK ?Anne%'. >ran%e@ in&ol&ed ne!otiation (it# nations
t#at desired GATT mem,ers#i*+ T#e *rin%i*al em*#asis (as on tariff
ne!otiations+
9+ T#e t#ird ro$nd in 5KG5 ?Tor7$a'. En!land@ %ontin$ed a%%ession and tariff
red$%tion ne!otiations+
F+ T#e fo$rt# ro$nd in 5KGH ?Gene&a@ *ro%eeded alon! t#e same tra% as earlier
ro$nds+
G+ T#e fift# ro$nd in 5KHL1H5 ?Gene&a. Dillon Ro$nd@ in&ol&ed f$rt#er re&ision
of t#e GATT and t#e addition of more %o$ntries+
H+ T#e si)t# ro$nd in 5KHF1HI ?Gene&a Kenned' Ro$nd@ (as #',rid of earlier
*rod$%t ,' *rod$%t a**roa%# (it# a%ross t#e ,oard tariff red$%tions+
I+ T#e se&ent# ro$nd in 5KI91IK ?Gene&a. To'a Ro$nd@ %entred on t#e
ne!otiation of additional tariff %$ts and de&elo*ed a series of a!reements
!o&ernin! t#e $se of non1tariff meas$res+
J+ T#e ei!#t ro$nd ?Ur$!$ar' Ro$nd @ started in 5KJH and (as %on%l$ded in
A*ril 5KKF+
As a res$lt of t#ese ne!otiations. t#e tariff rates for t#o$sands of items enterin! into (orld
trade (ere red$%ed or ,o$nd a!ainst in%rease+ T#e a&era!e le&el of tariffs on
man$fa%t$red !oods in ind$strial %o$ntries (as ,o$t 9 *er %ent no( as %om*ared to a,o$t
FL *er%ent in t#e immediate se%ond (orld (as 'ears+ De&elo*in! %o$ntries (ere
disa**ointed (it# Kenned' ro$nd and t#e To'o Ro$nd+ :o(e&er. !i&en its *ro&isional
nat$re and t#e limited field of a%tion. t#e s$%%ess of GATT in *romotion and se%$rin!
li,eralisation of m$%# of (orld trade o&er FI 'ears (as in%ontesta,le+
5EAKNESS OF GATT:
T#e (eaness of GATT is t#at its ,enefits #a&e mainl' !one to t#e ind$striali2ed
%o$ntries+ Under GATT. Most ne!otiations and tariff red$%tions #a&e taen *la%e in
res*e%t of man$fa%t$red !oods+ So t#e trade !a* for t#e de&elo*in! %o$ntries #as ,e%ome
more $nfa&o$ra,le+ A sear%# for a ne( instit$tional arran!ement. es*e%iall' one (#i%#
one (o$ld ta%le t#e *ro,lems of t#e !lo,al trade of de&elo*in! %o$ntries. led to t#e
formation of $nited Nations Committee on Trade and De&elo*ment in 5KFH+
5ORLD TRADE ORGANISATION
Esta,lis#ed on Ban$ar' 5. 5KKG ATO is t#e em,odiment of t#e Ur$!$ar' Ro$nd res$lts
and t#e s$%%essor to GATT+ T is not a sim*le e)tension of GATT; it %om*letel' re*la%es
its *rede%essor and #as a &er' different %#ara%ter+ As on Ht# No&em,er 8LLL. t#e
mem,ers#i* of t#e ATO stood at 59K+ IH Go&ernments ,e%ame mem,ers of t#e ATO on
its first da'+ T#e *resent mem,ers#i* a%%o$nts for more t#an KL *er %ent of (orld trade+
Man' more %o$ntries #a&e re7$ested to ATO+ T#e ATO is ,ased in Gene&a.
S(it2erland+ Its essential f$n%tions are as follo(s+
5+ To administer t#e trade *oli%' me%#anism+
8+ To a%#ie&e !reater %o#eren%e in !lo,al e%onomi%1*oli%' main! in
%oo*eration (it# Aorld 6an and IM>+
9+ To *ro&ide a for$m for ne!otiations amon! its mem,ers %on%ernin! t#eir
m$ltilateral trade relations in matters dealt (it# in t#e a!reements+
F+ To administer t#e $nderstandin!s on R$les on Pro%ed$res !o&ernin! t#e
settlement of dis*$tes+
G+ To introd$%e t#e idea of "s$staina,le de&elo*ment" in relation to t#e o*timal
$se of t#e (orld reso$r%es and t#e need to *rote%t and *reser&e t#e
en&ironment in a manner %onsistent (it# t#e &ario$s le&els of national
e%onomi% de&elo*ment+
H+ To re%o!ni2e t#at t#ere is a need for *ositi&e efforts to ens$re t#at t#e
de&elo*in! %o$ntries. es*e%iall'. t#e least de&elo*ed %o$ntries se%$re a ,etter
s#are of t#e !ro(t# of t#e international trade+
1O5 IS T1E 5TO DIFFERENT FROM T1E GATT8
?a@ T#e GATT (as a set of r$les. a m$ltilateral a!reement (it# no
instit$tional fo$ndation (it# onl' a small asso%iated se%retariat+ T#e ATO is a
*ermanent instit$tion (it# its o(n se%retariat+
?ii@ T#e GATT (as a**lied on a -Pro&isional ,asis- e&en if. after more t#an FL
'ears. !o&ernments %#ose to treat it as a *ermanent %ommitment+ T#e ATO
%ommitments are f$ll and *ermanent+
?iii@T#e GATT r$les a**lied to trade in mer%#andise !oods+ In addition to !oods.
t#e ATO %o&ers trade in ser&i%es and trade related as*e%ts of intelle%t$al
*ro*ert'+
?i&@A#ile GATT (as m$ltilateral instr$ment ,' t#e 5KJLs man' ne( a!reements
#ad ,een added of *l$rilateral. and t#erefore sele%ti&e. nat$re+ T#e a!reements
(#i%# %onstit$te t#e ATO are almost all m$ltilateral and t#$s in&ol&e
%ommitments for t#e entire mem,ers#i*+
?&@T#e ATO dis*$te settlement s'stem is faster. more a$tomati% and t#$s m$%#
less s$s%e*ti,le to ,lo%a!es t#an t#e old GATT s'stem+
?&i@T#e ATO is more !lo,al in its mem,ers#i* t#an t#e GATT+
ATO is a (at%#do! of international trade. re!$larl' e)amine t#e trade re!imes of
indi&id$al mem,ers+ Trade dis*$tes t#at %annot ,e sol&ed t#ro$!# ,ilateral tals are
ad3$di%ated $nder t#e ATO dis*$te settlement "%o$rt"+ T#e ATO is also a mana!ement
%ons$ltant for (orld trade+ It e%onomists ee* a %lose (at%# on t#e *$lse of t#e !lo,al
e%onom' and *ro&ide st$dies on t#e main trade iss$es of t#e da'+ T#e mandate of t#e
ATO in%l$des trade in !oods. trade in ser&i%es. trade related in in&estment meas$res and
trade related intelle%t$al *ro*ert' ri!#ts+
A n$m,er of sim*le and f$ndamental *rin%i*les r$n t#ro$!#o$t all of t#e
instr$ments (#i%#. to!et#er. mae $* t#e m$ltilateral tradin! s'stem + T#e' are/
1 Trade (it#o$t dis%rimination
1 Predi%ta,le and !ro(in! a%%ess to marets+
1 Promotin! fair %om*etition+
1 En%o$ra!in! de&elo*ment and e%onomi% reform+
5ORLD TRADE IN SER0I"ES
T#e ind$strial se%tor %an ,e %lassified as *rod$%tion se%tor and ser&i%e se%tor+ Prod$%tion
se%tor refers t#e ind$stries t#at are en!a!ed in *rod$%tion and s$**l' of !oods+ Ser&i%e
se%tor refers *ro&idin! ser&i%es and e)%#an!in! ser&i%es to t#e *$,li% as (ell as so%iet'+
T#e !ro(in! im*ortan%e of ser&i%es is refle%ted in t#e international trade also+ T#e &al$e
of t#e international trade in ser&i%es %omes to a,o$t one fo$rt# of t#e &al$e of t#e &al$e
of t#e trade in !oods+ Ser&i%es mae $* a ma3or s#are of t#e in&isi,le a%%o$nt in t#e
6alan%e of *a'ments of a %o$ntr'+ T#e most im*ortant ser&i%es in international trade
in%l$de/
8 Trans*ort
8 Tra&el
8 Comm$ni%ation
8 Media
8 6$siness ser&i%es
8 Ins$ran%es
8 En!ineerin! and %onstr$%tions ser&i%es
8 6anin! >inan%ial Ser&i%es
"(aracteristics an/ "ategories of Services:
An im*ortant %#ara%teristi%s of ser&i%es t#at #as far rea%#in! im*li%ations for
maretin! of ser&i%es is t#eir inse*ara,ilit'+ T#at is ser&i%es %annot ,e se*earated from
t#eir *ro&iders. (#et#er t#e' are *ersons or ma%#ines+ T#is does not. #o(e&er mean t#at
all ser&i%es re7$ire t#e *#'si%al *ro)imit' of t#e *ro&ider and $ser+
"1ARA"TERISTI"S:
?a@T#ose t#at ne%essaril' re7$ire t#e *#'si%al *ro)imit' of t#e *ro&ider and t#e
$ser; and
?,@ T#ose t#at do not. t#o$!# s$%# *#'si%al *ro)imit' ma' ,e $sef$l+
T#e ser&i%es (#ere *#'si%al *ro)imit' is essential fall into t#ree %ate!ories/
1T#e mo,ile *ro&ider and immo,ile $ser %ate!ori2e t#e first %ate!or'+ In t#is %ase
t#e *ro&ider !oes into t#e *la%e of $ser and doin! ser&i%es+ >or e)am*le t#e te%#ni%al
*eo*le of = & T Com*an' in India !oes to Srilana and do t#e %onstr$%tion (or+
Similarl' a te%#ni%ian ma' #a&e to !o a *lant a,road to re%tif' a *ro,lem (it# t#e *lant+
1 Mo,ile $ser and immos,ile *ro&ider %#ara%teri2es t#e se%ond %ate!or'+ I+e+ $ser
!oes to(ards t#e *ro&ider+ >or e)am*le a *atient (#o (ants an o*en1#eart s$r!er' (ill
#a&e to !o to a #os*ital (#ere t#e re7$ired fa%ilities are a&aila,le+
1T#e t#ird %ate!or' %onsists of of mo,ile $ser and mo,ile *ro&ider+ In t#is %ase
eit#er t#e *ro&ider !oin! to t#e $ser or t#e $ser !oin! to t#e *ro&ider ma' a%#ie&e
*ro)imit'+ >or e)am*le dr'1do%in! fa%ilities for s#i*s+
O'STA"LES OR RESTRI"TIONS IN SER0I"E SE"TOR:
D$e to t#e s*e%ial %#ara%teristi%s and t#e so%io e%onomi% and *oliti%al
im*li%ations of %ertain ser&i%es. t#e' are !enerall' s$,3e%t to &ario$s t'*es of national
restri%tions+ Prote%ti&e meas$res in%l$de &isa re7$irements. in&estment re!$lations.
maretin! re!$lations. restri%tions on t#e em*lo'ment of forei!ners. %om*$lsion to $se
lo%al fa%ilities et%+ :ea&il' *rote%ted r restri%ted ser&i%es in different %o$ntries in%l$de
,anin! and ins$ran%e; trans*ortation. tele&ision. radio. film and ot#er forms of
%omm$ni%ations and so on+
INSTIT.TIONAL INFRASTR."T.RE FOR E9$ORT $ROMOTION IN INDIA
T#e Go&ernment of India #as set $* a n$m,er of instit$tions (#ose main f$n%tions are to
#el* an e)*orter in its e)*ort efforts+ It is t#erefore. ne%essar' for t#e e)*orters to
a%7$aint t#emsel&es (it# t#ese instit$tions and t#e nat$re of #el* t#e' %an render to t#em
so t#at t#e' %an initiall' %onta%t t#em to !et (#ate&er #el* t#e' %o$ld !et from t#ese
instit$tions in e)*ortin! t#eir *rod$%ts+
#DE$ARTMENT OF "OMMER"E:
T#e De*artment of %ommer%e in t#e Ministr' of Commer%e and Ind$str' is t#e
Primar' Go&ernment a!en%' res*onsi,le for e&ol&in! and dire%tin! forei!n trade *oli%'
and *ro!rammes. in%l$din! %ommer%ial relations (it# ot#er %o$ntries+ T#is de*artment
is #eaded ,' a Se%retar' and #e is assisted in t#e dis%#ar!e of d$ties ,' a S*e%ial
Se%retar' . Additional se%retaries and a n$m,er of ot#er senior offi%ers f$n%tionin! as
Di&isional #eads+ T#e de*artment %onsistin! of t#e follo(in! Di&isions %on%ernin! (it#
&ario$s s$,3e%ts %onne%ted (it# e)*orts and im*orts+
International Trade Poli%' Di&ision
>orei!n Trade Territorial Di&ision
E)*ort Prod$%ts Di&ision
E)*ort ind$stries Di&ision
E)*ort Ser&i%e Di&ision
E%onomi% Di&ision
*AD0ISOR: 'OARDS
6oard of Trade / T#e 6oard of Trade is t#e #i!#est ad&isor' ,od' $nder t#e
De*artment of %ommer%e to deli,erate on *oli%' matters+ It #as its mem,ers as follo(s/
a+ Presidents of >ICCI. ASSOC:AM and >ASSI
,+ =eadin! ind$stries
%+ Se%retaries of Commer%e and ind$str'. >inan%e. E)ternal Affairs and
Te)tiles
d+ C#airman of ITPO0MD of ECGC
E)*ort Promotion 6oard/ $nder t#e %#airmans#i* of %a,inet Se%retar'+
6ATTA"1ED AND S.'ORDINATE OFFI"ES
a+ Dire%torate General of >orei!n Trade
,+ Dire%tor General of %ommer%ial Intelli!en%e and Statisti%s
%+ E)*ort Pro%essin! Nones
d+ Indian Go&ernment Commer%ial Re*resentati&es A,road
6A.TONOM.S 'ODIES:
+I, E&port $ro!otion "o)ncils/
T#ere are 8L e)*ort *romotion %o$n%ils %o&erin! t#e follo(in! *rod$%ts/
A**arels. %#emi%als. *#arma%e$ti%als and %osmeti%s. %ar*et. %as#e(. %otton te)tiles.
ele%troni%s and %om*$ter soft(are. !em and 3e(eller'. #andi%rafts. #andlooms. leat#er.
*o(eerloom. %onstr$%tion. *lasti%s. s#ella%. sil. s'nt#eti% . s*orts !oods and (ool and
(oolens+ T#ese %o$n%ils are re!istered $nder t#e %om*anies A%t as non1*rofit main!
a!en%ies+ T#e de*artment of %ommer%e *ro&ides ne%essar' finan%ial assistan%e in
relation to t#eir e)*ort *romotion (or+
T#ese %o$n%ils ad&ise t#e Go&ernment re!ardin! %$rrent de&elo*ments in t#e
e)*ort se%tor and meas$res t#e ne%essar' to fa%ilitate f$t$re !ro(t# in e)*orts. assist
man$fa%t$rers and e)*orters to o&er%ome t#e &ario$s %onstrains and e)tend to t#em t#e
f$ll ran!e of ser&i%es for t#e de&elo*ment of maret o&erseas+ T#e %o$n%ils also *erform
%ertain re!$lator' f$n%tions as t#e' #a&e t#e *o(er to re!ister and iss$e Re!istration
%$m1mem,ers#i* %ertifi%ate $nder t#e E)*ort and Im*ort *oli%' and also de1re!ister
errant or defa$ltin! e)*orters+
T#e %o$n%ils also %ond$%t maret s$r&e's. assist in *rod$%t de&elo*ment.+
S*onsor trade dele!ations and !$ide ne(%omers in t#e e)*ort trade+
+II, "o!!o/it3 'oar/s:
T#ere are K Stat$tor' 6oards for t#e follo(in! %ommodities/ :andi%rafts and
:andloom. Sil. Po(er loom. %offee. %oir. r$,,er. tea. to,a%%o and s*i%es+ T#e
%ommodit' ,oards del (it# t#e entire ran!e of *ro,lems of *rod$%tion. de&elo*ment.
maretin! et%+ In res*e%t of %ommodities %on%erned. t#e' a%t t#emsel&es as if t#e' (ere
t#e E)*ort Promotion Co$n%ils+ Some of t#ese 6oards #a&e o*ened t#eir ,ran%# in
forei!n %o$ntries in order to *romote t#e %ons$m*tion of t#e %ommodities $nder t#eir
3$risdi%tion+
+III, Marine $ro/)cts E&port Develop!ent A)t(orit3:
T#e main f$n%tions of t#e A$t#orit' are/
5+ De&elo*ment of off1s#ore and dee*1 sea fis#in! in all its as*e%ts and
%onser&ation and mana!ement of off1s#ore and dee*1sea fis#eries;
8+ Re!istration of fis#in! &essels. *ro%essin! *lants. stora!e *remises and
e)*orts (it# a &ie( to *romote a #ealt#' de&elo*ment+
9+ =a'in! do(n standards and s*e%ifi%ations for marine *rod$%ts for t#e *$r*ose
of e)*ort+
F+ Renderin! finan%ial assistan%e+
G+ Arran!in! for trainin! in different as*e%ts %onne%ted (it# e)*ort (it# s*e%ial
referen%e to fis#in!. *ro%essin! and maretin!+
+I0, Agric)lt)ral an/ $rocesse/ Foo/ $ro/)cts E&port Develop!ent A)t(orit3
+0, In/ian Instit)te of Foreign Tra/e
T#e Indian Instit$te of >orei!n Trade is f$n%tionin! $nder t#e Ministr' of
%ommer%e+ T#is is re!istered $nder t#e So%ieties A%t+
+0I, In/ia Tra/e $ro!otion Organi;ation
+0II, National "entre for Tra/e Infor!ation +N"TI,:
T#e main f$n%tions of NCTI in%l$si&e of
1 Create data,ase at national and international le&els for e)*ort
*romotion
1 Colle%t information on &ario$s as*e%ts of trade and %ommer%e on
different %o$ntries+
1 Esta,lis# lina!es (it# trade *romotion ,odies. re!$lator' ,odies.
%#am,er of %ommer%e et%+
1 Or!ani2e trainin!. seminars and %onferen%es on matters related to
trade and %ommer%e+
1 P$,lis# *a*ers. *eriodi%als and ot#er literat$re #a&in! a ,earin! on
trade and %ommer%e+
+0III, E&port cre/it an/ G)arantee "orporation:
T#e ECGC a Go&ernment of India $ndertain! #as ,een esta,lis#ed for
minimi2in! t#e ris element in e)*ort ,$siness and to fa%ilitate t#e flo( of finan%e from
t#e ,ans to e)*orters+ In addition to t#e normal ris *oli%ies. t#e %or*oration assists t#e
e)*orters t#ro$!# s*e%ial s%#emes s$%# as *a%in! %redit !$arantee. *ost s#i*ment %redit
!$arantee and e)*ort *rod$%tion finan%e !$arantee+ To s$it &ar'in! needs of e)*orters.
t#e %or*oration *ro&ides different t'*es of %o&er (#i%# ma' ,e di&ided into t#e follo(in!
t#ree ,road !ro$*s/
Standard *oli%es
>inan%ial !$arantees
S*e%ial *oli%ies
Under its *oli%ies intended o *rote%t t#e e)*orters a!ainst o&erseas %redit riss. ECGC
,ears t#e main riss and *a's t#e e)*orter KLO of #is loss on a%%o$nt of %ommer%ial riss
and Politi%al riss+
+I9, E&port%I!port 'ank:
T#e EXIM 6an (as esta,lis#ed on Ban$ar' 5. 5KJ8 for t#e *$r*ose of finan%in!.
fa%ilitatin! and *romotin! forei!n trade of India+ It e)tends finan%e to e)*orters of
%a*ital and man$fa%t$red !oods. e)*orters of soft (ares and %ons$ltan%' ser&i%es and
o&erseas 3oint &ent$res and %onstr$%tion *ro3e%ts a,road+ T#e ,an is t#e *rin%i*al
finan%ial instit$tion in India for %oordinatin! t#e (or of instit$tions en!a!ed in
finan%in! e)*ort and im*ort trade+ T#e EXIM ,an %on%entrates mainl' on medi$m and
lon! term %redit for e)*ort of !oods and ser&i%es on deferred *a'ment terms+
+9, E&port Inspection "o)ncils:
<$alit' %ontrol and *re s#i*ment ins*e%tion is one of t#e im*ortant fa%tors in t#e
e)*ort maretin!+ In order to ens$re t#e 7$alit' of t#e *rod$%ts e)*orted. a le!islation
entitled -E)*ort ?<$alit' %ontrol and Ins*e%tion@ A%t- (as ena%ted ,' t#e Indian
Parliament in 5KH9+ As *er t#is a%t T#e Go&ernment of India #as esta,lis#ed t#e E)*ort
Ins*e%tion Co$n%il+ T#e f$n%tions of t#is %o$n%il are !enerall' to ad&ise t#e %entral
!o&ernment re!ardin! t#e meas$res for t#e enfor%ement of 7$alit' %ontrol and ins*e%tion
in relation to %ommodities intended for e)*ort and dra( $* a *ro!ramme t#erefore+
+9I, In/ian Instit)te of $ackaging
+9II, In/ian "o)ncil of Ar-itration
+9III, Fe/eration of In/ian E&port Organi;ation
Ot(er Instit)tions concerne/ 4it( e&port pro!otion:
1 Offi%e of t#e Te)tile Commissioner. 6om,a'
1 Offi%e of t#e B$te Commissioner. Kolatta
1 Indian B$te Mill Asso%iation. Kolatta+
ROLE OF E9IM 'ANK OF INDIA
O-<ectives:
T#e E)*ort1Im*ort 6an of India (as set $*P t#e Go&ernment of India in 5KJ8 as
a *$,li% se%tor finan%ial instit$tion $nder an A%t *assed in t#e *arliament for t#e *$r*ose
of finan%in!. fa%ilititatin! and *romotin! forei!n trade of India+ T#e ,oard of dire%tors
mana!es t#e EXIM 6ANK (it# re*resentation from !o&ernment finan%ial instit$tions.
,ans and ,$siness %omm$nit'+
F.N"TIONS:
=endin! Pro!rammes to Indian E)*orters/
8 S$**liers %redit/ T#is ena,les t#e e)*orters to e)tend %redit to o&erseas im*orters
of eli!i,le Indian !oods+
8 >inan%e for %ons$ltan%' and te%#nolo!' ser&i%es; T#is ena,les Indian e)*orters
of %ons$ltan%' and te%#nolo!' ser&i%es to e)tend term %redit to o&erseas
im*orters+
8 Pre1s#i*ment %redit/ T#is ena,les Indian e)*orters to ,$' ra( materials and ot#er
in*$ts for f$lfillin! e)*ort %ontra%ts in&ol&in! %'%le time e)%eedin! si) mont#s+
8 >inan%e for deemed e)*orts+
8 >inan%e for EOU and EPN Units
8 Soft(are Trainin! Instit$tes
8 E)*ort maretin! finan%e
8 E)*ort1Prod$%t De&elo*ment >inan%e/ T#is Indian firms to $ndertae *rod$%t
de&elo*ment. R & D for e)*orts+
Services Offere/ to In/ian E&porters:
8 Under(ritin!/ T#is ena,les t#e Indian e)*orters to raise finan%e from %a*ital
marets (it# t#e ,a%in! of EXIM 6an"s $nder(ritin! %ommitment+
8 >orfeitin!/ T#is Indian e)*orters to %on&ert sale to %as# on (it#o$t re%o$rse
,asis+
8 G$arantee >a%ilit'/ To e)e%$te e)*ort %ontra%ts and im*ort transa%tions+
8 6$siness Ad&isor' and Te%#ni%al assistan%e
8 Coo*eration arran!ement (it# Afri%an Mana!ement Ser&i%es+
For "o!!ercial 'anks:
8 Refinan%e of E)*ort %redit
8 6$l im*ort finan%e
8 G$arantee %$m Refinan%e s$**lier"s %redit
Ot#er a%ti&ities/
8 T#e ,an #el*s Indian %om*anies !o !lo,al ,' settin! $* s$,sidiaries and 3oint
&ent$res a,road+
8 It *ro&ides information to *otential e)*orters a,o$t *ro3e%ts a,road s*e%iall'
a,o$t m$ltilaterall' a!en%ies+
8 It also #el*s %om*anies in *re*arin! ,ids a%%ordin! to stri%t %ondition *res%ri,ed
,' t#e m$ltilateral a!en%ies+
8 It also entertains *ro*osals for &ario$s fa%ilities $nder #e E$ro*ean Comm$nit'
In&estment Partners lie feasi,ilit' st$dies for settin! $* e)*ort $nits+
8 T#e ,an introd$%ed t#e -%l$ster of E)%ellen%e- *ro!ramme for $* !radation of
7$alit' standards and o,tainin! ISO %ertifi%ation+
#==> E9$ORT%ORIENTED .NITS
T#e s%#eme of 5LL EOU"s (ere introd$%ed in 5KJL (it# a &ie( to !eneratin!
additional *rod$%tion %a*a%it' for e)*orts ,' *ro&idin! an a**ro*riate *oli%' frame
(or. fle)i,ilit' of o*erations and in%enti&es+ In order to ena,le t#em to o*erate
s$%%essf$ll' in t#e international maret s$%# $nits are allo(ed to im*ort ma%#iner'. ra(
material. %om*onents and %ons$ma,le at free of %$stom d$ties+ T#ese $nits #a&e to
o*erate $nder %$stom ,ond and a%#ie&e t#e le&el of &al$e addition fi)ed ,' t#e 6oard of
A**ro&al+ At *resent more t#an GLL $nits are in o*eration $nder t#e EOU s%#eme++
Some of t#e modifi%ations done to fa%ilitate t#e e)*ortin! $nits in t#e EOUs are as
follo(s/
8 Sim*lifi%ation of %$stoms0e)%ise *ro%ed$res
8 A$tomati% a**ro&al $nder %ertain %onditions to *ro*osal for settin! $* $nits+
8 =easin! of %a*ital !oods from domesti% %om*anies ,' EPNQEOU #as ,een
*ermitted+
8 En%o$ra!ement of a!ro and ele%troni% $nits ,' *ro&idin! #i!#er domesti% a%%ess+
T#e follo(in! *ri&ile!es are en3o'ed ,' t#e E)*ort Oriented Units/
8 An EOU $nit ma' e)*ort all !oods and ser&i%es e)%e*t t#e items *ro#i,ited ,' t#e
e)im *oli%'+
8 An EOU $nit ma' im*ort (it#o$t *a'ment of d$t' for all t'*e of !oods. in%l$din!
%a*ital !oods re7$ired ,' it for its a%ti&ities *ro&ided t#e' are not *ro#i,ited items
of im*orts+
8 EOU $nits ma' im*ort0*ro%$re from Domesti% Tariff Area (it#o$t *a'ment of
d$t'+
8 Se%ond #and %a*ital !oods ma' also ,e im*orted d$t' free (it#o$t an' a!e limit+
8 EOU $nit s#all ,e *ositi&e net forei!n e)%#an!e earner+
Onl' *ro3e%t #a&in! an in&estment of Rs+5 %rore and a,o&e in ,$ildin!. *lant and
ma%#iner' s#all ,e %onsidered for esta,lis#ment $nder EOU s%#eme+ A**li%ation for
settin! $* of $nits $nder EOU s%#eme ma' ,e a**ro&ed ,' t#e $nits A**ro&als
Committee (it#in 5G da's+
T#e entire *rod$%tion of EOU $nits s#all ,e e)*orted s$,3e%t to t#e follo(in!/
8 Re3e%ts ma' ,e sold in t#e domesti% tariff area on *a'ment of d$ties on *rior
intimation to t#e %$stoms a$t#orities+
8 S%ra*0(aste arisin! o$t of *rod$%tion *ro%ess or in %onne%tion t#ere(it# ma'
,e sold in t#e domesti% tariff area on *a'ment of d$ties (it#in t#e o&erall
%eilin! of GLO >O6 &al$e of e)*orts+
8 6' *rod$%ts ma' also ,e sold in t#e domesti% tariff are s$,3e%t to a%#ie&ement
of *ositi&e net forei!n e)%#an!e on *a'ment of a**li%a,le d$ties (it#in t#e
o&erall entitlement+
ROLE OF E9$ORT "REDIT G.ARANTEE "OR$ORATION +E"G",
T#e ris element in e)*ort ,$siness is !reater t#an t#e ris in&ol&ed in domesti%
trade,e%a$se t#e t(o *arties of t#e e)*ort %ontra%t ?e)*orter and im*orter@ ,elon! to
different %o$ntries+ In t#e %onte)t of !ro(in! %om*etition no e)*orter %an mana!e
(it#o$t sellin! !oods on %redit+ Gi&in! %redit *oses t(o *ro,lems to an e)*orter/
1 :e s#o$ld #a&e eno$!# mone' to offer %redit to #is o&erseas ,$'ers and
1 :e s#o$ld ,e *re*ared to tae t#e %redit riss+
E)*ortin! on %redit is not (it#o$t ris+ T#e o&erseas ,$'er ma' defa$lt; #e
ma' !o ,anr$*t; t#ere ma' ,e eart#7$ae or t'*#oon. a (ar in #is %o$ntr'. (#i%# ma'
(re% #is fort$nes+ T#e ECGC. a Go&ernment of India $ndertain!. %o&ers t#e e)*orts
a!ainst t#ese riss+ T#e ECGC also *ro&ides !$arantees to t#e finan%in! ,ans to ena,le
t#em to *ro&ide ade7$ate finan%e to t#e e)*orters+
"O0ERS ISS.ED ': E"G":
T#e %o&ers iss$ed ,' ECGC ma' ,e di&ided ,roadl' into fo$r !ro$*s as follo(s/
a@ Standard *oli%ies iss$ed to e)*orters to *rote%t t#em a!ainst t#e ris of not
re%ei&in! *a'ments (#ile tradin! (it# o&erseas ,$'ers on s#ort term %redit+
,@ S*e%ifi% *oli%ies desi!ned to *rote%t Indian >irms a!ainst t#e ris of not re%ei&in!
*a'ments in res*e%t of
1 E)*ort on deferred *a'ment terms
1 Ser&i%es rendered to forei!n *arties and
1 Constr$%tion (or1$ndertaen a,road+
%@ >inan%ial !$arantees iss$ed to ,ans a!ainst riss in&ol&ed in *ro&idin! %redit to
e)*orters; and
d@ S*e%ial s%#emes &i2/ Transfer G$arantee. Ins$ran%e %o&er for ,$'er"s %redit. =ine
of %redit. Boint &ent$res and o&erseas in&estment+
A RISKS "O0ERED .NDER STANDARD $OLI"IES:
Under its *oli%ies to *rote%t t#e e)*orters a!ainst o&erseas %redit riss. ECGC
,ears t#e main ,r$nt of t#e riss and *a's t#e e)*orter KL *er %ent of #is loss on a%%o$nt
of %ommer%ial and *oliti%al riss+
Commer%ial Ris/
a+ T#e insol&en%' of t#e ,$'er
,+ T#e ,$'er"s *rotra%ted defa$lt to *a'
%+ In some s*e%ial %ir%$mstan%es s*e%ified in t#e *oli%'. ,$'er"s fail$re to a%%e*t t#e
!oods. (#en non1a%%e*tan%e is not d$e to t#e e)*orter"s a%tions+
Politi%al Ris/
a+ Restri%tion on remittan%e in t#e ,$'er"s %o$ntr' or an' !o&ernment a%tion (#i%#
ma' ,lo% or *a'ment to t#e e)*orter;
,+ Aar. re&ol$tion or %i&il dist$r,an%es in t#e ,$'er"s %o$ntr'
%+ Can%ellation of e)*ort li%ense or im*osition of ne( e)*ort li%ensin! restri%tions
in India ?$nder %ontra%ts *oli%'@
d+ Ne( im*ort li%ensin! restri%tions or %an%ellation of a &alid im*ort li%ense in t#e
,$'er"s %o$ntr'/
e+ Additional #andlin! trans*ort or ins$ran%e %#ar!es d$e to interr$*tion or
di&ersion of &o'a!e (#i%# %annot ,e re%o&ered from t#e ,$'er/ and
f+ An' ot#er %a$se of loss o%%$rrin! o$tside India. not normall' ins$red ,'
%ommer%ial ins$rers+ And ,e'ond t#e %ontrol of ,ot# t#e e)*orter and t#e ,$'er+
RISKS NOT "O0ERED
ECGC. #o(e&er. does not %o&er riss of loss d$e to/
a+ Commer%ial dis*$tes. in%l$din! 7$alit' dis*$tes raised ,' t#e ,$'er $nless t#e
e)*orter o,tains a de%ree from a %om*etent %o$rt of la( in ,$'er"s %o$ntr' in #is fa&o$r+
,+ Ca$ses in#erent in t#e nat$re of !oods/
%+6$'er"s fail$re to o,tain im*ort or e)%#an!e a$t#ori2ation from t#e a**ro*riate
a$t#orit'/
d+Insol&en%' or defa$lt of an' a!ent of t#e e)*orter or of t#e %olle%tin! ,ans/
+e+!+ =oss or dama!e to !oods (#i%# %an ,e %o&ered ,' !eneral ins$rers/
f+>l$%t$rations in e)%#an!e rates ?e)%e*t $nder E)%#an!e >l$%t$ation Ris o&er
S%#emes@and
!+>ail$re of t#e e)*orter to f$lfill t#e term of %ontra%t or ne!li!en%e on #is *art+
' S$E"IFI" $OLI"IES
Contra%ts for e)*ort of %a*ital !oods or *ro3e%ts for %onstr$%tion (ors and for
renderin! ser&i%es a,road are ins$red ,' ECGC on %ase to %ase ,asis $nder s*e%ifi%
*oli%ies+ S*e%ial mention ma' ,e made of t#e ser&i%es *oli%' to *rote%t Indian firms
a!ainst *a'ment for t#eir ser&i%es *oli%' to *rote%t Indian firms a!ainst *a'ment for t#eir
ser&i%es *oli%' o *rote%t Indian firms a!ainst *a'ment for t#eir ser&i%es and t#e
%onstr$%tion (ors *oli%' to %o&er all *a'ments t#at fall d$e to a %ontra%tor $nder a
%om*osite %ontra%t for e)e%$tion of ser&i%es as (ell as s$**l' of material+
"SMALL E9$ORTER?S $OLI":
T#e small e)*orter"s *oli%' is ,asi%all' t#e Standard Poli%'. in%or*oratin! %ertain
im*ro&ements in terms of %o&er. in order to en%o$ra!e small e)*orters to o,tain and
o*erate t#e *oli%'+ It (ill ,e iss$ed to e)*orters (#ose anti%i*ated e)*ort t$rno&er for
t#e ne)t 58mont#s does not e)%eed Rs+8G laes+ T#e *remi$m *a'a,le for a small
e)*orter"s *oli%' is less t#an t#e standard *oli%'+
D FINAN"IAL G.ARANTEE TO 'ANKS
Timel' and ade7$ate %redit fa%ilities. at t#e *re1s#i*ment as (ell as *ost1s#i*ment
sta!e+ Are essential for e)*orters to reali2e t#eir f$ll e)*ort *otential+ E)*orters m' not.
#o(e&er. ,e a,le to o,tain s$%# fa%ilities from t#eir ,aners for se&eral reasons+ T#e
E)*ort Credit G$arantee Cor*oration. ?ECGC@ #as desi!ned a s%#eme of G$arantees to
6ans (it# a &ie( to en#an%in! t#e %redit (ort#iness of t#e e)*orter so t#at t#e' (o$ld
,e a,le to se%$re ,etter and lar!e fa%ilities from t#eir ,aners+
To meet t#e &ar'in! needs of e)*orters+ T#e Cor*oration #as e&ol&ed t#e
follo(in! t'*es of G$arantees;
5+ Pa%in! Credit G$arantee/
8+ E)*ort Prod$%tion >inan%e G$arantee;
9+ Post1s#i*ment E)*ort Credit G$arantee/
F+ E)*ort >inan%e G$arantee
G+ E)*ort Performan%e G$arantee/
H+ E)*ort >inan%e ?O&erseas lendin! @ G$arantee
# $A"KING "REDIT G.ARANTEE
An' loan !i&en to an e)*orter for t#e man$fa%t$re *ro%essin!. *$r%#asin! or
*a%in! of !oods meant for e)*ort a!ainst a firm order or letter of %redit 7$alifies
for *a%in! Credit G$arantee+
T#e G$arantee is iss$ed for a *eriod of 58 mont#s a!ainst a *ro*osal made
for t#e *$r*ose and %o&ers all t#e ad&an%es t#at ma' ,e made ,' t#e ,ans d$rin!
t#e *eriod to a !i&en e)*orter (it#in an a**ro&ed limit+
To ,ans. (#i%# $ndertae to o,tain %o&er for *a%in! %redit ad&an%es.
!ranted to all its %$stomers on an all India ,asis+
* E9$ORT $ROD."TION FINAN"E G.ARANTEE
T#e *$r*ose of t#is G$arantee is to ena,le ,ans to san%tion ad&an%es at
t#e *re1s#i*ment sta!e to t#e f$ll e)tent of %ost of *rod$%tion (#en it e)%eeds t#e
>O6 &al$e of t#e %ontra%t0order. t#e differen%e re*resentin! in%enti&es re%ei&a,le+
T#e e)tent of %o&er and t#e *remi$m rate are t#e same as *a%in! Credit
G$arantee+ 6ans #a&in! ATPCG are eli!i,le for %on%essionar' *remi$m rate
and #i!#er *er%enta!e %o&er+
6 $OST %S1I$MENT E9$ORT "REDIT G.ARANTEE
Post1s#i*ment finan%e !i&en to e)*orters ,' ,ans t#ro$!# *$r%#ase.
ne!otiations or dis%o$nt of e)*ort ,ills or ad&an%es a!ainst s$%# ,ills 7$alifies for t#e
G$arantee+ It is ne%essar' #o(e&er. t#at t#e e)*orter %on%erned s#o$ld #old s$ita,le
*oli%' of ECGC to %o&er t#e o&erseas Credit riss+
T#e Premi$m rate for t#is G$arantee is I *aise *er Rs+ 5LL01*er mont#
T#e *er%enta!e of loss %o&ered $nder t#e indi&id$al *ost1s#i*ment G$arantee is IGO
7 E9$ORT FINAN"E G.ARANTEE
T#is !$arantee %o&ers *ost1s#i*ment ad&an%e !ranted ,' ,ans to
e)*orters a!ainst e)*ort in%enti&es re%ei&a,le in t#e form of d$t' dra(,a%. et%+
T#e Premi$m rate for t#is G$arantee is I*aise *er Rs+ 5LL *er mont# and
t#e %o&er is IG *er%ent+ 6ans #a&in! ATPSG are eli!i,le for %on%essional rate of
*remi$m and #i!#er *er%enta!e of %o&er+
@ E9$ORT $ERFORMAN"E G.ARANTEE
E)*orters are often %alled $*on to e)e%$te ,onds d$l' !$aranteed ,' Indian ,ans
at &ario$s sta!es of e)*ort ,$siness+ An e)*orter (#o desires to 7$ote for a
forei!n tender ma' #a&e to f$rnis# a ,an !$arantee for t#e ,id ,ond+ If #e (ins
t#e %ontra%t. #e ma' #a&e to f$rnis# ,an !$arantees to forei!n ,$'ers to ens$re
d$e *erforman%e or a!ainst ad&an%e *a'ment or in lie$ of retention mone' or to
a forei!n ,an in %ase #e #as to raise o&erseas finan%e for #is %ontra%t+
A E9$ORT FINAN"E +O0ERSEAS LENDING, G.ARANTEE
If a ,an finan%in! an o&erseas *ro3e%t *ro&ides a forei!n %$rren%' loan to t#e
%ontra%tor. it %an *rote%t itself from t#e ris of non1*a'ment ,' t#e %ontra%tor ,'
o,tainin! E)*ort >inan%e G$arantee+ Premi$m rate (ill ,e L+LKO *er ann$m for
IGO %o&er and 5+LJO *er ann$m for KLO %o&er+ Premi$m is *a'a,le in Indian
R$*ees+ Claims $nder t#e !$arantee (ill also ,e in Indian r$*ees+
E9$ORT ASSISTAN"E AND E9$ORT $ROMOTION MEAS.RES
E)*ort assistan%e #as ,e%ome an im*ortant tool in an' de&elo*in! %o$ntr' to moti&ate
t#e man$fa%t$rer and ,$sinessmen to enter t#e international maret+ Most de&elo*in!
%o$ntries #a&e resorted to a n$m,er of e)*ort *romotion meas$res+ India #as also ,een
*ro&idin! e)*ort assistan%e for t#e *ast a,o$t fort' 'ears+ >rom 5K88. e)*ort in%enti&e
s'stem in India #as ,een made &er' sim*le+ T#ere are essentiall' t#ree ma3or in%enti&es.
a&aila,le to e)*orters+ T#ese are
+i,Market%-ase/ E&c(ange Rate: Sin%e Mar%# 5KK9 t#e e)%#an!e rate of t#e r$*ee is
f$ll' determined ,' t#e demand and s$**l' %ondition in t#e maret as t#e r$*ee (as
made f$ll' %on&erti,le for e)*ort1im*ort transa%tions in Mar%# 5KK9+ Under t#e
=i,ralised E)%#an!e Rate Mana!ement S'stem ?=ERMS@ e)*orters (ill !et ,enefit (#en
r$*ee de*re%iates (#ile im*orters (ill lose+ A#en r$*ee a**re%iates t#e ,alan%e of
,enefits (ill t#e 3$st t#e re&erse+
+ii, Fiscal concession: T#e different t'*es of fis%al %on%essions are as follo(s/
In t#e %om*$tation of total in%ome Se%+JL+ ::C of t#e In%ome Ta) A%t allo(s a
ded$%tion of t#e (#ole of t#e *rofit deri&ed from t#e e)*ort of !oods or mer%#andise+
T#is ,enefit is also a&aila,le to s$**ortin! man$fa%t$rers e)*ortin! t#ro$!# E)*ort0
Tradin! :o$ses *ro&ided t#at t#e amo$nt of ded$%tion %laimed is retained as a reser&e
for t#e *$r*ose of t#e ,$siness of t#e assessee+ :o(e&er. t#e ,$d!et for t#e 'ear 8LLL1
8LL5 #as red$%ed t#is e)em*tion ,' 8LO e&er' 'ear to ,e *#ased o$t in fi&e 'ears+
1 E)em*tion from ta)ation of t#e *rofits from o&er seas *ro3e%ts to t#e e)tent of
GL *er%ent+
1E)em*tion from ta)ation GL *er %ent of ro'alt'. %ommission. fees or an' similar
*a'ment o,tained from t#e e)*orts of te%#ni%al no(1#o( and te%#ni%al ser&i%es+
1 A 5L 'ear ta) #olida' for 5LL *er %ent e)*ort oriented $nits and for $nits
lo%ated in >ree trade 2one0E)*ort *ro%essin! 2ones+
1Con%essional rate of %$stoms d$t' on im*orts of sele%ted items of ma%#iner' for
e)*ort *rod$%tion $nder EPCG s%#eme+
+iii,Facilities availa-le )n/er t(e E&port%I!port $olic3 for E&port:
a+ EPCG S%#eme
,+ D$t' E)em*tion S%#eme
%+ E)*ort :o$ses0Tradin! :o$ses
d+ E)*ort *ro%essin! Nones
e+ 5LL O E)*ort oriented $nits
?i&@Ot#er fa%ilities a&aila,le to e)*orters/
In addition to t#e a,o&e mentioned in%enti&es. t#e Central Go&ernment is offerin! t#e
follo(in! fa%ilit' to e)*orters+
?a@D$t' Dra(,a%/ T#is is a ref$nd of im*ort d$t' or e)%ise d$t' *aid on t#e ra(
materials and %om*onents. (#i%# #a&e !one into t#e *rod$%tion of e)*orted *rod$%ts+
?,@Re,ate of e)%ise d$t'/ If t#e !oods e)*orted attra%t %entral e)%ise d$t' eit#er t#e d$t'
is e)em*ted or ref$nded if alread' *aid
RE)*ort >inan%e/ E)*orters are allo(ed to !et e)*ort finan%e ,ot# *re1s#i*ment and *ost
s#i*ment %redit at %on%essional rate of interest+
?d@Ins$ran%e of %redit ris/ T#e ECGC is (illin! to %o&er KLO of t#e *oliti%al and
%ommer%ial riss of e)*ort o*erations+ T#e %ommer%ial ,ans (#i%# !i&e %redit to
e)*orters %an also !et !$arantee from ECGC+
?e@Deemed e)*orts; Certain transa%tions in (#i%# !oods s$**lied do not lea&e t#e
%o$ntr' and t#e *a'ment for t#e !oods (#i%# is re%ei&ed ,' t#e s$**liers sin India #a&e
,een treated as deemed e)*orts and are entitled some ,enefits s$%# as d$t' e)em*tion in
res*e%t of deemed e)*ort %ate!ories. deemed e)*ort dra(,a%. ref$nd of terminal e)%ise
d$t'. s*e%ial im*ort li%ense. et%
E9$ORT FINAN"E
6$sinessmen. ind$strialists and ot#ers re7$ire finan%e for t#eir da'1to1da'
a%ti&ities+ In e)*ort ,$siness also finan%e *la's an im*ortant role+ E)*ort finan%e starts
as soon as t#e e)*orter !ets an order to e)*ort+ An e)*orter needs finan%e for *ro%essin!
or man$fa%t$rin! or assem,lin! or *ro%$rin! or *a%in! t#e !oods for e)*ort. Pres#i*ment
finan%e is *ro&ided to t#e e)*orter to meet s$%# re7$irements+ After t#e
s#i*ment is made e)*orter (ill #a&e to !i&e %redit t#e e)*orter #as to (ait till t#e
do%$ments rea%# t#e im*orter and #e maes t#e *a'ment+ It (ill tae some more time
,efore t#e ad&i%e of *a'ment is finall'. %omm$ni%ated to t#e e)*orter+ Post1s#i*ment
finan%e is t#erefore *ro&ided to t#e e)*orter to meet #is needs for f$nds d$rin! t#e
inter&enin! *eriod ,et(een t#e s#i*ment of t#e !oods and t#e re%ei*t of *a'ment
t#erefore+
# $RE%S1I$MENT "REDIT OR $A"KING "REDIT
E)*ort *a%in! %redit is a loan or an' ot#er %redit !i&en ,' a ,an to an e)*orter
for finan%in! ?a@ *ro%$rin! ra( materials and %om*onents to man$fa%t$re t#e *rod$%t or
?,@ *ro%essin! or assem,lin! or *a%in! t#e !oods for e)*ort+ T#e ,ans on t#e ,asis of
t#e follo(in! !i&e t#e *a%in! %redit+
A letter of Credit ?=0C@ o*ened in fa&o$r of t#e e)*orter ,' t#e im*orter"s ,an/ A
%onfirmed or irre&o%a,le order for t#e e)*ort of !oods from India #a&in! ,een *la%ed on
t#e e)*orter. or An' ot#er e&iden%e of an order for e)*orts of !oods from India #a&in!
,een *la%ed on t#e e)*orter or Rele&ant *oli%' iss$ed ,' t#e ECGC; or Personal ,ond in
t#e %ase of *art'"s alread' no(n to t#e e)*orter+
"OSTS "O0ERED ': $RE%S1I$MENT FINAN"E
Pre1s#i*ment finan%e (o$ld normall' %o&er t#e follo(in! %osts;
Cost of *$r%#ase or *rod$%tion
Pa%in! in%l$din! an' s*e%ial *a%in! for e)*ort
Costs of s*e%ial ins*e%tion or tests re7$ired ,' t#e im*orter
Internal trans*ort %osts
Port. %$stoms and s#i**in! a!ent"s %#ar!es
>rei!#t and ins$ran%e %#ar!es if t#e %ontra%t is eit#er CI> %ontra%t or C&>
%ontra%t and E)*ort d$t' or ta). if an'+
*$OST S1I$MENT "REDIT
Post1s#i*ment finan%e is re7$ired ,' t#e e)*orters to ,rid!e t#e !a* ,et(een t#e
time of s#i*ment of !oods and t#e a%t$al *a'ment for t#e !oods e)*orted+ Post 1
s#i*ment %redits are !i&en ,' %ommer%ial ,ans
A!ainst t#e se%$rit' of a**ro&ed s#i**in! do%$ments tendered a!ainst1letters of
%redit or ot#er(ise+ It is also *ro&ided at %on%essional rate of Interest+ T#e ,ans
normall' finan%e t#e *ost1s#i*ment %redit in one t#e follo(in! (a's/
?i@ Ne!otiatin! e)*ort ,ills $nder letter of %redit
?ii@ Dis%o$ntin! of ,ills dra(n a!ainst s#i*ment of !oods1dis%o$ntin!
of $san%e ,ills ?D0A 6ills @ dra(n a!ainst s#i*ment of !oodsdis%o$ntin!
of ,ills is $s$all' done $nder limits san%tioned to
different %$stomers. and
?iii@ An ad&an%e a!ainst ,ills $nder %olle%tion+
6ans $s$all' %#ar!e a %ommission a%%ordin! to t#e rates *res%ri,ed ,' t#e
>orei!n E)%#an!e Dealer"s Asso%iation of India+ T#e rate of interest on *ost1s#i*ment
%redit is also %#ar!ed at %on%essional rate+
T:$ES OF $OST %S1I$MENT "REDIT
Post s#i*ment %redit ma' ,e of t#ree t'*es/
?i@ S#ort term/ T#e s#ort term %redit is $s$all' for H mont#s and *ro&ided ,'
,ans+
?ii@ Medi$m term/ Medi$m term loans are offered for a *eriod ,e'ond H mont#s
and $* to G 'ears+ T#ese loans are also *ro&ided ,' %ommer%ial ,ans in
%olla,oration (it# EXIM 6an of India+ Medi$m term loans are *ro&ided for
in t#e %ase of d$ra,le %ons$mer !oods and li!#t %a*ital !oods+
?iii@ =on! term/ =on! term loans are *ro&ided in t#e %ase of sale of %a*ital !oods
%om*lete *lants and t$rne' 3o,s+ T#e *eriod of %redit is $s$all' more t#an G
'ears+
6ans en3o' %ertain ,enefits for ad&an%in! loans to e)*orters. T#e' are as
follo(s+
?i@ Refinan%e ,' EXIM 6an of India+
?ii@ G$arantees *ro&ided ,' ECGC (#ere a s$,stantial *art of t#e ris is
%o&ered ,' t#e ECGC+
6 FORFAITING
>orfaitin! ena,le an e)*orter to %on&ert an o&erseas %redit sale into a %as# sale
t#ro$!# t#e *ro%ess of dis%o$ntin! of e)*ort re%ei&a,les+ T#e ,ill of e)%#an!e a%%e*ted
,' t#e im*orter is s$rrendered to t#e forfeitin! a!en%' (#i%# *a's #im in %as# after
ded$%tin! a fee+ T#e $nderstandin! is t#at t#e a!en%' (ill %olle%t t#e d$es from t#e
im*orter on e)*ir' of t#e said *eriod+
7FINAN"E FOR E9$ORTS ON DEFERRED $A:MENT TERMS
O$r e)%#an!e %ontrol re!$lations sti*$late t#at e)*orter s#o$ld reali2e t#e
forei!n e)%#an!e for t#eir e)*orts (it#in 5JL da's from t#e date of s#i*ment+ Contra%ts
for e)*ort of !oods a!ainst *a'ment to ,e re%ei&ed f$ll' or *artl' after t#e e)*ir' of t#e
sti*$lated *eriod for t#e reali2ation of e)*ort *ro%eeds are treated as deferred *a'ment
e)*ort %ontra%t+ E)tension of lon! term e)*ort %redit #as ,e%ome an a%%e*ted e)*ort
maret strate!' and t#erefore. *ro&ision #as ,een made for t#e e)tension of medi$m and
lon! term %redit to finan%e t#e sale of Indian %a*ital !oods and related ser&i%es+
FREE TRADE 2ONE +E9$ORT $RO"ESSING 2ONES,
T#ese are also referred to as E)*ort Pro%essin! Nones. are set $* (it# t#e
intension of *ro&idin! an internationall' %om*etiti&e d$t' free en&ironment for e)*ort
*rod$%tion. at lo( %ost+ T#is ena,les t#e *rod$%ts of EPN to ,e %om*etiti&e. ,ot# 7$alit'
(ise and *ri%e (ise. in t#e international maret+
India #as se&en EPN at different *arts of o$r %o$ntr'+ EPN o*eratin! $nits ,roadl'
$nder t#e *rod$%t !ro$*s of ele%troni%s. en!ineerin! items. %#emi%als and allied *rod$%ts.
!ems and 3e(eller'. te)tiles. !arments. *lasti%s and r$,,er *rod$%ts+
T#e o,3e%ti&es of t#ese $nits are/
5+ To earn forei!n e)%#an!e
8+ To !enerate em*lo'ment o**ort$nities
9+ To fa%ilitate transfer of te%#nolo!' ,' forei!n in&estment and ot#er means+
F+ To %ontri,$te to t#e o&erall de&elo*ment of t#e e%onom'+
Entitlement for EPN Units/
Ea%# of t#e 2ones *ro&ides ,asi% infrastr$%t$re s$%# as de&elo*ed land for
%onstr$%tion of fa%tor' s#eds. standard desi!n fa%tor' ,$ildin!s. roads. *o(er. (ater
s$**l' and draina!e+ In addition %$stoms %learan%e is arran!ed (it#in t#e 2one at no
e)tra %#ar!e+ Pro&ision is made for lo%atin! ,anin!Q*ost offi%e fa%ilities and offi%es of
%learin! a!ents in t#e ser&i%e %enters lo%ated in ea%# of t#e 2ones+
>orei!n e7$it' $* to 5LLO is *ermissi,le in t#e %ase of EPN $nits
Pro%$rement of ra( materials. %om*onents and %ons$ma,les and e)*ort of
finis#ed *rod$%ts s#all ,e e)em*t from %entral le&ies+
E)em*tion from ind$strial li%ensin! for man$fa%t$re of items reser&ed for SSI
se%tor+
INTERNATIONAL TRADE UNIT FOUR
$RO"ED.RE FOR E9E".TING AN E9$ORT ORDER
T#e follo(in! t#e *arties and a!en%ies in&ol&ed in e)e%$tin! an e)*ort order/
5+ E)*orter
8+ Im*orter+
9+ T#e ne!otiatin! ,an
F+ S#i**in! %om*an'
G+ Ins$ran%e %om*an'
H+ Reser&e 6an of India
I+ ECGC
J+ Dire%torate General of >orei!n Trade
K+ C$stoms :o$se
5L+ Port Tr$st
55+ Ins*e%tion A!en%'
58+ Clearin! A!ents
$roce/)re for e&ec)ting an e&port or/er:
T#e e)*orter #as to *ro%ess t#e e)*ort order in t#e follo(in! manner/
5+T#e e)*orter s#o$ld s%r$tini2e t#e e)*ort order (it# referen%e to t#e terms and
%onditions of t#e %ontra%t+ T#e order s#o$ld s*e%if' t#e mode of *a'ment s$%# as letter of
%redit. do%$ment a!ainst a%%e*tan%e or do%$ment a!ainst *a'ment. and t#e terms of
%onditions as s*e%ified in t#e letter of %redit+ T#e follo(in! do%$ments #a&e to ,e
*re*ared+
8 6ill of E)%#an!e ?if D0A or D0P ,ill@
8 Commer%ial in&oi%e
8 6ill of ladin!
8 Marine ins$ran%e
8 Pa%in! list
8 Certifi%ate of or!in
8 E)*ort ins*e%tion %ertifi%ate
8+A deli&er' note ?in d$*li%ate@ is to sent to t#e (ors mana!er or fa%tor'
mana!er !i&in! t#e des%ri*tion of !oods to ,e e)*orted alon! (it# t#e %o*' of t#e
instr$%tion !i&en ,' t#e im*orter+
9+As soon as t#e !oods are man$fa%t$red and e*t read' for s#i*ment t#e
follo(in! #a&e to ,e done/
Clearan%e of t#e e)%ise a$t#orit' #as to ,e o,tained+
E)*ort ins*e%tion a!en%' s#o$ld ,e a**roa%#ed+
Goods s#o$ld ,e dis*at%#ed to t#e *ort of s#i*ment+
AR1F form #as to ,e *re*ared+
F+T#ereafter t#e (ors mana!er sends a dis*at%# ad&i%e to t#e e)*ort de*artment+
T#e' (ill o,tain t#e marine ins$ran%e %o&er for t#e !oods+ T#en t#e e)*orts de*artment
sends t#e follo(in! do%$ments to its %learin! and for(ardin! a!ents alon! (it# detailed
instr$%tions/
Commer%ial in&oi%e
Ori!inal e)*ort order
Ori!inal =0C
Pa%in! list
Certifi%ate of ins*e%tion
Endorsement re!ardin! floor *ri%e
G+ T#e %learin! and for(ardin! a!ent taes deli&er' of t#e %onsi!nment and
arran!es its stora!e in t#e (are#o$se+ T#ereafter #e *re*ares re7$isite %o*ies of s#i**in!
,ill and s$,mits t#em to t#e E)*ort De*artment of t#e C$stoms #o$se alon! (it#
ne%essar' do%$ments mentioned a,o&e+
H+ After t#e s#i**in! ill #as ,een *assed ,' t#e %$stoms. t#e %learin! and
for(ardin! a!ents *resents t#e Port Tr$st %o*' of t#e s#i**in! ,ill to t#e res*e%ti&e
a$t#orities+ T#ereafter. in t#e %ase of s#ed %ar!o. t#e Do% %#allan is *re*ared+ A#ere t#e
s#i* loads o&erside. t#e do% %#ar!es are indi%ated in t#e s#i**in! ,ill itself and
t#erefore. no do% %#allan is *re*ared+
I+T#e *assed S#i**in! 6ill in%l$din! do% %#allan (ill ,e s$,mitted to t#e Port
Commissioners+
J+ In res*onse to t#at t#e S#i*"s E)*ort Cler %alls for %ar!o from s#ed or ,oat and
after loadin! *re*ares t#e Mate Re%ei*t+ A mate re%ei*t is a re%ei*t iss$ed ,' t#e
%ommandin! offi%e of t#e s#i* (#en t#e %ar!o is loaded on t#e s#i* and %ontains
information a,o$t t#e name of t#e &essel. ,ert#. date of s#i*ment. des%ri*tion of
*a%a!es. mars and n$m,ers. %ondition of t#e %ar!o at t#e time of re%ei*t on ,oard t#e
s#i* et%+ T#e mate re%ei*t is first #anded o&er to t#e Port Tr$st a$t#orities so t#at t#e
e)*orter ma' *a' all t#e *ort d$es+ After *a'in! all t#e *ort d$es. t#e %learin! a!ent
%olle%t t#e mate re%ei*t from t#e Port Tr$st A$t#orities+
K+ T#e %learin! and for(ardin! a!ent for(ards t#e follo(in! do%$ments to t#e
e)*orter/ >$ll set of ,ill of ladin!. e)*ort *romotion %o*' of t#e ,ill. %o*ies of %$stoms
in&oi%e. ori!inal e)*ort order+
5L+ As soon as t#e e)*orter re%ei&es t#e a,o&e do%$ments from t#e %learin! and
for(ardin! a!ent. #e %om*letes t#e remainin! formalities+ :e (ill *resent t#e follo(in!
do%$ments to t#e ne!otiatin! ,an+
8 GR >orm. C$stoms in&oi%e. Certifi%ate of ori!in. Pa%in! list. Marine
ins$ran%e *oli%' and 6an %ertifi%ate
55+ T#e ne!otiatin! ,an transmits d$*li%ate %o*' of t#e GR form to t#e e)%#an!e
%ontrol de*artment of t#e Reser&e 6an of India after re%ei*t of t#e e)*ort *ro%eeds+
58+T#e ori!inal %o*' of t#e ,an %ertifi%ate alon! (it# attested %o*ies of t#e
%ommer%ial in&oi%e are ret$rned to t#e e)*orter+ T#e d$*li%ate %o*' of t#e ,an
%ertifi%ate is for(arded to t#e offi%e of t#e DG>T in t#e area+
59+>inall' t#e e)*orter (ill !et t#e &al$e of t#e &al$e of e)*ort %onsi!nment
a!ainst t#e a,o&e1mentioned do%$ments+
E9$ORT $RO"ED.RE FOR SENDING GOODS
An o$tline of t#e im*ortant ste*s in e)*ortin! t#e !oods is as follo(s/
IEC NUMBER/
E&er' *erson im*ortin! or e)*ortin! !oods re7$ire and Im*orter1E)*orter Code
n$m,er+ T#e re!ional li%ensin! a$t#orities normall' allot t#e IEC n$m,er+ T#is %ode
n$m,er is re7$ired to ,e in%or*orated in t#e &ario$s e)*ort do%$ments s$,mitted to t#e
a$t#orities for *$r*oses of e)*ort+
MEMBERSHIP CUM REGISTRATION:
Mem,ers#i* of %ertain ,odies (ill #el* t#e e)*orters in a n$m,er of (a's+ T#ere
are s*e%ified E)*ort Promotion Co$n%ils . %ommodit' ,oards and e)*ort de&elo*ment
a$t#orities for &ario$s *rod$%ts+ Mem,ers of EPC (ill re%ei&e different ind of assistan%e
and ser&i%es in res*e%t of t#e e)*ort ,$siness+
E)*orters are ad&ised to ,e%ome mem,ers of lo%al %#am,er of %ommer%e.
*rod$%ti&it' %o$n%il or an' ot#er trade *romotion or!ani2ation re%o!ni2ed ,' t#e
Ministr' of Commer%e+ Mem,ers#i* of s$%# ,odies (ill #el* t#e e)*orters in different
(a's. in%l$din! o,tainin! t#e %ertifi%ate of or!in. (#i%# is ne%essar' do%$ment re7$ired
for e)*ort to %ertain %o$ntries+
INQUIRY AND OFFER:
An in7$ir' is a re7$est from a *ers*e%ti&e im*orter to ,e informed of t#e terms
and %onditions of sale+ It ma' %ontain f$ll details of t#e !oods re7$ired. t#eir des%ri*tion.
%atalo!$e n$m,ers or !rades. si2es. (ei!#ts or ot#er distin!$is#in! feat$res. time and
met#od of deli&er' et%+
As soon as t#e e)*orter re%ei&es a ,$siness in7$ir' from *art' a,road. it s#o$ld
,e *rom*tl' attended to+ T#e e)*orter s#o$ld ,ear in mind t#at t#e forei!n ,$'er #a&e a
lar!e n$m,er of *ros*e%ti&e s$**liers in a n$m,er of %o$ntries and t#$s #e is in a &er'
%om*etiti&e sit$ation+ Serio$s and sin%ere %are s#o$ld. t#erefore. ,e e)er%ised in dealin!s
(it# forei!n %o$ntr' %$stomers+
As a startin! *oint of t#e ne!otiations. t#e e)*orter (o$ld #a&e to mae an offer
to t#e forei!n %$stomer+ An offer is a *ro*osal in (#i%# an e)*orter s$,mits. ma' ,e in
t#e form of a letter. #is 7$otation and ot#er rele&ant information+ T#e offer. (#en
a%%e*ted ,' t#e forei!n ,$'er. ,e%omes an order+
CONFIRMATION OF ORDER:
On%e t#e ne!otiations are %om*leted and t#e terms and %onditions are a%%e*ta,le
to t#e ,$'er and seller. t#e ,$'er ma' *la%e an order (it# t#e e)*orter+ T#e e)*orter
s#o$ld immediatel' %onfirm t#e order ,' sendin! t#is a%%e*tan%e+ >or t#e %onfirmation of
t#e order. t#e *roforma in&oi%e is !enerall' sent in tri*li%ate to t#e ,$'er. and t#e ,$'er is
ased to ret$rn t(o %o*ies si!ned ,' #im+ T#e e)*orter s#o$ld a!ain send on%e %o*' to
t#e im*orter (it# t#e e)*orter"s si!nat$re to %onfirm t#e a%%e*tan%e of t#e order+ T#e
%onfirmation of t#e order $s$all' taes t#e form of a %ontra%t+
EXPORT LICENSE:
T#ese e)*orts of some items are ,anned and of some items %ontrolled ,' means
of li%enses. t#o$!# man' items are *ermitted to ,e e)*orted freel'+ Needless to sa'. t#e
e)*orter s#o$ld mae s$re t#at t#e item so$!#t to ,e e)*orted is not one. (#i%# falls in
t#e ,anned list+ If t#e item to ,e e)*orted re7$ires a li%ense. it is ne%essar' to o,tain it
,efore finali2in! t#e %ontra%t+
FINANCE:
If t#e e)*orter re7$ires *re1s#i*ment finan%ial assistan%e. #e s#o$ld tae t#e
ne%essar' ste*s to o,tain it+
PRODUCTION/PROCRUMENT OF GOODS:
On%e t#e order is %onfirmed. t#e e)*orter s#o$ld tae ne%essar' ste*s to ens$re
t#e timel' a&aila,ilit' of t#e !oods of t#e s*e%ifi%ations re7$ired and e)e%$te t#e e)*ort
order *rom*tl'+ If t#e e)*orter is not a man$fa%t$rer. #e s#o$ld %ontra%t (it# #is
s$**liers and ens$re timel' a&aila,ilit' of t#e !oods of t#e ,$'er"s s*e%ifi%ations+
SHIPPING SPACE:
As soon as t#e e)*ort order is %onfirmed. t#e e)*orter s#o$ld %ontra%t t#e
s#i**in! %om*anies (#i%# #a&e sailin!s for t#e *ort to (#i%# !oods #a&e ,e sent and
,oo t#e re7$ired s#i**in! s*a%e+ On t#e e)*orter"s a**li%ation or on t#e a**li%ation of
t#e frei!#t ,roer on t#e e)*orter"s ,e#alf. t#e s#i**in! %om*an' iss$es sits a%%e*tan%e if
t#e s*a%e a**lied for is !i&en+
PACKING AND MARKING:
On%e t#e !oods re read'. t#e' are mared and mared *ro*erl'+ If t#e ,$'er #as
!i&en instr$%tions a,o$t *a%in! and marin!. t#e' s#o$ld ,e follo(ed a%%ordin!l'+ If
t#ere are no s$%# instr$%tions. it s#o$ld ,e ens$red t#at t#e *a%in! and marin! are of
t#e standards re%ommended or s*e%ified+
QUALITY CONTROL AND PRE-SHIPMENT INSPECTION:
T#ereafter !et t#e !oods ins*e%ted ,' t#e ins*e%tin! a$t#orities $nder t#e
%om*$lsor' 7$alit' %ontrol and *re1s#i*ment ins*e%tion+ T#e' are as follo(s/
8 E)*ort Ins*e%tion A!en%'
8 AGMARK A$t#orities
8 Te)tile %ommittee 1 for te)tile !oods+
8 An' ot#er a$t#orities a$t#ori2ed for t#is *$r*ose+
EXCISE CLEARANCE:
As a matter of *oli%'. t#e !o&ernment #as !ranted e)%ise d$t' e)em*tion for t#e
e)*ort *rod$%ts+ E)%isa,le !oods ma' ,e e)*orted eit#er $nder %laim for re,ate of e)%ise
d$t' or in ,ond+ In t#e %ase of e)*ort $nder %laim for ref$nd of e)%ise d$t'. t#e d$t' is
first *aid and its ref$nd is %laimed+ Some times (it# s*e%ifi%ation t#e !oods are allo(ed
to e)*ort (it#o$t *a'ment of d$t' on e)e%$tion of a ,ond (it# s$ffi%ient s$ret' and
se%$rit' in t#e *res%ri,ed ,ond+
CUSTOMS FORMALITIES:
Goods ma' ,e s#i**ed o$t of India onl' after t#e %$stoms %learan%e #as ,een
o,tained+ >or t#is *$r*ose. t#e e)*orter ?or t#e %learin! and for(ardin! a!ent on ,e#alf of
t#e e)*orter@ s#o$ld *resent t#e follo(in! do%$ments to t#e %$stoms a$t#orities+
1 S#i**in! 6ill
1 De%laration re!ardin! tr$t# of statement made in t#e s#i**in! ,ill
1 In&oi%e
1 GR form
1 E)*ort li%ense ?if re7$ired@
1 <$alit' %ontrol
1 Ori!inal %ontra%t
1 =etter of %redit ?if a**li%a,le@
1 Certifi%ate from 7$alit' %ontrol a$t#orities
1 Marine ins$ran%e *oli%'
1 Certifi%ate of or!in
1 Mate re%ei*t or ,ill of ladin!
1 Pa%in! list
1 AR1F >orm
1 An' ot#er do%$ments
T#e %$stoms a$t#orities s%r$tini2e t#e s#i**in! ,ill and ot#er re7$isite do%$ments.
and if. *rima1fa%ie. satisfied. t#e' *ass it for e)*ort. s$,3e%t to a *#'si%al e)amination ,'
t#e staff of t#e %$stoms+ T#e s#i**in! ,ill *assed ,' t#e e)*orter de*artment #as to
*resented to t#e %ar!o s$*er&isor or t#e steams#i* %om*an' or t#e s#ed mana!er. (#o is
t#e *ort offi%ial. for *ermission to ,rin! in t#e %ar!o for e)*ort+
SEND THE SHIPPING ADVICE TO THE IMPORTER:
On%e all t#e said a,o&e *ro%ess are o&er and as and (#en !oods are loaded into
%ar!o or s#i*. t#e e)*orter (ill inform t#e im*orter a,o$t t#e dis*at%# of !oods and
de*art$re of t#e s#i*+ So t#at t#e im*orter !et read' for #is a%tions+
NEGOTIATION OF DOCUMENTS:
After s#i**in! t#e !oods. t#e e)*orter s#o$ld arran!e to o,tain *a'ment for t#e
e)*orts ,' ne!otiation (it# t#e rele&ant do%$ments t#ro$!# t#e ,an+
APPLYING FOR REFUND (if a!"
T#en a**ro*riate ste*s to ,e taen ,' (a' of a**l'in! to !et t#e D$t' Dra( ,an
from %$stoms and ot#er assistan%e. if an' from Go&ernment+
E9$ORT ': AIR AND SEA
EXPORTS BY AIR
In international trade t#e $se of air1frei!#t is in%reasin! da' ,' da'+ No(a1
da's all t'*es of *rod$%ts lie food. read'made !arments. finis#ed leat#er and leat#er
*rod$%ts. !ems and 3e(eller'. ele%troni% *rod$%ts et%+. are sent ,' air frei!#t+
International Air Trans*ort Asso%iation (as set $* in 5KFG+ IATA #as made ra*id
e)*ansion ,e%a$se of t#ree de&elo*ments for (#i%# it #as ,een res*onsi,le+ T#e' are as
follo(s/
1 A $niform s'stem of do%$mentation for air %ar!o+
1 A standard s'stem of rate main! and inter airline a!reements on
rates+
1 A %learin! #o$se+
ADVANTAGES:
6asi%all'. t#ere are ten reasons (#i%# %an mae total distri,$tion %osts %#ea*er
t#ro$!# t#e $se of air trans*ort. at least for %ertain %ate!ories of mer%#andise+ T#e
reasons are as follo(s+
8 =o( in&entor' %arr'in! %osts
8 De%reased %a*ital %osts of !oods in transit
8 =ess *a%in! lo(ers %ost and red$%es %#ar!ea,le (ei!#t+
8 Related s$rfa%e trans*ort %osts are red$%ed+
8 T#e loss d$e to ro$!# #andlin! and *ilfera!e is red$%ed to t#e minim$m+
8 6reaa!e is ne!li,le+
8 Deterioration is a&oided+
8 O,solen%e is eliminated+
8 Ins$ran%e *remi$m is red$%ed+
8 Costs related to administration. orderin! et%+ are minimi2ed+
T#$s t#e ad&anta!e of e)*orts ,' air ma' ,e s$mmari2ed as follo(s/
5+ S*eed of deli&er'
8+ Sa&in!s in %ost
9+ Good ser&i%e to %$stomers (it#o$t #a&in! an' (are#o$se+
F+ Greater se%$rit' and *rote%tion d$rin! transit+
G+ A satisf'in! %$stomer+
E9$ORT ': SEA
If t#e !oods are sent ,' sea t#e e)*orter #as to o,tain0s$,mit t#e follo(in!
do%$ments/
6ill of =adin!
Marine Ins$ran%e Poli%'
E9$ORT DO".MENTS
DO".MENTS RELATED TO GOODS
INVOICE:
An in&oi%e is t#e seller"s ,ill for mer%#andise and %ontains *arti%$lars of !oods.
s$%# as t#e *ri%e *er $nit at a *arti%$lar lo%ation. 7$antit'. total &al$e. *a%in!
s*e%ifi%ations. terms of sale. identifi%ation mars of t#e *a%a!e . ,ill of ladin! n$m,er.
name and address of t#e im*orter. destination. name of t#e s#i* et%+
Some im*ortin! %o$ntries insist t#at t#e im*ortin! %o$ntr'"s %ons$l lo%ated in t#e
e)*orter"s %o$ntr' s#o$ld si!n t#e in&oi%e+ S$%# in&oi%es are no(n as %ons$lar in&oi%e+
T#e main *$r*ose of a %ons$lar in&oi%e is to ena,le t#e a$t#orities of t#e im*ortin!
%o$ntr' to %olle%t a%%$rate information a,o$t t#e &ol$me. &al$e. 7$alit'. !rade. so$r%es
et%+ of its im*orts for *$r*ose of assessin! im*ortin! d$ties and also for statisti%al
*$r*oses+
PACKING NOTE AND LIST:
T#e differen%e ,et(een *a%in! note and a *a%in! list is t#at t#e *a%in! note
refers to t#e *arti%$lar of t#e %ontents of an indi&id$al *a%. (#ile t#e *a%in! list is a
%onsolidated statement of t#e %ontents of a n$m,er of %ases or *a%s+
A *a%in! note s#o$ld in%l$de t#e *a%in! note n$m,er. t#e date of *a%in!. t#e
name and address of t#e e)*orter. t#e name and address of t#e im*orter. t#e order
n$m,er. date. s#i*ment *er ,i. ,ill of ladin! n$m,er and date. marin! n$m,ers. %ase
n$m,er to (#i%# t#e note relates. and t#e %ontents of t#e !oods is in terms of 7$antit' and
(ei!#t+ A*art from t#e details in t#e *a%in! note. a *a%in! list s#o$ld also in%l$de item
(ise details+
CERTIFICATE OF ORGIN:
A %ertifi%ate of or!in. as t#e name indi%ates. is a %ertifi%ate. (#i%# s*e%ifies t#e %o$ntr'
of t#e *rod$%tion of t#e !oods+ T#is %ertifi%ate #as also to ,e *rod$%ed ,efore %learan%e
of !oods and assessment of d$t'. for t#e %$stoms la( of t#e %o$ntr' ma' re7$ire t#is
*ro%ed$re+ T#is %ertifi%ate is a ne%essit' (#ere a %o$ntr' offers a *referential tariff to
India and t#e former is to ens$re t#at onl' !oods of Indian Or!in ,enefit from s$%#
%on%ession. A %ertifi%ate of or!in ma' ,e re7$ired (#en !oods of a *arti%$lar t'*e from
%ertain %o$ntries are ,anned+ A %ertifi%ate of or!in from ma' ,e o,tained from %#am,ers
of %ommer%e. e)*ort *romotion %o$n%ils. and &ario$s trade asso%iations t#at #a&e ,een
a$t#ori2ed ,' t#e !o&ernment+
DO".MENTS RELATED TO S1I$MENT
MATE RECEIPT
A mate re%ei*t is a re%ei*t iss$ed ,' t#e %ommandin! offi%e of t#e s#i* (#en t#e
%ar!o is loaded on t#e s#i*. and %ontains information a,o$t t#e &essel. ,ert#. date of
s#i*ment. des%ri*tion of *a%a!es. mars and n$m,ers. %ondition of t#e %ar!o at t#at time
of re%ei*t on ,oard t#e s#i*. et%+ T#e mate re%ei*t is first #anded o&er to t#e Port Tr$st
a$t#orities so t#at all t#e *ort d$es ma' ,e *aid ,' t#e e)*orter.+ After *a'in! all t#e *ort
d$es. t#e mer%#ant or t#e !ent ma' %olle%t t#e mate re%ei*t from t#e Port Tr$st
a$t#orities+ T#e ,ill of ladin! *re*ared ,' t#e s#i**in! a!ent after t#e mate re%ei*t #as
,een o,tained+
SHIPPING BILL
T#e s#i**in! ,ill is t#e main do%$ment on t#e ,asis of (#i%# t#e %$stoms"
*ermission for e)*ort is !i&en+ T#e s#i**in! ,ill %ontains *arti%$lars of t#e !oods
e)*orted. t#e name of t#e &essel. master or a!ents. fla!. t#e *ort at (#i%# !oods are to ,e
dis%#ar!es. t#e %o$ntr' of final destination. t#e e)*orter"s name and address. et%+ It also
%ontains details of t#e *a%a!es and t#e !oods. s$%# as n$m,er and des%ri*tion. mars
and n$m,ers. 7$antit' details a,o$t ea%# %ase. real &al$e as defined in t#e sea %$stoms
a%t. (#et#er Indian or forei!n mer%#andise to ,e re1e)*orted. total n$m,er of *a%a!es.
t#eir total (ei!#t and &al$e et%+
CART TICKET
A %art ti%et also no(n as a %art %#it. &e#i%le and !ate *ass. is *re*ared ,' t#e
e)*orter and in%l$des details of t#e e)*ort in terms of t#e s#i**er"s name. t#e n$m,er of
*a%a!es. t#e s#i**in! ,ill n$m,er. t#e *ort of destination and t#e n$m,er of t#e &e#i%le
%arr'in! t#e %ar!o+ T#e dri&er of t#e &e#i%le %arr'in! %ar!o s#o$ld *osses t#e ti%et. and
(#en t#e &e#i%le is ,ro$!#t at t#e *ort !ate. it s#o$ld ,e *resented to t#e !ate
(arden0ins*e%tor alon! (it# ot#er s#i**in! and *ort do%$ments+ T#e ins*e%tor. after
satisf'in! #imself t#at t#e &e#i%le is %arr'in! t#e %ar!o as mentioned in t#e do%$ment.
allo(s it to *ass t#e !ate+
CERTIFICATE OF MEASUREMENT
>rei!#t is %#ar!ed eit#er on t#e ,asis of (ei!#t or meas$rement+ A#en it is
%#ar!ed on t#e ,asis of (ei!#t. t#e (ei!#t de%lared ,' t#e s#i**er ma' ,e a%%e*ted+
:o(e&er. a %ertifi%ate of meas$rement from t#e Indian %#am,er of %ommer%e or ot#er
a**ro&ed or!ani2ation ma' ,e o,tained ,' t#e s#i**er and !i&en to t#e s#i**in!
%om*an' for %al%$lation of t#e ne%essar' frei!#t+
BILL OF LADING
T#e 6ill of ladin! is a do%$ment (#ere in t#e s#i**in! %om*an' !i&es its offi%ial
re%ei*ts of t#e !oods s#i**ed in its &essel and at t#e same time %ontra%ts to %arr' t#em to
t#e *ort of destination+ It is also an do%$ment of title to t#e !oods. and. as s$%#. is freel'
transfera,le ,' endorsement and deli&er'+
A 6ill of ladin! ser&es t#ree main *$r*oses/ I@ As a do%$ment of title to t#e
!oods" ?ii@ as a re%ei*t from t#e s#i**in! %om*an'"; and ?iii@ as a %ontra%t for t#e
trans*ortation of !oods+
Ea%# s#i**in! %om*an' #as its o(n 6ill of ladin!+ T#e e)*orter *re*ares t#e 6ill
of ladin! in t#e forms o,tained from t#e s#i**in! %om*an' or from t#e a!ents of t#e
s#i**in! %om*an'+ T#e information %ontained in t#e 6ill of ladin! in%l$des t#e date and
*la%e of s#i*ment; t#e name of t#e %onsi!nor; t#e name and destination of t#e &essel; t#e
des%ri*tion. 7$alit' and destination of t#e !oods; t#e mars and n$m,ers; t#e in&oi%e
n$m,er and t#e date of e)*ort; t#e !ross ei!#t and net (ei!#t; t#e n$m,er of *a%a!es;
t#e amo$nt of frei!#t et%+
A 6ill of ladin! a%no(led!in! re%ei*t of t#e !oods a**arentl' in !ood order and
%ondition and (it#o$t an' 7$alifi%ation is termed as a %lean ,ill of ladin!; if a 6ill of
ladin! is 7$alified (it# %ertain ad&erse remars s$%# as "!oods ins$ffi%ien%' *a%ed in
a%%ordan%e (it# %arria!e of !oods ,' Sea A%t-. -one ,o) dama!ed- et%+. it is termed as a
%la$sed ,ill of ladin!+
AIR#AY BILL
An air(a' ,ill. also %alled an air %onsi!nment note. is a re%ei*t iss$ed ,' an
airline for t#e %arria!e of !oods+ As ea%# s#i**in! %om*an' #as its o(n ,ill of ladin!.
ea%# #as its o(n air(a' ,ill+
B.ALIT: "ONTROL AND $RES1I$MENT INS$E"TION
T#e E)*ort Ins*e%tion %o$n%il of India (as set $* ,' t#e Go&ernment f India in
5KH9 to *ro&ide for so$nd de&elo*ment of e)*ort trade t#ro$!# 7$alit' %ontrol and
*res#i*ment
ins*e%tion+ T#e E)*ort Ins*e%tion Co$n%il ?EIC@ %onsists of a C#airman
a**ointed ,' t#e Central Go&ernment. F e)1offi%io mem,ers and 5G mem,ers nominated
,' t#e %entral !o&ernment+ T#e main f$n%tions of EIC as assi!ned are/
To ad&ise t#e %entral !o&ernment re!ardin! meas$res for enfor%ement of
7$alit' %ontrol and ins*e%tion in relation to %ommodities intended for
e)*ort and to dra( $* *ro!rammes t#erefore; and
To arran!e *re1s#i*ment ins*e%tion of notified %ommodities for e)*ort+
A,o$t 5LLLitems $nder *rod$%e !ro$* #eads of en!ineerin!. %#emi%als and allied
*rod$%ts. food and a!ri%$lt$ral *rod$%ts. 3$te and 3$te *rod$%ts. foot(ear and foot(ear
%om*onents. %as#e(. fis# and fis#er' *rod$%ts et%+. are $nder t#e %om*$lsor' 7$alit'
%ontrol ins*e%tion s'stem+
MA"1INER: FOR B.ALIT: "ONTROL AND INS$E"TION:
(i" EXPORT INSPECTION AGENCIES:
>or %arr'in! o$t *re1s#i*ment ins*e%tion of e)*ort of !oods. t#e Go&ernment of
India #as esta,lis#ed fi&e e)*ort ins*e%tion a!en%ies one ea%# at Cal%$tta. %#ennai.
%o%#in. Del#i and M$m,ai $nder t#e te%#ni%al and administrati&e %ontrol of t#e EIC+ T#e
E)*ort ins*e%tion a!en%ies #a&e also ,een a$t#ori2ed ,' t#e Go&ernment of India to
iss$e %ertifi%ates of or!in $nder t#e Generalised s'stem of *referen%es for e)*ort to
Ba*an. EEC. USA and East E$ro*ean %o$ntries+
(ii" OTHER AGENCIES:
Go&ernment #as also re%o!ni2ed 85 *ri&ate ins*e%tion a!en%ies and I !o&ernment
ins*e%tion a!en%ies to s$**lement t#e (or of 7$alit' %ertifi%ation+
SYSTEM OF INSPECTION
T#ree S'stems of ins*e%tion are in o*eration at *resent+ T#e' are/
5+ Consi!nment1Aise Ins*e%tion
8+ In1Pro%ess <$alit' Control
9+ Self1%ertifi%ation
CONSIGNMENT-#ISE INSPECTION:
Under %onsi!nment1(ise ins*e%tion. ea%# e)*ort %onsi!nment is ins*e%ted and
tested ,' t#e re%o!ni2ed ins*e%tion a!en%ies ,' sele%tin! %onsi!nments on t#e ,asis of
statisti%al sam*lin! *lan to satisf' %onformit' of t#e *rod$%ts (it# t#e *res%ri,ed
standards+
IN-PROCESS QUALITY CONTROL:
T#is s'stem la's em*#asis on t#e res*onsi,ilit' of t#e man$fa%t$rers and
*ro%essors in ens$rin! %onsistent 7$alit' d$rin! ea%# sta!e of *rod$%tion ,' e)er%isin!
%#e%s on materials. %om*onents t#ro$!# ins*e%tin! *ro%ess %enters+ T#e %ertifi%ations of
ins*e%tion in fa&o$r of $nits a**ro&ed $nder t#e s%#eme are iss$ed ,' t#e E)*ort
Ins*e%tin! A!en%ies+ T#ese $nits are $nder t#e s$*er&ision ,' t#e E)*ort Ins*e%tion
A!en%ies t#ro$!# random s*ot %#e%s+
SELF-CERTIFICATION:
Under t#is s'stem t#e man$fa%t$rin! $nits f$lfillin! t#e norms *res%ri,ed are
a$t#ori2ed ,' t#e %entral !o&ernment to iss$e %ertifi%ates of ins*e%tion $nder t#e A%t ,'
t#emsel&es for t#eir *rod$%ts+
DO"EMENTS RELATED TO $A:MENTS
LETTER OF CREDIT
A letter of %redit is a do%$ment %ontainin! t#e !$arantee of a ,an to #ono$r
drafts dra(n on it ,' an e)*orter. $nder %ertain %onditions and $* to %ertain amo$nts .
*ro&ided t#at t#e ,enefi%iar' f$lfils t#e sti*$lated %onditions
BILL OF EXCHANGE
T#e Ne!otia,le Instr$ments A%t. 5JJ5. defines t#e ,ill of e)%#an!e as - an
instr$ment in (ritin! %ontainin! an $n%onditional order. si!ned ,' t#e maer. dire%tin! a
%ertain *erson to *a' a %ertain s$m of mone' onl' to. or t t#e order of. a %ertain *erson or
t#e ,earer of t#e instr$ment+ T#ere are fi&e im*ortant *arties to a ,ill of e)%#an!e/
T#e Dra(er
T#e Dra(ee
T#e Pa'ee
T#e Endorser
T#e Endorsee
TRUST RECEIPT
If t#e im*orter is $na,le to tae *ossession of t#e do%$ments ,' main! t#e
*a'ment on t#e D0P ,ill follo(in! t#e arri&al of t#e !oods. t#e mer%#andise ma' ,e made
a&aila,le to t#e im*orter ,' #is ,an $nder an arran!ement (#ere,' t#e im*orter si!ns a
tr$st re%ei*t+ Under t#is arran!ement. t#e im*orter is allo(ed to sell t#e im*orted !oods
,' a%tin! as an a!ent of t#e ,an; ,$t t#e retains o(ners#i* of t#e mer%#andise $ntil t#e
im*orter #as made f$ll settlement; all s$ms re%ei&ed from t#e sale of !oods m$st ,e
%redited to t#e ,an $ntil s$%# settlement is made+
LETTER OF HYPOTHECATION
A letter of #'*ot#e%ation is a do%$ment si!ned ,' t#e %$stomer %on&e'in! to a
,aner t#e f$ll o(ners#i* of !oods at t#e *ort of destination in res*e%t of (#i%# #e #as
made ad&an%es eit#er ,' loan or ,' a%%e*tan%e or ne!otiation of ,ills of e)%#an!e+ T#is is
a sort of ,lanet do%$ment (#i%# s#i**in! do%$ments. demands from a %$stomer to !i&e
#im re%o$rse son t#e ,ills and %ontrol of t#e do%$ments+
BANK CERTIFICATE OF PAYMENT
It is a %ertifi%ate iss$ed ,' t#e ne!otiatin! ,an of t#e e)*orter %ertif'in! t#at t#e
,ill %o&erin! *arti%$lar %onsi!nments #as ,een ne!otiated and t#at t#e *ro%eeds re%ei&ed
in a%%ordan%e (it# e)%#an!e %ontrol re!$lation in t#e a**ro&ed manner+
MARINE INS.RAN"E
Ins$ran%e !ranted to %o&er loss or dama!e to s#i*s or !oods in transit eit#er ,'
sea. air or land is %alled Marine Ins$ran%e+ Ins$ran%e of s#i*s is %alled - :$ll Ins$ran%e-
(#ile %o&er *ro&ided in res*e%t of !oods sis termed as %ar!o ins$ran%e+
T#e f$ndamental *rin%i*les of marine ins$ran%e are e)*lained ,elo(//
I$%&a'( I)(&($): A *erson #as an ins$ra,le interest in a t#in! if #e (ill ,e ,enefited ,'
its safet' or d$e arri&al or ,e *re3$di%ial ,' its loss. dama!e or detention or in%$r in
res*e%t t#ereof+
U)*+$) G++, Fai)-/ It is t#e d$t' of t#e *ro*oser to dis%lose %learl' and a%%$ratel' all
material fa%ts related to t#e ris+
I,(*i)!: Marine ins$ran%e is a %ontra%t of indemnit' (#ere,' t#e $nder(riter or
ass$rer or t#e ins$ran%e %om*an' a!rees for a stated %onsideration no(n as *remi$m. to
*rote%t and indemnit' t#e s#i**er or t#e o(ner of t#e !oods a!ainst loss or dama!e or
e)*ense in %onne%tion (it# t#e !oods at t#e ris. if t#e dama!e is %a$sed ,' *erils
s*e%ified in t#e %ontra%t no(n of *oli%' of t#e ins$ran%e+
S%.&+/a)i+/ T#e ins$rer $*on *a'ment of loss is entitled to t#e ,enefits of an' ri!#ts
a!ainst t#ird *arties t#at ma' ,e #eld ,' t#e ass$red #imself+
C+)&i.%)i+/ If t#ere are more t#an one ins$rer it is desira,le not onl' to ens$re t#at t#e
ins$red does not re%ei&e more t#an indemnit' ,$t t#at an' loss is fairl' s*read ,et(een
all t#e ins$rers in&ol&ed+
P&+0i*a)( Ca%$(/ Pro)imate %a$se means t#e a%ti&e effi%ient %a$se t#at sets in motion a
train of e&ents. (#i%# ,rin!s a,o$t a res$lt. (it#o$t t#e inter&ention of an' for%e started
and (orin! a%ti&el' from a ne( and inde*endent so$r%e+
1o4 to Ins)re:
Under marine ins$ran%e t#e *oli%' (ill ,e taen ,' t(o (a's+ One is o*en *oli%' and
anot#er one is s*e%ifi% *oli%'+ In o*en *oli%' t#e ins$ran%e (ill ,e made for all t#e
s#i*ments made in a *eriod+ A#ereas in s*e%ifi% *oli%' t#e ins$ran%e (ill ,e made ,'
s#i*ment (ise+
RISKS "O0ERED:
Perils of t#e Sea/ It in%l$des o$t1of1t#e ordinar' (ind and (a&e a%tion. li!#tnin!.
%ollision and dama!e ,' sea (ater (#en %a$sed ,' *erils s$%# as o*enin! of t#e seams of
t#e &essel ,' %ollision+
Fi&(: >ire in%l$des ,ot# dire%t fire dama!e and also %onse7$ential dama!e as ,' smoe or
stream. and loss res$ltin! from efforts to e)tin!$is# a fire+
A$$ai1i/ )-i(2($/ T#is refers to a for%i,le tain! rat#er t#an %landestine t#eft or mere
*ilfera!e+
3())i$+: Bettison is t#e t#ro(in! of arti%les o&er ,oard. $s$all' to li!#ten t#e s#i* in
times of emer!en%'+
Ba&&a)&!/ 6arratr' is t#e (illf$l mis%ond$%t of master or %re( and (o$ld in%l$de t#eft.
(ron!f$l %on&ersion. intentional %astin! a (a' of &essel or an' ,rea%# of tr$st (it#
dis#onest intent+
A11 +)-(& 4(&i1$/ T#is %la$se does not mean all t#e *erils t#at ,e fall a s#i*ment. ,$t sea
*erils of t#e sort listed in t#e %la$se+
RISKS NOT "O0ERED:
Marine ins$ran%e does not %o&er t#e losses or dama!es e)*e%ted to o%%$r in t#e
follo(in! %ases/
U,(& N+&*a1 C+,i)i+$: 6e%a$se of t#e nat$re of !oods t#emsel&es t#eir
in#erent &i%e s$%# as ,reaa!e of fra!ile !lasses *a%a!ed inade7$atel'+ Dama!e %a$sed
,' ori!inal *a%in! is e)%l$ded no matter (#en t#e dama!e itself ma' o%%$r+
L(a5a/($ +& #oo losses on !oods *a%ed in ,a!s. solidifi%ation of *alm and
%o%on$t oil $nless #eated stora!e is *ro&ided+
D(1a!: T#is means t#at loss of maret and loss. dama!e or deterioration arisin!
o$t of dela' in transit are not %o&ered+
O&,ia&! %a2+i,a.1( T&a,( L+$$($: T#ese losses s$%# as s#rina!e and
e&a*oration in ,$l s#i*ment are also not %o&ered $nless s*e%iall' ins$red+
#a&$6 S)&i5($ a, C+**+)i+$: S$%# as t#ese *erils are %ommonl' e)%l$ded
$nless endorsed+
Da/(&+%$ D&%/$ C1a%$(: T#e dan!ero$s dr$!s %la$se sti*$lates t#at losses
%onne%ted (it# t#e s#i*ment of o*tim$m and ot#er dan!ero$s dr$!s (ill not ,e *aid for
$nless %ertain s*e%ified %onditions are met+
IM$LIED "ONDITIONS:
In a %ontra%t of marine ins$ran%e t#e follo(in! %onditions are im*lied/
i+ t#at t#e ass$red (ill e)er%ise $tmost !ood fait# in dis%losin! t#e a%t$al
fa%ts+
ii+ T#at t#e !enerall' a%%e*ted $sa!es of trade a**li%a,le to t#e ins$red
s$,3e%t1matter are follo(ed; and
iii+ T#at t#e ass$red s#all not %ontri,$te to t#e loss t#ro$!# (illf$l fa$lt or
ne!li!en%e+
1O5 M."1 TO INS.RE FOR8
In a marine ins$ran%e t#e *oli%es are normall' "&al$ed"+ T#at is ins$ran%e is done
at t#e a!reed &al$e. i+e+ Cost of t#e *ri%e of t#e %ar!o *l$s frei!#t and all %#ar!es *l$s an
allo(an%e for normal e)*e%ted *rofit+ Normall'. t#e e)*e%ted *rofit is %al%$lated at 5LO
of CI> &al$e. ,$t t#is fi!$re ma' ,e in%reased $*on t#e %onsi!nee"s s*e%ifi% re7$est+In t#e
%ase of total loss. t#e a!reed *ri%e is *aid and in t#e %ase of *artial loss. a *er%enta!e of
t#e total ins$red &al$e is re%o&era,le+
1O5 TO MAKE A "LAIM 51EN LOSS ARISES:
D$ties of Ass$red/ 6efore main! a %laim t#e ass$red m$st *erform %ertain
d$ties+ T#e' are/T#e ass$red m$st mae reasona,le effort to minimi2e t#e loss+
o :e m$st immediatel' inform t#e nearest a!ent of #is $nder(riter. arran!e
for a s$r&e' of t#e dama!e and s$**l' t#e ne%essar' %ommer%ial
do%$ments+
o :e m$st mae timel' (ritten %laim $*on t#e %arrier for t#e loss or dama!e
(it#in a reasona,le time (it# t#e ne%essar' do%$ments+
T#e follo(in! do%$ments are $s$all' sent (it# t#e %laim a**li%ation+
8 Ori!inal and d$*li%ate %o*ies of t#e marine ins$ran%e *oli%' or t#e
%ertifi%ate+
8 O%ean ,ill of ladin!
8 Ori!inal s#i**ers in&oi%e
8 Pa%in! list. (ei!#t %ertifi%ate or ot#er e&iden%e of t#e nat$re and
%onditions of t#e !oods at t#e time of s#i*ment+
8 S$r&e' re*ort of t#e $nder(riter"s rePre*resentati&e +
8 Claim ,ill/ T#is sets o$t t#e a%t$al %laim !i&in! t#e details of t#e loss or
dama!e of t#e %ar!o+
TOTAL LOSS:
A total loss ma' ,e a%t$al or %onstr$%ti&e+ An a%t$al total loss ma' o%%$r (#en
t#e !oods are destro'ed or (#en t#e' arri&e so dama!ed as to %ease to ,e a t#in! of t#e
des%ri*tion ins$red+ A %onstr$%ti&e total loss o%%$rs (#en t#e e)*enses of re%o&erin! or
re*airin! t#e !oods (o$ld e)%eed t#eir &al$e after t#e e)*endit$re #as ,een in%$rred+
$ARTIAL LOSS:
If loss is less t#an total it is %alled a&era!e in ins$ran%e term+ A&era!e ma' ,e
*arti%$lar or !eneral+
PARTIAL: T#ere are t(o t'*es of *arti%$lar a&era!e losses+i+e+ Total loss of a *art
of t#e !oods and !oods arri&ed in a dama!ed %ondition+ T#at means (#en a *art of t#e
total %onsi!nment is %om*letel' lost. t#e ins$red &al$e of s$%# !oods s#all ,e %al%$lated
*ro*ortionatel'+ T#e se%ond t'*e is t#at t#e *art !oods are arri&ed (it# dama!ed
%ondition+
INTERNATIONAL TRADE % .NIT FI0E
E9$ORT TERMS OF $A:MENT AND LETTERS OF "REDIT
T#e e)*orter #as to re%ei&e *a'ment for t#e !oods #e s$**lied to t#e im*orter+ :o( it is
to ,e *aid %an ,e de%ided ,' t#e e)*orter and im*orter ,efore t#e s#i*ment is made+
Generall' t#ere are fi&e met#ods of e)*ort *a'ment and t#e' are e)*lained ,elo(/
PAYMENT IN ADMANCE/
T#is t'*e of *a'ment is most $n%ommon+ :o(e&er. if t#ee is #ea&' demand for
t#e !oods and t#e !oods are tailor1made for t#e %$stomer. t#e e)*orter ma' !et *a'ment
in ad&an%e+ Under t#is met#od. t#e e)*orter re%ei&es a ,an or a ,an ad&i%e eit#er on
%onfirmation of t#e order or at an' time ,efore s#i*ment+ T#is is t#e most ad&anta!eo$s
form of *a'ment as t#e e)*orter does not #a&e an' ris ,$t. as (e #a&e alread' o,ser&ed.
it is not &er' %ommon+
OPEN ACCOUNT/
Under t#is met#od. t#e e)*orter sends t#e do%$ments dire%tl' to t#e im*orter (it#
a %o&erin! letter asin! for t#e in&oi%e &al$e to ,e remitted to #im+ In t#is %ase t#e
e)*orter does not dra( an' ,ill of e)%#an!e+ :en%e. t#ere is no e&iden%e of t#e
o,li!ation to *a'+ T#o$!# t#is met#od is sim*le and less e)*ensi&e t#e e)*orter %arries
t#e ,$rden of finan%e and it also in&ol&es real ris for t#e e)*orter+ T#e e)*orter ma'
a%%e*t t#is met#od of *a'ment if t#ere is een %om*etition and t#ere is a lon! and
esta,lis#ed relations#i* ,et(een and t#e im*orter+
DOCUMENTARY 6I==S/
T#is met#od of *a'ment finan%es a lar!e *ro*ortion of o&erseas trade+ T#ese ,ills
a%t as a ,rid!e ,et(een t#e e)*orter"s (illin!ness to *art (it# #is mone' $nless #e is *aid
for and im*orter"s $n(illin!ness to *art (it# #is mone' $nless #e is s$re of re%ei&in! t#e
!oods+ T#e %ommer%ial ,ans t#at deal in forei!n e)%#an!e *ro&ide a &ia media ,'
!i&in! t#e ne%essar' ass$ran%es to ,ot# t#e *arties+ Under t#is met#od of *a'ment t#e
e)*orter a!rees to s$,mit do%$ments to #is ,an alon! (it# t#e ,ill of e)%#an!e+ T#e
do%$ments in%l$de ,ill of ladin!. in&ol&e and a marine ins$ran%e *oli%'+
Under t#is met#od t#ere are t(o t'*es of *a'ments &i2/ Do%$ments a!ainst
*a'ment ?D0P@ and do%$ments a!ainst A%%e*tan%e ?D0A@+ Under D0P ,ills. t#e e)*orter"s
,an (ill send t#e do%$ments to its %orres*ondent ,an in t#e im*orter"s %o$ntr'. (#i%#
(ill *resent t#e do%$ments to t#e im*orter and as #im to *a' t#e mone' for t#e !oods
e)*orted+ On *a'ment of t#e ,ill of e)%#an!e t#e ,an (ill deli&er t#e do%$ments to t#e
im*orter so t#at #e %an tae *ossession of t#e !oods+ In %ase of D0A ,ills. t#e
%orres*ondent ,an (ill s$,mit t#e ,ill of e)%#an!e to ,e si!ned ,' t#e im*orter t
indi%ate #is a%%e*tan%e of t#e *a'ment o,li!ation+ After t#e im*orter a%%e*ts t#e ,ill #e
(ill !et *ossession of t#e do%$ments for tain! deli&er' of t#e !oods+ On t#e d$e date of
*a'ment. t#e ,an (ill a!ain *resent t#e ,ill to t#e im*orter (#o t#en maes t#e
*a'ment+ T#e mone' re%ei&ed is remitted t#ro$!# $s$al ,anin! %#annels to ,e %redited
to t#e e)*orter"s a%%o$nt+
=ETTRS O> CREDIT
A letter of %redit is a do%$ment %ontainin! t#e !$arantee of a ,an to #ono$r
drafts dra(n on it ,' an e)*orter. $nder %ertain %onditions and $* to %ertain amo$nts.
*ro&ided t#at t#e ,enefi%iar' f$lfils t#e sti*$lated %onditions ?Detailed e)*lanation for
letter of %redit (as !i&en se*aratel'@+
S:IPMENT ON CONSIGNMENT 6ASIS
In t#is %ase. t#e e)*orter maes s#i*ment to t#e o&erseas %onsi!nee0a!ent. ,$t
retains t#e title to t#e !oods as also t#e ris attendant t#ereto; e&en t#o$!# t#e o&erseas
%onsi!nee (ill #a&e t#e *#'si%al *ossession of t#e !oods+ T#e *a'ment for t#e !oods
s#i**ed is made onl' (#en t#e a!ent $ltimatel' sells t#e !oods to ot#er *arties+ If t#e
a!ent fails to sell t#e !oods. #e ma' ret$rn t#e !oods at an' time (it#o$t an' lia,ilit' and
at t#e seller"s e)*ense+
LETTER OF "REDIT
A letter of %redit is a do%$ment %ontainin! t#e !$arantee of a ,an to #ono$r
drafts dra(n on it ,' an e)*orter. $nder %ertain %onditions and $* to %ertain amo$nts.
*ro&ided t#at t#e ,enefi%iar' f$lfils t#e sti*$lated %onditions+ T#e letter of %redit offers
ad&anta!es to ,ot# t#e seller and ,$'er+ As far as t#e seller is %on%erned. a letter of %redit
ens$res #im *a'ment for t#e !oods #e sells. *ro&ided. of %o$rse. t#at #e follo(s t#e
instr$%tions+ T#o$!# t#e ,$'er #as to #a&e t#e ,ot#eration of arran!in! for t#e letter of
%redit. it ma' ena,le #im to o,tain more li,eral dis%o$nts and a lo(er *ri%e from t#e
seller+ >$rt#er. t#e ,$'er is ass$red t#at t#e s#i*ment (ill ,e made ,' t#e date s*e%ified
in t#e letter of %redit. or else t#e %redit (ill e)*ire+
PARTIES TO T:E =ETTER O> CREDIT/
5+ T#e O*ener/ T#e o*ener is t#e ,$'er?im*orter@+ T#e letter of %redit is o*ened
at t#e initiati&e and re7$est of t#e ,$'er+
8+ T#e Iss$er/ T#e iss$er. also %alled t#e o*enin! or iss$in! ,an. is t#e ,an in
t#e im*orter"s %o$ntr' iss$in! t#e letter of %redit at t#e re7$est of t#e im*orter+
9+ T#e 6enefi%iar'/ T#e ,enefi%iar' is t#e *art' in (#ose fa&o$r t#e %redit is
iss$ed; t#at is t#e ,enefi%iar' is t#e seller or e)*orter+
F+ T#e %onfirmin! 6an/ T#e %onfirmin! ,an is a ,an in t#e e)*orter"s
%o$ntr'. (#i%# !$arantees t#e %redit at t#e re7$est of t#e iss$in! ,an+ T#e
%onfirmin! ,an $ndertaes all t#e o,li!ations of t#e iss$in! ,an as a
*rimar' *art' to t#e %redit. and e&en if t#e iss$in! ,an fails d$rin! t#e
%$rren%' of t#e %redit. t#e %onfirmin! ,an is o,li!ed to #ono$r its
%ommitment+
G+ T#e Notif'in! 6an/ T#e notif'in! ,an is t#e ,an. (#i%#. at t#e re7$est of
t#e iss$in! ,an. notifies t#e ,enefi%iar' t#at t#e %redit #as ,een o*ened in #is
fa&o$r+ If t#e letter of %redit is %onfirmed. t#e %onfirmin! t#e ,an ad&ises t#e
,enefi%iar' a%%ordin!l'+
H+ T#e Pa'in! 6an/ T#e *a'in! ,an is t#e ,an on (#i%# t#e draft or ,ill of
t#e e)%#an!e is to ,e dra(n $nder t#e %ommer%ial %redit+ T#e *a'in! ,an
ma' ,e t#e iss$in! ,an. t#e %onfirmin! ,an or t#e notif'in! ,an+
I+ T#e Ne!otiatin! 6an/ T#e ne!otiatin! ,an is t#e ,an. (#i%# *a's or
a%%e*ts t#e drafts of t#e e)*orter+ If no *a'in! ,an is s*e%ified in t#e %redit.
t#e ,enefi%iar' ma' !o t#e an' ,an and *resent t#e draft and related
do%$ments $nder t#e %redit; and if t#e ,an a!rees to ne!otiate t#e do%$ments.
it ,e%omes t#e ne!otiatin! ,an+
KINDS OF LETTER OF "REDIT
5+ Clean =etter of Credit/ T#is ind of letter of %redit ma' ,e ne!otiated a!ainst a
%lean draft+ A %lean draft is a draft (it#o$t an' do%$ments atta%#ed to it+
8+ Do%$mentar' =etter of Credit/ Under t#is. t#e draft m$st ,e a%%om*anied ,' t#e
do%$ments s*e%ified in t#e letter of %redit+
9+ Assi!na,le Credit; Under t#is ind of =0C. t#e ,enefi%iar' ma' assi!n #is ri!#ts to
anot#er ,enefi%iar'. eit#er (it#in a stated *eriod or ,efore t#e e)*ir' date of t#e
%redit+
F+ Non1Assi!na,le Credit/ As o**osed to t#e assi!na,le %redit. t#e named
,enefi%iar' of a non1assi!na,le =0C %annot transfer #is ri!#ts to anot#er *art'+
G+ Cas# %redit; $nder t#e %as# %redit. t#e e)*orter ma' dra( a si!#t draft on t#e
,an+ T#e !reat ad&anta!e of t#is t'*e of %redit. t#erefore. is t#at t#e ,enefi%iar'
(ill re%ei&e %as# for #is draft as soon as t#e !oods are read' for s#i*ment and t#e
rele&ant do%$ments in *ro*er order are re*resented to t#e ,an+
H+ A%%e*tan%e Credit/ Under t#is arran!ement. t#e ,an merel' "a%%e*ts" t#e drafts
dra(n ,' t#e e)*orter+ After t#e ,an #as a%%e*ted it. t#e draft ,e%omes a ,an
a%%e*tan%e. (#i%# ma' ,e readil' dis%o$nted or sold ,' t#e e)*orter to t#e
a%%e*tin! ,an. to ot#er ,ans or to e)%#an!e dealers+
I+ Re&o%a,le %redit/ T#e re&o%a,le letter of %redit ma' ,e re&oed or %an%elled at
an' time (it#o$t t#e %onsent of. and (it#o$t noti%e to. t#e ,enefi%iar'+ As t#e
re&o%a,le =0C does not ade7$atel' *rote%t t#e ,enefi%iar' on t#e ,asis of t#is t'*e
of =0C are not %ommon+
J+ Irre&o%a,le Credit/ An irre&o%a,le =0C is one. (#i%# %annot ,e re&oed. amended
or modified ,' t#e iss$in! ,an (it#o$t t#e e)*ress %onsent of all t#e *arties
%on%erned+
K+ Confirmed Credit/ If a ,an in t#e ,enefi%iar' %o$ntr' %onfirms t#e =0C. it
,e%omes a %onfirmed %redit+ In t#is %ase. t#e ,an iss$in! t#e =0C sends it t#ro$!#
its ,ran%# or %orres*ondent ,an lo%ated in t#e ,enefi%iar'"s %o$ntr' (it# t#e
re7$est to add its %onfirmation to t#e %redit+
5L+ 6a%1to16a% Credit/ A ,a%1to ,a% %redit is essentiall' a se%ondar' %redit.
o*ened ,' a ,an on ,e#alf of t#e ,enefi%iar' of an ori!inal %redit. in fa&o$r of a
domesti% s$**lier+ T#e ori!inal %redit ,a%s anot#er %redit and fa%ilitates t#e
*$r%#ase of t#e !oods from a lo%al s$**lier ,' t#e ,enefi%iar' of t#e ori!inal =0C+
55+ Re&ol&in! Credit/ A re&ol&in! %redit is desi!ned to o,&iate t#e need for
esta,lis#in! ne( %redit for ea%# s#i*ment (#en t#e transa%tions are more or less
%ontin$o$s+ Under t#e re&ol&in! %redit. *ro&ision ma' ,e made for main!
a&aila,le t#e %redit a!ain as soon as t#e im*orter reim,$rses t#e iss$in! ,an (it#
t#e drafts alread' ne!otiated ,' t#e *a'in! ,an+
58+ Red Cla$se Credit/ T#e red %la$se =0C ena,les t#e ,enefi%iar' to dra( a
*redetermined &al$e of t#e =0C as its esta,lis#ed+ T#e red %la$se is an a$t#orit' to
t#e ne!otiatin! ,an to mae ad&an%es to t#e ,enefi%iar' for t#e *$r*ose of
*$r%#asin! t#e rele&ant mer%#andise+ T#e %onditions on (#i%# s$%# ad&an%es
ma' ,e made are in%or*orated in t#e =0C+
STE$S IN T1E O$ERATION OF LETTER OF "REDIT:
In =etter of %redit. normall' fo$r *arties are in&ol&ed. &i2. t#e a**li%ant for t#e
%redit ?im*orter@. t#e ,enefi%iar' of t#e %redit ?e)*orter@. t#e iss$in! ,an and t#e
ad&isin! ,an in%ase of $n%onfirmed %redit or t#e %onfirmin! ,an in %ase of %onfirmed
%redit+ T#e ste*1,'1ste* *ro%ed$re in&ol&ed %an ,e dis%$ssed ,' tain! an e)am*le+
M0S Rain,o( limited+ C#ennai #as se%$red a %ontra%t for t#e s$**l' of 8LL
%eilin! fans to a Ni!erian im*orter+ It #as ,een de%ided t#at t#e terms of *a'ment (ill ,e
a %onfirmed irre&o%a,le letter of %redit+ T#e total &al$e of t#e %ontra%t is Rs+8. LL.LLL+
On%e t#e %ontra%t is d$l' si!ned t#e Ni!erian ,an t#en sends instr$%tions to its
%orres*ondent ,an to t#e %redit and t#e ad&i%e t#e Rain,o( limited a%%ordin!l'+ On
re%ei*t of t#is ad&i%e from t#e lo%al %orres*ondent ,an in India. t#e Rain,o( limited+.
maes t#e s#i*ment of #e %lin! fns and !ets t#e s#i**in! do%$ments and ot#er related
do%$ments+ :e *resents t#ese to t#e %orres*ondent ,an. (#i%# s%r$tini2es t#e
do%$ments+ If t#ese are in f$ll %onformit' (it# t#e terms of t#e %redit. it (ill a%%e*t t#e
do%$ments and mae t#e *a'ment to t#e e)*orter+ T#e do%$ments are t#en for(arded to
t#e iss$in! ,an. (#i%# reim,$rses t#e amo$nt to t#e %orres*ondent ,an+ T#e iss$in!
,an in t$rn *resents t#e do%$ments to t#e im*orter and de,its #is a%%o$nt for t#e
%orres*ondin! amo$nt+
T#e ste*s in&ol&ed. t#erefore. relate to t#ree distin%t a%ti&ities. &i2+. o*enin! of
%redit. *resentation of do%$ments and t#e *ro%ess of *a'ment+ T#e entire s%#eme of
o*eration %an ,e easil' &is$ali2ed (it# referen%e to t#e >lo( %#art !i&en ,elo(+
T#e strai!#t lines s#o( t#e flo( of t#e %redit+ T#e das#ed lines s#o(s t#e flo( of
t#e do%$ments and t#e dotted lines s#o( t#e *ro%ess of *a'ment+
AD0ANTAGES OF LETTER OF "REDIT:
5+ P$r%#ase (it#o$t %as#/ T#e im*orter %an *$r%#ase !oods on %redit from forei!n
mer%#ants. (#o do not no( #im and ma' rel' $*on #is standin!. on t#e ,aner"s %redit
iss$in! t#e letter of %redit+
8+ Pa'ment after satisf'in! %onditions/ T#e im*orter is ass$red in %ase of do%$mentar'
letter of %redit t#at t#e e)*orter %annot o,tain an' ,enefit $nder t#e letter of %redit
(it#o$t a%t$all' s#i**in! t#e mer%#andise and #andin! o&er t#e do%$ments to t#e ,an+
6UYER SE==ER
CON>IRMING
6ANK
ISSUING
6ANK
SA=ES CONTRACT
OPENING ADMICE
DOCUMENTS
ISSUING
CON>IRMATI
9+ 6etter terms of trade/ T#e iss$in! ,aner lends t#e ad&anta!e of #is o(n %redit to t#e
im*orter. (#o is a,le to se%$re terms of trade from t#e forei!n s$**lier. (#i%# is
ot#er(ise not *ossi,le+
F+ Release a!ainst tr$st re%ei*t/ A#en ,ans are (illin! to ass$me %redit ris of t#e
im*orter. s#i**in! do%$ments are s$rrendered to #im in ret$rn for #is tr$st re%ei*t. and
t#e !oods released+
G+ Certaint' of Pa'ment/ T#o$!# t#e im*orter and t#e e)*orter are not no(n ea%# ot#er.
t#e letter of %redit *ro&ides an a,sol$te ass$ran%e t#at t#e ,ills of e)%#an!e dra(n $nder
t#e letter of %redit (ill ,e #ono$red+
H+Credit fa%ilities/ T#e e)*orter %an se%$re loans from #is ,an to ,$' or man$fa%t$re t#e
!oods to ,e s$**lied on t#e stren!t# of t#e letter of %redit+
I+ Dis%o$nt fa%ilities/ T#e ,ills of e)%#an!e dra(n $nder t#e letter of %redit are readil'
dis%o$nted (it# t#e ad&isin!0%onfirmin! ,aner or an' ot#er ,aner. ,e%a$se of t#e firm
$ndertain! !i&en ,' t#e o*enin! ,aner+
"OMMODIT: 'OARDS
T#e !o&ernment of India #as esta,lis#ed a n$m,er of %ommodit' ,oards
to ,e res*onsi,le for t#e *rod$%tion. de&elo*ment and e)*ort of some %ommodities lie
tea. %offee. r$,,er. to,a%%o s*i%es et%+ T#ese ,oards are stat$tor' ,odies+
TEA 'OARD:
T#e Tea 6oards #ead offi%e is in Cal%$tta+ T#e f$n%tions of t#ese ,oards in%l$des
1 It loos after t#e *rod$%tion and maretin! of tea in India+
1 In order to in%rease t#e *rod$%tion. t#e Tea 6oard r$ns &ario$s de&elo*ment
s%#emes+ Some of t#em are 5+Tea *lantation finan%e s%#eme.
Ne( tea $nit finan%e s%#eme. Small !ro(ers de&elo*ment s%#eme.S*e%ial
area de&elo*ment s%#eme et%+
1 Pro&ide finan%ial assistan%e and !rants for tea resear%# instit$tes
1 Promote resear%# a%ti&ities on t#e allied s$,3e%ts lie *a%a!in! of tea+
1 T#e e)*ort *romotion a%ti&ities are $ndertaen to *o*$lari2e Indian tea and
%ons$mer le&el (it# s*e%ial *romotion *ro!ramme to *romote India teas in
&al$e added for lie *a%et tea. tea ,a!s and instant tea+
1 >or *romotion of tea as ,e&era!e t#e tea ,oard also *arti%i*ates in t#e !eneri%
*romotion *ro!ramme %ond$%ted ,' tea %o$n%il at U+K+. German'. US. and
Canada and is also mem,er of t#e International Tea %ommittee+
"OFFEE 'OARD: T#e f$n%tions of %offee ,oard in%l$des
1 T#e %offee ,oard *arti%i*ates in sele%ted international e)#i,itions and trade
fairs for #i!#li!#tin! t#e #i!# 7$alit' and e)%ellent fla&o$r of Indian %offee
for t#e a(areness of im*orters and roasters from different %o$ntries+
1 S*e%ial ad&ertisements on t#e e)%ellen%e of t#e Indian %offee (ere released in
im*ortant %offee trade 3o$rnals and ma!a2ines in %o$ntries. (#i%# #a&e
*otential marets for Indian %offee+
1 St$dies on diseases of %offee and t#eir %ontrol (ere %arried o$t+
1 >or im*ro&in! t#e *rod$%ti&it' and 7$alit' of %offee. %onta%t *ro!ramme (as
la$n%#ed in F re!ions %o&erin! a total n$m,er of 5L5J !ro(ers+
1 Kee*in! &ie( t#e *rod$%tion of 7$alit' %offee at estate le&el. trainin!
*ro!ramme (as %ond$%ted+
TO'A""O 'OARD:T#e follo(in! are t#e f$n%tions rendered ,' to,a%%o ,oard to
*romote e)*ort of to,a%%o/
1 Allo(in! e)*orts to %o$ntries fa%in! forei!n e)%#an!e %r$n%# on lon! term
%redit terms+
1 Allo(in! e)*orts of to,a%%o to R$ssia t#ro$!# de,t re*a'ment ro$te+
1 S*onsorin! dele!ations a,road and *arti%i*ation in international trade fairs+
1 Im*ro&in! 'ield and 7$alit' of to,a%%o t#ro$!# %ontrol of diseases in to,a%%o
n$rseries. ,alan%ed fertili2ation. *est and disease %ontrol+
1 Im*ro&ement of %$rin! and storin! fa%ilities ,' %onser&ation of ener!' ,'
roof ins$lation of to,a%%o ,arns. s$**l' of tar*a$lins and s$**l' of %oal for
%$rin!+
1 Im*ro&in! to,a%%o !radin! t#ro$!# esta,lis#ment of %omm$nit' !radin!
%enters+
S$I"ES 'OARD:
T#e S*i%es 6oard #as n$m,er of s%#emes of assistan%e to s*i%e e)*orters s$%# as
6rand *romotion. =o!o Promotion. !rant of S*i%e :o$se %ertifi%ate et%+ T#e' are
e)*lained ,elo(/
6rand Promotion/ Under t#is s%#eme. interest free lon!1term loans $* to a
ma)im$m of GLO of t#e *romotion %ost for a *eriod of t#ree 'ears are *ro&ided to t#e
e)*orters of s*i%es in %ons$mer *a%s for *romotin! t#eir indi&id$al ,rands in o&erseas
marets+
=o!o Promotion/ In t#e e)*orts of s*i%es. 7$alit' is a e' element+ T#e s*i%es
,oard #as a s%#eme to *romote a -lo!o mar- as a mar of 7$alit' and Indian ness of
s*i%es+ T#e lo!o mar is a(arded to e)*orters of s*i%es in %ons$mer *a%s (#o f$lfill
%ertain sti*$lated %onditions of #'!iene0*ro%essin!0*a%a!in! and *rod$%t 7$alit'+ =o!o
is re!istered in si) %o$ntries and (o$ld ,e re!istered in anot#er 5F %o$ntries+
S*i%e :o$se Certifi%ate/ T#e 6oard #as introd$%ed a %on%e*t of "S*i%e :o$se" and
it is a(arded onl' to t#ose e)*orters (#o f$lfill t#e *res%ri,ed 7$alit' standards and #a&e
ne%essar' *ro%essin! infrastr$%t$re for *rod$%tion of %lean 7$alit' *ro%ess+ Certifi%ates
#a&e ,een a(arded to man' man$fa%t$rers0*ro%essors of s*i%es+
A*art from t#ose s%#emes. s*i%es ,oard #as ,een s$**lementin! a%ti&ities of
Ministr' of A!ri%$lt$re (it# a n$m,er of s%#emes t#at in%l$de/
5+ Prod$%tion and s$**l' of 7$alit' material and rooted %$ttin!;
5+ Re*lantation of old and diseased *lants;
8+ Pro&idin! assistan%e to mar!inal !ro(ers in non1traditional areas;
9+ Or!ani2in! trainin! *ro!rammes for !ro(ers for 7$alit' im*ro&ement and
*ost1#ar&est te%#ni7$es+
E9$ORT $ROMOTION "O.N"ILS
T#e ,asi% o,3e%ti&e of E)*ort Promotion Co$n%ils is to *romote and de&elo* t#e
e)*orts of t#e %o$ntr'+ Ea%# %o$n%il is res*onsi,le for t#e *romotion of a *arti%$lar !ro$*
of *rod$%ts. *ro3e%ts and ser&i%es+ T#ere are 8L EPCs and a n$m,er of s*e%ified
a!en%ies0,oards (#i%# s#all ,e re!arded as EPCs $nder t#e E)*ort and Im*ort Poli%'+
T#e' iss$e Re!istration %$m mem,ers#i* %ertifi%ate to e)*orters+
T#e main role of EPC is to *ro3e%t India"s ima!e a,road as a relia,le s$**lier of
#i!# 7$alit' !oods and ser&i%es+ T#e ma3or f$n%tions of t#e EPCs are as $nder/
8 To *ro&ide %ommer%iall' $sef$l information and assistan%e to t#eir mem,ers in
de&elo*in! and in%reasin! t#eir e)*orts+
8 To offer *rofessional ad&i%e to t#eir mem,ers in areas s$%# as te%#nolo!' $*
!radation. 7$alit' and desi!n im*ro&ement. standards and s*e%ifi%ations. *rod$%t
de&elo*ment. inno&ation et%+
8 To or!ani2e &isits of dele!ations of its mem,ers a,road to e)*lore o&erseas
maret o**ort$nities+
8 To or!ani2e *arti%i*ation in trade fairs. e)#i,ition and ,$'er seller meets in India
and a,road+
8 To *romote intera%tion ,et(een t#e e)*ortin! %omm$nit' and t#e Go&ernment
,ot# at t#e Central and State le&els+
8 To ,$ild a statisti%al ,ase and *ro&ide data on t#e e)*orts and im*orts of t#e
%o$ntr'. e)*orts and im*orts of t#eir mem,ers. as (ell as ot#er rele&ant
international trade data+
T#e E)*ort *romotion %o$n%ils are non1*rofit or!ani2ations re!istered $nder t#e
Com*anies A%t or t#e So%ieties Re!istration A%t. as t#e %ase ma' ,e+
#==> E9$ORT%ORIENTED .NITS
T#e s%#eme of 5LL EOU"s (ere introd$%ed in 5KJL (it# a &ie( to !eneratin!
additional *rod$%tion %a*a%it' for e)*orts ,' *ro&idin! an a**ro*riate *oli%' frame
(or. fle)i,ilit' of o*erations and in%enti&es+ In order to ena,le t#em to o*erate
s$%%essf$ll' in t#e international maret s$%# $nits are allo(ed to im*ort ma%#iner'. ra(
material. %om*onents and %ons$ma,le at free of %$stom d$ties+ T#ese $nits #a&e to
o*erate $nder %$stom ,ond and a%#ie&e t#e le&el of &al$e addition fi)ed ,' t#e 6oard of
A**ro&al+ At *resent more t#an GLL $nits are in o*eration $nder t#e EOU s%#eme++
Some of t#e modifi%ations done to fa%ilitate t#e e)*ortin! $nits in t#e EOUs are as
follo(s/
8 Sim*lifi%ation of %$stoms0e)%ise *ro%ed$res
8 A$tomati% a**ro&al $nder %ertain %onditions to *ro*osal for settin! $* $nits+
8 =easin! of %a*ital !oods from domesti% %om*anies ,' EPNQEOU #as ,een
*ermitted+
8 En%o$ra!ement of a!ro and ele%troni% $nits ,' *ro&idin! #i!#er domesti% a%%ess+
T#e follo(in! *ri&ile!es are en3o'ed ,' t#e E)*ort Oriented Units/
8 An EOU $nit ma' e)*ort all !oods and ser&i%es e)%e*t t#e items *ro#i,ited ,' t#e
e)im *oli%'+
8 An EOU $nit ma' im*ort (it#o$t *a'ment of d$t' for all t'*e of !oods. in%l$din!
%a*ital !oods re7$ired ,' it for its a%ti&ities *ro&ided t#e' are not *ro#i,ited items
of im*orts+
8 EOU $nits ma' im*ort0*ro%$re from Domesti% Tariff Area (it#o$t *a'ment of
d$t'+
8 Se%ond #and %a*ital !oods ma' also ,e im*orted d$t' free (it#o$t an' a!e limit+
8 EOU $nit s#all ,e *ositi&e net forei!n e)%#an!e earner+
Onl' *ro3e%t #a&in! an in&estment of Rs+5 %rore and a,o&e in ,$ildin!. *lant and
ma%#iner' s#all ,e %onsidered for esta,lis#ment $nder EOU s%#eme+ A**li%ation for
settin! $* of $nits $nder EOU s%#eme ma' ,e a**ro&ed ,' t#e $nits A**ro&als
Committee (it#in 5G da's+
T#e entire *rod$%tion of EOU $nits s#all ,e e)*orted s$,3e%t to t#e follo(in!/
8 Re3e%ts ma' ,e sold in t#e domesti% tariff area on *a'ment of d$ties on *rior
intimation to t#e %$stoms a$t#orities+
8 S%ra*0(aste arisin! o$t of *rod$%tion *ro%ess or in %onne%tion t#ere(it# ma'
,e sold in t#e domesti% tariff area on *a'ment of d$ties (it#in t#e o&erall
%eilin! of GLO >O6 &al$e of e)*orts+
8 6' *rod$%ts ma' also ,e sold in t#e domesti% tariff are s$,3e%t to a%#ie&ement
of *ositi&e net forei!n e)%#an!e on *a'ment of a**li%a,le d$ties (it#in t#e
o&erall entitlement+
O0ER0IE5 OF E9$ORT AND IM$ORT $OLI": OF INDIA
I PO=ICY AND ITS O6BECTIMES/
Under t#e >orei!n Trade ?De&elo*ment and Re!$lation@ A%t. 5KK8 t#e Central
Go&ernment #as notified t#e E)*ort and Im*ort Poli%' for t#e *eriod 8LL818LLI (#i%#
%ame into for%e (it# effe%t from 5st A*ril 8LL8 and s#all remain in for%e $* to 95st Mar%#
8LLI+ T#e follo(in! are t#e salient feat$res of t#e *oli%' as amended $* to 95st Mar%#
8LL9+
T#e *rin%i*les o,3e%ti&es of t#is *oli%' are/
8 To fa%ilitate s$stained !ro(t# in e)*orts to attain a s#are of at least 5O of !lo,al
mer%#andise trade+
8 To stim$late s$stained e%onomi% !ro(t# of *ro&idin! a%%ess to essential ra(
materials. intermediates. %om*onents. %ons$ma,les and %a*ital !oods re7$ired for
a$!mentin! *rod$%tion and *ro&idin! ser&i%es+
8 To en#an%e t#e te%#nolo!i%al stren!t# and effi%ien%' of Indian a!ri%$lt$re.
ind$str' and ser&i%es. t#ere,' im*ro&in! t#eir %om*etiti&e stren!t# (#ile
!eneratin! ne( em*lo'ment o**ort$nities. and to en%o$ra!e t#e attainment of
internationall' a%%e*ted standards of 7$alit'+
8 To *ro&ide %ons$mers (it# !ood 7$alit' !oods and ser&i%es at internationall'
%om*etiti&e *ri%es (#ile at t#e same time %reatin! a le&el *la'in! field for t#e
domesti% *rod$%ers+
II GENERA= PROMISIONS REGARDING IMPORTS AND EXPORTS
a@ E)*orts and Im*orts s#all ,e free e)%e*t in %ases (#ere t#e' are re!$lated ,'
*ro&isions of t#is *oli%' or an' ot#er la(+ T#e item (ise e)*ort and im*ort *oli%'
s#all ,e. as s*e%ified in ITC. *$,lis#ed and notified ,' DG>T+
,@ An' *erson (it#o$t an im*orter1e)*orter %ode n$m,er s#all mae no e)*ort or
im*ort $nless s*e%ifi%all' e)em*ted+ T#is n$m,er s#all ,e iss$ed ,' DG>T+
%@ T#e *ro&isions !i&en in :and,oo s#all !o&ern im*ort of sam*les+
d@ Im*ort of !ifts s#all ,e *ermitted (#ere s$%# !oods are ot#er(ise freel'
im*orta,le $nder t#is *oli%'+
e@ E)*ort of sam*les and >ree of %#ar!e !oods s#all ,e !o&erned ,' t#e *ro&isions
!i&en in t#e :and 6oo+
f@ All e)*ort %ontra%ts %$rren%' and in&oi%es s#all ,e denominated in freel'
%on&erti,le %$rren%' or Indian R$*ees ,$t t#e e)*ort *ro%eeds s#all ,e reali2ed in
freel' %on&erti,le %$rren%'+
!@ Goods in%l$din! edi,le items of &al$e not e)%eedin! Rs+5.LL.LLL01 in a li%ensin!
'ear. ma' ,e e)*orted as a !ift+
#@ Goods im*orted ma' ,e e)*orted in t#e same or s$,stantiall' t#e same form
(it#o$t a li%ense0%ertifi%ate0*ermission *ro&ided t#at t#e item to ,e im*orted or
e)*orted is not mentioned as restri%ted for Im*ort or E)*ort in t#e ITC+
i@ A li%ense s#all %ontain s$%# terms and %onditions as ma' ,e s*e%ified ,' t#e
li%ensin! a$t#orit' ma' in%l$de t#e 7$antit'. des%ri*tion and &al$e of !oods.
a%t$al $ser. t#e &al$e of addition to ,e a%#ie&ed if an'+
3@ E&er' li%ense s#all ,e &alid for t#e *eriod of &alidit' s*e%ified in t#e li%ense+
III PROMOTIONA= MEASURES/
5+Central Assistan%e to States/
State !o&ernments s#all ,e en%o$ra!ed to f$ll' *arti%i*ate in en%o$ra!in! e)*orts from
t#eir res*e%ti&e states+ >or t#is *$r*ose. s$ita,le *ro&isions s#all ,e made in t#e Ann$al
Plan of t#e De*artment of %ommer%e for allo%ation of f$nds to t#e states on t#e t(in
%riteria of !ross e)*orts and t#e rate of !ro(t# of e)*orts from different states+ T#e states
s#all $tili2e t#is amo$nt for de&elo*in! %om*lementar' and %riti%al infrastr$%t$re s$%# as
rods %onne%tin! *rod$%tion %enters and %reation of ne( state le&el e%onomi% *ro%essin!
2ones. ind$strial *ars et%+
8+Maret A%%ess Initiati&e/
>inan%ial assistan%e s#all ,e a&aila,le $nder t#is s%#eme to t#e E%onomi% Pro%essin!
Nones. ind$str' and trade asso%iations et%+. on t#e ,asis of t#e %om*etiti&e merits of
*ro*osal re%ei&ed in t#is re!ard for maretin! st$dies on %o$ntr' *rod$%t fo%$s a**roa%#
,asis. *arti%i*ation in international trade fairs. seminars. ,$'er1seller meet et%+
9+To(ns of E)*ort E)%ellen%e/
T#e ind$strial %l$ster to(ns t#at e)*ort s$,stantial *ortion of t#eir *rod$%ts. (#i%# are
(orld %lass. s#o$ld ,e !ranted re%o!nition (it# a &ie( to ma)imi2e t#eir e)*ort *rofile+
T#e %ommon ser&i%e *ro&iders in t#ese to(ns s#o$ld ,e entitled for fa%ilit' $nder
different s%#emes offered ,' t#e Go&t+ for e)*ort *romotion+ Sele%ted to(ns *rod$%in!
!oods of Rs+5LLL %rores or more (ill ,e notified as To(ns of E)*ort E)%ellen%e on t#e
,asis of Potential for !ro(t# in e)*orts+
F+S*e%ial >o%$s on Cotta!e and :andi%raft se%tor/
T#e small1s%ale se%tor alon! (it# t#e %otta!e and :andi%raft se%tor #as ,een
%ontri,$tin! to more t#an #alf of t#e total e)*orts of t#e %o$ntr'+ T#e %otta!e and
#andi%raft se%tor. (#i%# mostl' em*lo's artisan and r$ral *eo*le. %ontri,$tes
si!nifi%antl' to t#is effort+ In re%o!nition of t#e e)*ort *erforman%e of t#is se%tor and to
f$rt#er in%rease its %om*etiti&eness. t#e follo(in! fa%ilities s#all ,e e)tended to t#is
se%tor+
8 T#e $nits s#all ,e eli!i,le for f$nds from Maret A%%ess Imitati&e s%#eme+
8 Under EPCG s%#eme. t#ese $nits (ill not ,e re7$ired to maintain a&era!e le&el of
e)*orts+
8 T#e $nits s#all ,e entitled to t#e ,enefit of e)*ort #o$se stat$s on a%#ie&in! lo(er
total e)*ort0deemed e)*ort *erforman%e of Rs+5G %rores d$rin! t#e *re%edin!
t#ree li%ensin! 'ears+
8 T#e' are also entitled to d$t' free im*orts of s*e%ified items $*to 9O of >O6
&al$e of t#eir e)*orts+
G+A!ri E)*ort Nones/
T#e ser&i%es. rendered to A!ri E)*ort Nones (#i%# (o$ld ,e mana!ed and
%oordinated ,' state !o&ernment (o$ld in%l$de *ro&ision of *re0*ost #ar&est treatment
and o*erations *lant *rote%tion. *ro%essin!.+ Pa%in!. stora!e and related R & D et%+
Units A!ri e)*ort 2ones (o$ld ,e entitled for all t#e fa%ilities a&aila,le for e)*orts of
!oods in terms of *ro&isions of t#e res*e%ti&e s%#emes+
H+6rand Promotion and <$alit'/
T#e %entral !o&ernment (ill e)tend s$**ort and assistan%e to trade and ind$str' to
la$n%# a nation(ide *ro!ramme on 7$alit' a(areness and to *romote t#e %on%e*t of total
7$alit' mana!ement+ T#e Re!ional S$,1Committee on 7$alit' %om*laints s#all
in&esti!ate 7$alit' %om*laints re%ei&ed from forei!n ,$'ers+
I+Stat$s Certifi%ate/
Mer%#ant as (ell as man$fa%t$rer e)*orters. ser&i%e *ro&iders. E)*ort Oriented Units
s#all ,e eli!i,le for s$%# re%o!nition+ T#e stat$s #olders s#all ,e eli!i,le for t#e
follo(in! ne(Qs*e%ial fa%ilities/
8 =i%ense0%ertifi%ate0Permissions and %$stoms %learan%es for ,ot# im*orts and
e)*orts on self1de%laration ,asis+
8 >i)ation of in*$t1o$t*$t norms on *riorit'. (it#in HL da's+
8 E)em*tion from %om*$lsor' ne!otiation of do%$ments t#ro$!# ,ans+ T#e
remittan%e. #o(e&er. (o$ld %ontin$e to ,e re%ei&ed t#ro$!# ,anin! %#annels+
8 En#an%ement in normal re*atriation *eriod from 5JL da's to 9HL da's+
8 D$t' free im*ort entitlement for stat$s s$,3e%t to some %onditions+
Alls stat$s %ertifi%ates s#all ,e &alid from L51LF18LL8 to 951L918LLI+
J+Ser&i%e E)*orts/
T#e Ser&i%e *ro&iders s#all ,e entitled for all t#e fa%ilities mentioned in t#e *oli%'+
K+Ele%troni% Data Inter%#an!e/
A**li%ations re%ei&ed ele%troni%all' s#all ,e %leared (it#in 8F #o$rs+
A*art from t#e a,o&e *ro&isions. ,enefits and fa%ilities t#e ne( E)*ort and
Im*ort Poli%' s#o(ed its em*#asis t#ro$!# t#e follo(in! s%#emes/
8 D$t' E)em*tion S%#eme
8 D$t' Remission S%#eme
8 D$t' Entitlement Pass 6oo S%#eme
8 E)*ort Promotion Ca*ital Goods S%#eme
CONC=USION
In s#ort. t#e EXIM *oli%' sin%e 5KK8 a%no(led!es t#at t#e trade %an flo$ris# in
a re!ime of s$,stantial freedom+ It also re%o!ninses t#e need for reasona,le sta,ilit' of
t#e *oli%'. ,' main! t#e d$ration of t#e *oli%' G 'ears+ T#e im*li%ation of t#e ne(
*oli%' is t#at s$r&i&al of a firm (ill de*end on its %om*etiti&eness in t#e !lo,alisin!
en&ironment and t#e %om*etiti&e firms (ill #a&e *lentif$l o**ort$nities+ Indian firms (ill
#a&e to !ear $* t#emsel&es to s$r&i&e and to ,e%ome s$%%essf$l in t#e emer!in!
,orderless (orld+
FOREIGN E9"1ANGE
T#e im*ortin! %o$ntr' *a's mone' to t#e e)*ortin! %o$ntr' in ret$rn of !oods
eit#er in its domesti% %$rren%' or t#e #ard %$rren%'+ T#is %$rren%' (#i%# fa%ilitates t#e
*a'ment to %om*lete t#e transa%tion is %alled forei!n e)%#an!e+ T#is forei!n e)%#an!e is
t#e mone' in one %o$ntr' for mone' or %redit or !oods or ser&i%es in anot#er %o$ntr'+
>orei!n e)%#an!e in%l$des forei!n %$rren%'. %#e7$es and forei!n drafts+ S
>orei!n e)%#an!e is ,o$!#t and sold in forei!n e)%#an!e marets+ T#e
%om*onents of forei!n e)%#an!e maret rate in%l$de/ t#e ,$'ers. t#e sellers and t#e
intermediaries+ T#e maret intermediaries of forei!n e)%#an!e maret in%l$de E)%#an!e
,ans dealin! in forei!n e)%#an!e. ,ill ,roers. a%%e*tan%e #o$ses and Central 6an of
t#e %o$ntr'+
E&c(ange rate /eter!ination:
T#e transa%tions in t#e forei!n e)%#an!e maret. &i2+. ,$'in! and sellin! forei!n
%$rren%' tae at a rate (#i%# is %alled e)%#an!e rate+ E)%#an!e rate is t#e *ri%e *aid in
t#e #ome %$rren%' for a $nit of forei!n %$rren%'+ T#e e)%#an!e rate %an ,e 7$oted in t(o
(a's namel'
8 One $nit of forei!n mone' to a n$m,er of $nits of domesti% %$rren%'+
8 A %ertain n$m,er of $nits of forei!n %$rren%' to one $nit of domesti% %o$ntr'+
>or e)am*le. 5 UST U Rs+FJ or Rs+ 5 U UST L+L8
E)%#an!e rate in a free maret is determined ,' t#e demand and t#e s$**l' of e)%#an!e
of a *arti%$lar %o$ntr'+ T#e e7$ili,ri$m e)%#an!e rate is t#e rate at (#i%# demand for
forei!n e)%#an!e and t#e s$**l' of forei!n e)%#an!e are e7$al+ E7$ili,ri$m e)%#an!e
rate %an ,e determined ,' t(o met#ods/
8 T#e E)%#an!e rate ,et(een US dollars and Indian R$*ees %an ,e determined ,'
demand for and s$**l' of US dollars in India or ,' Indians+ T#e *ri%e of US T is
fi)ed in Indian R$*ees+
8 T#e e)%#an!e rate ,et(een Indian R$*ees and US T dollars %an also ,e
determined ,' demand for and s$**l' of Indian R$*ees ,' Ameri%ans or in USA+
T#e *ri%e of Indian R$*ee is determined in US dollars+ 6$t t#e *ri%es are same in
,ot# t#ese met#ods+
De!an/ for Foreign E&c(ange: T#e demand for forei!n e)%#an!e is determined ,' t#e
%o$ntr'4s
8 Im*ort of !oods and ser&i%es
8 In&estment in forei!n %o$ntries i+e+ esta,lis#ment of an ind$str' ,' Indians in
USA+
8 Ot#er *a'ments in&ol&ed in international transa%tions lie *a'ments of Indian
Go&ernment to &ario$s forei!n !o&ernments for settlement of t#eir transa%tions+
8 Ot#er t'*es of forei!n %a*ital lie !i&in! donations et%+
S)ppl3 of Foreign E&c(ange: S$**l' of >orei!n E)%#an!e of a *arti%$lar %o$ntr'
indi%ates t#e a&aila,ilit' of forei!n %$rren%' of a *arti%$lar %o$ntr' to t#e %o$ntr'
%on%erned ?i+e+ India@ in its forei!n e)%#an!e maret+ T#e s$**l' of forei!n e)%#an!e
in%l$des/
8 Co$ntr'4s e)*orts of !oods and ser&i%es to forei!n %o$ntries+
8 Inflo( of forei!n %a*ital
8 Pa'ments made ,' t#e forei!n !o&ernments to Indian !o&ernments
for settlin! t#eir transa%tions+
8 Ot#er t'*es of inflo( of forei!n %a*ital lie remittan%es ,' t#e
Non1Resident Indians. donations re%ei&ed et%+
E9"1ANGE RATE S:STEM:
Fi&e/ E&c(ange Rates:
Under t#is s'stem. t#e !o&ernments $sed to fi) t#e e)%#an!e rate and t#e %entral ,an to
o*erate it ,' %reatin! Ve)%#an!e esta,lis#ment f$nd4+ T#e %entral ,an of %o$ntr'
*$r%#ases t#e forei!n %$rren%' (#en t#e e)%#an!e rate falls and sells t#e forei!n
e)%#an!e (#en t#e e)%#an!e rate in%reases+ T#e %o$ntries follo( fi)ed e)%#an!e rates
d$e to its ad&anta!es+ T#e' are/
>i)ed e)%#an!e rates ens$re %ertaint' and %onfiden%e and t#ere,' *romoters
international ,$siness+
>i)ed e)%#an!e rates *romote lon!1term in&estments ,' &ario$s a%ross t#e !lo,e+
Most of t#e (orld %$rren%' lie US dollar areas and sterlin! *o$nd areas *refer
fi)ed e)%#an!e rates+
>i)ed e)%#an!e rates res$lt in e%onomi% sta,ili2ation+
>i)ed e)%#an!e rates sta,iles international ,$siness and a&oid forei!n e)%#an!e
riss to a !reater e)tent+ As s$%# t#e small ,$t international ,$siness oriented
%o$ntries lie UK and Demar *refer fi)ed e)%#an!e rate s'stem+
Des*ite t#ese ad&anta!es. most of t#e (orld %o$ntries at *resent are not in fa&o$r of t#is
s'stem ,e%a$se of t#e follo(in! reasons;
8 D$e to *ro,lems (it# t#e fi)ed e)%#an!e rate s'stem. IM> *ermits
o%%asional %#an!es in t#e s'stem+ T#e s'stem is %#an!ed into mana!ed
fle)i,ilit' s'stem+ T#e mana!ed fle)i,ilit' s'stem needs lar!e forei!n
e)%#an!e reser&es to ,$' or sell forei!n e)%#an!e in order to mana!e t#e
e)%#an!e rate+ Maintenan%e of !reater reser&es a!!ra&ate t#e *ro,lem of
international li7$idit'+ >i)ed
e)%#an!e rates s'stem ma' res$lt in a lar!e s%ale desta,ili2in! s*e%$lation
in forei!n e)%#an!e marets+
8 =on!1term forei!n %a*ital ma' not ,e attra%ted as t#e e)%#an!e rates are
not *e!!ed *ermanentl'+
8 T#e e%onomi% *oli%ies and forei!n e)%#an!e *oli%ies of t#e %o$ntries are
rarel' %oordinated+ In s$%# %ase. t#e e)%#an!e rate s'stem does not (or+
8 Most of t#e e%onomies in re%ent 'ears are li,erali2ed and !lo,ali2e+ T#ese
e%onomies *refer fle)i,le e)%#an!e rate s'stem+
8 Defi%it of ,alan%e of *a'ments of most of t#e %o$ntries in%reases $nder
fi)ed e)%#an!e rate s'stem as t#e elasti%ities in international marets are
too lo( for e)%#an!e rate e)%#an!es+
Fle&i-le E&c(ange Rates:
>le)i,le e)%#an!e rates are also %alled floatin! or fl$%t$atin! e)%#an!e rates+
>le)i,le e)%#an!e rates are determined ,' maret for%es lie demand for and s$**l' of
forei!n e)%#an!e+ Eit#er t#e !o&ernment or monetar' a$t#orities do not interfere or
inter&ene in t#e *ro%ess of e)%#an!e rate determination+ Under t#is s'stem. if t#e s$**l'
of forei!n e)%#an!e is more t#an t#at of demand for t#e same. t#e e)%#an!e rate is
determined at a lo( rate and &i%e &ersa+ Most of t#e %o$ntries in re%ent times are in
fa&o$r of fle)i,le e)%#an!e rates d$e to t#eir ad&anta!es+
8 T#is s'stem is sim*le to o*erate+ T#is s'stem does not res$lt in defi%it or s$r*l$s
of forei!n e)%#an!e+ T#e e)%#an!e rate mo&es a$tomati%all' and freel'+
8 T#e ad3$stment of e)%#an!e rate $nder t#is s'stem is a %ontin$o$s *ro%ess+
8 T#e s'stem #el*s for t#e *romotion of forei!n trade+
8 Sta,ilit' in e)%#an!e rate in t#e lon!1r$n is not *ossi,le e&en in fi)ed e)%#an!e
rate s'stem+ :en%e. t#is s'stem *ro&ides t#e same ,enefit lie fi)ed e)%#an!e
rate s'stem for lon! term in&estments+
8 T#is s'stem *ermits t#e e)isten%e of free trade and %on&erti,le %$rren%ies on a
%ontin$o$s ,asis+
8 T#is s'stem also %onfers more inde*enden%e on t#e !o&ernment re!ardin! t#eir
domesti% *oli%ies+
8 T#is s'stem eliminates t#e e)*endit$re of maintenan%e of offi%ial forei!n
e)%#an!e reser&es and o*eration of t#e fi)ed e)%#an!e rate s'stem+
Disa/vantages:
:o(e&er t#is s'stem is also not free from t#e disad&anta!es+ T#e disad&anta!es of t#is
s'stem in%l$de/
8 Maret me%#anism ma' fail to ,rin! a,o$t an a**ro*riate e)%#an!e rate+ T#e
e7$ili,ri$m e)%#an!e rate ma' fail to !i&e %orre%t si!nals to %orre%t t#e ,alan%e of
*a'ments *osition+
8 It is rat#er diffi%$lt to define fle)i,le e)%#an!e rate+
8 Under fle)i,le e)%#an!e rate s'stem. t#e e)%#an!e rate %#an!es 7$ite fre7$entl'+
T#ese fre7$ent %#an!es res$lt in e)%#an!e riss. ,reed $n%ertaint' and im*ede
international trade and %a*ital mo&ements+
8 Under fle)i,le rate s'stem. s*e%$lation ad&ersel' infl$en%es fl$%t$ations in s$**l'
and demand for forei!n e)%#an!e+
8 Under t#is s'stem a red$%tion in e)%#an!e rates leads to a &i%io$s %ir%le of
inflation+
Des*ite t#e ad&anta!es of fi)ed e)%#an!e rate and t#e disad&anta!es of floatin! e)%#an!e
rate s'stem. it is &ie(ed t#at t#e fle)i,le rate s'stem is s$ita,le for t#e !lo,ali2ation
*ro%ess+ In addition. t#e %on&ert a,ilit' also #el*s t#e floatin! rate s'stem and t#e
!lo,ali2ation of forei!n e)%#an!e *ro%ess+
INTERNATIONAL TRADE % 7#6=6
B.ESTION 'ANK
.NIT ONE
5+ Narrate t#e s%o*e of International Maretin!+
8+ Define International Maretin!+ :o( domesti% maretin! does differs
from international maretin!E
9+ A#at are t#e ad&anta!es t#at a firm %an deri&e ,' !oin! into
internationalE
?Ans/ moti&ation for e)*orts and ad&anta!es of !lo,ali2ation@
F+ A#' t#e tas of international maretin! is is more diffi%$lt t#an t#at
of domesti% maretin!E ?Ans/ Diffi%$lties of international maretin!@
G+ :o( do %ontrolla,le and $n%ontrolla,le fa%tors affe%t t#e en&ironment
of international maretin!E
H+ E)*lain t#e %on%e*t of Glo,ali2ation+
I+ Arite a note on Pros and Cons of Glo,ali2ation+
.NIT T5O
5+ A#' more and more Indian man$fa%t$rers tain! re%o$rse to dire%t
maretin!E
?Ad&anta!es of dire%t e)*ortin! and limitations of indire%t maretin!@
8+ Dis%$ss t#e %riteria in&ol&ed in International Maretin! in res*e%t of
maret
Sele%tion de%ision+
9+ Gi&e a %riti%al e&al$ation of &ario$s strate!' alternati&es for sele%tion
and entr' in
t#e international maretin!+
F+ =ist t#e im*ortan%e of 0$ses of0need for international Maretin!
resear%#+
G+ A#at are t#e &ario$s as*e%ts of International Maretin! Resear%#+
H+ A#at is meant ,' %om*etiti&e intelli!en%eE :o( do firms a%7$ire itE
I+ A#at are t#e different met#ods of *rote%tion made o$r !o&ernment for
t#e sae of domesti% mer%#antsE ?tariffs. s$,sidies and 7$otas@
J+ 6rin! o$t t#e im*a%t of Tariffs & <$otas+
K+ =ist o$t t#e standard %la$ses of International Sales Contra%t+
5L+ Arite a e)*lanator' not on trade ,arriers+
.NIT T1REE
5+ A#at do 'o$ mean ,' %o$nter tradeE Is it ad&anta!eo$sE
8+ Arite a note on (orld trade ser&i%es+
9+ =ist o$t t#e f$n%tions of GATT+ A#at are its ,asi% *rin%i*lesE
F+ :o( (o$ld GATT a!reements #el* in red$%in! trade ,arriersE
G+ A#at are t#e different forms of %o$nter tradeE
H+ :o( ATO differ from GATTE
I+ E&al$ate t#e instit$tional and infrastr$%t$re fa%ilities a&aila,le for
e)*ort *romotion in India+
J+ Des%ri,e ,riefl' t#e &ario$s meas$res taen ,' Go&ernment of India
to #el* Indian E)*orters+?e)*ort assistan%e and e)*ort *romotion
meas$res@
K+ Criti%all' e)amine t#e %ontri,$tions ,' t#e %ommer%ial ,ans in
E)*ort *romotional efforts in India+?*ost s#i*ment %redit and *re
s#i*ment %redit@+
5L+ Mae a %riti%al a**raisal of (orin! of t#e E)*ort Credit and
G$arantee Cor*oration+
55+ Dis%$ss t#e role of EXIM ,an in International Trade %onte)t+
58+ Arite a note 5LLO E)*ort Oriented Units ?EOU@ and its o,li!ations+
59+ E)*lain t#e role of >TN+
.NIT FO.R
5+ Des%ri,e t#e sta!es of *ro%essin! an e)*ort order+
8+ 6riefl' dis%$ss t#e f$n%tions of %ommodit' ,oards+
9+ Arite s#ort notes on
E)*ort ,' Air
E)*ort ,' sea
F+ A#at are t#e ad&anta!es of e)*ort of !oods ,' airE
G+ Present a detailed a%%o$nt of t#e *ro%ed$re for e)*ort of !oods+
H+ E)*lain t#e si!nifi%an%e of do%$ments $sed in e)*ort trade related to
s#i*ment of !oods and *a'ment+
I+ A#at are t#e ma%#ineries a&aila,le for 7$alit' %ontrol and ins*e%tionE
J+ A#at are t#e riss t#at are %o&ered $nder marine ins$ran%eE E)*lain
t#e *ro%ed$re and do%$ments $sed (#en t#e loss o%%$r
K+ E)*lain t#e f$ndamental *rin%i*les of marine ins$ran%e and dis%$ss
t#e e)tent of %o&era!e a&aila,le $nder different forms of marine
ins$ran%e+
.NIT FI0E
5+ E)*lain #o( *a'ments are settled in International Trade+
8+ A#at are t#e $ses of =etter of CreditE 6riefl' e)*lain t#e &ario$s
t'*es of =etter of Credit+
9+ State t#e ste*s in&ol&ed in t#e o*eration of =etter of Credit+
F+ E)amine t#e salient feat$res of India4s latest EXIM Poli%'+
G+ :o( t#e forei!n e)%#an!e rate (ill ,e determinedE
H+ Dis%$ss t#e ad&anta!es and disad&anta!es of different e)%#an!e rate
s'stem+
INTERNATIONAL TRADE GENERAL QUESTIONS
1. Trace the recent trends in Indian foreign trade.
2. Present an overview of Indias latest Export -Import
policy.
3. Explain the main featres of India!s foreign trade"
#. $rite short note on I%&.
'. (tate in yor opinion reasons for slggishness in
Indias &oreign Trade"
). $hat are varios assistance availa*le to Indian
Exporters"
+. $hat are the ma,or Exports of India"
-. Explain the advantages of .egional Economic gropings"
/. Explain the salient featres of the E0I% policy of or
contry 1ive sggestions to frther improve the
competitiveness of Indian Exports"
12.Examine the extent to which the direct Export
s*sidies have helped the Indian Exporters.what other
methods cold prove effective in encoraging more
exports"
11.3ritically examine the Indias export performance
.4escri*e the cases for the existing sitation and
give sggestions to improvement.
12.5ssess the impact of recent li*eralisation measres on
India!s International mar6eting"
13.&ormlate a stategy to increase exports of India!s ((I
sector"
1#.78ality improvements are essential to *oost
exports7.4iscss the validity of the statement in the
Indian context"
1'.Explain the role of export s*sidies in promoting
Indian
exports.$hat other methods do yo sggest"
1).9ow does International Trade contri*te to the
contries economy"
1+.$rite a detailed note on Pro,ect exports of India"
1-.$hat are the varios export incentives provided *y
1ovt.of India to *oost Exports"
1/.$hat are the main isses that shold *e considered
while framing the mltinational mar6eting plan.
22.Examine the extent to which the direct export s*sides
have helped the Indian exporters.$hat other methods
cold prove effective in encoraging more exports"
21.&ormlate a strategy to increase exports of India!s
small scale indstry sector.
22.7 8ality improvements are essential to *oost
exports7.4iscss the validity of the statement in the
Indian context.
23.5s a mar6eting manager :how will yo go a*ot the
pro*lems of finding overseas mar6et for a prodct of
yor choice.
2#.$hat do yo mean *y !%ar6eting mix :in the context of
International Trade"
2'.4istingish *etween !des6 research and field
research!.
2).;riefly descri*e the recent experience of <on tariff
*arriers.
2+.$hat are the different mar6et entry strategies
availa*le to %<3 to expand their international trade "
2-.4iscss the isse !standardisation =s localisation in
international mar6eting.
2/.>nder &?;contract :what are the dties of the exporter
and importer "
32.$hat do yo nderstand *y %edical Transcription
";riefly otline how it helps india in service
exports.
31.$hat are the ma,or export items of India " $ho are the
ma,or competitiors of these items "4iscss.