Agri Export Management

8/10/2019 Agri Export Management

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GETTING STARTED IN INTERNATIONAL TRADE-STEP BY STEP

CHAPTER OBJECTIVES:

A. To understand the broad objectives of firm in international trade and to discuss the factors which

the firms do appraise for getting into International business.

B. To elaborate the various factors which helps the firm in making a decision for getting started?

C. To discuss the various strategic entry routes used by the firms in getting started in international

trade in LPG! era.

D. To e"plain the factors which the firm need to analy#e the competition in international market.

E. To e"plain the various regulatory formalities which the firm has to complete for getting started in

international trade.

CHAPTER OUTLINE:

A. $efining %irm &bjective %or International !arkets

B. The $ecision To Go International &r 'otC. (canning International !arkets

D. !ode &f )ntering Into Potential !arkets

E. Targeting The !arkets

F. *egulatory *e+uirement %or Getting (tarted

The one, who has a trade, may go anywhere.

Spanish Proverb

DEFINING FIRM OBJECTIVE FOR INTERNATIONAL MARKETS:

&rgani#ational strategy of a company or firm is basically concerned with a number of issues but

specifically tries to cover the broad objectives of the organi#ation. In LPG! era, the profit making

organi#ations are likely to have financial profits as an objective. (uch financial profits are e"plained as

wealth creation or wealth ma"imi#ation for the firm or company and in LPG! era each organi#ation tries

to achieve it by increasing it presence in the market through greater sales and profits. -owever, some

organi#ations may have other broad objectives such as interacting with their stakeholders/ in a socially

responsible/ way and does not have profit as an objective for the organi#ation but cater to render services

for cause or problem ensuring minimum returns which is just to keep the organi#ation running.

&rgani#ations are mainly devising their strategies to be competitive, domestically and internationally so

that shareholders risks may be reduced and chances choices of global e"pansion may be brightened up.

Table : To Te! Co"a!#e$ #! %o&l' a!' I!'#a b( Sale$

Ra!) Co"a!( #! %o&l' Sale$ #! *++,

B#ll#o!/

Co"a!( #! I!'#a Sale$ #! *++,

R$. I! C&o&e/


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0.

1.

2.

3.

4.5.

6.

7.

8.

09.

)""on!obil

*oyal $utch (hell

:P

Toyota !otor ;o

I'G GroupGeneral )lectric

-(:; -oldings

:erkshire -athaway

:ank of %orbes !aga#ine :usiness (tandard

THE DECISION TO GO INTERNATIONAL OR NOT:


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nations are looking at Indian companies as important supplier to their market as it helps these nations to

tame down inflation and outsource product and services from outside. Indian ;ompanies can easily become

Dest countries darling due to the reasons of not only their +uality product but also effectively banking

against its major rival ;hina which is facing a backlash due to inferior +uality products and military build

up all around the world.

In this race for international market, a new force of companies has come up which largely draw their sales

form overseas market. These companies are usually in the knowledge areas and has made a place for them

in international market and are in the areas of IT ET;(, Infosys, DIP*&, ;ogni#ant, Tech !ahindraF, ITes

&utsourcing E(atyam ;apegeminiF, $rug Pharmaceutical E:iocon, *anba"y, ;iplaF, Product

(oftware EPatni ;apegeminiF etc. !icro, (mall and !edium (cale Industry which contribute almost 39

to IndiaBs )"port is fast improving its learning curve in their core areas of activity in Leather and Leather


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&nce, the broader objectives of the firm or company are decided it tries to appraise the surrounding

geopolitical and economic realities for selecting the appropriate business, it can enter. (uch appraisal for

geopolitical, social, legal, technological and above all economic realties for selection of business activity is

known as company corporate strategy. < company can decide to enter to only select country with limited

no. of products and such strategy will be referred as niche strategy.


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Ge11#!2 S1a&1e'

3. The decision to go international

or not


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improve its weakness patiently which may come on its way. Dhile scanning the international markets the

firms shall properly study the all aspects of economic data which may be specific or general or both and

can be effectively used for making decisions on whether to enter markets or not. (uch data analysis can

also help the firm to understand the various aspects of risks and can guide in the degree of its engagement

in that market. The general and specific information which can be of use is as follows>

Table: Se4#6#4 I!6o&"a1#o! 1o Be S4a!!e' Fo& Ge11#!2 S1a&1e' I! I!1e&!a1#o!al T&a'e

3. MARKET INFORMATION

!arketing $ecision (tatistics


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Ta"es Legislation governing the Trade and :usiness Incentives, $ividends Ta" *ules,

)arnings, *epatriation &f Profits

(pot, %orward !arket Level of $eveloped, (tage of !aturity

Intervention :y &utside :odies I!% or Dorld :ank KKwww.oecd.orgKfind$ocumentK9,2243,enO1538O25252334O0O008573O0O0O0,99.html


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is an important factor as time involved in getting various clearances may increase transaction cost of doing

business in potential markets. The cost of doing business in some potential markets is bench marked with

good markets as under.

Table: Be!40 Ma&) o6 Co$1 o6 Do#!2 B;$#!e$$ #! Vao;$ Ma&)e1$

S.R.No.

Ge&"a!( I!'#a C0#!a N#2ea

0 (tarting a business ErankF 55 77 017 007

1 $ealing with licenses ErankF 10 044 042 018

2 )mploying workers ErankF 018 001 67 45

3 *egistering property ErankF 31 009 10 069

4 Getting credit ErankF 92 54 090 72

5 Protecting investors Erank 72 22 72 35

6 Paying ta"es ErankF 62 047 057 094

7 Trading across borders ErankF 96 37< 27 026

8 )nforcing contracts ErankF 18 062 52 55

09 ;losing a business ErankF 17 022 64 61

So"rce# $ompiled %rom &oing "siness 'eport !(()

(ome other essentially important information to be scanned include the attributes of markets such as total

population, per capita income, economic growth rate, structure of the market, economic conduct, capital

intensity, economic trading blocs, availability of resources such as raw material, skilled human

resources, and cost +uality of such resources. Physical infrastructure such as internet access, tele@

communications, stock markets, and banks are also important guiding factors as they are important for the

business sustainability and survival.

MODE OF ENTERING INTO POTENTIAL MARKETS:

-aving scanned the best potential international markets which meet the corporate competitiveness criteria

of the firm, it has to evaluate the most profitable way of market entry so as to sell its products and services

to potential customers in these markets. There are several methods used in LPG! era for international

market entry such as )"porting, Licensing, %ranchising =oint Menture and Dholly &wned (ubsidiary. The

entry method suitable to firm re+uirement shall depend on a variety of factors such as the nature of firm

product or service, the conditions for market penetration, entry and e"it barriers and financial commitment

re+uired for getting into international markets.

)"porting, which is widely used for the first time traders is accomplished by selling the products orservices directly to a foreign firm or customer.


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firm getting started, involves a contractual agreement whereby firm assign the rights to distribute or

manufacture its product or service to a foreign company. Dholly &wned (ubsidiary re+uires either setting

up its own production or manufacturing facility or sub@contracting the manufacturing of its product to an

assembly operator such as ;oco ;ola used %&:& method for bottling in India.

Table: Co"a$o! o6 Fo&e#2! Ma&)e1 E!1&( Mo'e$

S.

NoMo'e

Fa41o&$ Fa5o!2 10e E!1&( Mo'e

#! Ta&2e1 Ma&)e1A'5a!1a2e$ D#$a'5a!1a2e$

3. E=o&1#!2

0. &pportunities for limited sales in

the target countryA

1. ;hances for little product new

Product and adaptation.

2. $istribution channels are

Jsually close to !anufacturing

(ites

3. -igh production costs as

economies of scale can not be

generated in production and

logistics cost.

4. Liberal import policies of target

country.

5. -igh political risk in target

country

0. !inimi#es the potential risk

in trade as firms need not to

make investment in target

market.

1. )ase in market entry

2. :enefits of utili#ation

available production facility

and resources

0. Trade barriers tariffs and

other cost make products

and services uncompetitive.

1. In case of far away market,

transport, packaging and

logistics costs put additional

burden.

2. Problems in accessing the

local market information.

3. %irm is viewed and regarded

as an alien and outsider

*.

L#4e!$#!2

0. If the firms is facing various

import control and investment

barriers for entry.

1. If country provides protection to

domestic industry and allows

foreign firms through licensing

or franchising only.

2. If the firms foresee low sales

potential in target market.

3. If the firms foresee large cultural

distance in potential market.

4. %irm foresee that licensee lacks

ability to become a potential

competitor in future.

0. Licensing minimi#es risk and

investment of Licensor i.e.

e"porter.

1. )nsures speed in entering the

target market.

2. Licensing help in

circumventing the various

trade barriers

3. Licensing offers higher

return on investments as

investment from firms is

virtually #ero as product

technology offering.

0. In licensing, firm lack the

control of market and use of

assets in target market.

1. (ometimes, licensee

becomes potential

competitor.

2. %irm knowledge, technical

knowhow and *$ get

spillovers to licensees and

may result in proliferation.

3. Jsually, the license period

is limited and offsets firmBs

chances for long term flows

of profits.

Jo#!1 0. Dhen there are import barriers 0. This method overcomes the 0. =oint Mentures are prone to


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2. Ve!1;&e$

in target market.

1. Dhen firm have large cultural

distance from target markets and

its way of functioning.

2. %irms itself can employ allresources needed to tap market.

3. ;ountry prescribes certain of

e+uity participation.

4. There are potential chances of

some political risk and

e"propriation.

5. < local partner is better in

distribution knowledgeA

technical skills, naturalresourcesA brand name, etc.

problem of ownership

restrictions and cultural

distance in target markets.

1. =oint Menture helps in

combining the resources of

foreign and local companies.

2. =oint Mentures provide

chances for learning from

partner.

3. %irm is viewed and regarded

as insider

4. %irm re+uire less finances as

local firm also contribute

something.

disputes and are difficult to

manage as power and

authority is diluted.

1. It is tough to control the

administrative, strategic and

operational decisions.

2. =oint Mentures has higher

risk e"posure than e"porting

licensing

3. %irmBs technical and

scientific knowledge get

spill@overed to local partners

and they may eventually

become competitor for firm.

3.%0oll(

O>!e'

S;b$#'#a&(

0. Dhen there are high import

barriers in firms and foreign

ownership is allowed.

1. There is little cultural distance in

target country.

2. The firm has good sales

potential in target market.

3. There is low political risk for the

firm.

1. %irm has good knowledge of

local market and accordingly

devise strategies.

2. %irm can apply speciali#ed

skills in good manner.

3. ;hances of knowhow

proliferation get minimi#ed.

4. The firm is viewed as an

insider.

0. This method has greater risk

than other modes of entry.

1. It re+uires more financial

and non financial resources

and commitment from firm.

2. It is possible that firm could

not manage the local

resources due to change in

working conditions and

technology.

So;&4e> Taking our :usiness International

3. E?PORTING

&f the various methods of foreign market entry, e"porting is most commonly used by small and first time

businesses as e"porting involves limited start@up costs and risks and profit under this method can be

reali#ed as early as firm get started. The most advantages aspect of market entry through e"porting is that it

involves minimal preliminary e"penditures e"cept some which incur on market research and product

promotion. Getting through e"port into international market can be by two basic ways. Dhich are?

a. $irect )"port

b. Indirect )"port


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The direct e"porting re+uires the firmK company to find a potential foreign buyer and then the firm is

supposed to make all necessary arrangements for transporting the products into destined market. $irect

e"porting indicate the commitment and dedication on the part of e"porter to engage in international trade in

manner that firm want to be long time player in that market and wish to develop and adapt its product as

per local re+uirement over a period of time. $irect )"port re+uires the e"port company personnel to travel

occasionally so as to find out the buyers and also look into the changing demand and market patterns. In

direct )"porting firm has to handle the logistics part as goods are manufactured in domestic markets and

e"ported to foreign markets. (uch handling of logistics on the part of e"porter has to be prompt, speedy and

time oriented. (ome of the benefits of e"porting are the possibility to diversify, additional revenue for the

firm, use of e"cess production capacity, business operation stability, leverage of purchasing power, product

life cycle e"tension and product innovation, improvement development. %ollowing are different types of

e"porting

a. Through (ales *epresentatives or


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to the licensor but usually it has been seen that licensee who produces and markets the product take away

returns from manufacturing and marketing activities due to vague regulatory law in developing countries.

7. JOINT VENTURES:

=oint Mentures are market entry options whereby firm and another company or firm in target market may

join together to form a new incorporated company for business operations in that market. In joint ventures,

both the parties are supposed to provide capital and resources in the agreed proportion and accordingly they

will represent and share management and profits loses. (uch mode of entry is popular in countries where

there are restrictions on foreign ownership. %or e"ample, Mene#uela, ;hina, Mietnam

=oint Menture is also preferred way of market entry as it is good trade off between potential risks and

returns and usually joint ventures is manifested with the following common objectives for market entry in

LPG! era. They areA

a. !arket )ntry into potential marketb. *iskK*eward sharing between parties.

4. Technology sharing between parties

'. =oint product development between partiesA and

e. ;onforming to government regulations.

6. Possible advantages from political connections

%ollowing are advantages and disadvantages of =oint ventures>

A'5a!1a2e$ o6 Jo#!1 Ve!1;&e$ D#$a'5a!1a2e$ o6 Jo#!1 Ve!1;&e$

0. -elps to ac+uire new competencies or skills which are not

domestically available.

1. -elps in +uick penetration of the market and also helpful

in rapid implementation of technological change.

2. *educing the firm risks by sharing it with one or more

than one firms.

3. -elpful in easy and faster entry in to target market and

also enable +uick payback

4. Pooling of firm resources such as capital, technical know

how and manpower with partner firms.5. -elp in avoiding the tariff barriers and non tariff barriers.

6. -elpful in satisfying local content re+uirements due to

partnering with local firm.

0. Lack of full control on management of

the firm.

1. (haring of profit may make it be

impossible to recover capital invested.

2. Potential risk of disagreement with

partner organi#ation on e"ploring new

markets, new operations etc.

3. :locking firm chances of other joint

ventures as e"isting partners may have

different views.4. %ear in partner mind that other may not

take unwanted advantage out of e"isting

operations.

So"rce# *dapted %rom *bo"t +porting, *"strade !((-

8. %HOLLY O%NED SUBSIDIARY:


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Dholly &wned (ubsidiary, as the name suggest, is the direct ownership of production facilities in the

potential international market. It re+uire the long term commitment on the part of firm as it involves the

transfer of resources such capital, technology, and personnel to the potential market. Dholly owned

subsidiary can also be made through the ac+uisition of an e"isting firm or the establishment in the target

market. D&( has several advantages as it provides high degree of administrative control in the business

operations of the firm and the firm has better chances to understand and analy#e the consumers and

competitive environment in the target market. &n the other hand such entry strategy re+uires a high level of

physical and capital resources to run the business in the target market.

TARGETTING THE MARKETS:

&ne of the most crucial steps in international trade operations, in LPG! era, is to target the markets by

segmenting that how a particular product and service can be marketed effectively in selected market. It is

mainly defined by factors such as age, gender, per capita income, geography, psychographic behavioral

patterns of customers, socio@economic grouping, or any other combination of the selected countrydemographics. !arket targeting re+uires studying and mapping through secondary data inputs such as lists

and reports containing demographic information of target country and to assess that what impact it may

have on the marketing of key products or services. !arket Targeting can be defined as the process o%

p"lling apart the entire market as a whole and separating it into manageable, disparate "nits based on

demographics.

%ollowing are the various types of target@market strategies which are usually used by firm in targeting the

markets overseas and the same can be categori#ed as one of the following>

3. S#!2le-$e2"e!1 $1&a1e2( This strategy of market targeting is also known as a

concentrated strategy as the firm intend to cater to one segment and wish to have

competitive advantage in that segment by having superior products, lower prices, good

branding etc. such strategy is useful to smaller, first time firm as it provide them leverage

to cater to only one segment of market and provide them opportunity to speciali#e in that

product with firm limited and scare resources.

*. Sele41#5e $e4#al#@a1#o!@


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8. Ma&)e1 $e4#al#@a1#o!. Jnder this strategy, the firm speciali#es to cater to a particular

market and offers an array of different products in various market segment of that market.

In LPG! era such strategy is not sustainable as global market is increasingly becoming

borderless.

9. F;ll "a&)e1 4o5e&a2e Jnder this strategy of market targeting, the firm try to cater to

the entire market. !ass production strategy is used so as to cater to all segment of target

market. The products are usually undifferentiated under this strategy.

Be!e6#1$ o6 Ma&)e1 Ta&2e1#!2 #! LPGM e&a:

In LPG! )ra, there are several reasons which motivate the firms to design proper and suitable market

targeting strategies some of which are summari#ed as under.

3. S;#1able U!'e&$1a!'#!2 o6 4;$1o"e& !ee'$:

;ustomer is king and may have different e"pectations from the manufacturer based on his demographic,

behavioral and psychographic profile. !arket targeting helps the firm to understand customer needs andaccordingly designed a customer solution for each segment for the counter.

*. Be11e& &e1;&!$ 6o& 10e 6#&":

;ustomerBs choices of the product and services are based on their disposable income and price sensitivity.

!arketer by segmenting and targeting the markets with variety of products and can sell the products in

higher income segments thereby generating additional income for the firm.

7. H#20e& oo&1;!#1#e$ 6o& E=a!$#o! a!' D#5e&$#6#4a1#o!:

Good segmenting, targeting positioning E(TPF can help the firm to have greater opportunities for growth

as product and market coverage increase with good market targeting. ;ustomer have better chances of

selecting a suitable product as per their choices if firm has good targeting strategy for selling its product in

target market.

8. Re1a#!#!2 C;$1o"e&$ 6o& lo!2e& 1#"e:

!arket targeting helps the international trader to keep a tack of changing customer choices and preferencesA

because they have different set of re+uirement at different stages of life such as when they are young they

have different buying patterns as compared to when they become older. :y designing and targeting the

products as per customer life cycle, firm can retain customer for longer period of time.

9. Hel #! "a)#!2 1a&2e1 4o"";!#4a1#o!$ $1&a1e2(:

!arket targeting also help the firm to devise a suitable communication and promotion policy as help save

important revenue to be spend unnecessarily on wrong advertising campaigns.

. Hel #! #!4&ea$#!2 Ma&)e1 S0a&e:

;reative market targeting helps the firm to achieve competitive production and marketing costs and

automatically become the preferred choice of customers and distributors. -ence it can be said that creative

market targeting offers the opportunity for smaller and first time firms, planning to get started in LPG!

era, to compete effectively with bigger firm in the market.


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COMPETITION IN INTERNATIONAL MARKETS:

The famous ;ompetition Guru, !ichael ). PorterCs has given a very crisp, simple and understandable

model for assessing, analy#ing and appraising the competitive strength of the firm keeping in mind its

factor conditions, related industries, demand conditions and corporate strategy. The competition diamond is

given as under.

)"hibit> PorterBs ;ompetition


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B. ;ompetitors offer better price performance of substituteBs product and services.

C. ImporterK :uyer have lower switching cost to another product or services.

$. ImporterK:uyer keeps on changing as he has higher perception on level of product differentiation

from one manufacturer to another.

*. THE THREAT OF THE ENTRY OF NE% COMPETITORS

The new firms will enter into the market due to the high returns as profit is one of the driving forces for

selecting a market in LPG! era. This will lead to rivalryK price wars among firms and as a result the

profitability of the firm will decrease. (uch kind of competition can be restrained if the entry of new firms

can be blocked by incumbents or alternately there are high entry and e"it barriers making firms reluctant to

enter new markets. &therwise such entry of new firms will decrease the profit rate towards a competitive

level Eperfect competitionF. %irm can survive in such kind of competition if there areA

A. )ntrant ;ompetitors have greater opportunities product diversification, e"tension and modification

as per importerK buyerBs choice.B. )ntrant competitors have high reputation, prestige and brand e+uity in the target markets.

C. There are low entry and e"it barriers for the firms vis a vis patents, rights, etc.

$. (witching costs or sunk costs are lower for players in target segment.

E. There are lower re+uirement of capital for business in target segment.

%. $istribution channels and logistics are easy for the product and services allowing various players

to get into without any cost and risks involved.

&. )ntrant competitors offer better product or services as it enjoys absolute cost advantages in target

segment.

'. )ntrant ;ompetitors have higher learning curve in this segment.

I. The segment is prone to possibility of price war

(. (egment has favorable government policies vis a vis other segment

7. THE INTENSITY OF COMPETITIVE RIVALRY

In LPG! era, the most important determinant of the competitiveness of any industry is the intensity of

competitive rivalry. *ivals are supposed to compete aggressively and each firm will try to differentiate

their offer from each otherA and sometimes rivals happen to compete each other on the basis of non@price

factors such as technological innovation, marketing, etc. such kind of competition will be marked by

following features.

A. There will be greater number of competitors in market due to higher returns.

B. !arket segment have higher growth rate of industry, economy and disposable income.

C. !arket segment have intermittent industry overcapacity

$. !arket segment has lower e"it barriers

E. There will higher diversity of competitors as they come from different background.


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%. !arket segment is manifested with problem of informational comple"ity and asymmetry.

&. ;ompetitors will try to ma"imise their share as they will have fi"ed cost allocation per value

added

'. !arket segment will re+uire higher level of advertising e"pense

I. !arket segment have unsustainable economies of scale prompting others to jump in.(. %irms tries to have sustainable competitive advantage through improvisation

8. THE BARGAINING PO%ER OF CUSTOMERS

In LPG! era, the customer is a king and meeting his e"pectations is rightly described as the market of

outputs. The customers demand new product and their ability of putting the firm under pressure is an

essential factor of competition which the firms has to handle with uni+ue products, better designs etc. (uch

bargaining power of the customer will also affect the customerCs sensitivity to price changes.

A. There is less buyer concentration than the firmBs concentration in the market segment.B. Importer will have a bargaining leverage as industries will like to continue operations due to high

fi"ed costs and minimi#e their losses in short run.

C. Importers K buyer buying volume are higher.

$. ImporterKbuyer switching costs are lower in comparison to the firmBs switching costs.

E. :uyer has easy cost free and prompts first hand information on the market segment.

%. :uyer due to his higher volume can integrate backward with suppliers

&. :uyer has choiceA availability and affordability of substitute products from other sources.

'. ImporterK:uyer is sensitive to price of product or services.

9. THE BARGAINING PO%ER OF SUPPLIERS

In LPG! era, suppliers are getting critical factors in marketing success as input has become a driving

force in managing competition. < recent oil spike is its good e"ample and suppliers of raw materials,

components, and services are increasingly using their lever of power over the firm. (uppliers can refuse to

supply the inputs or may try to charge e"orbitant prices for such uni+ue resources.

A. (upplier has lower switching costs in comparison to buyers.

B. The supplierBs product is highly differentiated and uni+ue from competitors.

C. There is absence of substitute inputs in market segment.

$. < supplier is uni+uely positioned as market segment has few suppliers and large no. of buyers.

E. (uppliers enjoy better space for forward integration than the buyers.

The porter competition model in uni+ue in analy#ing various aspects of completion and it can be of

immense use for a first time entrepreneur, getting started in international trade as it focuses on five different

aspects of potential competition.


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REGULATORY REUIREMENT FOR GETTING STARTED: %ollowing are the regulatory

re+uirement which an e"porter has to completer before starting an e"port import business.

3. I"o&1e&$- E=o&1e&$ Co'e IEC/ No.


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Dhere an I); 'umber is lost or misplaced, the issuing authority may consider re+uests for grant

of a duplicate copy of I); number, if accompanied by an affidavit.

E. S;&&e!'e& o6 IEC N;"be& :

If an I); holder does not wish to operate the allotted I); number, he may surrender the same by

informing the issuing authority. &n receipt of such intimation, the issuing authority shall

immediately cancel the same and electronically transmit it to $G%T for onward transmission to

the ;ustoms and *egional #10 EPC$ :

A. A;10o#e$ I$$;#!2 RCMC:


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be specified in this behalf. In case an e"porter desires to get registration as a manufacturer

e"porter, he shall furnish evidence to that effect. ProspectiveKpotential e"porters may also, on

application, register and become an associate member of an e"port promotion council.

C. Val#'#1( Peo' o6 RCMC:

The *;!; shall be deemed to be valid from 0st

The e"porter shall furnish +uarterly returnsK details of his e"ports of different commodities to the

concerned registering authority. This will be in addition to any other returns as may be prescribed

by the registering authority. -owever, status holders shall also send +uarterly returns to %I)& in

the format specified by %I)&.

F. De-Re2#$1&a1#o!

The registering authority may de@register an *;!; holder for a specified period for violation of

the conditions of registration. :efore such de@registration, the *;!; holder shall be given a show

cause notice by the registering authority, and an ade+uate and reasonable opportunity to make a

representation against the proposed de@registration. Jpon de@registration, the concerned e"port

promotion council shall intimate the same to all the regional authorities.

G. Aeal A2a#!$1 De-&e2#$1&a1#o!:

< person aggrieved by a decision of the registering authority in respect of any matter connected

with the issue of *;!; may prefer an appeal to the $irector General of %oreign Trade or an

officer designated in this behalf within 34 days against the said decision and the decision of the

appellate authority shall be final.

H. D#&e41#5e$ o6 DGFT:


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The $irector General of %oreign Trade may direct any registering authority to register or de@

register an e"porter or otherwise issue such other directions to them consistent with and in order to

implement the provisions of the


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33. :ank guarantee for a sum of *s. 099,999K@ however, subject to compliance of certain additional

re+uirements e.g. if the premises is owned by the ;ompany, bank guarantee of *s. 49,999K@ may

also accepted by the $epartment.


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a. Those persons who are manufacturing e"cisable goods, on which the duty chargeable is at nil rate

or such persons have been fully e"empted from payment of duty by ga#ette notification.

b. (mall scale units which are under the slab e"emption based on the basis value of e"cise clearances

under ga#ette notification. :ut such are supposed to give a declaration to the authorities as

specified under the law, once the value of their e"cise clearances touches *s.89 lakh.

4.


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< personK firm have to apply for );; on an application form which has been prescribed for the purpose

under the (ection 5 of the ;entral )"cise

a. The applicant for );; registration or by the authori#ed agent of the applicant provided has

general power of attorney. The *ange &fficer of ;entral )"cise department shall have the powers

if he is not satisfied to call the original documents so as to verify Hpower of attorneyB.

b.


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m"ltinational process o% planning and eec"ting the conception, pricing, promotion and distrib"tion o%

ideas, goods, and services to create echanges that satis%y individ"al and organi/ational ob3ectives. R2SIn

contrast to the definition of marketing only the word m"ltinationalhas been added.R2SIn simple words

international marketing is the application of marketing principles to across national boundaries. -owever,

there is a crossover between what is commonly e"pressed as international marketing and global marketing,

which is a similar term.

The intersection is the result of the process of internationali#ation. !any a!1$ 10&o;20 a! e=40a!2e

&o4e$$ #! a 2lobal $($1e"

Dithin this e"change transaction customers will only e"change what they value EmoneyF if they feel that

their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value

an organisation can charge.

;ateora and Ghauri E0888F I!1e&!a1#o!al Ma&)e1#!2 #$ 10e e&6o&"a!4e o6 b;$#!e$$ a41#5#1#e$ 10a1

'#&e41 10e 6lo> o6 a 4o"a!($ 2oo'$ a!' $e&5#4e$ 1o 4o!$;"e&$ o& ;$e&$ #! "o&e 10a! o!e !a1#o! 6o& a

&o6#1.

International marketing is often not as simple as marketing your product to more than one nation. R3S

;ompanies must consider language barriers, ideals, and customs in the market they are approaching. R3S

Tailoring your marketing strategies to attract the specific group of people you are attempting to sell to is

highly important and can serve the number one cause of failure or success.R3S
http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/internationalization-1http://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/internationalization-1http://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3


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*t its simplest level, international marketing involves

the%irmin making one or moremarketing midecisions across national bo"ndaries. *t its most comple

level, it involves the %irm in establishing man"%act"ring %acilities overseas and coordinating marketing

strategies across the globe.R4S 0nternational marketing is the per%ormance o% b"siness activities that

direct the %low o% a company4s goods and services to cons"mers or "sers in more than one nation %or a

pro%it.R5SIt can be also defined as the application o% marketing orientation and marketing capabilities to

international b"siness.R6SThe international market goes beyond the eport marketer and becomes more

involved in the marketing environment in the co"ntries in which it is doing b"siness.R7S

(ome definition refer to the term global marketing> 5lobal6transnational marketing %oc"ses "pon

leveraging a company4s assets, eperience and prod"cts globally and "pon adapting to what is tr"ly "ni"e

and di%%erent in each co"ntry.R7S

5lobal marketing re%ers to marketing activities coordinated andintegrated across m"ltiple co"ntry markets.R8S

To#4$ 4o5e!2 10e "#4&o-4o!1e=1 o6 #!1e&!a1#o!al "a&)e1#!2


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;ompetitive strategy>

conceptual developmentA

competitive advantage vs. competitive positioningA

sources of competitive advantage and performance implications.

(trategic alliances>

learning and trustA

recipes for alliance successA

performance of different types of alliance.

Global sourcing>

global sourcing in a service conte"tA

benefits of global sourcingA

country of origin issues in global sourcing.

!ultinationalperformance>

determinants of performanceA

a different interpretation of performance.

!nalytical techniques in cross"national research:

measuerment issuesA

reliability and validity issues.

D#66e&e!4e$ be1>ee! 'o"e$1#4 "a&)e1#!2 a!' #!1e&!a1#o!al "a&)e1#!2

There are various differences between domestic marketing and international marketing. $ue to a language

barrierit is more difficult to obtain and interpret research data in international marketing. R00SPromotional

messages needs to consider numerous cultural differences between different countries. R00SThis includes the

differences in languages, e"pressions, habits, gestures, ideologies and more. %or e"ample, in the Jnited

(tates the round & sign made with thumb and first finger means 7okay7while in !editerranean countries

the same gesture means 7/ero7or 7the worst7.R01SIn Tunisia it is understood as 704ll kill yo"7meanwhile for

a =apan consumer it implies 7money7.R01S)ven among the 63 )nglish@speaking nations a word with the same

meaning can differ greatly from the )nglish which is spoken in the Jnited (tates as the following e"ample

shows>R01S

Police#bobby E:ritainF, garda EIrelandF, !ountie E;anadaF, police wallah E(outh


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Tr"ck#lorry E:ritain and If

you want just condition of warmin your room, please control yourself.

0n an *cap"lco hotel#The manager has personally passed all the water served here.

T0e "a&)e1#!2 4o!4e1

The concept of marketing has changed and evolved over time. Dhilst in todayBs business world, the

customer is at the forefront, not all businesses in the past followed this concept. Their thinking, orientation

or ideology put other factors rather then the customer first. Let us e"amine these below.

P&o';41#o! Oe!1e':The focus of the business is not the needs of the custobmer, but of reducing costs by

mass production. :y reaching economies of scale the business will ma"imi#e profits by reducing costs.

P&o';41 Oe!1a1#o!: The company believes that they have a superior product, based on +uality and

features, and because of this they feel their customers will like it also.

Sale$ Oe!1a1#o!:The focus here is to make the product, and then try to sell it to the target market.

-owever, the problem could be that consumers do not like what is being sold to them.

Ma&)e1 Oe!1a1#o!> Puts the customer at the heart of the business. The organi#ation tries to understand

the needs of the customers by using appropriate research methods,


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I!1e&!a1#o!al B;$#!e$$ E!5#&o!"e!1

The world has a long, rich history of international trade among nations that can be traced back to early


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economy that relies on e"porting cutting@edge technology as high tech software and computer companies

proliferate.

Pol#1#4al E!5#&o!"e!1

)ach country varies regarding international trade and relocation of foreign plants on its native soil. (ome

countries openly court foreign companies and encourage them to invest in their country by offering reduced

ta"es or some other investment incentives. &ther countries impose strict regulations that can cause large

companies to leave and open a plant in a country that provides more favorable operating conditions. Dhen

a company decides to conduct business in another country, it should also consider the political stability of

the host countryCs government. Jnstable leadership can create significant problems in recouping profits if

the government falls of the host country andKor changes its policy towards foreign trade and investment.

Political instability is often caused by severe economic conditions that result in civil unrest.


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what is called aprotective tariff. This type of tariff is designed to make foreign products more e"pensive

than domestic products and, as a result, protect domestic companies. < protective tariff is normally very

popular with the affected domestic companies and their workers because they benefit most directly from it.

In retaliation, a country that is affected by a protective tariff will fre+uently enact a tariff of its own on a

product from the original tariff enacting country. In 0829, for e"ample, the J.(. ;ongress passed the

(moot@-awley Tariff


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named doesnCt go. This marketing errorVresulting simply from ignorance of the (panish languageVcost

General !otors millions in initial salesVas well as considerable embarrassment.

:usiness professionals also need to be aware of foreign customs regarding standard business practices. %or

e"ample, people from some countries like to sit or stand very close when conducting business. In contrast,

people from other countries want to maintain a spatial distance between them and the people with whom

they are conducting business. Thus, before business@people travel overseas, they must be given training on

how to conduct business in the country to which they are traveling.

:usiness professionals also run into another practice that occurs in some countriesVbribery. The practice

ofbribery is common in several countries and is considered a normal business practice. If the bribe is not

paid to a businessperson from a country where bribery is e"pected, a transaction is unlikely to occur. Laws

in some countries prohibit businesspeople from paying or accepting bribes.


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Export goods are subject to approval of proper ocers of customs before

being loaded to the ship or airlines and can not be loaded without his

permission. As per Customs Act 19!" the person#in#charge of the ship$ truc%$

rail$ airlines is supposed not to allow the loading at a customs station except/0

a f e%port goods other than baggage and mail bags unless a

shipping !illor !ill of e1port or a !ill of transshipment as the

case may be duly passed by the proper o-cer has been handed over

to him by the e%porter

b f baggage and mail bags unless their e%port has been duly

permitted by the proper o-cer.

ection 45 to 5 is important for getting cleared the goods in case of imports whilesection 51 & 52 are important in case of getting the goods cleared in a e%port

business. imilarly e%porter has to take care that which type of shipping bill is to be

submitted for availing the bene$ts of duty drawback under section 64 & 65 of

customs )ct 1+,2. 7oreign 8%change 9egulation s )ct 1+++ deals with the documents

which are to be submitted by the e%porters for realizing the e%port proceeds with the

prescribed time under the act and subsequent rules.

"n the similar fashion various other sections of custom )ct put bar on loading and

unloading of cargo at various stages of e%port & import process. "t is better for an

e%porter to understand the role and importance of these documents in the beginning

of e%port business so as to avoid any unforeseen situation in future.

+'2 E3P,T $,C*ENTATI,N IS I*P,TANT::

#rade documentation is necessary and an integral part of international trade

operations due to variety of reasons. ;hen e%porter sells his goods in international

markets he has to prepare various documents as transportation of cargo from one

country to another is full of various regulatory and commercial requirements. )nother

country may have some legislation in place for quality control and inspection of

certain items such as sanitary photo:sanitary requirements and technical barriers to

trade. ;hen e%porter gives goods to shipping company he must have some

documents to prove the delivery of goods and title of goods. uch goods have to be

4)"cerpted from Indian ;ustoms


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insured and crosschecked by customs o-cial for whom one again require some

documents such as packing list insurance certi$cate and shipping bill. #he various

reasons for careful understanding of international trade documentation are as

follows.

A. #rade practices of a country

B.


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by importing country so as to administer the e%change control regulations or

import quotas of the country.

7. "n certain cases importing country demands certain documents so as to arrive

on conclusion regarding the safeguard of public and animal health and to

ensure that such commodities shall not be imported which may cause thespread of plant diseases. uch documents are furnished for control of anitary

=hyto:sanitary and #echnical Barriers to trade. 7or 8%ample >ermany imposes

restrictions on import of honey from Cepal as Cepalese Aoney was considered

to be having pesticides due to high use of pesticides insecticides by farmers

on their agricultural crops. 9ecently =akistan has not allowed a passage to

"ndian trucks carrying wheat which was to be e%ported to )fghanistan on the

fear that some pilferage on way to Dourney of "ndian wheat may spread bio

made diseases in =akistan agriculture.

/. *ustoms -cial Dob is not only the evaluation determination and collection ofe%port or import duties on the cargo being e%ported/imported but has a wider

spectrum of functions such as looking after whether the goods are permitted

for e%port/import or not. Cow days customs department act in tandem with

other federal crime prevention agencies such as =olice "ntelligence ervices

=ara ?ilitary 7orces and *oast >uard as there is a greater threat to national

and international security due to international smuggling of radioactive items

opium 9(E and other hazardous materials. *ustoms o-cials have to comply

with the 7oreign #rade =olicy of the country on the pen/ *hannelized/

=rohibited/ 9estricted trade categories of e%port and import as e%porter has to

get his goods checked by customs o-cial and get a let export seal proving

that goods meant for e%port are as per country rules & regulations. #he

e%porter is duty bound to provide such information to customs through e%port

documents. *ustoms o-cials ask the e%porter to authenticate the documents

submitted and ask for certi$cate in this regards if documents submitted are

found to be false e%porter is subDect to penalty and even in certain cases his

goods may be con$scated. #rade (ocuments helps the customs to see verify

and inspect the cargo of e%porter and importer.

8. 8%porter has to declare that these goods are meant for e%ports through trade

documents which the e%porter declare that these goods are meant for e%ports

and ensure that he may avail right insurance cover for the same as

transportation of goods in international trade is full of risks. 8%porter has to

submit such e%port documents indicating that goods are insured to shipping


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company importers and banks while negotiating the documents for

realization of e%port proceeds.

9. #here are certain countries which in order to control their imports and keep a

check on them through sound information system ask that the commercial

invoice by the e%porter has to be prepared on the forms of these countries. "ninternational trade such forms are known as customs invoices. n the other

hand certain other countries demand the consular invoice along with the

commercial invoice or legalization/visaed of commercial invoice so as to get

the details of e%port shipments coming to their country. uch documents

create several non tari' barriers for e%porter and countries demand it so as to

control their imports from certain countries. Fnowledge of such various

invoices which have to be prepared is essential for e%porter Aence sound

understanding & knowledge of trade documentation is important part of

international trade for an e%porter and importer.. *ertain documents such as short shipment certi$cate etc are required so as to

prove that only the part of goods has been shipped provided it was either

agreed in "nternational ales *ontract or mentioned in overnment

of "ndia has given immense emphasis to the same and has asked the several trade

promotion organizations & institutions to provide the training to e%porters &

importers in trade documentation etc. "ndian "nstitute of 7oreign #rade set up under

?inistry of *ommerce has been playing an vital role in this regard since its

foundation in 1+,3.

VAI,S ASPECTS ,% E3P,T $,C*ENTATI,N:

#he maDor concern of importing as well as e%porting country parties in international

trade is the accuracy of e%port documents as it helps the importer in making prompt

duty payments which comes to doldrums if e%port documents are not correct or

discrepant. Banks may not negotiate the documents for purchase or discount if

e%porter has submitted inaccurate trade documents. imilarly e%porting country also


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emphasize that e%porter shall submit the accurate documents to customs

department with right description so that customs may take least time in assessing

for duty if any and also for clearing the goods promptly. Aence it is advisable that

new e%porters should consider obtaining the training advice or suggestions or

outsource services from freight forwarder before for e%porting the goods with rightaccurate and proper documentation. "t is usually advisable that e%porter should take

the services of reliable competent and dynamic freight forwarder so as to ensure

the compliance in essential documents in international trade. 7reight forwarder

provides an invaluable source of information and help to e%porter regarding the

information on markets packing trend keeping in mind nature of goods shipping

costs as well as documentation & procedure for trade transactions. "nterestingly the

role of freight forwarder has signi$cantly increased and is continuously increasing in

the previous some decades due to rapid e%pansion of trade not only in "ndia but

globally.

(ocumentation is of prime importance in the $nancing transport/ carriage and

control of goods in international trade. "t is only through documents that $nancing of

shipments transportation of cargo and ensuring of payments is possible. 8%port

documents helps in implementing completion and transfer of goods to importer.

Aence 8%port documentation is mandatory in order to ensure that e%porterGs cargo

shall arrive to destination on time and e%porter may realize his payment for the

consignment promptly and safely. "t is the duty of e%porter to ensure the correct &

accurate documents in trade transactions so that whole cycle of trade may run

smoothly without any legal regulatory or commercial hiccups. everal aspects of

e%port documentations are as follows.

I. It is Easy pro#ess:

mall and $rst time e%porters are usually worried about the trade documentation

practices as they $nd it very complicated and cumbersome process. But the fact is it

is very easy to understand and prepare e%port/import documents and trader himself

can use his own e%pertise in preparing them provided he must go for a training

program on trade documentation practices for a hand on knowledge on various

aspects of trade documentation. everal #=s established under ?inistry of

*ommerce help to a $rst time e%porters. #hese organizations use to conduct short

term awareness program/ management development program for to e%porter s and

importers aware about trade documentation framework. )s the volume of trade grow

e%porters can engage a shipping and forwarding agent who are supposed to take


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#rade documents clarity and transparency in international sales deals. ne maDor

purpose of the trade documentation is to provide a speci$c and complete description

of the goods to customs o-cials shipping company banks duty drawback

directorate and importers.

*onclusively it can say that whether or not the e%porter uses a hipping and

7orwarding )gent he should be well informed about the international trade

documentation because it plays such an e%tensive role in international trade

transactions.

T'E *A(, $,C*ENTS SE$ IN INTENATI,NA) TA$E

?aDor e%port document used in "ndia *ommon e%port

document used in H8

?aDor e%port

document used in

)ustralia61. =ro:forma "nvoice

2. *ommercial "nvoice

3. =acking


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#rust *opy of hipping Bill

2. 9eceipt for =ayment of =ort *harges

21. Kehicle *hit

22. 8%change *ontrol (eclaration (7/>9 /

==/ 7#8E/K= 7orms23. 7reight =ayment *erti$cate

24. "nsurance =remium =ayment *erti$cate

invoice

1. "nsurance

certi$cate

11.8%port =acking


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B,3: *A(, C,**ECIA) $,C*ENTS SE$ IN IN$IA

Prin#ipal Commer#ial $o#uments Au1iliary Commer#ial $o#uments4. *ommercial "nvoice5. =acking


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4. Performa Invoi#e

=erforma invoice is $rst and important documents of conveying e%porter idea about

the prices description quantity and quality for sale of goods to importer. 8%porter

provides all the information with respect to e%port purposes to importer and such

information may includes

a. #entative prices of per unit of commodity

!. #entative description of goods

#. #entative idea about shipping terms

". #entative idea about payments terms

e. Iuality benchmarks of the commodity

f. ?ode of shipment

g. 8%pected time required by e%port for delivering date etc.

8%porter also e%presses his desire for letter of credit or other mode of payments such

as (/= (/) pen )ccount/)dvance =ayment from importer in case importer is

satis$ed with the description prices mode of shipment payment mode of goods on

the basis of =erforma invoice. 7or preparing a performa invoice e%porter need to do

the following things.

I. *omplete description of commodities goods and services which the importer is

planning to import. #entative idea about the value weight and dimensions of

the shipment such as cubic dimension of the cargo and packaging of cargo etc

clearly e%pressed in performa invoice.

II. 8%porter shall clearly e%press his idea and interest about his preferred mode of

transportation. Aowever such tasks and activities are duly taken care by the

freight forwarder who shall be consulted on all such issues such as

determination of charges with respect to the freight or mode of transportation

insurance premium the charges for legalization of invoices and the charges for

handling the letter of credit. "n case the goods are to be transited through

inland transportation or multimodal transportation the e%porter should provide

the details of possible charges which may so incur.

III. =rocess of packing the cargo and an elaboration on packing material to be used

such as crates pallets or containers for safely transporting the goods from

e%porter country to importer keeping in mind the nature of goods as the ship to

be booked may vary on the nature of cargo for e%ample for cars shipments 9:

9 ship for fruits shipments 9eefer ship etc.


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IV. #he name of the place to which cargo is destined by clearly indicating the name

of port and city along with international shipping codes.

=ro:forma invoice is issued by the e%porter to an importer whereby he provides the

detailed knowledge about the consignment. ometimes e%porter sends the =erforma

invoice to importer so that importer can avail an import license in case required

from the authorities so as to purchase the cargo from e%porter. "t is to be considered

that =erforma invoice is not a demand for payment.

5. Commer#ial Invoi#e

*ommercial "nvoice is rightly referred as the bill for e%ports of the goods from the

e%porter to the importer. *ommercial "nvoices are often used by custom o-cial to

decide the actual value of cargo while assessing customs duties. >overnmentGs world

wide use the commercial invoice so as to restrict/control imports as commercial

invoice will often specify the whole description about the e%port and import.

)s a matter of practice some e%porters are using the same invoice *ommercial

"nvoice for domestic and international trade operations. "n certain countries of the

world a commercial invoice is demanded in the speci$ed forms of the country which

his also referred as customs invoice. "n some cases importing countries insist on

legalization/ visaed commercial invoice as such invoice is known as consular

invoice. #his is done by importing country so as to keep the tack on the imports of

the country. "f at any point of time country realized that imports are increasing and

country doesnGt have the foreign e%change to make payment it can control / restrict

certain items from importing lists. uch arrangement is also used to provide

preferential tari's to friendly country and to avoid the enemy countries for the

trading. "t has sometimes been used as diplomatic weapon to settle other issues with

trading countries through use of non tari' barriers.

#he commercial invoice includes important information such as the dates of shipping

of cargo packing marks as per importer requirements and "8* code and name of

e%porter terms of payments name of the consignee trade terms such as incoterms

description of goods including A classi$cation numbers of units to be sold total

price of the cargo mode of transportation per unit price and any other important

information which is required in the importerGs country. *ommercial "nvoice is

prepared by e%porter and it is addressed to importer by giving full details of the cargo

to be e%ported.


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packing list as it summaries the material in each individual carton/ packet and

describes the type of package such as a bo% crate drum or carton.

7. Shipping Instru#tion

#he signi$cance of furnishing the shipping instructions to freight forwarder clearly

precisely is immense. "n the modern times when e%port activities has become so

comple% it is rightly said that the appointing a freight forwarder is a kind of

e%tension to e%porter e%port department. #he 7reight 7orwarder has to be apprised

the various aspects of shipment through shipping instructions and process of

shipping it. 7reight forwarder needs to know as much about the transaction as

e%porter know so as to comply with all of importerMs requirements for successful and

e'ective e%ecution of contract and for keeping the importer loyal for future purposes.

"n case e%porter make an error or mistake in furnishing the e%act and accurate

shipping instructions to freight forwarder following types of unnecessary problems

may come in trade transactions. ome of them are as follows0

I. #here may be failure to collect/ negotiate against a letter of credit as that the

forwarder was not known that there was a letter of credit involved in trade

transaction.

II. #here may be mistake on the part of freight forwarder in insuring the shipment

as per importer desired risk cover.

III. 7orwarder may make mistake to ship the goods on wrong incoterms such as

freight prepaid instead of collect basis.

IV. 7reight forwarder may make mistake in preparing the certain essential

documents which are important for letter of credit negotiation as freight

forwarder would have thought that the e%porter would prepare them.

V. 7right forwarder may make mistake in returning the original documents to the

shipper so as to distribute them instead of sending them to a bank and/or

consignee for payment negotiation/purchase or discounting of e%port proceeds.

/. Intimation of Inspe#tion:)s per the 8%port Iuality *ontrol and "nspection )ct

1+,3 an e%porter is required to make an application in duplicate in the prescribed

form for intimating to the e%port inspection agency to carry out the pre:shipment

inspection works. uch inspection may be carried out at e%porter premises or at

prescribed e%port agency. #he intimation for the same purpose has to be given to the

8") through


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application for "ntimation of "nspection to be the submitted to the nearby 8%port

"nspection )gency0

a= *opy of the *ommercial "nvoice for description of goods to be e%ported.

!= 9equisite fees for inspection of cargo in a crossed cheque/draft or "ndian

=ostal rder.

#= *opy of letter of *redit.

"= (escription of packing speci$cations as instructed by importer.

e= *opy of the e%port order/contract which indicate that goods are strictly

according to the prescribed speci$cations of importer.

8%porter inspection agency on the satisfaction that goods to be e%ported meet to

standards quality norms as per 8%port Iuality *ontrol and "nspection )ct 1+,3 or as

per importerGs speci$cations shall issue a certi$cate of inspection within 4 to 5 days

from the date of receipt of application of the e%porter.

8. Certi>#ate of Inspe#tion:

=re:shipment inspection has to be done by 8%port "nspection )gency which worked

under the administrative control of 8%port "nspection *ouncil depending upon the

nature of products standard quality norms or as per importer speci$cations. uch

inspection usually takes place from consignment to consignment basis at the

premises of e%porter. "f quality control facilities are not available at the e%porter

premises the inspections of consignment can be done at port of shipment. 8%porter

shall give an application in writing to the concerned e%port inspection agencies for

pre:shipment inspection well in advance so as to ensure that shipment is inspected

well in advance from the date of shipment. ometimes inspection is also done by

concerned commodity board o-cials such as #ea Board *o'ee Board due to speci$c

nature of goods requiring e%pertise. "n cases where the pre:shipment inspection is

made mandatory by a particular agency as named by importer e%port inspection has

to take place essentially by the agency as named by importer.

)n application has to be submitted by e%porter to concerned e%port inspectioncouncil along with requisite fees and following documents.

a. =hoto state copy of the *ommercial "nvoice for e%port consignment.

!. =hoto state copy of letter of credit in favor of e%porter

#. =acking speci$cations standard and as per importerGs request

". =hoto state copy of the e%port order or 8%port ales *ontract


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n the submission of above documents 8%port "nspection )gency requires at least 4

to 5 days so as to conduct quality test of consignment of e%portable goods. n its

satisfaction about the e%portable quality of consignment as per importer

requirement/standards it issues the certifcate o inspectionto the e%porter in theprescribed pro:forma in $ve copies.

8%porter submits the original copy of such inspection certi$cate to *ustoms

authorities along with shipping bill / bill of e%port at the time of e%port consignment

clearance by "ndian *ustoms. econd copy of e%port inspection is to be sent to the

importer while sending the shipping advice along with various e%port documents.

#hird copy shall be retained by the e%porter for any future reference. 7ourth copy is

to be sent to e%port "nspection *ouncil at its headquarters at Cew (elhi and $fth

copy shall be retained by the concerned 8%port "nspection )gency for futurereferences.

9. Insuran#e $e#laration

#he standard "nsurance declaration which is part of standardized documents is based

on the format which is approved by the "nstitute of eneral insurance company should issue the certi$cate of

insurance to e%porter after completion of necessary entries and certi$cation by the

*ompany.

. Certi>#ate of Insuran#e:

)s international trade transportation is full of risks and ocean carriers doesnGt take

any responsibility for loss/piracy/damage/pilferage etc to the cargo if the cargo is

shipped without the insurance cover. cean carriers consider it negligence on the

part of e%porter. Aence it is mandatory for the e%porter to arrange the cargo/marine

insurance for his e%port shipment. #he insurance certi$cate indicates the amount

insured of the shipments and also describes that what kind of risks are covered under

the particular policy of various "nstitute *argo *lauses of ) B & *.


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?.Shipping ,r"er N hipping order is issued by the conference shipping lines for

intimating the e%porter about the reservation of space of shipment. hipping order

also describes that the speci$c vessel along with shipping dates and speci$ed port of

departure.

4@. *ate


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acknowledgement of payment of freight and shipping company ensures that it shall

transport the goods to destination.

!.An ,r"er !ill of la"ingis a document that is prepared to the order the foreign

importer or its bank for the payment and custody of goods. "t is negotiable.

#his is the most satisfactory type of receipt and the shipper prefers such a bill as

there is no doubt about the goods being on board and consequent dispute on this

point will not arise with the bankers or consignee thereby facilitating earliest

$nancial settlement of the e%port sale.

2. 9eceived bill of lading0 #his arises where the word QshippedQ does not appear on

the bill of lading. "t merely con$rms that the goods have been handed over to theship:owner and are in his custody. #he cargo may be in his dock warehouse/transit

shed or even inland. #he bill has therefore not the same meaning as a QshippedQ bill

and the buyer under a *.".7. contract need not accept such a bill for ultimate $nancial

settlement through the bank unless provision has been made in the contract.

7orwarding agents will invariably avoid handling Qreceived billsQ for their clients

unless special circumstances obtain.

3. #hrough bills of lading0 "n many cases it is necessary to employ two or more

carriers to get the goods to their $nal destination. #he on carriage may be either by asecond vessel e.g. to the eychelles "slands via ?ombasa or Bombay or by a

di'erent form of transport e.g. to destinations in the interior of *anada. "n such

cases it would be very complicated and more e%pensive if the shipper had to arrange

on carriage himself by employing an agent at the point of transshipment.

4. >roupage Bill of


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the use of containers and particularly evident in the continental trade and deep sea

container services. "t will doubtless increase with containerisation development and is

ideal to the shipper who has small quantities of goods available for e%port.

)dvantages of groupage include less packing0 lower insurance premiums usually

quicker transits less risk of damage and pilferage and lower rates when comparedwith such cargo being dispatched as an individual parcel/consignment.

5. #ransshipment Bill of


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and including the cost of loading the goods on to the vessel. "t does not include the

cost of sea freight. "n the case of *.".7. the price quoted includes the cost of the

goods the cost of insuring the goods to destination and the freight or cost of

transport.

The o#ean !ill of la"ing means that it is a0

a. ) document carrying title of ownership.

!. ) contract of carriage between the shipping company and the

e%porter/consignee.

#. ) receipt for goods which is given by the shipping company to the

e%porter.

". #he bill of lading con$rms where goods are to be delivered

e. 8nsures process of payment of freight charges.

f. Came of the person to whom the goods are consigned.

#he bill of lading is a document which describes all legal responsibilities and liability

between e%porters importer and shipping company. )s the original bill of lading is a

negotiable document and e%porter shall try to prepare it in such a manner that he

shall retain the title of cargo and title shall be delivered to importer only when he

makes the payments to issuing bank in turn for documents.

rder bills of lading play a signi$cant role in international transactions in cases where

the mode of payment is letter of credit or documentary collections. "t is the usual

practice that bill of lading shall be on boardbills of lading as it provide the proof

to the importer that his cargo has been placed on board to shipment and he will

receive his cargo once he receive documents in e%change for payment to


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II. "t is kind of contract between e%porter and shipping company where by shipping

company undertakes the responsibility of transporting the cargo to destination

in e%change for payment of freight charges.

III. Bill of lading is document which indicates and records the transfer of title or

ownership from the e%porter/ consignor to the importer/ consignee on paymentsby importer to e%porter.

B. Airway Bill

#he airway bill is a non#negotiableinstrument meaning that it doesnGt carry the title

of goods as in case of bill of lading. )irway bill refers that goods has been received by

the carrier. )irway bill is issued by the cargo airline carrier or by consolidator of the

cargo. #he airway bill refers that the airlines/carrier has accepted the goods and it

obligates to the carrier to carry the consignment to the airport of destination of

importer country. )irway bill is also documentary evidence that contract has been

e%ecuted. #he airway bill also serves the purposes of providing guidance to

airlines/carrierMs sta' for handling dispatching and delivering of the shipments to

destined port in importer country. ome important features of airway bill are as

follows.

a. )irway Bill is non:negotiable

!. )irway bill cannot be used as a collection instrument for receiving

payments.

#. )irway bill has provision for insurance but some carriers donGt provide

such coverage hence e%porter shall take care.

". )irway bill is not a document of title to the goods.

46. Certi>#ate of ,rigin

*erti$cate of rigin is a document which is used to avail the preferential tari' rates

as per some agreements such as >= >#= & C)7#). *erti$cate of origin indicates

that the goods have been manufactured from the originating country material hence

they shall be entitled to preferential duties. "n certain cases countries which are

giving such preferential treatment require legalization of the document from their

country consular for e%porter entitled to such preferential bene$ts. *erti$cation for

origin of goods in other cases can also be availed from *hamber of *ommerce such

as =A(**" or 7"**". Aowever the certi$cate of origin provided by *hambers of


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*ommerce is general has to be authenticated by importer country *hamber of

*ommerce.

47. Bill of E1#hange:

Bill of e%change is a non:interest:bearing written order which is used in international

trade as it provides a sort of guarantee to e%porter to get a speci$ed and $%ed sum

of money from importer at a predetermined future date as has been agreed between

e%porter and importer in e%port sales contract.

Bills of e%change are Dust like the cheque hundi or promissory notes. Bills can be

withdrawn by individuals or banks. Bill of e%change is also a transferable by

endorsements of importer.

4/. Shipping A"vi#e hipping advice is prepared so as to provide information to

the overseas importer about the shipment of goods. #his document is sort of

intimation to the importer that goods has been shipped to importer as per agreed

terms and condition in sales contract and commercial invoice.

48. )etter of Cre"it


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#op


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riginal ;hite(uplicate Bu'

#riplicate =inkIuadruplicate >reenIuintuplicate Blue

&ource' Central Excise )anual

"t is advisable that the copies of )98.1 shall contain a color band on the top or on the

right hand side according to the color symmetry as given above.

5. Shipping BillD Bill of E1port:

)s per provision of the "ndian *ustoms )ct 1+,2 goods cannot be loaded on board

the carrier unless permission from the customs authorities has not been obtained.

uch permission to e%porter is accorded on a document prescribed by the customs

authorities. "n cases where the goods are sent by sea this document is known ashipping Bill and when goods are sent by land/rail it is known as bill of e%port. Bill of

8%port is also known as )pplication for 8%port. 8%port consignment through post

parcel requires custom declaration form to be $lled in by the e%porter. hipping Bill/

Bill of 8%port is a document which is essentially required by the *ustoms

)uthority/o-cials for allowing shipment for e%port purposes with let export seal.

#he various types of the hipping Bill are mentioned below by having distinction to

the e%port goods0

a 8%port duty/ cessb 7ree of duty/ cess

c 8ntitlement of duty drawback

d 8ntitlement of credit of duty under (8=B cheme

e 9e:e%port of imported goods

#he following are the documents required for the processing of the hipping Bill0

a (7/>9 forms in duplicate for shipment to all the countries.

b 4 copies of the packing list or cargo manifest mentioning the contentsquantity gross and net weight of each package of the cargo to be e%ported.

c 4 copies of invoices which contains all relevant particulars like number of

packages quantity unit rate total f.o.b./ c.i.f. value correct & full description

of goods to be e%ported.

d 8%port ales *ontract


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e )98 " & "" both original and duplicate and commercial invoice/ legalized

invoice/ customs invoice as the case may be.

f =re:shipment "nspection/ 8%amination *erti$cate of quality control.

#he shipping bill is presented in the following types of formats as given below0

a ;hite hipping Bill in 3 copies for e%port of duty free of goods.

b >reen hipping Bill in 4 copies for the e%port of goods which are under claim

for duty drawback.

c Tellow hipping Bill in 3 copies for the e%port of dutiable goods.

d Blue hipping Bill in 6 copies for e%ports under the (8=B scheme.

7or the goods which are cleared by


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freight forwarder pay such charges on the behalf of e%porter and then chares the

same from e%porter through their fess.

/. Vehi#le Chit:

Kehicle chit is given by the customs o-cial when the goods enter to customs

designated areas so that the duty can be assessed and let e%port seal can be availed

from the customs for loading the cargo to the ship.

8. E1#hange Control $e#laration %orms:

#he 7oreign 8%change ?anagement )ct 1+++ and subsequent rules has prescribed

certain forms to be used by e%porters for declaring the foreign e%change which they

shall be bringing to the country through the e%ports in following forms. "t is to be

noted that declaration has to be made with appropriate forms as mentioned below for

all e%ports as per 7oreign 8%change ?anagement )ct 9ules and regulations to 9B".

a8%change *ontrol (eclaration

(7 />9 7orm

(7/>9 refers to proof of e%ports to all

the countries e%cept by post. (7

7orms are used for e%ports more than

25U and less than that >9 form will

be used. 8V/ 8H have certain

e%ceptions in use of >9 form even in

case of e%port less than 25U.b == 7orm == forms refer to e%ports to all

countries by parcel post e%cept in the

case where e%port is made on


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9. %reight Payment Certi>#ate: ) *erti$cate showing that freight for the goods

meant for e%port has been paid. 7reight payment certi$cate is a document which

indicates that the freight for the consignment has been paid to the shipping

company. "t is a supplementary evidence to avail second bill of lading in case the

original has been lost.

. Insuran#e Premium Payment Certi>#ate: hipping company demand

"nsurance premium payment *erti$cate for the insurance cover of the goods. #he

carriage of goods through ship is full of risks and company usually does not want to

be responsible in case of pilferage/loss/piracy etc. and insist that insurance cover

shall be taken by the e%porter for the goods to be e%ported.

Date post:	02-Jun-2018
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