export market

7/27/2019 Export Market

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CHAPTER-1

1.1 INTRODUCTION OF EXPORT

Export in itself is a very wide concept and lot of preparations is required by an

exporter before starting an export business.

A key success factor in starting any export company is clear understanding and

detail knowledge of products to be exported. In order to be a successful in

exporting one must fully research its foreign market rather than try to tackle every

market at once. The exporter should approach a market on a priority basis.

Overseas design and product must be studies properly and considered carefully.

Because there are specific laws dealing with International trade and foreign

business, it is imperative that you familiarize yourself with state, federal, and

international laws before starting your export business.

Price is also an important factor. So, before starting an export business an exporter

must considered the price offered to the buyers. As the selling price depends on

sourcing price, try to avoid unnecessary middlemen who only add cost but no

value. It helps a lot on cutting the transaction cost and improving the quality of the

final products.

However, before we go deep into "How to export ? let us discuss what an export

is and how the Government of Indian has defined it.

In very simple terms, export may be defined as the selling of goods to a foreign

country. However, As per Section 2 (e) of the India Foreign Trade Act (1992), the

term export may be defined as 'an act of taking out of India any goods by land, sea

or air and with proper transaction of money.

Exporting a product is a profitable method that helps to expand the business and

reduces the dependence in the local market. It also provides new ideas,

management practices, marketing techniques, and ways of competing, which is not

possible in the domestic market. Even as an owner of a domestic market, an

individual businessman should think about exporting. Research shows that, on


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average, exporting companies are more profitable than their non-exporting

counterparts.

Definition of 'Export'

A function of international trade whereby goods produced in one country are

shipped to another country for future sale or trade. The sale of such goods adds to

the producing nation's gross output. If used for trade, exports are exchanged for

other products or services. Exports are one of the oldest forms of economic

transfer, and occur on a large scale between nations that have fewer restrictions on

trade, such as tariffs or subsidies.

Most of the largest companies operating in advanced economies will derive a

substantial portion of their annual revenues from exports to other countries. The

ability to export goods helps an economy to grow by selling more overall goods

and services. One of the core functions of diplomacy and foreign policy within

governments is to foster economic trade in ways that benefit both parties involved.


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1.2 OBJECTIVES

Undertaking market studies in individual foreign countries on regular as wellas an ad-hoc basis.

Organizing visits of delegations of members to explore opportunities forServices

Organizing, participation in seminars, conferences and meets in India andabroad, trade fairs/exhibitions/buyer-seller meets.

Disseminating information regularly and continuously in foreign countriesregarding the potential image of Indian Services sector and informing the

public in foreign countries the advantages of availing Services from India.

Compiling statistics and other relevant information regarding internationaltrade in Services.

Providing commercially useful information and assistance to members indeveloping and increasing export of Services.

Disseminating information useful to members by literatures, discussions,books, correspondence or otherwise.

Offering professional advice to members in areas such as technologyupgradation, quality and design improving, standards and specifications ofthe products and Services;

Maintaining liaison with agencies dealing in international trade andServices so as to promote export of Services from India.

Communicating with the chambers of commerce and other mercantilechambers of commerce, professional bodies, other mercantile and public

bodies in India and abroad for promoting measures for the advancement ofexports of Services from India.


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1.3 Methodology

The methodology used for the implementation of the assigned project is based on

secondary data. Research design for the descriptive study is of explanatory typeand the forms is given to discover the possible measure by detailed analysis this

report also based on descriptive research because it provide the detailed knowledge

about the INDIA EXPORT TRADE. Secondary data is to be used in the research,

have been collected from various magazines, news paper, websites and other

source.

1.4 Sources of Data

Secondary data collect method is used for this project and have been collectedfrom various magazines, news paper, websites, etc.

1.5 Scope of Study

The study is limited to INDIA EXPORT TRADE as it is a very vast topic, to study.

1.6 Chapter wise Scheme

The present study is an endeavor to evaluate the study of INDIA EXPORT

TRADE. The analysis and evaluation is based on secondary data. The present

study has been divided into five chapters. Chapter one is introductory in nature and

discusses the origin of INDIA EXPORT TRADE. It further provides the overview

of primary market in India. And also explains the scope of the study, data

collection and statistical tools for analysis. The reviews of the selected studies in

India covering various aspects of EXPORT TRADE has been covered in the

second chapter. Chapter three evaluates the various aspects of the INDIAEXPORT TRADE. Chapter four gives the detailed analysis at different points of

time in the chapter. Chapter five entitled Findings and Suggestions summarizes

the findings of the study. An attempt has been made to draw the conclusions from

the present study.


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CHAPTER-2

STUDY OF EXPORT TRADE

INTRODUCTION

Trade & Export:

A member of the World Trade Organization since 1996, the UAE supports opentrade and has stable trade relations with countries throughout the world. Thanks toits open economy, attractive business environment and continued economic

growth, the UAE has emerged as a key international trade hub between East andWest.

The UAEs main export commodities are crude oil, natural gas, re -exports, driedfish and dates. Its main import commodities are machinery and transportequipment, chemicals and food.

The UAEs top 5 import partners are:

Rank Country Primary Products

1.

India

17.50%

Primary products: cotton, accessories, gems and jewelry,

man-made yarn, fabrics, manufacturers of metals, cotton

yarn, marine products, machinery and instruments,

plastic and linoleum products, tea.

2.

China14.00%

Primary products: textile products, clothes, light

industrial products, handicrafts, machinery and products

made from gold, silver, copper, iron, tin.

3.

United

States

7.70%

Primary products: transport equipment, machinery,

computer & electronic products, primary metal

manufacturing, chemicals.

4.

Germany

5.60%

Primary products: machineries, electronics, chemical

products, measurement and control technology, iron,

steel.


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5.

Japan

4.82%

Primary products: transport equipment, electrical

machinery, general machinery, foodstuff, raw materials,

mineral fuels.

Perspective on International Trade

International trades between countries and across continents have existed forcenturies including previous civilizations. Traditionally international tradeconsisted of traded goods like textile, food items, spices, precious metals, preciousstones, and objects of art and various items across the borders. Everybody hasheard of the silk route as well as amber road and other famous routes that existed

and the ports and settlements that flourished due to the trade, which was carried onthrough land route as well as sea routes.

We have come a long way since the earlier times and International trade today hastaken on new dimension. It was a fact earlier that impact of trade between twocountries was not limited to economics alone, but fuelled political, social ambitionstoo.

Today with the advancement of technology and impact of globalization has made itnecessary for all countries to engage necessarily in international trade for their

survival.

Various factors including but not limited to industrialization, development oftransportation, globalization, technology that enables trade and communication hascontributed to change in the format of business organizations as well as trade

practices.

Companies and Organizations today are no longer entities with a local identity.Multinational organizations have emerged through the previous century with

footprints all over the globe. They have in fact shrunk the earth and changed theway businesses are conducted. Companies no longer limit themselves to localmarkets. They no longer depend upon local resources. These companies setupmanufacturing wherever it is conducive in terms of cheaper resource availability aswell as support from local government and in terms of markets, geographical

boundaries do not bother them. They are present everywhere.


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Technology in terms of communication as well as software technology haschanged the way business organizations manage activities be it manufacturing,

procurement, finance or sales. Today software applications drive the processes andwork at the speed of thought.

In present scenario, no country can afford to remain isolated from and not

participate in globalization. While countries do open their economies to globalcompetition, they need to tread very carefully not to upset their domestic economyand protected industries. This balancing act is often managed through individualcountries trade and tariff policy, which forms a part of each countries foreign trade

policy that governs its approach to international trade and commerce.

Post Second World War, World Trade Organization has been playing major role infacilitating and attempting to streamline the global trade and tariff structures with

an aim to move towards free trade. However in reality, free trade may just be adream as long as there is no parity between developed and developing economies.

Today most of the countries are party to several bi-lateral as well as multi lateraltariff and trade agreements like GATTGeneral Agreement on Tariffs and Tradethough which they regulate imports and exports to and from specific countries.


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EXPORT DOCUMENTATION

Introduction

The export process is made more complex by the wide variety of documents thatthe exporter needs to complete to ensure that the order reaches its destinationquickly, safetly and without problems. These documents range include thoserequired by the South African authorities (such as bills of entry, foreign exchangedocuments, export permits, etc.), those required by the importer (such as the

proforma and commercial invoices, certifcates of origin and health, and pre-shipment inspection documents), those required for payment (such as the SouthAfrican Reserve Bank forms, the letter of credit and the bill of lading) and finally,those required for transportation (such as the bill of lading, the airwaybill or thefreight transit order). Documentation requirements for export shipments also vary

widely according to the country of destination and the type of product beingshipped. Most exporters rely on an international freight forwarder to handle theexport documentation because of the multitude of documentary requirementsinvolved in physically exporting goods and it is strongly recommended that youalso make use of a freight forwarder to help you work your way through the mazeof documentation. Click here for a list of freight forwarders that you can approachto help you.

The benefits of documentation

Documentation is a key means of conveying information from one person orcompany to another, and also serves as permanent proof of tasks and actionsundertaken throughout the export process. Documentation is not only required foryour own business purposes and that of your business partner, but also to satisfythe customs authorities in both countries and to facilite the transportation of and

payment for goods sold.

One value of documentation is that copies can be made and shared with the partiesinvolved in the export process (although you should always ensure that you make

identical copies from an agreed-upon master - it is no use making changes withoutthe other party's agreement and then presenting these as the "latest" copies). If thedocumentation is complete, accurate, agreed upon by the parties involved andsigned by each of these of these parties (or their representatives), the documentwill represent a legally binding document.


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Function of export documentation

Export documentation may serve any or all of the following functions:

An attestation of facts, such as a certificate of origin Evidence of the terms and conditions of a contract if carriage, such as in the

case of an airway bill Evidence of ownership or title to goods, such as in the case of a bill of lading A promissory note; that is, a promise to pay A demand for payment, as with a bill of exchange A declaration of liability, such as with a customs bill of entry A receipt for goods received.

India Export Trade Intelligence

India exports are growing everyday and you can access this vast market with IndiaExport data.

Indian Export data is based on actual import bill of entries filed with IndianCustoms. This data can help you locate Indian Sellers and Exporters with their

products.

India Export Data is the best tool to access new emerging India export Market.

Info drive India provides India Export market Research based on yourrequirements, we can compile a highly customized, accurate Directory of ActiveIndian Seller with product and shipment data and contact details.

Data Fields:

Indian Exporter Name, Address, Tel, Fax, Email Contact Person( Wherever available - as per Customs Notification no 128/ 2004 )

Data of Shipment Harmonized Codes Product Description Actual Product Description as entered in Shipping Documents Export Value in INR and US $ Quantity and Unit of Quantity Country of Destination Port of Destination Country of Origin


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CHAPTER-3

STUDY OF INDIA EXPORT TRADE

INTRODUCTION:

Export means the transferring of any good from one country to another country in

a legal way for the purpose of trade. Export goods are provided to the foreign

consumers by the domestic producers.

Indian Exports:

The history of Indian exports is very old. During ancient times India exported

spices to the other parts of the world. India was also famous for its textiles which

were a chief item for export in the 16th century. Textiles and cotton were exported

to the Arab countries from Gujarat. During the Mughal era India exported various

precious stones such as ivory, pearls, tortoise stones etc. But during the British era,

Indian exports declined as the East India Company took control of foreign trade.

Markets

Though India has seen some product diversification in its export basket, it has not

expanded significantly in the two big markets-Africa and Latin America.

Indias business with South Asian countries is also negligible. This region has not

been integrated with the global economy, though political and economic initiatives

have been taken in the recent past in this direction.

Leading Export Items of India

In the past ten years, Indian exports have grown at a rate of nearly 22%. Some

commodities have enjoyed faster export growth than others. Some of India's main

export items are cotton, textiles, jute goods, tea, coffee, cocoa products, rice,


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wheat, pickles, mango pulp, juices, jams, preserved vegetables etc. India exports its

goods to some of the leading countries of the world such as UK, Belgium, USA,

China, Russia etc.

Restriction on the Exports of ItemsHowever there are some restrictions on the export of goods. Under sub section (d)

of section 111 and sub section (d) of section 113, any good exported or attempted

to be exported, contrary to any prohibition imposed by or under the customs act or

any other law is liable for confiscation.

Export Trends

If the Indian economy grows at the same pace, India would most definitely exportgoods worth US $500 billion by 2013 and may supersede the exports of other large

developing countries like Brazil.

The Way Ahead

India needs the right mix of policy formulation sector focus and industry led

initiatives to move up the value chain in the global export basket

The Opportunity

It is very clear that Indian exports have still not achieved their true potential and

there exists immense opportunities for expanding the basket of Indias exports.

With a strategic attention on the new markets that are evolving due to free trade,

India is witnessing a boom in both manufacturing and services.

Problems of the Indian Export Sector

There are few problems which need to be solved before India makes a mark for

itself in the export sector. The Indian goods have to be of superior quality. Thepackaging and branding should be such that countries are interested to export from

India. At the same time India must look for potential market to sell their goods.

The government should frame policies which gives boost to the exports.


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Directional Change in Exports

India has seen massive directional change in the context of origin of demand for

Indian products. Till 2001-02 North America and the EU markets shared nearly

21% and 23.2 % respectively of total exports and the remaining to the rest of the.

Export License in India

To export in India, you must first obtain an export license. Before submitting your

application, you should consult the latest import and export procedures and

policies, which list all the regulations for obtaining an export license in India.

Before you receive a license, a careful review will be conducted of the factors

surrounding the your intended export transactions. Licensing is determined by the

goods to be exported and the port of export.

Setting up an appropriate business organization

The first and the foremost question you as a prospective exporter has to decide areabout the kind of business organisation needed for the purpose. You have to take acrucial decision as to whether a business will be run as a sole proprietary concernor a partnership firm or a company. The proper selection of organisation will

depend upon

Your ability to raise finance Your capacity to bear the risk Your desire to exercise control over the business Nature of regulatory framework applicable to you

If the size of the business is small, it would be advantageous to form a soleproprietary business organisation. It can be set up easily without much expensesand legal formalities. It is subject to only a few governmental regulations.

However, the biggest disadvantage of #138;sole proprietary business is limitedliability to raise funds which restricts its growth. Besides, the owner has unlimited

personal liability. In order to avoid this disadvantage, it is advisable to form apartnership firm. The partnership firm can also be set up with ease and economy.Business can take benefit of the varied experiences and expertise of the partners.The liability of the partner though joint and several, is practically distributed


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amongst the various partners, despite the fact that the personal liability of thepartner is unlimited.

The major disadvantage of partnership form of business organisation is thatconflict amongst the partners is a potential threat to the business. It will not be outof place to mention here that partnership firms are governed by the IndianPartnership Act, 1932 and, therefore they should be form within the parameterslaid down by the Act.

Exporters Manual and Documentation

Company is another form of business organisation, which has the advantage of

distinct legal identity and limited liability to the shareholders. It can be a private

limited company or a public limited company. A private limited company can be

formed by just two persons subscribing to its share capital. However, the numberof its shareholders cannot exceed fifty, public cannot be invited to subscribe to its

capital and the member's right to transfer shares is restricted. On the other hand, a

public limited company has a minimum of seven members. There is no limit to

maximum number of its members. It can invite the public to subscribe to its capital

and permit the transfer of shares. A public limited company offers enormous

potential for growth because of access to substantial funds. The liquidity of

investment is high because of easiness of transfer of shares. However, its formation

can be recommended only when the size of the business is large. For smallbusiness, a sole proprietary concern or a partnership firm will be the most suitable

form of business organisation. In case it is decided to incorporate a private limited

company, the same is to be registered with the Registrar of Companies.


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India Exim Policy - Foreign Trade Policy

Exim Policy or Foreign Trade Policy is a set of guidelines and instructions

established by the DGFT in matters related to the import and export of goods in

India.

The Foreign Trade Policy of India is guided by the Export Import in known as in

short EXIM Policy of the Indian Government and is regulated by the Foreign

Trade Development and Regulation Act, 1992.

DGFT (Directorate General of Foreign Trade) is the main governing body in

matters related to Exim Policy. The main objective of the Foreign Trade

(Development and Regulation) Act is to provide the development and regulation

of foreign tradeby facilitating imports into, and augmenting exports from India.

EXIM Policy

Indian EXIM Policy contains various policy related decisions taken by the

government in the sphere of Foreign Trade, i.e., with respect to imports and

exports from the country and more especially export promotion measures,

policies and procedures related thereto. Trade Policy is prepared and announced by

the Central Government (Ministry of Commerce). India's Export Import Policy

also know as Foreign Trade Policy, in general, aims at developing export potential,

improving export performance, encouraging foreign trade and creating favorable

balance of payments position.
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Market Entry India, Exporting to India

Entering the Indian market by exporting to India (directly or indirectly) requires

only a small investment from the producer (e.g. market research, trade fair

participation, B2B Meetings, eventual travel expenses etc.)

Direct Export means the producers sells directly to the importer / distributor in

India. Whereas in the case of indirect export, a European broker / trading

company or the importers subsidiary in Europe will buy from the producer and sell

to the importer in India. Indirect Export is the easiest way to sell in the Indian

market. The producer does not even have to deal with international billing,

shipping documents or payment methods. Investments and risks are very low. The

drawback of the indirect export is that the producer cannot really control where his

products end up and he most probably will never be able to build his own brand

in the Indian market.


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Since exporting to India involves minimal costs and risks producers can offer a

lower product price. Moreover many European trade and government associations

subsidies export promotion activities.

The disadvantage, which come along with exporting, are the rather hightransportation costs to India, high import duties and other tariff and non-

tariff barriers. Also the producer will have no or little understanding of the Indian

market and will not be able to anticipate changes in consumer demands. Being a

pure exporter will also create some image problems, since the European company

will never be considered as an Indian player, which means no local and fast after

sales service. Another risk factor when exporting to India are the currency

fluctuations. The Indian Rupee / Euro exchange rate keeps on fluctuating +/- 15%,

making it difficult for Indian importers to work out their long term pricing strategy.

If the Rupee looses too much against the Euro, this could mean the importer will

stop buying from Europe and procure from other countries.

Still, exporting to India remains the most favorite market entry strategy. At

least for the beginning. Many European companies decide to start with export and

once a certain trade volume is reached and they are sure that their products are well

accepted by the Indian consumer, a foreign direct investment to set up their own

subsidiary in India can be made. Many global beer brands (like Fosters, Tiger or

Carlsberg) initially used to export to India and only after reaching a certainthreshold volume, started to produce locally in India.


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EXPORT PROCEDURE IN INDIA

Documents Required

Export procedure describes the documents required for exporting from India.Special documents may be required depending on the type of product or

destination. Certain export products may require a quality control inspection

certificate from the Export Inspection Agency. Some food and pharmaceutical

product may require a health or sanitary certificate for export.

Shipping Bill/ Bill of Export is the main document required by the Customs

Authority for allowing shipment. Usually the Shipping Bill is of four types and the

major distinction lies with regard to the goods being subject to certain conditions

which are mentioned below:

Export duty/ cess Free of duty/ cess Entitlement of duty drawback Entitlement of credit of duty under DEPB Scheme Re-export of imported goods

The following are the export documents required for the processing of theShipping Bill:

GR forms (in duplicate) for shipment to all the countries. 4 copies of the packing list mentioning the contents, quantity, gross and net

weight of each package.

4 copies of invoices which contains all relevant particulars like number ofpackages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full

description of goods etc.

Contract, L/ C, Purchase Order of the overseas buyer. AR4 (both original and duplicate) and invoice. Inspection/ Examination Certificate.
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The formats presented for the Shipping Bill are as given below

White Shipping Bill in triplicate for export of duty free of goods. Green Shipping Bill in quadruplicate for the export of goods which are

under claim for duty drawback.

Note: - For the goods which are cleared by Land Customs, Bill of Export (also of 4

types - white, green, yellow & pink) is required instead of Shipping Bill.

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are

mentioned below:

Customs Declaration Form - It is prescribed by the Universal Postal Union(UPU) and international apex body coordinating activities of national postaladministration. It is known by the code number CP2/ CP3 and to be preparedin quadruplicate, signed by the sender.

Dispatch Note, also known as CP2. It is filled by the sender to specify theaction to be taken by the postal department at the destination in case theaddress is non-traceable or the parcel is refused to be accepted.

Prescriptions regarding the minimum and maximum sizes of the parcel withits maximum weight : Minimum size: Total surface area not less than 140

mm X 90 mm. Maximum size: Lengthwise not over 1.05 m. Measurement ofany other side of circumference 0.9 m./ 2.00 m. Maximum weight: 10 kgusually, 20 kg for some destinations.

Commercial invoice - Issued by the seller for the full realizable amount ofgoods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda,Tanzania, Mauritius, New Zealand, Burma, Iraq, Australia, Fiji, Cyprus,

Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and issigned/ certified by the counsel of the importing country located in thecountry of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc.It is prepared on a special form being presented by the Customs authoritiesof the importing country. It facilitates entry of goods in the importingcountry at preferential tariff rate.

Legalized/Visaed Invoice - This shows the seller's genuineness before theappropriate consulate/ chamber of commerce/ embassy. It do not have any

prescribed form.
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Certified Invoice - It is required when the exporter needs to certify on theinvoice that the goods are of a particular origin or manufactured/ packed at a

particular place and in accordance with specific contract. Packing List - It shows the details of goods contained in each parcel/

shipment. Certificate of Inspection - It shows that goods have been inspected before

shipment. Black List Certificate - It is required for countries which have strained

political relation. It certifies that the ship or the aircraft carrying the goodshas not touched those country(s).

Weight Note - Required to confirm the packets or bales or other form are ofa stipulated weight.

Manufacturers/ Supplier's Quality/ Inspection Certificate. Manufacturer's Certificate - It is required in addition to the Certificate of

Origin for few countries to show that the goods shipped have actually beenmanufactured and are available.

Certificate of Chemical Analysis - It is required to ensure the quality andgrade of certain items such as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have beenshipped.

Health/ Veterinary/ Sanitary Certification - Required for export offoodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certifycompliance of humidity factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of India in caseof antiques.

Transshipment Bill - It is used for goods imported into a customs port/airport intended for transshipment.

Shipping Order - Issued by the Shipping (Conference) Line whichintimates the exporter about the reservation of space of shipment of cargothrough the specific vessel from a specified port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through theport gate and includes the shipper's name, cart/ lorry No., marks on

packages, quantity, etc. Shut Out Advice - It is a statement of packages which are shut out by a ship

and is prepared by the concerned shed and is sent to the exporter.


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FEDRATION OF INDIAN EXPORT ORGANISATION

FIEO-India's Premier Institution for International Trade

The Federation of Indian Export Organizations represents the Indian entrepreneurs

spirit of enterprise in the global market. set up in October, 1965, the Federation,

known popularly as "FIEO", has kept pace with the country's evolving economic

and trade policies, and provided the content, direction and thrust to India's

expanding international trade. As the apex body of all Indian export promotion

organizations, FIEO works as a partner of the Government of the India to promote

Indian exports.

Today, FIEO expresses all the dynamism and resurgence that are the hallmark of

India's open, liberal and progressively market-friendly economic and trade regime,

representing the Indian export promotion effort in its entirely. Its membership,

largely comprising professional exporting films or long experience called

Government recognised Export Houses, Trading Houses, Star Trading Houses and

Super Star Trading Houses and Consultancy exporting firms, contributes 72 % of

the total exports of India.

In essence, FIEO represents directly or indirectly, over 100,000 exporters across

India. Exports by FIEO members comprise a wide spectrum of products including

Gems & Jewellery, Textiles, Garments, Engineering Goods, Leather and Leather

Products, Handicrafts, Chemicals and allied products, Cosmetics, Drugs and

Pharmaceuticals, etc. as well as a wide range of Consultancy Services covering

Infrastructure, Engineering, Industries, Cement, Leather, Paper & Rubber

Industries. Agro-based Industries, Small Scale Industries etc.

The activities of our members also include manufacturing, international trading,

investment and joint ventures etc. To any foreign investor, user or seller, FIEO is

the one-stop organisation which will put him in touch with a trade partner or high

repute, backed by its own credentials as an organisation of excellence in India.

FIEO has forged strong links with counterpart organisations in several countries as

well as international agencies to enable direct communication and interaction


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between India and world businessmen. It is registered with UNCTAD as a national

non-Government organisation, and has direct access to information/data

originating from UN bodies and world agencies like the IMF, ADB, ESCAP,

WORLD BANK, FAO, UNIDO and others. In addition, it has bilateral

arrangements for exchange of information as well as for liasioning with several

How FIEO has developed:

Today the Federation is proud of the fact that its members accounts for an

estimated exports of US$ 24.3 billion out of the total India's export of US$ 33.0

billion. It shows for itself an achievement which notes that approximately 73.6 %

of the total exports from India emanate from FIEO members. This enviable

position has been reached rapidly in a very short span, albeit with a long legacy

behind it. It was in the year 1965 that this Federation came into being with the

support of Ministry of Commerce. Government of India and private trade and

Industry. It has now graduated to a level of organisation providing global link to

exporters and working as a 'nerve centre' of Indian exports.

FIEO ACTIVITIES

What FIEO Specifically achieves The Federation keeps its members posted with

the latest developments in the field of Export / Import by organising Seminars andWorkshops, Inviting delegations, organising Buyer-Sellermeets in India and

abroad. Trade Fairs, providing advisory and consultative services and bringing

about constant interaction between member exporters and various Government

departments. The end result of such activity is discussion of issues in depth,

evolving of suitable action plans to promote Indian exports, formulation and

dissemination of government policies pertaining to all sectors in manufacturing

and merchant exporting and apprising Government on problems and suggesting

remedial measures.

What FIEO does

When Federation was constituted in 1965, certain economic realities had taken

shape in India. There was greater industrialisation, centralised planning and


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Government controls. Side by side, there existed a buoyant and thriving private

sector. Thus there was an urgent need for :

Wider exchange of views between allied industies in public as well as theprivate sectors.

Apprising all concerned bodies of Status of exports. Monitoring the effects of Government policies on Exports - Imports. Interacting with the Government on behalf of the exporting community.

Basically, the Federation fulfills the above needs in these three ways :

o Sending representations on policy matters to Central and State(Regional)


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India's Rupee Keeps Falling and the Trade Deficit Keeps

Widening:-

Its standard macroeconomics: When a countrys currency declines, its exporters

should soon get a boost as the lower currency makes their goods more competitive.

By that rule, India should be enjoying an export boom. Since the start of May, the

currency has dropped 23 percent, making it one of the worlds worst performers.

Sure enough, exports did go up in July, rising 11.6 percent year-on-year, the best

increase in more than 12 months.


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PROBLEMS OF RICE EXPORT FROM INDIA

India is facing stiff competition in the world markets for export of rice. Besides,

there are many domestic problems for rice exporters. If these internal problems arerelaxed to the extent possible, the exporters may find easy way to boost rice exportand such measures will go a long way to sustain the exports. Some of the major

problems are discussed in this chapter below: -

1. As per the state Govt. policy, various taxes are imposed on rice exports, suchas the states are imposing Purchase Tax (on indirect export), Market Fees,Rural Development Fund, Administrative Charges etc. These taxes arerendering the pricing of rice internationally in competitive. Thus, Indian rice

becomes costlier in the international market as compared to other competingcountries in the world and Indian rice exports get setback many times. Infact, in Pakistan rice meant for exports specially the branded ones; duties areextremely low or duty free.

2. There is lack of proper infrastructural facilities. Many times exporters, whenthey carry their stock to sea port and if the stock is not loaded due to somereason or the other, exporters do not find godown or proper place to storetheir stocks properly and safely at sea port, exporters have to face lot ofdifficulties, besides, it adds additional expenditure to the exporters.

3. Due to increase in the cost of inputs used for paddy cultivation theproduction cost goes up and the Minimum Support Price (MSP) for paddyis enhanced every year by the govt. of India to safeguard the interest of thegrowers. When paddy is converted to rice, it becomes costlier and thusmakes it internationally uncompetitive.

4. Rice production meant for export purpose is having subsidy in othercountries, which reduces the cost of production and thereby reducing thecost of rice. Therefore, the export price of rice of such countries is morecompetitive in the international markets compared to Indian rice.

5. The major rice producing nations have decreased the price to capture theinternational markets but Indian rice prices are inelastic due to relativelyhigh cost of production and become uncompetitive in the internationalmarkets. Much of basmati rice export prospects have been lost in the recent

part to other competing countries like Pakistan etc because of high prices.


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6. Rice mills have not been fully modernized to ensure high milling recoveryand reduce the percentage of broken rice. The conventional rice mills arehaving Rubber Roll Sheller in which percentage of broken rice is more thanthe modern rice mills that are having under Runner Sheller. Hence, head riceobtained from milling of conventional mills becomes costly due to recoveryof higher percentage of broken rice. Therefore, conventional mills arerequired to be modernized to get recovery of higher percentage of head ricesuitable for export.

7. Lack of proper arrangements for production of sufficient quantity of qualityseeds needed for cultivation of rice for export purposes.

8. The export is also suffering much due to the competition from otherexporting countries like Thailand, Vietnam and Pakistan because the cost of

production in these competing countries is low as compared to the cost ofproduction in India. Infact, trade segment believes that Indian rice can face

the global competition if subsidy is provided.9. In these days basmati rice is facing aroma problem, because intensity of

aroma in traditional basmati varieties is not so high as it used to be. Infact,basmati varieties are highly prone to lodging and lodging affects the naturalgrain development. In such situation both aroma and linear kernel elongationare affected.

10.Post harvest handling of produce is another important aspect. Generally,farmers are harvesting the crop at different moisture levels and keeping the

produce at higher moisture level for a longer period will impair the intensityof aroma.

11.In absence of genetically pure seed of basmati varieties, in majority ofbasmati rice fields, a variation in plant height, grain size and maturity of thecrop is found. This is one of the major reasons for poor quality of basmatirice. Infact, at the time of rice processing the grain size can be taken care of,

but it is a waste. However, using good quality seed the loss can be convertedinto profit.


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Trade Barriers in India

Any restriction imposed on the free flow of trade is a trade barrier. Trade barriers

can either be tariff barriers (the levy of ordinary negotiated customs duties in

accordance with Article II of the GATT) or non-tariff barriers, which are any trade

barriers other than tariff barriers.

Impor t Licensing:One of the most common non-tariff barriers is the prohibition

or restrictions on imports maintained through import licensing requirements.

Though India has eliminated its import licensing requirements for most consumer

goods, certain products face licensing related trade barriers. For example, the

Indian government requires a special import license for motorcycles and vehicles

that is very restrictive. Import licenses for motorcycles are provided to only foreign

nationals permanently residing in India, working in India for foreign firms that

hold greater than 30 percent equity or to foreign nations working at embassies and

foreign missions. Some domestic importers are allowed to import vehicles without

a license provided the imports are counterbalanced by exports attributable to the

same importer.

Standards, testing, labeli ng & certif ication:The Indian government has identified

109 commodities that must be certified by its National Standards body, the Bureau

of Indian Standards (BIS). The idea behind these certifications is to ensure the

quality of goods seeking access into the market, but many countries use them as

protectionist measures. For more on how this relates to labeling requirements,

please see the section on Labeling and Marking Requirements in this chapter.

Anti-dumping and countervail ing measures:Anti-dumping and countervailing

measures are permitted by the WTO Agreements in specified situations to protect

the domestic industry from serious injury arising from dumped or subsidized

imports. India imposes these from time-to-time to protect domestic manufacturers


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from dumping. India's implementation of its antidumping policy has, in some

cases, raised concerns regarding transparency and due process. In recent years,

India seems to have aggressively increased its application of the antidumping law.

In the first half of the calendar year 2006 India topped the list of countries

initiating new anti-dumping investigations with 20 new initiations.

Export subsidies and domestic support: Several export subsidies and other

domestic support is provided to several industries to make them competitive

internationally. Export earnings are exempt from taxes and exporters are not

subject to local manufacturing tax. While export subsidies tend to displace exports

from other countries into third country markets, the domestic support acts as a

direct barrier against access to the domestic market.

Procurement:The Indian government allows a price preference for local suppliers

in government contracts and generally discriminates against foreign suppliers. In

international purchases and International Competitive Bids (ICB's) domestic

companies gets a price preference in government contract and purchases.

Service barriers:Services in which there are restrictions include: insurance,

banking, securities, motion pictures, accounting, construction, architecture and

engineering, retailing, legal services, express delivery services and

telecommunication.

Other barr iers:Equity restrictions and other trade-related investment measures are

in place to give an unfair advantage to domestic companies. The GOI continues to

limit or prohibit FDI in sensitive sectors such as retail trade and agriculture.

Additionally there is an unpublished policy that favors counter trade. Several

Indian companies, both government-owned and private, conduct a small amount of

counter trade.


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Non-tariff barriers to trade

Non-tariff barriers to trade (NTBs) are trade barriers that restrict importsbut are

not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although called non-tariff

barriers, have the effect of tariffs once they are enacted.

Their use has risen sharply after the WTO rules led to a very significant reduction

in tariff use. Some non-tariff trade barriers are expressly permitted in very limited

circumstances, when they are deemed necessary to protect health, safety,

sanitation, or depletable natural resources. In other forms, they are criticized as a

means to evade free trade rules such as those of the World Trade Organization(WTO), the European Union (EU), orNorth American Free Trade Agreement

(NAFTA) that restrict the use of tariffs.

Some of non-tariff barriers are not directly related to foreign economic regulations

but nevertheless have a significant impact on foreign-economic activity and

foreign trade between countries.

Trade between countries is referred to trade in goods, services and factors of

production. Non-tariff barriers to trade include import quotas, special licenses,unreasonable standards for the quality of goods, bureaucratic delays at customs,

export restrictions, limiting the activities of state trading, export subsidies,

countervailing duties, technical barriers to trade, sanitary and phyto-sanitary

measures, rules of origin, etc. Sometimes in this list they include macroeconomic

measures affecting trade.
http://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29http://en.wikipedia.org/wiki/Countervailing_dutieshttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/Countervailing_dutieshttp://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29http://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Trade_barrier


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Six Types of Non-Tariff Barriers to Trade

1. Specific Limitations on Trade:1. Import Licensing requirements2. Proportion restrictions of foreign to domestic goods (local content

requirements)3. Minimum import price limits4. Free5. Embargoes

2. Customs and Administrative Entry Procedures:1. Valuation systems2. Anti-dumpingpractices3. Tariff classifications4. Documentation requirements5. Fees

3. Standards:1. Standard disparities2. Intergovernmental acceptances of testing methods and standards3. Packaging, labeling, and marking

4. Government Participation in Trade:1. Government procurementpolicies2. Export subsidies3. Countervailing duties4. Domestic assistance programs

5. Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discrimination5. Variable levies6. Border taxes

6. Others:1. Voluntary export restraints2. Orderly marketing agreements
http://en.wikipedia.org/wiki/Licensinghttp://en.wikipedia.org/wiki/Embargohttp://en.wikipedia.org/wiki/Trade_facilitationhttp://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29http://en.wikipedia.org/wiki/Government_procurementhttp://en.wikipedia.org/wiki/Countervailing_dutyhttp://en.wikipedia.org/wiki/Countervailing_dutyhttp://en.wikipedia.org/wiki/Government_procurementhttp://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29http://en.wikipedia.org/wiki/Trade_facilitationhttp://en.wikipedia.org/wiki/Embargohttp://en.wikipedia.org/wiki/Licensing


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Different methods of international payment

settlement

INTRODUCTION

The central bank of any country is usually the driving force in the development ofthe national payment system. The Reserve Bank of India (RBI) as the central bankof the country has been playing this developmental role and has taken severalinitiatives for a safe, secure, sound and efficient payment system. The buyer andthe seller incorporate the details in the contract of sale itself that how payments forgoods to be send. Depending upon the bargaining power of the buyer and seller,

provisions of Exchange Contracts in the countries concerned, the duration of traderelationship between the buyer and seller and also the credit worthiness of the

parties concerned, terms of payment are arrived at. It can also be said in generalthat, terms of payment reflects the extent to which the seller requires a guarantee of

payment before he loses control over the goods.

There are four main methods using by the exporters and importers to fulfill thecontract value. These are Advance payment, open Account System, ConsignmentSale and Documentary Collection.

ADVANCE PAYMENT

1) Meaning: - An amount paid before it is earned or incurred, for example, aprepayment by an importer to an exporter before goods are shipped, or a

cash advance for travel expenses.

2) This method is the most desirable for the Exporter; the Importer has to relyon the integrity of the Exporter and his capacity to execute the order in time.

More than that, the entire transaction is financed by the Importer in this

method thereby making the transaction more costly for him; besides

exposing the Importer to credit risks. On account of the above factors some

countries have imposed Exchange Control restriction regarding imports.3) In India advance payment is allowed only in respect of import of books,

periodicals, life saving payment apparatus, capital goods, machinery and a

few other items.


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4) Advance payment of USD 2500/- or equal to this amount can be made forcommercial purposes. If the following condition are followed by the contract

party.

a) Documents produced by the parties must be evidence showing thedemand of the overseas supplier.

b) Payment must be given to the overseas supplier.c) Endorsement in the import license if any.d) Import is permitted either by a license covered under OGL. As regards

exports, depending on the nature of goods exported and the

competitiveness of the product, advance payments are insisted. For

example in the case of export of vegetables and fruits, it is customary

to demand 100% advance payment.

e) Application in F.A.I. in duplicate.f) Importer will submit evidence of import in the Exchange ControlCopy of Bill of Entry/Postal wrapper within a period of 3 months.

OPEN ACCOUNT SYTEM

1) It is just opposite to the Advance payment.2) Meaning: When an Exporter agrees to sell the commodity on open account

system to the Importer, he dispatches the goods to the buyer directly

followed by the transport documents and an invoice requesting payment.

3) The Exporter loses control over the goods completely and leaves everythingon the integrity of the buyer.

4) It is beneficiary to the Importer; the Exporter bears the entire financial andcommercial risks. This system is normally resorted to when the goods

command buyer's market.

5) The commercial risk is, to some extent minimized by taking a policy ofECGC. To take care of the interest of the Indian Exporters, there are

Exchange Control restrictions imposed by RBI on open account export

Sales.


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CONSIGNMENT SALE

If you sell goods sold on consignment, you have agreed to sell the goods withoutfirst buying those goods from the owner. Typically, your agreement specifies oneof the following:

1) you agree to sell the goods on behalf of the owner as an agent2) you agree to purchase the goods for an agreed price when you find a

buyer.

There are no restrictions on what goods can be sold on consignment. Goodsregularly sold on consignment include: motor vehicles, boats, wedding and formaldresses, cameras, farm machinery and artworks.

For Example: Selling on consignment means giving your car to someone else,usually a motor dealer, to sell on your behalf. Generally you set the minimum priceyou will accept and the dealer will add a commission to it.

While the ownership and possession passes to the buyer in the case of openaccount system, the ownership remains with the seller in the case of consignmentsale.

In the case of goods exported on consignment basis, freight and marine insurancemust be arranged in India.

DOCUMENTARY COLLECTION

The Exporter prepares the proper financial and commercial document including thetransport document and hands over to his Banker requesting in clear terms as tohow the documents are to be delivered to the Importer at the other end.

Four main parties to a documentary collection are The Principal i.e.. the Exporter,The Remitting Bank- The Exporter's Bank , The Collecting Bank- The Bank inthe Importer's country and The Importer, the consignee.

When the Exporter wants the Bank to hand over the export documents to theImporter only against payment immediately, the Bill of Exchange is called a SightDraft. In case the Exporter wishes to give some time (30 days, 60 days, 90 daysetc.)


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CHAPTER-4

ANALYSIS OF DATA

Major Export Products of India, Export from IndiaExports have boosted the growth of Indian economy substantially and Indian

exports in the current year has earned nearly US $ 125 billion and is expected to

earn US $ 160 billion for the next fiscal year.

The major export products of India include leather, medical appliances,

equipments, textiles and so on.

Leather Goods among Major Export Products of India:

India has developed over the years to become a key player in the export of leathergoods and accessories among the major export products of India.

India exports numerous leather products for daily use like leather wallets, belts,key holders, folders, pouches, leather toys, handbags etc. Gift items made ofleather such as Leather notebooks, decorated leather journals, key rings, rugs arequite popular in foreign countries.

A large number of small scale, medium scale as well as large scale companies inIndia are engaged in the export of leather goods, the list of such companiesinclude:

Sharie International Islam International Indobest Falcon International Z.N.T International Balaji Impex Private Limited Paradise Noble Creations Asian adores The Lotus Handicrafts


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Medical Appliances among Major Export Products of India:

Indian medical appliances have made their mark in the foreign countries on

account of superior quality and variety. Common medical appliances exportedfrom India include absorbent gauze, sterile gloves, crepe bandages, gauze sponge,surgical face masks, surgical caps, surgical disposables. Export of specializedmedical appliances have also gained importance among major export products ofIndia and appliances such as baby incubator, automatic vertical autoclave, airionisers, nelaton catheter, digital video colposcopes, digital imaging softwares.

A large number of small scale, medium scale as well as large scale companies inIndia are engaged in the export of medical appliances goods, the list of suchcompanies include:

Nidhi Meditech Systems Coral Marketing Narang Scientific Works Private Limited Relique Technologies Surya Surgical Industries Chatterjee Surgical United Surgical Industries B. L. Lifesciences Private Limited Paramount Surgical Emporium, Delhi Magnum Medicare Pvt. Ltd.


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Textile goods among Major Export Products of India:

Textile goods have gained prominence among the export products of India,

designer garments for ladies as well as gents manufactured by the big houses

in India have created huge demand in the International garment industry. The

popular ladies garment include knitted tops, embroidered salwar, sequin

work blouses, sarongs, floral t-shirts, beaded garments, poplin embroidered

kurta, viscose crape printed skirt.

A large number of small scale, medium scale as well as large scale companies

in India are engaged in the export of textile goods, the list of such companies

include:

Kshethra Exports Mirza Fabric Private Limited Kanha Designs Pvt. Ltd. Knitco Fashionns Boom Buying Private Limited Revolution Exports Flying Fashions Subasri Textile Vipro Garments Kewal Impex Sudharshanaa Tex Macsam


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Equipments among Major Export Products of India:

India caters to the need of varied equipments of the foreign countries,

therefore the Indian equipment industry have grown in leaps and bounds and

ranks high among the major export products of India like conveyor systems,

hand pallet trucks, magnetic coolent cleaners, vibrating screens, EOT cranes,

industrial magnetic conveyors, cantilever racks, steel rolling mill plants,

hydraulic stackers, heavy duty pallet rack, pin pulveriser, agitator vessel,

rotary vane feeders.

A large number of small scale, medium scale as well as large scale companies

in India are engaged in the export of equipments, the list of such companies

include:

Orton Engineering Private Limited A.S. Precision Machines Pvt. Ltd. Dewas Techno Products P Ltd. Metal Storage Systems Private Limited Yagnam Pulverizer Private Limited Elegant Engineers Metro Engineering Industries Jai Gopal Engineering Works Private Limited


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CHAPTER-5

CONCLUSION,FINDINGS & SUGGESTIONS

While India has gradually opened up its economy, its tariffs continue to be high

when compared with other countries, and its speculation norms are still restrictive.

This leads some to see India as a rapid globalizer while others still see it as a

highly protectionist economy. The main focus of this page is the foreign trade

policy of India.

Foreign trade concerning main legislation in India is the Foreign Trade(Development and Regulation) Act, 1992. The Act endow with the expansion and

regulation of foreign trade by assisting imports into, and supplementing exports

from, India and for matters associated therewith or incidental thereto. As per the

requirements of the Act, the government:-

i. may make necessities for assisting and controlling foreign trade;ii. may proscribe, confine and regulate exports and imports, in all or

particular cases as well as subject them to exclusion;

iii. is endorsed to formulate and proclaim an export and import policy andalso modify the same from time to time, by notification in the Official

Gazette;

iv. Is also authoritative to appoint a 'Director General of Foreign Trade'for the purpose of the Act, including formulation and accomplishment

of the export-import policy.

Nevertheless, in modern years, the governments stand on trade and investment

policy has demonstrated a marked shift from protecting producers to benefitingconsumers. This is revealed in its foreign trade policy of India for 2004/09

according to which, "For India to become a major player in world trade we have

also to make possible those imports which are required to stimulate our economy."

Along with economic transformations, globalization of the Indian economy has

been the leading factor in devising the trade policies. The reform procedures


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pioneered in the subsequent policies have focused on liberalization, ingenuousness

and lucidity. They have given export friendly surroundings by simplifying the

procedures for trade facilitation.

The declaration of a new Foreign Trade Policy of India for a five year period of2004-09, substituting the till now nomenclature of EXIM Policy by Foreign Trade

Policy (FTP) is another step in this course. It takes an incorporated view of the

overall development of Indias foreign trade and provides a roadmap for the

development of this sector. A dynamic export-led growth strategy of doubling

Indias share in global commodities trade (in the next five years), with a spotlight

on the sectors having prospects for export expansion and prospective for

employment generation, constitute the main lath of the policy.

All such events are expected to enhance India's international competitiveness and

aid in auxiliary increasing the acceptability of Indian exports. The policy sets out

the core intentions, identifies key strategies, spells out focus initiatives, delineates

export incentives, and also addresses issues relating to institutional support

including simplification of procedures relating to export activities.

The coming years are sure to witness a vigorous export-led growth strategy of

doubling Indias share in global merchandise trade with a focus on the sectors

having prospects for export expansion. The rising potential for employmentgeneration will constitute the main backbone for the Indian foreign trade policy.