CHALLENGES TO INDIAN EXPORT

Submitted By – 1. Reet Khanuja 15202036

2. Mrityunjay Kr. Pandey 152020303. Mohini Khandelwal 152020284. Kalicharan Padhy 152020225. Laxmi Agarwalla 152020246. Nivedita Nanda 152020327. Kingshuk Gupta 15202022

MAJOR EXPORTS OF INDIA Oil Products - $ 61.2 billion. Gems, precious metal - $41.2 billion. Textile Industry - $ 40.0 billion. Pharmacy Products - $ 24.0 billion.

MAJOR COUNTRIES TO WHICH EXPORTS ARE DONE USA $33.9 ＄ Billion UAE 18.6 ＄ Billion Singapore 10.3 ＄ Billion UK 9.7 ＄ Billion Germany 5.2 ＄ Billion

MAJOR COMPANY’S INVOLVED Essar

Bello Jewels Pvt Ltd.It is one among the leading companies in india. The gems and jewelry sector covers a wide range of items which include diamonds, precious and semi precious stones, in addition to gold,silver, studded and costume jewelry.

The gems and jewelry industry in India is mostly concentrated in the unorganized sector and employs around 2 million workers.

The diamond segment contributes a major share of nearly 70 percent of the total (gems and jewelry) export and thus the remainder of the analysis focuses on the performance of Indian diamond exports

Bombay Dyeing Cotton, textiles and garments are traditional export items and an important

industry for India. India’s textile industry, in particular, is the second largest textile industry in the world after China. Over time, a number of changes in the domestic and global environment have had a bearing on this industry.

It is a highly labour-intensive industry and therefore of chief importance to the Indian economy.

This industry employs the largest number of workers after agriculture, around 35 million workers, and an additional 50 million people who are typically engaged in allied activities.

India is the largest producer of jute, the second largest producer of Silk and the third largest producer of cotton (and Cellulosic Fibre/Yarn). Consequently, this industry is visible in global trade, and contributes to 12 percent of world exports of textile fiber and yarn, and up to 25 percent of world trade in cotton yarn.

The apparel industry is one of largest foreign revenue earners and in aggregate, contributes 12 percent of India’s total exports

Ranbaxy

The dynamic growth of Indian Pharma Industry, a knowledge based industry, and the recommendations of four major Pharma associations made the Ministry of Commerce & Industry to realize the need for separate export promotion council.

India ranks 3rd in terms of volume of production (10 per cent of global share) and 14th largest by value (1.5 per cent of global share). The reason for lower value share is the lowest cost of drugs in India ranging from 5 per cent to 50 per cent less as compared to developed countries.

The industry is making adequate returns from the domestic sales but bulk of its profits come from the export of generics and active pharmaceutical ingredients to the developed markets. The industry has been exporting more than half of its total production, which is estimated to be more than 20 billion dollars currently.

The largest export destination continues to be the US, followed by the UK, Germany, South Africa, and Russia.

Shipping Industries at a glance

Zim Integrated Shipping Services India Private Limited(ZIM is owned by 32% Israel Corporation and 68% Financial Institutions and Ship-Owners.)

Shipping Corporation of India Limited(indian owned) MSC Agency India Private Limited(South Africa) Qatar Shipping Company(Qatar UAE) Doehle Danautic India TORM Shipping India Pte. Ltd. Dockendale Ship Management India Private Limited Mitsui O.S.K. Lines Maritime India Pvt. Ltd Northern Marine Management Mariners Planet India Pvt. Ltd Merchant Shipping Services Private Limited MMS Maritime (India) Pvt. Ltd. The Great Eastern Shipping Company Ltd.

Top 10 Shipping Companies in India Shipping Corporation Of India Ltd.

Revenue:- Rs 13808 crores. Operations:- 79 vessels operational in sea. Employees:- 2500-3000.

Essar shipping

Revenue- Rs 8383 crores. Operations- 26 vessels carry crude oil and other bulk cargo. Employees- 3000-6000.

The Great Eastern Shipping Company

Revenue- Rs 8157 crores. Operations- 20 vessels. Employees- 2000-3000.

Continued.. Bharati Shipyard Revenue- Rs 5257 crores. Operation- Only in designing and building. Employees- 3000-5000.

ABG Shipyard Revenue- Rs 4322 crores. Operation- Ship building ,designing and repairing. Employee- 3000-4000.

Mercator Limited Revenue- Rs 1835 crores. Operation-Company caters shipping ,coal dredging and offshore

business. Employees- 2000-5000.

Continued.. Gujarat pipavav Revenue- Rs 1515 crores. Operation- Build merchant vessels. Employees- 3500-5000. Varun Shipping Revenue- Rs 1500 crores. Operation- 20 vessels,10 LPG carriers,3 crude oil tankers. Employee- 3000-5000. Global Offshore services Ltd. Revenue-Rs 641 crores. Operations- 10 vessels. Employees-1500-2000. Shreyas Shipping Revenue- Rs 185 crores. Operation- Port agency services. Employee- 2000-4000.

Size and Structure Size of the Industry 515 vessels with a GRT(Gross

Registered Tonnage) of 7.06 million

Geographical distribution The major ports are located at Calcutta/ Haldia, Chennai, Cochin, Ennore, Jawaharlal Nehru Port at Nhava Sheva, Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin and Vishakhapatnam.

Output per annum 42% of total Indian tonnage

Percentage in world market 8% of entire world trade

Indian Shipping Industry At A Glance in 2014 15

• Cargo traffic,which was 976 MMT in 2012 is expected to reach 1758 MMT by 2017.• India currently ranks 16th among maritime countries,and boasts a coastline of about 7517 km.• Around 95 percent of India’s trade by volume and 70 percent by value takes place through maritime transport,according to Ministry Of Shipping.•The capacity of all major ports as on March 31,2014 was 800.52 MMT against cargo traffic of 555.54 MMT handled in 2013-14.•The container handling in 2014 expanded 7.15% to 7.25% .•Indian port sector received FDI worth $ 1637.30 million in the period April 2000-February 2015,as per the Department of Industrial Policy & Promotion(DIPP), Ministry of Commerce and Industries.•The ports sector was also awarded 30 projects in FY14, investing over Rs 20000 crore (US $ 3.16 billion) which is a threefold increase over the preceding year.•In FY14, coal cargo traffic grew by 20.6% to 104.5 MT from 86.7 MT in FY13.

What Strategies Are Adapted When Oil Prices Change.

Ship owners started to use fuel surcharges to recoup some of the increased costs that they face so that they pass some of these costs on to the importers. Other then passing the costs, liners are also implementing other strategies to cover this variable cost, below are some of the trends:

1. Designing More Efficient Vessels-• Ships will save approximately 50% on fuel consumption compared to the old

design fleet.• Initial high investment in designing ships are high but this will have a very

short period of payback time due to cost efficiency on fuel.• Another advantage of new ships is that they will be 100% recyclable when

they retire after25 years of service.2. Vessel Speed-• Increasing the speed from say 23 knots to 26 knots will incur extra fuel cost

but can be covered by timely shipping of products. 3. Outsourcing Fuel supply-• More and more liners are outsourcing their fuel supply to professional

companies who focus on this issue alone so that liners can focus more on their core business. These companies develop comprehensive fuel strategies that effectively manage oil prices as well as finding the right type of fuel to meet government regulations.

Highlights of the Foreign Trade Policies 2015-2020Increase exports to $900 billion by 2019-20, from

$466 billion in 2013-14

Raise India's share in world exports from 2% to 3.5%.

Merchandise Export from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) launched.

Higher level of rewards under MEIS for export items with High domestic content and value addition.

Export obligation under EPCG scheme reduced to 75% to Promote domestic capital goods manufacturing.

Objectives of Foreign Trade Policies

To double India's share To increase economic growth To encorage domestic producers To enhance technological strength To encourage attainment of quality goods

PORT SECTOR India has 12 major ports and about 187 non-major

ports. Ports handle 95% of trade volumes in India.

The Indian ports sector plays a vital role in sustaining growth in the country’s trade and commerce.

Indian Government plays an important role in supporting the ports sector. It has allowed Foreign Direct Investment (FDI) up to 100 per cent under the automatic route for port and harbour construction and maintenance projects.

The DIPP, Ministry of Commerce and Industry, reported that the Indian ports sector received FDI worth US$ 1,637.3 million between April 2000 and May 2015.

PORT CLEARANCES Exporter has to obtain IEC code from DGFT

Open a current account in the designated bank for credit of any Drawback incentive.

All the exporters intending to export under the export promotion scheme need to get their licences registered at the Customs Station.

The processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods.

PORT CLEARANCES

Shipping Bill

"Let Export Order"

Stuffing / Loading of goods in containers

Export General Manifest

Bill of Lading

PAYMENT TECHNIQUES EXIM bank is the premier finance institution in India,

established in 1982, under Export Import Bank Of India Act, 1981.

Main Idea is to promote Indian Export.

Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India,Export Credit Guarantee Corporation of India, a financial institution, public sector banks, and business communities.

FUNCTIONS OF BANK1. Corporate Banking Group

2. Export Credit Services

3. Credit Proposals from SMEs

4. Support Services (Research & Planning, Treasury & Accounts etc..)

EXPORT FINANCE METHODS1. Letter of Credit

2. Bills of Exchange / Drafts

3. Factoring

4. Working Capital Financing

5. Counter trade

EXPORT INSURANCE Export Insurance Services,Inc.is an Insurance brokerage specializing in

commercial credit, export credit & political risk Insurance for domestic & International trade & finance.

EIS,Inc.is among the top three brokers serving small business exporters for the Export-Import Bank of the United states.

EIS has been repeatedly recognized by EX-IM Bank for the outstanding growth in its portfolio of U.S.

Usually small business exporters who actively use EX-IM bank Insurance.

EIS has also demonstrated leadership bringing small business clients to EXIM.

Where as bank’s include new online insurance application process,which is designed to speed up services to users .

The Benefit of Export Insurance Policy Up to 95% cover is provided to the Exporter. The Exporter is covered against loss suffered due to specified risk . Export risk includes political risk & commercial risk. NEIA(National Export Insurance a/c) is operated by ECGC & set up by

GOI to cover the credit Insurance. The NEIA trust also provides cover to banks for buyer’s credit

transactions which facilitates foreign buyer to pay for project exports from India.

To ensure proper & effective utilization of the NEIA scheme,to monitor its operations & to provide guidance, the GOI has set up a high powered committee. They are

1) The Secretary-Ministry of Commerce - chairman 2) The Secretary-Department of Economic affairs3) The Secretary-Ministry of External affairs4) The Additional secretary & Financial advisor-Department of

commerce.5) The CMD-EXIM Bank 6) Representatives of RBI7) Joint Secretary-Ministry of commerce & Industry.

Factors Affecting Export Business • Trade barriers : The degree to which governments erect or remove

trade barriers has a tremendous impact on importing and exporting.• Shipping costs:  Importing and exporting typically involves the

movement of large amounts of materials.  The costs of this movement have a major impact on whether importing and exporting can be profitable. 

• Domestic costs and infrastructure availability:  One reason that importing and exporting has risen is that it has become cheaper and more feasible to produce many things in poorer countries and ship them to richer ones.

• Marketing: Marketing is indeed a crucial aspect in businesses, most especially in the import export business. You must make them aware of these products and services.

Logistics: In the import export business, the delivery of products is one of the utmost important considerations, most especially if the products imported or exported are perishable.

Government rules: This business is always dependent on various rules imposed by the government. These rules may vary from country to country.

OTHER TOP EXPORTED PRODUCTS AND COMPANIES INVOLVED ARE:

Natural or cultured pearls, precious or semiprecious stones, and jewellery clad with precious metals and also coins accounted for 15.95% of total exports. Companies involved are Bello Jewels Pvt Ltd, C.R enterprise , Rajesh export limited.

Exports of Iron and steel accounted for 3.76% of the total business. Companies involved are Vedanta ltd, Sesa goa group, Ashapura group.

Organic chemicals like fertilizers and similar products made up 3.64% of India’s exports. Companies involved are Hindustan Fertilizer Corporation Limited, Madras Fertilizers Limited, National Fertilizers Limited.